Document:

exv10w3

Exhibit 10.3

Guarantee and Collateral Agreement, dated as of May 29, 2007

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GUARANTEE AND COLLATERAL AGREEMENT

Dated and effective as of May 29, 2007,

among

BAUBLE HOLDINGS CORP.,

BAUBLE ACQUISITION SUB, INC. (to be merged with and into Claire’s Stores, Inc.),

as Borrower,

each Subsidiary Loan Party,

and

CREDIT SUISSE,

as Administrative Agent

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TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I

DEFINITIONS

	 
	 	 	 	 	 	 
	Section 1.01.
	 	Credit Agreement	 	 	5	 
	Section 1.02.
	 	Other Defined Terms	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE II

GUARANTEE

	 
	 	 	 	 	 	 
	Section 2.01.
	 	Guarantee	 	 	8	 
	Section 2.02.
	 	Guarantee of Payment	 	 	9	 
	Section 2.03.
	 	No Limitations, Etc.	 	 	9	 
	Section 2.04.
	 	Reinstatement	 	 	10	 
	Section 2.05.
	 	Agreement To Pay; Contribution; Subrogation	 	 	11	 
	Section 2.06.
	 	Information	 	 	11	 
	Section 2.07.
	 	Maximum Liability	 	 	11	 
	Section 2.08.
	 	Payment Free and Clear of Taxes	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE III

PLEDGE OF SECURITIES

	 
	 	 	 	 	 	 
	Section 3.01.
	 	Pledge	 	 	12	 
	Section 3.02.
	 	Delivery of the Pledged Collateral	 	 	12	 
	Section 3.03.
	 	Representations, Warranties and Covenants	 	 	13	 
	Section 3.04.
	 	Registration in Nominee Name; Denominations	 	 	15	 
	Section 3.05.
	 	Voting Rights; Dividends and Interest, Etc.	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE IV

SECURITY INTERESTS IN OTHER PERSONAL PROPERTY

	 
	 	 	 	 	 	 
	Section 4.01.
	 	Security Interest	 	 	17	 
	Section 4.02.
	 	Representations and Warranties	 	 	19	 
	Section 4.03.
	 	Covenants	 	 	21	 
	Section 4.04.
	 	Other Actions	 	 	24	 
	Section 4.05.
	 	Covenants Regarding Patent, Trademark and Copyright Collateral	 	 	25	 
	Section 4.06.
	 	Intercreditor Relations	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE V

REMEDIES

	 
	 	 	 	 	 	 
	Section 5.01.
	 	Remedies Upon Default	 	 	27	 

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	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 5.02.
	 	Application of Proceeds	 	 	28	 
	Section 5.03.
	 	Securities Act, Etc.	 	 	29	 
	 
	 	 	 	 	 	 
	ARTICLE VI

INDEMNITY, SUBROGATION AND SUBORDINATION

	 
	 	 	 	 	 	 
	Section 6.01.
	 	Indemnity	 	 	30	 
	Section 6.02.
	 	Contribution and Subrogation	 	 	30	 
	Section 6.03.
	 	Subordination	 	 	31	 
	 
	 	 	 	 	 	 
	ARTICLE VII

MISCELLANEOUS

	 
	 	 	 	 	 	 
	Section 7.01.
	 	Notices	 	 	33	 
	Section 7.02.
	 	Security Interest Absolute	 	 	33	 
	Section 7.03.
	 	Limitation By Law	 	 	33	 
	Section 7.04.
	 	Binding Effect; Several Agreement	 	 	33	 
	Section 7.05.
	 	Successors and Assigns	 	 	34	 
	Section 7.06.
	 	Collateral Agent’s Fees and Expenses; Indemnification	 	 	34	 
	Section 7.07.
	 	Collateral Agent Appointed Attorney-in-Fact	 	 	34	 
	Section 7.08.
	 	GOVERNING LAW	 	 	35	 
	Section 7.09.
	 	Waivers; Amendment	 	 	35	 
	Section 7.10.
	 	WAIVER OF JURY TRIAL	 	 	36	 
	Section 7.11.
	 	Severability	 	 	36	 
	Section 7.12.
	 	Counterparts	 	 	36	 
	Section 7.13.
	 	Headings	 	 	36	 
	Section 7.14.
	 	Jurisdiction; Consent to Service of Process	 	 	36	 
	Section 7.15.
	 	Termination or Release	 	 	37	 
	Section 7.16.
	 	Additional Subsidiaries	 	 	38	 
	Section 7.17.
	 	Right of Set-off	 	 	38	 
	 
	 	 	 	 	 	 
	Schedules
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Schedule I
	 	Subsidiary Parties	 	 	 	 
	Schedule II
	 	Pledged Stock; Debt Securities	 	 	 	 
	Schedule III
	 	Intellectual Property	 	 	 	 
	Schedule IV
	 	Filing Jurisdictions	 	 	 	 
	Schedule V
	 	Commercial Tort Claims	 	 	 	 
	Schedule VI
	 	Matters Relating to Accounts and Inventory	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibits
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibit I
	 	Form of Supplement to the Guarantee and Collateral Agreement	 	 	 	 

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          GUARANTEE AND COLLATERAL AGREEMENT dated and effective as of May 29, 2007 (this
“Agreement”), among BAUBLE HOLDINGS CORP., a Delaware corporation (“Holdings”),
BAUBLE ACQUISITION SUB, INC., a Florida corporation (the “Borrower”) each Subsidiary Loan
Party and CREDIT SUISSE, as administrative agent and collateral agent (in such capacities, the
“Administrative Agent”) for the Secured Parties (as defined below).

          Reference is made to the Credit Agreement dated as of May 29, 2007 (as amended, restated,
supplemented, waived or otherwise modified from time to time, the “Credit Agreement”),
among Holdings, the Borrower, the LENDERS party thereto from time to time, CREDIT SUISSE, as
administrative agent and collateral agent for the Lenders, BEAR STEARNS CORPORATE LENDING INC. and
MIZUHO CORPORATE BANK, LTD., as co-syndication agents, and LEHMAN COMMERCIAL PAPER INC. and LASALLE
BANK NATIONAL ASSOCIATION, as co-documentation agents.

          The Lenders have agreed to extend credit to the Borrower subject to the terms and conditions
set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are
conditioned upon, among other things, the execution and delivery of this Agreement. Holdings and
the Subsidiary Parties are affiliates of the Borrower, will derive substantial benefits from the
extension of credit to the Borrower pursuant to the Credit Agreement and are willing to execute and
deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the
parties hereto agree as follows:

ARTICLE I

DEFINITIONS

          Section 1.01. Credit Agreement. (a) Capitalized terms used in this Agreement and not
otherwise defined herein have the respective meanings assigned thereto in the Credit Agreement.
All capitalized terms defined in the New York UCC (as defined herein) and not defined in this
Agreement have the meanings specified therein. The term “instrument” shall have the meaning
specified in Article 9 of the New York UCC.

          (b) The rules of construction specified in Section 1.02 of the Credit Agreement also apply to
this Agreement.

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

          “Account Debtor” means any person who is or who may become obligated to any Pledgor
under, with respect to or on account of an Account, Chattel Paper, General Intangibles, Instruments
or Investment Property.

          “Article 9 Collateral” has the meaning assigned to such term in Section 4.01.

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          “Collateral” means the collective reference to Article 9 Collateral and Pledged
Collateral.

          “Copyright License” means any written agreement, now or hereafter in effect, granting
any right to any Pledgor under any Copyright now or hereafter owned by any third party, and all
rights of any Pledgor under any such agreement (including, without limitation, any such rights that
such Pledgor has the right to license).

          “Copyrights” means all of the following now owned or hereafter acquired by any
Pledgor: (a) all copyright rights in any work subject to the copyright laws of the United States
or any other country, whether as author, assignee, transferee or otherwise, (b) all registrations
and applications for registration of any such Copyright in the United States or any other country,
including registrations, supplemental registrations and pending applications for registration in
the United States Copyright Office and the right to obtain all renewals thereof, including those
listed on Schedule III, (c) all claims for, and rights to sue for, past or future
infringements of any of the foregoing and (d) all income, royalties, damages and payments now or
hereafter due and payable with respect to any of the foregoing, including damages and payments for
past or future infringement thereof.

          “Credit Agreement” has the meaning assigned to such term in the preliminary statement
of this Agreement.

          “Federal Securities Laws” has the meaning assigned to such term in Section 5.03.

          “General Intangibles” means all “General Intangibles” as defined in the New York UCC,
including all choses in action and causes of action and all other intangible personal property of
any Pledgor of every kind and nature (other than Accounts) now owned or hereafter acquired by any
Pledgor, including corporate or other business records, indemnification claims, contract rights
(including rights under leases, whether entered into as lessor or lessee, Swap Agreements and other
agreements), Intellectual Property (but excluding “intent-to-use” applications for trademark or
service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051,
unless and until an Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of
the Lanham Act has been filed, to the extent that, and solely during the period for which, any
assignment of an “intent-to-use” application prior to such filing would violate the Lanham Act),
goodwill, registrations, franchises, tax refund claims and any guarantee, claim, security interest
or other security held by or granted to any Pledgor to secure payment by an Account Debtor of any
of the Accounts.

          “Guarantors” means Holdings (prior to a Borrower Qualified IPO), and the Subsidiary
Loan Parties.

          “Intellectual Property” means all intellectual property of every kind and nature now
owned or hereafter acquired by any Pledgor, including inventions, designs, Patents, Copyrights,
Trademarks, Patent Licenses, Copyright Licenses, Trademark Licenses, trade secrets, domain names,
confidential or proprietary technical and business information, know-how, show-how or other data or
information and all related documentation.

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          “Intellectual Property Security Agreement” means a security agreement in the form
hereof or a short form hereof, in each case, which form shall be reasonably acceptable to the
Administrative Agent.

          “IP Agreements” means all material Copyright Licenses, Patent Licenses, Trademark
Licenses, and all other agreements, permits, consents, orders and franchises relating to the
license, development, use or disclosure of any material Intellectual Property to which a Pledgor,
now or hereafter, is a party or a beneficiary, including, without limitation, the agreements set
forth on Schedule III hereto.

          “Loan Document Obligations” has the meaning assigned to such term in the
Credit Agreement.

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

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

          “Patent License” means any written agreement, now or hereafter in effect, granting to
any Pledgor any right to make, use or sell any invention covered by a Patent, now or hereafter
owned by any third party (including, without limitation, any such rights that such Pledgor has the
right to license).

          “Patents” means all of the following now owned or hereafter acquired by any Pledgor:
(a) all letters patent of the United States or the equivalent thereof in any other country or
jurisdiction, including those listed on Schedule III, and all applications for letters
patent of the United States or the equivalent thereof in any other country or jurisdiction,
including those listed on Schedule III, (b) all provisionals, reissues, extensions,
continuations, divisions, continuations-in- part, reexaminations or revisions thereof, and the
inventions disclosed or claimed therein, including the right to make, use, import and/or sell the
inventions disclosed or claimed therein, (c) all claims for, and rights to sue for, past or future
infringements of any of the foregoing and (d) all income, royalties, damages and payments now or
hereafter due and payable with respect to any of the foregoing, including damages and payments for
past or future infringement thereof.

          “Permitted Liens” means any Lien permitted by Section 6.02 of the Credit Agreement.

          “Pledged Collateral” has the meaning assigned to such term in Section 3.01.

          “Pledged Debt Securities” has the meaning assigned to such term in Section 3.01.

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

          “Pledged Stock” has the meaning assigned to such term in Section 3.01.

          “Pledgor” shall mean the Borrower and each Guarantor.

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          “Secured Parties” means (a) the Lenders (and any Affiliate of a Lender designated by
the Borrower as a provider of cash management services to which any obligation referred to in
clause (c) of the definition of the term Obligations is owed), (b) the Administrative Agent, (c)
each Issuing Bank, (d) each counterparty to any Swap Agreement entered into with a Loan Party or
any Affiliate of a Loan Party, the obligations under which constitute Obligations, (e) the
beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan
Document and (f) the successors and permitted assigns of each of the foregoing.

          “Security Interest” has the meaning assigned to such term in Section 4.01.

          “Subsidiary Loan Party” means any Subsidiary that is a party hereto or any Subsidiary
that becomes a party hereto pursuant to Section 7.16.

          “Trademark License” means any written agreement, now or hereafter in effect, granting
to any Pledgor any right to use any Trademark now or hereafter owned by any third party (including,
without limitation, any such rights that such Pledgor has the right to license).

          “Trademarks” means all of the following now owned or hereafter acquired by any
Pledgor: (a) all trademarks, service marks, corporate names, company names, business names,
fictitious business names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations thereof (if any), and all registration and recording applications filed in connection
therewith, including registrations and registration applications in the United States Patent and
Trademark Office or any similar offices in any State of the United States or any other country or
any political subdivision thereof (except for “intent-to-use” applications for trademark or service
mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, unless and
until an Amendment to Allege Use or a Statement of Use under Sections 1(c) and 1(d) of the Lanham
Act has been filed, to the extent that any assignment of an “intent-to-use” application prior to
such filing would violate the Lanham Act), and all renewals thereof, including those listed on
Schedule III, (b) all goodwill associated therewith or symbolized thereby, (c) all claims
for, and rights to sue for, past or future infringements of any of the foregoing and (d) all
income, royalties, damages and payments now or hereafter due and payable with respect to any of the
foregoing, including damages and payments for past or future infringement thereof.

ARTICLE II

GUARANTEE

          Section 2.01. Guarantee. Each Guarantor unconditionally guarantees, jointly with the
other Guarantors and severally, to the Administrative Agent, for the ratable benefit of the Secured
Parties, as a primary obligor and not merely as a surety, the due and punctual payment and
performance of the Obligations. Each Guarantor further agrees that the Obligations may be extended
or renewed, in whole or in part, without notice to or further assent from it, and that it will
remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation. Each
Guarantor waives presentment to, demand of payment from and protest to the

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Borrower or any other Loan Party of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment.

          Section 2.02. Guarantee of Payment. Each Guarantor further agrees that its guarantee
hereunder constitutes a guarantee of payment when due (whether at the stated maturity, by
acceleration or otherwise) and not of collection, and waives any right to require that any resort
be had by the Administrative Agent or any other Secured Party to any security held for the payment
of the Obligations or to any balance of any deposit account or credit on the books of the
Administrative Agent or any other Secured Party in favor of the Borrower or any other person.

          Section 2.03. No Limitations, Etc. (a) Except for termination of a Guarantor’s
obligations hereunder as expressly provided for in Section 7.15 and except as provided in Section
2.07, the obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise (other than defense of payment or performance).
Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder, to
the fullest extent permitted by applicable law, shall not be discharged or impaired or otherwise
affected by, and each Guarantor hereby waives any defense to the enforcement hereof by reason of:

     (i) the failure of the Administrative Agent or any other Secured Party to assert any
claim or demand or to exercise or enforce any right or remedy under the provisions of any
Loan Document or otherwise;

     (ii) any rescission, waiver, amendment or modification of, increase in the Obligations
with respect to, or any release from any of the terms or provisions of, any Loan Document or
any other agreement, including with respect to any other Guarantor under this Agreement;

     (iii) the failure to perfect any security interest in, or the exchange, substitution,
release or any impairment of, any security held by the Administrative Agent or any other
Secured Party for the Obligations;

     (iv) any default, failure or delay, willful or otherwise, in the performance of the
Obligations;

     (v) any other act or omission that may or might in any manner or to any extent vary the
risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of
law or equity (other than the payment in full in cash or immediately available funds of all
the Obligations);

     (vi) any illegality, lack of validity or enforceability of any Obligation;

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     (vii) any change in the corporate existence, structure or ownership of any Loan Party,
or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Loan
Party or its assets or any resulting release or discharge of any Obligation;

     (viii) the existence of any claim, set-off or other rights that the Guarantors may have
at any time against the Borrower, the Administrative Agent, any other Secured Party or any
other person, whether in connection herewith or any unrelated transactions; provided
that nothing herein will prevent the assertion of any such claim by separate suit or
compulsory counterclaim;

     (ix) any action permitted or authorized hereunder; or

     (x) any other circumstance (including without limitation, any statute of limitations)
or any existence of or reliance on any representation by the Administrative Agent or any
other Secured Party that might otherwise constitute a defense to, or a legal or equitable
discharge of, the Borrower or any Guarantor or any other guarantor or surety.

Each Guarantor expressly authorizes the Secured Parties to take and hold security for the payment
and performance of the Obligations, to exchange, waive or release any or all such security (with or
without consideration), to enforce or apply such security and direct the order and manner of any
sale thereof in their sole discretion or to release or substitute any one or more other guarantors
or obligors upon or in respect of the Obligations, all without affecting the obligations of any
Guarantor hereunder.

          (b) To the fullest extent permitted by applicable law, each Guarantor waives any defense based
on or arising out of any defense of any other Loan Party or the unenforceability of the Obligations
or any part thereof from any cause, or the cessation from any cause of the liability of any other
Loan Party, other than the payment in full in cash or immediately available funds of all the
Obligations (other than contingent or unliquidated obligations or liabilities). The Administrative
Agent and the other Secured Parties may, at their election, foreclose on any security held by one
or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any other Loan Party or exercise any other right or remedy available to them
against any other Loan Party, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Obligations (other than contingent or unliquidated
obligations or liabilities) have been paid in full in cash or immediately available funds. To the
fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any
such election even though such election operates, pursuant to applicable law, to impair or to
extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor
against any other Loan Party, as the case may be, or any security.

          Section 2.04. Reinstatement. Each Guarantor agrees that its guarantee hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any Obligation is rescinded or must otherwise be restored by the Administrative Agent
or any other Secured Party upon the bankruptcy or reorganization of the Borrower or any other Loan
Party or otherwise.

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          Section 2.05. Agreement To Pay; Contribution; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Administrative Agent or any other
Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of
the Borrower to pay any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will
forthwith pay, or cause to be paid, to the Administrative Agent for distribution to the applicable
Secured Parties in cash the amount of such unpaid Obligation. Each Guarantor hereby
unconditionally and irrevocably agrees that in the event any payment shall be required to be made
to any Secured Party under this guarantee or any other guarantee, such Guarantor will contribute,
to the maximum extent permitted by law, such amounts to each other Guarantor and each other
guarantor so as to maximize the aggregate amount paid to the Secured Parties under or in respect of
the Loan Documents. Upon payment by any Guarantor of any sums to the Administrative Agent as
provided above, all rights of such Guarantor against the Borrower, or other Loan Party or any other
Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subject to Article VI.

          Section 2.06. Information. Each Guarantor assumes all responsibility for being and
keeping itself informed of the financial condition and assets of the Borrower and each other Loan
Party, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and
the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and
agrees that none of the Administrative Agent or the other Secured Parties will have any duty to
advise such Guarantor of information known to it or any of them regarding such circumstances or
risks.

          Section 2.07. Maximum Liability. Each Guarantor, and by its acceptance of this
guarantee, the Administrative Agent and each Secured Party hereby confirms that it is the intention
of all such Persons that this guarantee and the Obligations of each Guarantor hereunder not
constitute a fraudulent transfer or conveyance for purposes of the U.S. Bankruptcy Code or any
other federal, state or foreign bankruptcy, insolvency, receivership or similar law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this guarantee and the Obligations of each Guarantor
hereunder. To effectuate the foregoing intention, the Administrative Agent, the Secured Parties
and the Guarantors hereby irrevocably agree that the Obligations of each Guarantor under this
guarantee at any time shall be limited to the maximum amount as will result in the Obligations of
such Guarantor under this guarantee not constituting a fraudulent transfer or conveyance. 

          Section 2.08. Payment Free and Clear of Taxes. Any and all payments by or on account
of any obligation of any Guarantor hereunder or under any other Loan Document shall be made free
and clear of, and without deduction for, any Indemnified Taxes or Other Taxes on the same terms and
to the same extent that payments by any Loan Party are required to be made pursuant to the terms of
Section 2.17 of the Credit Agreement. The provisions of Section 2.17 of the Credit Agreement shall
apply to each Guarantor mutatis mutandis. 

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ARTICLE III

PLEDGE OF SECURITIES

          Section 3.01. Pledge. As security for the payment or performance, as the case may be,
in full of its Obligations, each Pledgor hereby assigns and pledges to the Administrative Agent,
its successors and permitted assigns, for the ratable benefit of the Secured Parties, and hereby
grants to the Administrative Agent, its successors and permitted assigns, for the ratable benefit
of the Secured Parties, a security interest in all of such Pledgor’s right, title and interest in,
to and under (a) the Equity Interests directly owned by it (including those listed on Schedule II)
and any other Equity Interests obtained in the future by such Pledgor and any certificates
representing all such Equity Interests (the “Pledged Stock”); provided that the Pledged Stock shall
not include (i)(A) more than 65% of the issued and outstanding voting Equity Interests of any
“first tier” Foreign Subsidiary directly owned by such Pledgor, (B) more than 65% of the issued and
outstanding voting Equity Interests of any “first tier” Qualified CFC Holding Company directly
owned by such Pledgor, (C) any issued and outstanding Equity Interest of any Foreign Subsidiary
that is not a first tier Foreign Subsidiary, or (D) any issued and outstanding Equity Interests of
any Qualified CFC Holding Company that is not a “first tier” Qualified CFC Holding Company, (ii) to
the extent applicable law requires that a Subsidiary of such Pledgor issue directors’
qualifying shares or similar shares, such shares or nominee or other similar shares, (iii) any
Equity Interests with respect to which a grant of security is not required by reason of Section
5.10(g) of the Credit Agreement, or (iv) any Equity Interests of a Subsidiary (which Subsidiary is
set forth on Schedule 1.01A to the Credit Agreement) to the extent that, as of the Closing Date,
and for so long as, such a pledge of such Equity Interests would violate applicable law or an
enforceable contractual obligation binding on or relating to such Equity Interests; (b)(i) the debt
obligations listed opposite the name of such Pledgor on Schedule II, (ii) any debt securities in
the future issued to such Pledgor and (iii) the certificates, promissory notes and any other
instruments, if any, evidencing such debt securities (the “Pledged Debt Securities”); (c) subject
to Section 3.05 hereof, all payments of principal or interest, dividends, cash, instruments and
other property from time to time received, receivable or otherwise distributed in respect of, in
exchange for or upon the conversion of, and all other proceeds received in respect of, the property
referred to in clauses (a) and (b) above; (d) subject to Section 3.05 hereof, all rights and
privileges of such Pledgor with respect to the securities and other property referred to in clauses
(a), (b) and (c) above; and (e) all proceeds of any of the foregoing (the items referred to in
clauses (a) through (e) above being collectively referred to as the “Pledged Collateral”).

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

          Section 3.02. Delivery of the Pledged Collateral. (a) Each Pledgor agrees promptly
to deliver or cause to be delivered to the Administrative Agent, for the ratable benefit of the
Secured Parties, any and all Pledged Securities to the extent such Pledged Securities are either
(i) Equity Interests or (ii) promissory notes or other instruments evidencing Indebtedness required
to be delivered pursuant to paragraph (b) of this Section 3.02. If any Pledged Stock that

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is uncertificated on the date hereof shall hereafter become certificated, the applicable
Pledgor shall promptly cause the certificate or certificates representing Pledged Stock to be
delivered to the Administrative Agent, as agent for the Secured Parties, together with the
accompanying stock powers or other documentation required by Section 3.02(c). None of the Pledgors
shall permit any other party to “control” (for purposes of Section 8-106 of the New York UCC (or
any analogous provision of the Uniform Commercial Code in effect in the jurisdiction whose law
applies)) any uncertificated securities that constitute Pledged Collateral other than the
Administrative Agent, as agent for the Secured Parties.

          (b) Each Pledgor will cause any Indebtedness for borrowed money having an aggregate principal
amount in excess of $5.0 million (other than (i) intercompany current liabilities incurred in the
ordinary course of business in connection with the cash management operations of Holdings, the
Borrower and its Subsidiaries or (ii) to the extent that a pledge of such promissory note or
instrument would violate applicable law) owed to such Pledgor by any person to be evidenced by a
duly executed promissory note that is pledged and delivered to the Administrative Agent, for the
ratable benefit of the Secured Parties, pursuant to the terms hereof. To the extent any such
promissory note is a demand note, each Pledgor party thereto agrees, if requested by the
Administrative Agent, to immediately demand payment thereunder upon an Event of Default specified
under Section 7.01(b), (c), (f), (h) or (i) of the Credit Agreement unless such demand would not be
commercially reasonable or would otherwise expose such Pledgor to liability to the maker.

          (c) Upon delivery to the Administrative Agent, (i) any Pledged Securities required to be
delivered pursuant to the foregoing paragraphs (a) and (b) of this Section 3.02 shall be
accompanied by stock powers or note powers, as applicable, duly executed in blank or other
instruments of transfer reasonably satisfactory to the Administrative Agent and by such other
instruments and documents as the Administrative Agent may reasonably request and (ii) all other
property comprising part of the Pledged Collateral delivered pursuant to the terms of this
Agreement shall be accompanied to the extent necessary to perfect the security interest in or allow
realization on the Pledged Collateral by proper instruments of assignment duly executed by the
applicable Pledgor and such other instruments or documents (including issuer acknowledgments in
respect of uncertificated securities) as the Administrative Agent may reasonably request. Each
delivery of Pledged Securities shall be accompanied by a schedule describing the securities, which
schedule shall be attached hereto as Schedule II (or a supplement to Schedule II,
as applicable) and made a part hereof; provided that failure to attach any such schedule
hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so
delivered shall supplement any prior schedules so delivered.

          (d) In the event any Pledged Securities constitute uncertificated securities, each Pledgor
shall, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative
Agent, either (i) cause the issuer to agree to comply with instructions from the Administrative
Agent without further consent of any Pledgor or (ii) cause the issuer to register the
Administrative Agent as the registered owner of such uncertificated security.

          Section 3.03. Representations, Warranties and Covenants. The Pledgors, jointly and
severally, represent, warrant and covenant to and with the Administrative Agent, for the ratable
benefit of the Secured Parties, that:

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          (a) Schedule II correctly sets forth the percentage of the issued and outstanding
shares of each class of the Equity Interests of the issuer thereof represented by such Pledged
Stock and includes all Equity Interests, debt securities and promissory notes or instruments
evidencing Indebtedness required to be (i) pledged in order to satisfy the Collateral and Guarantee
Requirement, or (ii) delivered pursuant to Section 3.02(b);

          (b) the Pledged Stock and Pledged Debt Securities (solely with respect to Pledged Debt
Securities issued by a person that is not a Subsidiary of Holdings or an Affiliate of any such
subsidiary, to the best of each Pledgor’s knowledge) have been duly and validly authorized and
issued by the issuers thereof and (i) in the case of Pledged Stock, are fully paid and
nonassessable (other than with respect to Pledged Stock consisting of membership interests of
limited liability companies to the extent provided in Sections 18-502 and 18-607 of the Delaware
Limited Liability Company Act) and (ii) in the case of Pledged Debt Securities (solely with respect
to Pledged Debt Securities issued by a person that is not a Subsidiary of Holdings or an Affiliate
of any such subsidiary, to the best of each Pledgor’s knowledge) are legal, valid and binding
obligations of the issuers thereof, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’
rights generally, general equitable principles (whether considered in a proceeding at law or in
equity) and an implied covenant of good faith and fair dealing;

          (c) except for the security interests granted hereunder, each Pledgor (i) is and, subject to
any transfers made in compliance with the Credit Agreement, will continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on Schedule II as owned by
such Pledgor, (ii) holds the same free and clear of all Liens, other than Permitted Liens, (iii)
will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any
security interest in or other Lien on, the Pledged Collateral, other than pursuant to a transaction
permitted by the Credit Agreement and other than Permitted Liens and (iv) subject to the rights of
such Pledgor under the Loan Documents to dispose of Pledged Collateral, will use commercially
reasonable efforts to defend its title or interest hereto or therein against any and all Liens
(other than Permitted Liens), however arising, of all persons;

          (d) other than as set forth in the Credit Agreement or the schedules thereto, and except for
restrictions and limitations imposed by the Loan Documents or securities laws generally or
otherwise permitted to exist pursuant to the terms of the Credit Agreement, the Pledged Stock
(other than partnership interests) is and will continue to be freely transferable and assignable,
and none of the Pledged Stock is or will be subject to any option, right of first refusal,
shareholders agreement, charter or by-law provisions or contractual restriction of any nature that
might prohibit, impair, delay or otherwise affect the pledge of such Pledged Stock hereunder, the
sale or disposition thereof pursuant hereto or the exercise by the Administrative Agent of rights
and remedies hereunder;

          (e) each Pledgor has the power and authority to pledge the Pledged Collateral pledged by it
hereunder in the manner hereby done or contemplated;

          (f) other than as set forth in the Credit Agreement or the schedules thereto, no consent or
approval of any Governmental Authority, any securities exchange or any other person

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was or is necessary to the validity of the pledge effected hereby (other than such as have
been obtained and are in full force and effect);

          (g) by virtue of the execution and delivery by the Pledgors of this Agreement and the Foreign
Pledge Agreements, when any Pledged Securities (including Pledged Stock of any Domestic Subsidiary,
any Qualified CFC Holding Company or any foreign stock covered by a Foreign Pledge Agreement) are
delivered to the Administrative Agent, for the ratable benefit of the Secured Parties, in
accordance with this Agreement and a financing statement covering such Pledged Securities is filed
in the appropriate filing office, the Administrative Agent will obtain, for the ratable benefit of
the Secured Parties, a legal, valid and perfected lien upon and security interest in such Pledged
Securities under the New York UCC, subject only to Permitted Liens, as security for the payment and
performance of the Obligations;

          (h) each Pledgor that is an issuer of the Pledged Collateral confirms that it has received
notice of the security interest granted hereunder and consents to such security interest and agrees
to transfer record ownership of the securities issued by it in connection with any request by the
Administrative Agent; and

          (i) the Pledgors shall not amend, or permit to be amended, the limited liability company
agreement (or operating agreement or similar agreement) or partnership agreement of any Subsidiary
of any Loan Party whose Equity Interests are, or are required to be, Collateral in a manner to
cause such Equity Interests to not constitute a security under Section 8-103 of the New York UCC or
the corresponding code or statute of any other applicable jurisdiction unless such Loan Party shall
have first delivered 30 days written notice to the Administrative Agent and shall have taken all
actions contemplated hereby and as otherwise reasonably required by the Administrative Agent to
maintain the security interest of the Administrative Agent therein as a valid, perfected, first
priority security interest.

          Section 3.04. Registration in Nominee Name; Denominations. The Administrative Agent,
on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to
hold the Pledged Securities in the name of the applicable Pledgor, endorsed or assigned in blank or
in favor of the Administrative Agent or, if an Event of Default shall have occurred and be
continuing, in its own name as pledgee or the name of its nominee (as pledgee or as sub-agent).
Each Pledgor will promptly give to the Administrative Agent copies of any notices or other
communications received by it with respect to Pledged Securities registered in the name of such
Pledgor. If an Event of Default shall have occurred and be continuing, the Administrative Agent
shall have the right to exchange the certificates representing Pledged Securities for certificates
of smaller or larger denominations for any purpose consistent with this Agreement. Each Pledgor
shall use its commercially reasonable efforts to cause any Loan Party that is not a party to this
Agreement to comply with a request by the Administrative Agent, pursuant to this Section 3.04, to
exchange certificates representing Pledged Securities of such Loan Party for certificates of
smaller or larger denominations.

          Section 3.05. Voting Rights; Dividends and Interest, Etc. (a) Unless and until an
Event of Default shall have occurred and be continuing and the Administrative Agent shall have
given notice to the relevant Pledgors of the Administrative Agent’s intention to exercise its
rights hereunder:

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

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

     (iii) Each Pledgor shall be entitled to receive and retain any and all dividends,
interest, principal and other distributions paid on or distributed in respect of the Pledged
Collateral to the extent and only to the extent that such dividends, interest, principal and
other distributions are permitted by, and otherwise paid or distributed in accordance with,
the terms and conditions of the Credit Agreement, the other Loan Documents and applicable
laws; provided that (A) any noncash dividends, interest, principal or other
distributions, payments or other consideration in respect thereof, including any rights to
receive the same to the extent not so distributed or paid, that would constitute Pledged
Securities, whether resulting from a subdivision, combination or reclassification of the
outstanding Equity Interests of the issuer of any Pledged Securities, received in exchange
for Pledged Securities or any part thereof, or in redemption thereof, as a result of any
merger, consolidation, acquisition or other exchange of assets to which such issuer may be a
party or otherwise and (B) any non-cash dividends and other distributions paid or payable in
respect of any Pledged Securities that would constitute Pledged Securities in connection
with a partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid in surplus, shall be and become part of the Pledged
Collateral, and, if received by any Pledgor, shall not be commingled by such Pledgor with
any of its other funds or property but shall be held separate and apart therefrom, shall be
held in trust for the benefit of the Administrative Agent, for the ratable benefit of the
Secured Parties, and shall be forthwith delivered to the Administrative Agent, for the
ratable benefit of the Secured Parties, in the same form as so received (endorsed in a
manner reasonably satisfactory to the Administrative Agent).

          (b) Upon the occurrence and during the continuance of an Event of Default and after notice by
the Administrative Agent to the Borrower of the Administrative Agent’s intention to exercise its
rights hereunder, all rights of any Pledgor to dividends, interest, principal or other
distributions that such Pledgor is authorized to receive pursuant to paragraph (a)(iii) of this
Section 3.05 shall cease, and all such rights shall thereupon become vested, for the ratable
benefit of the Secured Parties, in the Administrative Agent which shall have the sole and exclusive
right and authority to receive and retain such dividends, interest, principal or other
distributions; provided, however, that even after the occurrence of an Event of Default,
any

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Pledgor may continue to exercise dividend and distribution rights solely to the extent
permitted under subclause (i), subclause (iii) and subclause (v) of Section 6.06(b) of the Credit
Agreement. All dividends, interest, principal or other distributions received by any Pledgor
contrary to the provisions of this Section 3.05 shall not be commingled by such Pledgor with any of
its other funds or property but shall be held separate and apart therefrom, shall be held in trust
for the benefit of the Administrative Agent, for the ratable benefit of the Secured Parties, and
shall be forthwith delivered to the Administrative Agent, for the ratable benefit of the Secured
Parties, in the same form as so received (endorsed in a manner reasonably satisfactory to the
Administrative Agent). Any and all money and other property paid over to or received by the
Administrative Agent pursuant to the provisions of this paragraph (b) shall be retained by the
Administrative Agent in an account to be established by the Administrative Agent upon receipt of
such money or other property and shall be applied in accordance with the provisions of Section 5.02
hereof. After all Events of Default have been cured or waived and the Borrower has delivered to
the Administrative Agent a certificate to that effect, the Administrative Agent shall promptly
repay to each Pledgor (without interest) all dividends, interest, principal or other distributions
that such Pledgor would otherwise be permitted to retain pursuant to the terms of paragraph
(a)(iii) of this Section 3.05 and that remain in such account.

          (c) Upon the occurrence and during the continuance of an Event of Default and after notice by
the Administrative Agent to the Borrower of the Administrative Agent’s intention to exercise its
rights hereunder, all rights of any Pledgor to exercise the voting and/or consensual rights and
powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.05, and the
obligations of the Administrative Agent under paragraph (a)(ii) of this Section 3.05, shall cease,
and all such rights shall thereupon become vested in the Administrative Agent, for the ratable
benefit of the Secured Parties, which shall have the sole and exclusive right and authority to
exercise such voting and consensual rights and powers; provided that, unless otherwise
directed by the Required Lenders, the Administrative Agent shall have the right from time to time
following and during the continuance of an Event of Default to permit the Pledgors to exercise such
rights. After all Events of Default have been cured or waived and the Borrower has delivered to
the Administrative Agent a certificate to that effect, each Pledgor shall have the right to
exercise the voting and/or consensual rights and powers that such Pledgor would otherwise be
entitled to exercise pursuant to the terms of paragraph (a)(i) above.

ARTICLE IV

SECURITY INTERESTS IN OTHER PERSONAL PROPERTY

          Section 4.01. Security Interest. (a) As security for the payment or performance when
due (whether at the stated maturity, by acceleration or otherwise), as the case may be, in full of
the Obligations, each Pledgor hereby assigns and pledges to the Administrative Agent, its
successors and permitted assigns, for the ratable benefit of the Secured Parties, and hereby grants
to the Administrative Agent, its successors and permitted assigns, for the ratable benefit of the
Secured Parties, a security interest (the “Security Interest”) in all right, title and interest in
or to any and all of the following assets and properties now owned or at any time hereafter
acquired

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by such Pledgor or in which such Pledgor now has or at any time in the future may acquire any
right, title or interest (collectively, the “Article 9 Collateral”):

     (i) all Accounts;

     (ii) all Chattel Paper;

     (iii) all cash and Deposit Accounts;

     (iv) all Documents;

     (v) all Equipment;

     (vi) all General Intangibles;

     (vii) all Instruments;

     (viii) all Inventory;

     (ix) all Investment Property;

     (x) all Letter of Credit Rights;

     (xi) all Commercial Tort Claims;

     (xii) all other personal property not otherwise described above (except for property
specifically excluded from any defined term used in any of the foregoing clauses);

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

     (xiv) to the extent not otherwise included, all proceeds, Supporting Obligations and
products of any and all of the foregoing and all collateral security and guarantees given by
any person with respect to any of the foregoing.

Notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute a
grant of a security interest in (a) any vehicle covered by a certificate of title or ownership,
whether now owned or hereafter acquired, (b) any assets (including Equity Interests), whether now
owned or hereafter acquired, with respect to which the Collateral and Guarantee Requirement or the
other paragraphs of Section 5.10 of the Credit Agreement would not be required to be satisfied by
reason of Section 5.10(g) of the Credit Agreement if hereafter acquired, (c) any property excluded
from the definition of Pledged Collateral by virtue of the proviso to Section 3.01 hereof, (d) any
Letter of Credit Rights to the extent any Pledgor is required by applicable law to apply the
proceeds of a drawing of such Letter of Credit for a specified purpose, (e) any Pledgor’s right,
title or interest in any license, contract or agreement to which such Pledgor is a party or any of
its right, title or interest thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement, result in a breach of the terms of,
or constitute a default under, or result in the abandonment,

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invalidation or unenforceability of, any license, contract or agreement to which such Pledgor is a
party (other than to the extent that any such term would be rendered ineffective pursuant to
Section 9-406, 9-407, 9-408 or 9-409 of the New York UCC or any other applicable law (including,
without limitation, Title 11 of the United States Code) or principles of equity); provided
that immediately upon the ineffectiveness, lapse or termination of any such provision, the
Collateral shall include, and such Pledgor shall be deemed to have granted a security interest in,
all such rights and interests as if such provision had never been in effect or (f) any Equipment
owned by any Pledgor that is subject to a purchase money lien or a Capital Lease Obligation if the
contract or other agreement in which such Lien is granted (or the documentation providing for such
Capital Lease Obligation) prohibits or requires the consent of any person other than the Pledgors
as a condition to the creation of any other security interest on such Equipment.

          (b) Each Pledgor hereby irrevocably authorizes the Administrative Agent at any time and from
time to time to file in any relevant jurisdiction any initial financing statements (including
fixture filings) with respect to the Article 9 Collateral or any part thereof and amendments
thereto that contain the information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment, including (i)
whether such Pledgor is an organization, the type of organization and any organizational
identification number issued to such Pledgor, (ii) in the case of a financing statement filed as a
fixture filing, a sufficient description of the real property to which such Article 9 Collateral
relates and (iii) a description of collateral that describes such property in any other manner as
the Administrative Agent may reasonably determine is necessary or advisable to ensure the
perfection of the security interest in the Article 9 Collateral granted under this Agreement,
including describing such property as “all assets” or “all property”. Each Pledgor agrees to
provide such information to the Administrative Agent promptly upon request.

          The Administrative Agent is further authorized to file with the United States Patent and
Trademark Office or United States Copyright Office (or any successor office) such documents as may
be reasonably necessary or advisable for the purpose of perfecting, confirming, continuing,
enforcing or protecting the Security Interest granted by each Pledgor, without the signature of
such Pledgor, and naming such Pledgor or the Pledgors as debtors and the Administrative Agent as
secured party. Notwithstanding anything to the contrary herein, no Pledgor shall be required to
take any action under the laws of any jurisdiction other than the United States (or any political
subdivision thereof) and its territories and possessions for the purpose of perfecting the Security
Interest in any Article 9 Collateral of such Pledgor constituting Patents, Trademarks or Copyrights
unless required by the Administrative Agent in its reasonable discretion.

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

          Section 4.02. Representations and Warranties. The Pledgors jointly and severally
represent and warrant to the Administrative Agent and the Secured Parties that:

          (a) Each Pledgor has good and valid rights in and title to the Article 9 Collateral with
respect to which it has purported to grant a Security Interest hereunder and has

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full power and authority to grant to the Administrative Agent the Security Interest in such
Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in
accordance with the terms of this Agreement, without the consent or approval of any other person
other than any consent or approval that has been obtained and is in full force and effect or has
otherwise been disclosed herein or in the Credit Agreement.

          (b) The information set forth in the schedules attached hereto is correct and complete, in all
material respects, as of the Closing Date. The Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings, recordings or
registrations containing a description of the Article 9 Collateral that have been prepared by the
Administrative Agent for filing in each governmental, municipal or other office specified in
Schedule IV (or specified by notice from the Borrower to the Administrative Agent after the
Closing Date in the case of filings, recordings or registrations required by Section 5.10 of the
Credit Agreement) constitute all the filings, recordings and registrations (except to the extent
that filings are required to be made in the United States Patent and Trademark Office and the
United States Copyright Office, or any similar office in any other jurisdiction, in order to
perfect the Security Interest in Article 9 Collateral consisting of United States Patents, United
States registered Trademarks and United States registered Copyrights) that are necessary to publish
notice of and protect the validity of and to establish a legal, valid and perfected security
interest in favor of the Administrative Agent (for the ratable benefit of the Secured Parties) in
respect of all Article 9 Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements or amendments. Each Pledgor
represents and warrants that a fully executed Intellectual Property Security Agreement containing a
description of all Article 9 Collateral consisting of Intellectual Property with respect to United
States Patents (and Patents for which United States applications are pending), United States
registered Trademarks (and Trademarks for which United States registration applications are
pending) and United States registered Copyrights (and Copyrights for which United States
registration applications are pending) has been delivered to the Administrative Agent for recording
with the United States Patent and Trademark Office and the United States Copyright Office pursuant
to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the regulations thereunder, as
applicable, and reasonably requested by the Administrative Agent, to protect the validity of and to
establish a legal, valid and perfected security interest in favor of the Administrative Agent, for
the ratable benefit of the Secured Parties, in respect of all Article 9 Collateral consisting of
such Intellectual Property in which a security interest may be perfected by recording with the
United States Patent and Trademark Office and the United States Copyright Office, and no further or
subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary
(other than the Uniform Commercial Code financings statements referred to above, and other than
such actions as are necessary to perfect the Security Interest with respect to any Article 9
Collateral consisting of United States Patents, Trademarks and Copyrights (or registration or
application for registration thereof) acquired or developed after the date hereof).

          (c) The Security Interest constitutes (i) a legal and valid security interest in all the
Article 9 Collateral securing the payment and performance of the Obligations, (ii) subject to

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the filings described in Section 4.02(b), a perfected security interest in all Article 9
Collateral in which a security interest may be perfected by filing, recording or registering a
financing statement or analogous document in the United States (or any political subdivision
thereof) and its territories and possessions pursuant to the Uniform Commercial Code or other
applicable law in such jurisdictions and (iii) a security interest that shall be perfected in all
Article 9 Collateral in which a security interest may be perfected upon the receipt and recording
of the Intellectual Property Security Agreement with the United States Patent and Trademark Office
and the United States Copyright Office, as applicable. The Security Interest is and shall be prior
to any other Lien on any of the Article 9 Collateral other than Permitted Liens.

          (d) The Article 9 Collateral is owned by the Pledgors free and clear of any Lien, other than
Permitted Liens. None of the Pledgors has filed or consented to the filing of (i) any financing
statement or analogous document under the Uniform Commercial Code or any other applicable laws
covering any Article 9 Collateral, (ii) any assignment in which any Pledgor assigns any Article 9
Collateral or any security agreement or similar instrument covering any Article 9 Collateral with
the United States Patent and Trademark Office or the United States Copyright Office or (iii) any
assignment in which any Pledgor assigns any Article 9 Collateral or any security agreement or
similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Permitted Liens.

          (e) None of the Pledgors holds any Commercial Tort Claim individually in excess of $5.0
million as of the Closing Date except as indicated on Schedule V.

          (f) Except as set forth in Schedule VI, as of the Closing Date, all Accounts have been
originated by the Pledgors and all Inventory has been produced or acquired by the Pledgors in the
ordinary course of business.

          (g) As to itself and its Article 9 Collateral consisting of Intellectual Property (the
“Intellectual Property Collateral”), to the best of each Pledgor’s knowledge:

     (i) The Intellectual Property Collateral set forth on Schedule III includes all
of the material Patents, domain names, Trademarks, Copyrights and IP Agreements owned by
such Pledgor as of the date hereof.

     (ii) The Intellectual Property Collateral is subsisting and has not been adjudged
invalid or unenforceable in whole or part (except for office actions issued in the ordinary
course by the United States Patent and Trademark Office or any similar office in any foreign
jurisdiction), and, to the best of such Pledgor’s knowledge, is valid and enforceable,
except as would not reasonably be expected to have a Material Adverse Effect. Such Pledgor
is not aware of any uses of any item of Intellectual Property Collateral that would be
expected to lead to such item becoming invalid or unenforceable, except as would not
reasonably be expected to have a Material Adverse Effect.

     (iii) Such Pledgor has made or performed all commercially reasonable acts, including
without limitation filings, recordings and payment of all required fees and

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taxes, required to maintain and protect its interest in each and every item of
Intellectual Property Collateral in full force and effect in the United States and such
Pledgor has used proper statutory notice in connection with its use of each Patent,
Trademark and Copyright in the Intellectual Property Collateral, in each case, except to the
extent that the failure to do so would not reasonably be expected to have a Material Adverse
Effect.

     (iv) With respect to each IP Agreement, the absence, termination or violation of which
would reasonably be expected to have a Material Adverse Effect: (A) such Pledgor has not
received any notice of termination or cancellation under such IP Agreement; (B) such Pledgor
has not received any notice of a breach or default under such IP Agreement, which breach or
default has not been cured or waived; and (C) neither such Pledgor nor any other party to
such IP Agreement is in breach or default thereof in any material respect, and no event has
occurred that, with notice or lapse of time or both, would constitute such a breach or
default or permit termination, modification or acceleration under such IP Agreement.

     (v) Except as would not reasonably be expected to have a Material Adverse Effect, no
Pledgor or Intellectual Property Collateral is subject to any outstanding consent,
settlement, decree, order, injunction, judgment or ruling restricting the use of any
Intellectual Property Collateral or that would impair the validity or enforceability of such
Intellectual Property Collateral.

          Section 4.03. Covenants. (a) Each Pledgor agrees to provide at least 10 days’ prior
written notice to the Administrative Agent of any change (i) in its corporate or organization name
(other than the Name Changes), (ii) in its identity or type of organization or corporate structure,
(iii) in its Federal Taxpayer Identification Number or organizational identification number or (iv)
in its “location” (determined as provided in UCC Section 9-307). Each Pledgor agrees promptly to
provide the Administrative Agent with certified organizational documents reflecting any of the
changes described in the immediately preceding sentence. Each Pledgor agrees not to effect or
permit any change referred to in the first sentence of this paragraph (a) unless all filings have
been made, or will have been made within any applicable statutory period, under the Uniform
Commercial Code or otherwise that are required in order for the Administrative Agent to continue at
all times following such change to have a valid, legal and perfected first priority security
interest in all the Article 9 Collateral, for the ratable benefit of the Secured Parties. Each
Pledgor agrees promptly to notify the Administrative Agent if any material portion of the Article 9
Collateral owned or held by such Pledgor is damaged or destroyed.

          (b) Subject to the rights of such Pledgor under the Loan Documents to dispose of Collateral,
each Pledgor shall, at its own expense, use commercially reasonable efforts to defend title to the
Article 9 Collateral against all persons and to defend the Security Interest of the Administrative
Agent, for the ratable benefit of the Secured Parties, in the Article 9 Collateral and the priority
thereof against any Lien that is not a Permitted Lien.

          (c) Each Pledgor agrees, at its own expense, to execute, acknowledge, deliver and cause to be
duly filed all such further instruments and documents and take all such actions as the
Administrative Agent may from time to time reasonably request to better assure, preserve,

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protect and perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the execution and delivery
of this Agreement and the granting of the Security Interest and the filing of any financing
statements (including fixture filings) or other documents in connection herewith or therewith. If
any amount payable under or in connection with any of the Article 9 Collateral that is in excess of
$5.0 million shall be or become evidenced by any promissory note or other instrument, such note or
instrument shall be promptly pledged and delivered to the Administrative Agent, for the ratable
benefit of the Secured Parties, duly endorsed in a manner reasonably satisfactory to the
Administrative Agent.

          Without limiting the generality of the foregoing, each Pledgor hereby authorizes the
Administrative Agent, with prompt notice thereof to the Pledgors, to supplement this Agreement by
supplementing Schedule III or adding additional schedules hereto to specifically identify
any asset or item that may constitute material Copyrights, Patents, Trademarks, Copyright Licenses,
Patent Licenses or Trademark Licenses; provided that any Pledgor shall have the right,
exercisable within 30 days after the Borrower has been notified by the Administrative Agent of the
specific identification of such Article 9 Collateral, to advise the Administrative Agent in writing
of any inaccuracy of the representations and warranties made by such Pledgor hereunder with respect
to such Article 9 Collateral. Each Pledgor agrees that it will use its commercially reasonable
efforts to take such action as shall be necessary in order that all representations and warranties
hereunder shall be true and correct with respect to such Article 9 Collateral within 30 days after
the date it has been notified by the Administrative Agent of the specific identification of such
Article 9 Collateral.

          (d) After the occurrence of an Event of Default and during the continuance thereof, the
Administrative Agent shall have the right to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter relating to, the
Article 9 Collateral, including, in the case of Accounts or Article 9 Collateral in the possession
of any third person, by contacting Account Debtors or the third person possessing such Article 9
Collateral for the purpose of making such a verification. The Administrative Agent shall have the
right to share any information it gains from such inspection or verification with any Secured
Party.

          (e) At its option, the Administrative Agent may discharge past due taxes, assessments,
charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the
Article 9 Collateral and not a Permitted Lien, and may pay for the maintenance and preservation of
the Article 9 Collateral to the extent any Pledgor fails to do so as required by the Credit
Agreement or this Agreement, and each Pledgor jointly and severally agrees to reimburse the
Administrative Agent on demand for any reasonable payment made or any reasonable expense incurred
by the Administrative Agent pursuant to the foregoing authorization; provided,
however, that nothing in this Section 4.03(e) shall be interpreted as excusing any Pledgor
from the performance of, or imposing any obligation on the Administrative Agent or any Secured
Party to cure or perform, any covenants or other promises of any Pledgor with respect to taxes,
assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set
forth herein or in the other Loan Documents.

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          (f) Each Pledgor (rather than the Administrative Agent or any Secured Party) shall remain
liable for the observance and performance of all the conditions and obligations to be observed and
performed by it under each contract, agreement or instrument relating to the Article 9 Collateral
and each Pledgor jointly and severally agrees to indemnify and hold harmless the Administrative
Agent and the Secured Parties from and against any and all liability for such performance.

          (g) None of the Pledgors shall make or permit to be made an assignment, pledge or
hypothecation of the Article 9 Collateral or shall grant any other Lien in respect of the Article 9
Collateral, except as permitted by the Credit Agreement and the other provisions hereof. None of
the Pledgors shall make or permit to be made any transfer of the Article 9 Collateral and each
Pledgor shall remain at all times in possession of the Article 9 Collateral owned by it, except as
permitted by the Credit Agreement and the other provisions hereof.

          (h) None of the Pledgors will, without the Administrative Agent’s prior written consent (which
consent shall not be unreasonably withheld), grant any extension of the time of payment of any
Accounts included in the Article 9 Collateral, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partly, any person liable for the payment thereof
or allow any credit or discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business and consistent with
prudent business practices or as otherwise permitted under the Credit Agreement.

          (i) Each Pledgor irrevocably makes, constitutes and appoints the Administrative Agent (and all
officers, employees or agents designated by the Administrative Agent) as such Pledgor’s true and
lawful agent (and attorney-in-fact) for the purpose, during the continuance of an Event of Default,
of making, settling and adjusting claims in respect of Article 9 Collateral under policies of
insurance, endorsing the name of such Pledgor on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Pledgor at any time or times shall fail to
obtain or maintain any of the policies of insurance required hereby or under the Credit Agreement
or to pay any premium in whole or part relating thereto, the Administrative Agent may, without
waiving or releasing any obligation or liability of the Pledgors hereunder or any Event of Default,
in its sole discretion, obtain and maintain such policies of insurance and pay such premium and
take any other actions with respect thereto as the Administrative Agent reasonably deems advisable.
All sums disbursed by the Administrative Agent in connection with this Section 4.03(i), including
reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be
payable, upon demand, by the Pledgors to the Administrative Agent and shall be additional
Obligations secured hereby.

          Section 4.04. Other Actions. In order to further ensure the attachment, perfection and
priority of, and the ability of the Administrative Agent to enforce, for the ratable benefit of the
Secured Parties, the Administrative Agent’s security interest in the Article 9 Collateral, each
Pledgor agrees, in each case at such Pledgor’s own expense, to take the following actions with
respect to the following Article 9 Collateral:

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          (a) Instruments and Tangible Chattel Paper. If any Pledgor shall at any time hold or
acquire any Instruments (other than checks received and processed in the ordinary course of
business) or Tangible Chattel Paper evidencing an amount in excess of $5.0 million, such Pledgor
shall forthwith endorse, assign and deliver the same to the Administrative Agent, accompanied by
such instruments of transfer or assignment duly executed in blank as the Administrative Agent may
from time to time reasonably request.

          (b) Investment Property. Except to the extent otherwise provided in Article
III, if any Pledgor shall at any time hold or acquire any Certificated Security, such Pledgor
shall forthwith endorse, assign and deliver the same to the Administrative Agent, accompanied by
such instruments of transfer or assignment duly executed in blank as the Administrative Agent may
from time to time reasonably specify. If any security of a domestic issuer now owned or hereafter
acquired by any Pledgor is uncertificated and is issued to such Pledgor or its nominee directly by
the issuer thereof, such Pledgor shall promptly notify the Administrative Agent of such
uncertificated securities and (i) upon the Administrative Agent’s reasonable request or (ii) upon
the occurrence and during the continuance of an Event of Default, such Pledgor shall pursuant to an
agreement in form and substance reasonably satisfactory to the Administrative Agent, either (x)
cause the issuer to agree to comply with instructions from the Administrative Agent as to such
security, without further consent of any Pledgor or such nominee, or (y) cause the issuer to
register the Administrative Agent as the registered owner of such security.

          (c) Commercial Tort Claims. If any Pledgor shall at any time hold or acquire a
Commercial Tort Claim in an amount reasonably estimated to exceed $5.0 million, such Pledgor shall
promptly notify the Administrative Agent thereof in a writing signed by such Pledgor, including a
summary description of such claim, and grant to the Administrative Agent in writing a security
interest therein and in the proceeds thereof, all under the terms and provisions of this Agreement,
with such writing to be in form and substance reasonably satisfactory to the Administrative Agent.

          Section 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral. Except
as permitted by the Credit Agreement: (a) Each Pledgor agrees that it will not knowingly do any
act or omit to do any act (and will exercise commercially reasonable efforts to prevent its
licensees from doing any act or omitting to do any act) whereby any Patent that is material to the
normal conduct of such Pledgor’s business may become prematurely invalidated, abandoned, lapsed or
dedicated to the public, and agrees that it shall take commercially reasonable steps with respect
to any material products covered by any such Patent as necessary and sufficient to establish and
preserve its rights under applicable patent laws.

          (b) Each Pledgor will, and will use its commercially reasonable efforts to cause its licensees
or its sublicensees to, for each material Trademark necessary to the normal conduct of such
Pledgor’s business, (i) maintain such Trademark in full force free from any adjudication of
abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered
under such Trademark, (iii) display such Trademark with notice of federal or foreign registration
or claim of trademark or service mark as required under applicable law and (iv) not knowingly use
or knowingly permit its licensees’ use of such Trademark in violation of any third-party rights.

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          (c) Each Pledgor will, and will use its commercially reasonable efforts to cause its licensees
or its sublicensees to, for each work covered by a material Copyright necessary to the normal
conduct of such Pledgor’s business that it publishes, displays and distributes, use a copyright
notice as necessary and sufficient to establish and preserve its rights under applicable copyright
laws.

          (d) Each Pledgor shall notify the Administrative Agent promptly if it knows that any Patent,
Trademark or Copyright material to the normal conduct of such Pledgor’s business may imminently
become abandoned, lapsed or dedicated to the public, or of any materially adverse determination or
development, excluding office actions and similar determinations or developments in the United
States Patent and Trademark Office, United States Copyright Office, any court or any similar office
of any country, regarding such Pledgor’s ownership of any such material Patent, Trademark or
Copyright or its right to register or to maintain the same.

          (e) Each Pledgor, either itself or through any agent, employee, licensee or designee, shall
(i) inform the Administrative Agent on an annual basis of each application by itself, or through
any agent, employee, licensee or designee, for any Patent with the United States Patent and
Trademark Office and each registration of any Trademark or Copyright with the United States Patent
and Trademark Office, the United States Copyright Office or any comparable office or agency in any
other country filed during the preceding twelve-month period, and (ii) upon the reasonable request
of the Administrative Agent, execute and deliver any and all agreements, instruments, documents and
papers as the Administrative Agent may reasonably request to evidence the Administrative Agent’s
security interest in such Patent, Trademark or Copyright.

          (f) Each Pledgor shall exercise its reasonable business judgment consistent with the practice
in any proceeding before the United States Patent and Trademark Office, the United States Copyright
Office or any comparable office or agency in any other country with respect to maintaining and
pursuing each application relating to any Patent, Trademark and/or Copyright (and obtaining the
relevant grant or registration) material to the normal conduct of such Pledgor’s business and to
maintain (i) each issued Patent and (ii) the registrations of each Trademark and each Copyright
that is material to the normal conduct of such Pledgor’s business, including, when applicable and
necessary in such Pledgor’s reasonable business judgment, timely filings of applications for
renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if
any Pledgor believes necessary in its reasonable business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.

          (g) In the event that any Pledgor knows or has reason to know that any Article 9 Collateral
consisting of a Patent, Trademark or Copyright material to the normal conduct of its business has
been or is about to be materially infringed, misappropriated or diluted by a third party, such
Pledgor shall promptly notify the Administrative Agent and shall, if such Pledgor deems it
necessary in its reasonable business judgment, promptly sue and recover any and all damages, and
take such other actions as are reasonably appropriate under the circumstances.

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ARTICLE V

REMEDIES

          Section 5.01. Remedies Upon Default. Upon the occurrence and during the continuance
of an Event of Default, each Pledgor agrees to deliver each item of Collateral to the
Administrative Agent on demand, and it is agreed that the Administrative Agent shall have the right
to take any of or all the following actions at the same or different times: (a) with respect to
any Article 9 Collateral consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any of or all such Article 9
Collateral by the applicable Pledgors to the Administrative Agent or to license or sublicense,
whether general, special or otherwise, and whether on an exclusive or a nonexclusive basis, any
such Article 9 Collateral throughout the world on such terms and conditions and in such manner as
the Administrative Agent shall determine (other than in violation of any then-existing licensing
arrangements to the extent that waivers thereunder cannot be obtained with the use of commercially
reasonable efforts, which each Pledgor hereby agrees to use) and (b) with or without legal process
and with or without prior notice or demand for performance, to take possession of the Article 9
Collateral and without liability for trespass to the applicable Pledgor to enter any premises where
the Article 9 Collateral may be located for the purpose of taking possession of or removing the
Article 9 Collateral and, generally, to exercise any and all rights afforded to a secured party
under the applicable Uniform Commercial Code or other applicable law. Without limiting the
generality of the foregoing, each Pledgor agrees that the Administrative Agent shall have the
right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all
or any part of the Collateral at a public or private sale or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery as the Administrative Agent shall
deem appropriate. The Administrative Agent shall be authorized in connection with any sale of a
security (if it deems it advisable to do so) pursuant to the foregoing to restrict the prospective
bidders or purchasers to persons who represent and agree that they are purchasing such security for
their own account, for investment, and not with a view to the distribution or sale thereof. Upon
consummation of any such sale of Collateral pursuant to this Section 5.01, the Administrative Agent
shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely,
free from any claim or right on the part of any Pledgor, and each Pledgor hereby waives and
releases (to the extent permitted by law) all rights of redemption, stay, valuation and appraisal
that such Pledgor now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.

          The Administrative Agent shall give the applicable Pledgors 10 Business Days’ written notice
(which each Pledgor agrees is reasonable notice within the meaning of Section 9-611 of the New York
UCC or its equivalent in other jurisdictions) of the Administrative Agent’s intention to make any
sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for
such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state
the board or exchange at which such sale is to be made and the day on which the Collateral, or
portion thereof, will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such place or places as
the Administrative Agent may fix and state in the notice (if any) of such sale. At any such sale,
the Collateral, or the portion thereof, to be sold may be sold in one lot as

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an entirety or in separate parcels, as the Administrative Agent may (in its sole and absolute
discretion) determine. The Administrative Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned. In the case of any sale of all or
any part of the Collateral made on credit or for future delivery, the Collateral so sold may be
retained by the Administrative Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Administrative Agent shall not incur any liability in the event that any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in the case
of any such failure, such Collateral may be sold again upon notice given in accordance with
provisions above. At any public (or, to the extent permitted by law, private) sale made pursuant
to this Section 5.01, any Secured Party may bid for or purchase in cash, free (to the extent
permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any
Pledgor (all such rights being also hereby waived and released to the extent permitted by law), the
Collateral or any part thereof offered for sale and may make payment on account thereof by using
any claim then due and payable to such Secured Party from any Pledgor as a credit against the
purchase price, and may make payment on account thereof by using any claim then due and payable to
such Secured Party from any Pledgor as a credit against the purchase price, and such Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such property in
accordance with Section 5.02 hereof without further accountability to any Pledgor therefor. For
purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Administrative Agent shall be free to carry out such sale pursuant
to such agreement and no Pledgor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Administrative Agent shall have
entered into such an agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred upon it, the
Administrative Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement
and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver.
Any sale pursuant to the provisions of this Section 5.01 shall be deemed to conform to the
commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its
equivalent in other jurisdictions.

          Section 5.02. Application of Proceeds. The Administrative Agent shall promptly apply
the proceeds, moneys or balances of any collection or sale of Collateral, as well as any Collateral
consisting of cash, as follows: FIRST, to the payment of all costs and expenses incurred by the
Administrative Agent in connection with such collection or sale or otherwise in connection with
this Agreement, any other Loan Document or any of the Obligations, including without limitation all
court costs and the fees and expenses of its agents and legal counsel, the repayment of all
advances made by the Administrative Agent hereunder or under any other Loan Document on behalf of
any Pledgor, any other costs or expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Loan Document, and all other fees, indemnities and other
amounts owing or reimbursable to the Administrative Agent under any Loan Document in its capacity
as such; SECOND, to payment of all fees, indemnities and other amounts (other than principal and
interest) payable to the Issuing Bank in capacity as such and of

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any amount required to be paid to the Issuing Bank by any Revolving Facility Lender pursuant
to Section 2.05(e) and (h) of the Credit Agreement and not paid by such Revolving Facility Lender
(which shall be payable to the Administrative Agent if the Administrative Agent advanced such
payment to the Issuing Bank in anticipation of such payment by such Revolving Facility Lender and
otherwise, to the Issuing Bank); and THIRD, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in accordance with the respective
amounts of the Obligations owed to them on the date of any such distribution, which in the case of
Letters of Credit, shall be paid by deposit in an account with the Administrative Agent, in the
name of the Administrative Agent and for the benefit of the Issuing Bank and the Lenders, an amount
in cash in U.S. Dollars equal to the aggregate Revolving L/C Exposure as of such date plus any
accrued and unpaid interest thereon).

          The Administrative Agent shall have absolute discretion as to the time of application of any
such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral
by the Administrative Agent (including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the purchase money by the Administrative Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Administrative Agent or such officer
or be answerable in any way for the misapplication thereof.

          If, after receipt of any payment which is applied to the payment of all or any part of any
Obligations, an Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any person because such payment or application of proceeds is invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference, impermissible set-off, or
a diversion of trust funds, or for any other reason, then the Obligations or part thereof intended
to be satisfied shall be revived and continued and this Agreement shall continue in full force as
if such payment or proceeds had not been received by such Agent or such Lender and the Borrower
shall be liable to pay to such Agent and the Lenders, and shall indemnify each Agent and the
Lenders and holds the Agents and the Lenders harmless for the amount of such payment or proceeds
surrendered. The provisions of this paragraph shall be and remain effective notwithstanding any
contrary action which may have been taken by an Agent or any Lender in reliance upon such payment
or application of proceeds, and any such contrary action so taken shall be without prejudice to the
Agents’ and the Lenders’ rights under this Agreement and shall be deemed to have been conditioned
upon such payment or application of proceeds having become final and irrevocable. The provisions
of this paragraph shall survive the termination of this Agreement.

          Section 5.03. Securities Act, Etc. In view of the position of the Pledgors in
relation to the Pledged Collateral, or because of other current or future circumstances, a question
may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar federal
statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as
from time to time in effect being called the “Federal Securities Laws”) with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Pledgor understands that
compliance with the Federal Securities Laws might very strictly limit the course of conduct of the
Administrative Agent if the Administrative Agent were to attempt to dispose of all or any part of
the Pledged Collateral, and might also limit the extent to which or the manner in which

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any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the Administrative Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other
state securities laws or similar laws analogous in purpose or effect. Each Pledgor acknowledges
and agrees that in light of such restrictions and limitations, the Administrative Agent, in its
sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration
statement for the purpose of registering such Pledged Collateral or part thereof shall have been
filed under the Federal Securities Laws or, to the extent applicable, Blue Sky or other state
securities laws and (b) may approach and negotiate with a single potential purchaser to effect such
sale. Each Pledgor acknowledges and agrees that any such sale might result in prices and other
terms less favorable to the seller than if such sale were a public sale without such restrictions.
In the event of any such sale, the Administrative Agent shall incur no responsibility or liability
for selling all or any part of the Pledged Collateral at a price that the Administrative Agent, in
its sole and absolute discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have been realized if the
sale were deferred until after registration as aforesaid or if more than a single purchaser were
approached. The provisions of this Section 5.03 will apply notwithstanding the existence of a
public or private market upon which the quotations or sales prices may exceed substantially the
price at which the Administrative Agent sells.

ARTICLE VI

INDEMNITY, SUBROGATION AND SUBORDINATION

          Section 6.01. Indemnity. In addition to all such rights of indemnity and subrogation
as the Guarantors may have under applicable law (but subject to Section 6.03 hereof), the Borrower
agrees that (a) in the event a payment shall be made by any Guarantor under this Agreement in
respect of any Obligation of the Borrower, the Borrower shall indemnify such Guarantor for the full
amount of such payment and such Guarantor shall be subrogated to the rights of the person to whom
such payment shall have been made to the extent of such payment and (b) in the event any assets of
any Guarantor shall be sold pursuant to this Agreement or any other Security Document to satisfy in
whole or in part an Obligation of the Borrower, the Borrower shall indemnify such Guarantor in an
amount equal to the greater of the book value or the fair market value of the assets so sold.

          Section 6.02. Contribution and Subrogation. Each Guarantor (other than Holdings) (a
“Contributing Guarantor”) agrees (subject to Section 6.03 hereof) that, in the event a payment
shall be made by any other Guarantor (other than Holdings) hereunder in respect of any Obligation
or assets of any other Guarantor (other than Holdings and the Borrower) shall be sold pursuant to
any Security Document to satisfy any Obligation owed to any Secured Party and such other Guarantor
(the “Claiming Guarantor”) shall not have been fully indemnified by the Borrower as provided in
Section 6.01 hereof, the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount
equal to the amount of such payment or the greater of the book value or the fair market value of
such assets, as applicable, in each case multiplied by a fraction of which the numerator shall be
the net worth of such Contributing Guarantor on the date hereof

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and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof
(or, in the case of any Guarantor becoming a party hereto pursuant to Section 7.16 hereof, the date
of the supplement hereto executed and delivered by such Guarantor). Any Contributing Guarantor
making any payment to a Claiming Guarantor pursuant to this Section 6.02 shall be subrogated to the
rights of such Claiming Guarantor under Section 6.01 hereof to the extent of such payment.

          Section 6.03. Subordination;Subrogation. (a) (a) Each Guarantor hereby subordinates
any and all debts, liabilities, receivables, advances and other Obligations owed to such Guarantor
by each other Loan Party of whatever nature at any time outstanding (the “Subordinated
Obligations”) to the Obligations to the extent and in the manner hereinafter set forth in this
Section 6.03:

     (i) Prohibited Payments, Etc . Except during the continuance of an Event of
Default, each Guarantor may receive payments, receivables or advances from any other Loan
Party on account of the Subordinated Obligations. After the occurrence and during the
continuance of any Event of Default, however, unless the Required Lenders otherwise agree,
no Guarantor shall demand, accept or take any action to collect any payment on account of
the Subordinated Obligations until the Obligations have been paid in full in cash.

     (ii) Prior Payment of Guaranteed Obligations . In any proceeding under the U.S.
Bankruptcy Code or any other federal, state or foreign bankruptcy, insolvency, receivership
or similar law relating to any other Loan Party, each Guarantor agrees that the Secured
Parties shall be entitled to receive payment in full in cash of all Obligations (including
all interest and expenses accruing after the commencement of a proceeding under any U.S.
Bankruptcy Code or any other federal, state or foreign bankruptcy, insolvency, receivership
or similar law, whether or not constituting an allowed claim in such proceeding
(Post-Petition Interest)) before such Guarantor receives payment of any Subordinated
Obligations.

     (iii) Turn-Over . After the occurrence and during the continuance of any Event
of Default, each Guarantor shall, if the Administrative Agent so requests, collect, enforce
and receive payments on account of the Subordinated Obligations as trustee for the Secured
Parties and deliver such payments to the Administrative Agent on account of the Obligations
(including all Post-Petition Interest), together with any necessary endorsements or other
instruments of transfer, but without reducing or affecting in any manner the liability of
such Guarantor under the other provisions of this Agreement.

     (iv) Administrative Agent Authorization . After the occurrence and during the
continuance of any Event of Default, the Administrative Agent is authorized and empowered
(but without any obligation to so do), in its discretion, (i) in the name of each Guarantor,
to collect and enforce, and to submit claims in respect of, the Subordinated Obligations and
to apply any amounts received thereon to the Obligations (including any and all
Post-Petition Interest), and (ii) to require each Guarantor (A) to collect and enforce, and
to submit claims in respect of, the Subordinated Obligations and (B) to pay

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any amounts received on such obligations to the Administrative Agent for application to the
Guaranteed Obligations (including any and all Post-Petition Interest).

          (b) Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights
that it may now have or hereafter acquire against the Borrower, any other Loan Party or any other
insider guarantor that arise from the existence, payment, performance or enforcement of such
Guarantor’s Obligations under or in respect of the guarantee set forth in Article II or any other
Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or remedy of any Secured
Party against the Borrower, any other Loan Party or any other insider guarantor or any Collateral,
whether or not such claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from the Borrower, any other Loan
Party or any other insider guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations and all other amounts payable under the guarantee set forth
in Article II shall have been paid in full in cash, all Letters of Credit and all Swap Agreements
secured hereunder shall have expired or been terminated or cash collateralized (pursuant to
arrangements reasonably satisfactory to the Administrative Agent and the Issuing Bank) and the
Commitments shall have expired, terminated or shall have been cash collateralized (pursuant to
arrangements reasonably satisfactory to the Administrative Agent and the Issuing Bank). If any
amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any
time prior to the latest of (a) the payment in full in cash of the Obligations and all other
amounts payable under the guarantee set forth in Article II and (b) the latest date of expiration
or termination or cash collateralization of all Letters of Credit and all Swap Agreements secured
hereunder and termination or expiration of all Commitments, such amount shall be received and held
in trust for the benefit of the Secured Parties, shall be segregated from other property and funds
of such Guarantor and shall forthwith be paid or delivered to the Administrative Agent in the same
form as so received (with any necessary endorsement or assignment) to be credited and applied to
the Obligations and all other amounts payable under the guarantee set forth in Article II, whether
matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as
Collateral for any Obligations or other amounts payable under such guarantee thereafter arising. If
(i) any Guarantor shall make payment to any Secured Party of all or any part of the Obligations,
(ii) all of the Obligations and all other amounts payable under the guarantee set forth in Article
II shall have been paid in full in cash, (iii) the Term Facility Maturity Date shall have occurred
and (iv) all Letters of Credit and all Swap Agreements secured hereunder shall have expired or been
terminated, the Administrative Agent will, at such Guarantor’s request and expense, execute and
deliver to such Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the
Obligations resulting from such payment made by such Guarantor pursuant to such guarantee.

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ARTICLE VII

MISCELLANEOUS

          Section 7.01. Notices. All communications and notices hereunder shall (except as
otherwise permitted herein) be in writing and given as provided in Section 9.01 of the Credit
Agreement. All communications and notices hereunder to any Subsidiary Loan Party shall be given to
it in care of the Borrower, with such notice to be given as provided in Section 9.01 of the Credit
Agreement.

          Section 7.02. Security Interest Absolute. All rights of the Administrative Agent
hereunder, the Security Interest in the Article 9 Collateral, the security interest in the Pledged
Collateral and all obligations of each Pledgor hereunder shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from the Credit Agreement, any other Loan Document or any other agreement
or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations or (d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Pledgor in respect of the Obligations or
this Agreement (other than a defense of payment or performance).

          Section 7.03. Limitation By Law. All rights, remedies and powers provided in this
Agreement may be exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Agreement are intended to be subject to
all applicable mandatory provisions of law that may be controlling and to be limited to the extent
necessary so that they shall not render this Agreement invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any applicable law.

          Section 7.04. Binding Effect; Several Agreement. This Agreement shall become
effective as to any party to this Agreement when a counterpart hereof executed on behalf of such
party shall have been delivered to the Administrative Agent and a counterpart hereof shall have
been executed on behalf of the Administrative Agent, and thereafter shall be binding upon such
party and the Administrative Agent and their respective permitted successors and assigns, and shall
inure to the benefit of such party, the Administrative Agent and the other Secured Parties and
their respective permitted successors and assigns, except that no party shall have the right to
assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral
(and any such assignment or transfer shall be void) except as expressly contemplated by this
Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with
respect to each party and may be amended, modified, supplemented, waived or released with respect
to any party without the approval of any other party and without affecting the obligations of any
other party hereunder.

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          Section 7.05. Successors and Assigns. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the permitted successors and
assigns of such party; and all covenants, promises and agreements by or on behalf of any Pledgor or
the Administrative Agent that are contained in this Agreement shall bind and inure to the benefit
of their respective permitted successors and assigns; provided that no Pledgor may assign, transfer
or delegate any of its rights or obligations under this Agreement without the prior written consent
of the Administrative Agent. The Administrative Agent hereunder shall at all times be the same
person that is the Administrative Agent under the Credit Agreement. Written notice of resignation
by the Administrative Agent pursuant to the Credit Agreement shall also constitute notice of
resignation as the Administrative Agent under this Agreement. Upon the acceptance of any
appointment as the Administrative Agent under the Credit Agreement by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Administrative Agent pursuant hereto.

          Section 7.06. Administrative Agent’s Fees and Expenses; Indemnification. (a) The
parties hereto agree that the Administrative Agent shall be entitled to reimbursement of its
expenses incurred hereunder as provided in Section 9.05 of the Credit Agreement.

          (b) Without limitation of its indemnification obligations under the other Loan Documents, each
Pledgor jointly and severally agrees to indemnify the Administrative Agent and the other
Indemnitees (as defined in Section 9.05 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of, (i) the execution, delivery or performance
of this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto and thereto of their respective obligations
thereunder or the consummation of the Transactions and other transactions contemplated hereby, (ii)
the use of proceeds of the Loans or the use of any Letter of Credit or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, or to the Collateral, whether or not
any Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related
expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to
have resulted from the gross negligence or willful misconduct of such Indemnitee.

          (c) Any such amounts payable as provided hereunder shall be additional Obligations secured
hereby and by the other Security Documents. The provisions of this Section 7.06 shall remain
operative and in full force and effect regardless of the termination of this Agreement or any other
Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of the Administrative Agent or
any other Secured Party. All amounts due under this Section 7.06 shall be payable on written
demand therefor.

          Section 7.07. Administrative Agent Appointed Attorney-in-Fact. Each Pledgor hereby
appoints the Administrative Agent the attorney-in-fact of such Pledgor for the purpose of

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carrying out the provisions of this Agreement and taking any action and executing any
instrument that the Administrative Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an interest. The Administrative Agent
shall have the right, upon the occurrence and during the continuance of an Event of Default, with
full power of substitution either in the Administrative Agent’s name or in the name of such
Pledgor, (a) to receive, endorse, assign or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any part thereof, (b) to
demand, collect, receive payment of, give receipt for and give discharges and releases of all or
any of the Collateral, (c) to ask for, demand, sue for, collect, receive and give acquittance for
any and all moneys due or to become due under and by virtue of any Collateral, (d) to sign the name
of any Pledgor on any invoice or bill of lading relating to any of the Collateral, (e) to send
verifications of Accounts to any Account Debtor, (f) to commence and prosecute any and all suits,
actions or proceedings at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in respect of any
Collateral, (g) to settle, compromise, compound, adjust or defend any actions, suits or
proceedings relating to all or any of the Collateral and (h) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and
to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Administrative Agent were the absolute owner of the Collateral for all
purposes; provided that nothing herein contained shall be construed as requiring or obligating the
Administrative Agent to make any commitment or to make any inquiry as to the nature or sufficiency
of any payment received by the Administrative Agent, or to present or file any claim or notice, or
to take any action with respect to the Collateral or any part thereof or the moneys due or to
become due in respect thereof or any property covered thereby. The Administrative Agent and the
other Secured Parties shall be accountable only for amounts actually received as a result of the
exercise of the powers granted to them herein, and neither they nor their officers, directors,
employees or agents shall be responsible to any Pledgor for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct.

          Section 7.08. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

          Section 7.09. Waivers; Amendment. (a) No failure or delay by the Administrative
Agent, any Issuing Bank or any Lender in exercising any right, power or remedy hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or remedy, or any abandonment or discontinuance of steps to enforce such a
right, power or remedy, preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The rights, powers and remedies of the Administrative Agent, any Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights, powers or remedies that they would otherwise have. No waiver of any
provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this Section 7.09, and
then such waiver or consent shall be effective only in the specific instance and for the purpose
for which given. Without

35

 

limiting the generality of the foregoing, the making of a Loan or the issuance of a Letter of
Credit shall not be construed as a waiver of any Default or Event of Default, regardless of whether
the Administrative Agent, any Lender or any Issuing Bank may have had notice or knowledge of such
Default or Event of Default at the time. No notice or demand on any Loan Party in any case shall
entitle any Loan Party to any other or further notice or demand in similar or other circumstances.

          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the
Loan Party or Loan Parties with respect to which such waiver, amendment or modification is to
apply, subject to any consent required in accordance with Section 9.08 of the Credit Agreement.

          Section 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.

          Section 7.11. Severability. In the event any one or more of the provisions contained
in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining provisions contained herein
and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of the invalid, illegal
or unenforceable provisions.

          Section 7.12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when taken together shall
constitute but one contract, and shall become effective as provided in Section 7.04 hereof.
Delivery of an executed counterpart to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed original.

          Section 7.13. Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and are not to affect
the construction of, or to be taken into consideration in interpreting, this Agreement.

          Section 7.14. Jurisdiction; Consent to Service of Process. (a) Each party to this
Agreement hereby irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the United States of

36

 

America sitting in New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or any other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such federal court. Each
of the parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that the Administrative
Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating
to this Agreement or any other Loan Document against any Pledgor, or its properties, in the courts
of any jurisdiction.

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

          Section 7.15. Termination or Release. (a) This Agreement, the guarantees made
herein, the pledges made herein, the Security Interest and all other security interests granted
hereby shall terminate when all the Loan Document Obligations (other than contingent or
unliquidated obligations or liabilities not then due) have been paid in full in cash or immediately
available funds and the Lenders have no further commitment to lend under the Credit Agreement, the
Revolving L/C Exposure has been reduced to zero (or cash collateralized or supported by
back-to-back letter of credit in form and substance and from an issuing bank satisfactory to the
Administrative Agent and the Issuing Bank) and each Issuing Bank has no further obligations to
issue Letters of Credit under the Credit Agreement.

          (b) A Subsidiary Loan Party shall automatically be released from its obligations hereunder and
the security interests in the Collateral of such Subsidiary Loan Party shall be automatically
released upon the consummation of any transaction permitted by the Credit Agreement as a result of
which such Subsidiary Loan Party ceases to be a Subsidiary of the Borrower or otherwise ceases to
be a Guarantor; provided that such portion of the Lenders as shall be required by the terms
of the Credit Agreement to have consented to such transaction (to the extent such consent is
required by the Credit Agreement) shall have consented thereto and the terms of such consent did
not provide otherwise.

          (c) Upon any sale or other transfer by any Pledgor of any Collateral that is permitted under
the Credit Agreement to any person that is not a Pledgor, or upon the effectiveness of any written
consent to the release of the security interest granted hereby in any Collateral pursuant to
Section 9.08 of the Credit Agreement, the security interest in such Collateral shall be
automatically released.

          (d) Upon the transfer by any Loan Party of Equity Interests in a “first tier” Foreign
Subsidiary or “first tier” Qualified CFC Holding Company to a “first tier” Foreign Subsidiary or
“first tier” Qualified CFC Holding Company in accordance with Section 6.05(d) of

37

 

the Credit Agreement, the pledge of Equity Interests so transferred shall be automatically
released.

          (e) In connection with any termination or release pursuant to paragraph (a), (b), (c) and (d)
of this Section 7.15, the Administrative Agent shall execute and deliver to any Pledgor, at such
Pledgor’s expense, all documents that such Pledgor shall reasonably request to evidence such
termination or release (including, without limitation, UCC termination statements) and will duly
assign and transfer to such Pledgor such of the Pledged Collateral that may be in the possession of
the Administrative Agent and has not theretofore been sold or otherwise applied or released
pursuant to this Agreement; provided that the Administrative Agent shall not be required to
take any action under this Section 7.15(e) unless such Pledgor shall have delivered to the
Administrative Agent together with such request, which may be incorporated into such request, (i) a
reasonably detailed description of the Collateral, which in any event shall be sufficient to effect
the appropriate termination or release without affecting any other Collateral, and (ii) a
certificate of a Responsible Officer of the Borrower or such Pledgor certifying that the
transaction giving rise to such termination or release is permitted by the Credit Agreement and was
consummated in compliance with the Loan Documents. Any execution and delivery of documents
pursuant to this Section 7.15 shall be without recourse to or warranty by the Administrative Agent.

          Section 7.16. Additional Subsidiaries. Upon execution and delivery by the
Administrative Agent and any Subsidiary that is required to become a party hereto by Section 5.10
of the Credit Agreement of an instrument in the form of Exhibit I hereto, such Subsidiary shall
become a Subsidiary Loan Party hereunder with the same force and effect as if originally named as a
Subsidiary Loan Party herein. The execution and delivery of any such instrument shall not require
the consent of any other party to this Agreement. The rights and obligations of each party to this
Agreement shall remain in full force and effect notwithstanding the addition of any new party to
this Agreement.

          Section 7.17. Right of Set-off. If an Event of Default shall have occurred and be
continuing, each Lender and each Issuing Bank is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other indebtedness at any time
owing by such Lender or such Issuing Bank to or for the credit or the account of any party to this
Agreement against any of and all the obligations of such party now or hereafter existing under this
Agreement owed to such Lender or such Issuing Bank, irrespective of whether or not such Lender or
such Issuing Bank shall have made any demand under this Agreement and although such obligations may
be unmatured. The rights of each Lender under this Section 7.17 are in addition to other rights
and remedies (including other rights of set-off) that such Lender or such Issuing Bank may
have. 

[Signature Page Follows]

38

 

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

	 	 	 	 	 
	 	BAUBLE HOLDINGS CORP.

 	 
	 	By:  	/s/ Peter P. Copses
 	 
	 	 	Name:  	Peter P. Copses 	 
	 	 	Title:  	President 	 
	 
	 	BAUBLE ACQUISITION SUB, INC.

 	 
	 	By:  	/s/ Peter P. Copses
 	 
	 	 	Name:  	Peter P. Copses 	 
	 	 	Title:  	President 	 
	 
	 	AFTERTHOUGHTS MERCHANDISING CORP.

CLAIRE’S BOUTIQUES, INC.

SASSY DOO!, INC.

CLAIRE’S PUERTO RICO CORP.

CBI DISTRIBUTING CORP.

CLAIRE’S CANADA CORP.

BMS DISTRIBUTING CORP.

 	 
	 	 	 
	 	By:  	                                              /s/ Rebecca Orand
 	 
	 	 	Name:  	Rebecca Orand 	 
	 	 	Title:  	Vice President and Secretary 	 

39

 

	 	 	 	 	 

	 	 	 	 	 
	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent

 	 
	 	By:  	/s/ Robert Hetu
 	 
	 	 	Name:  	Robert Hetu 	 
	 	 	Title:  	Managing Director 	 
	 
	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent

 	 
	 	By:  	/s/ Denise Alvarez
 	 
	 	 	Name:  	Denise Alvarez 	 
	 	 	Title:  	Associate 	 
	 

40exv10w4

Exhibit 10.4

This Mortgage was prepared by and

after recording should be returned to:

Skadden, Arps, Slate, Meagher & Flom LLP

333 W. Wacker Drive

Suite 2100

Chicago, IL 60606

Attention: Christine Schneible

Claire’s Boutiques, Inc.

Mortgagor

to

Credit Suisse,

as Administrative Agent

 

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
 AND FIXTURE FILING

 

Dated: As of May 29, 2007

Location: 2400 West Central Road, Hoffman Estates, Illinois 60195

County: Cook County, Illinois

1

 

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT

AND FIXTURE FILING

     THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (with all
amendments thereto, this “Mortgage”), made and entered into on May 29, 2007, by and between
Claire’s Boutiques, Inc., a Colorado corporation, having its principal place of business at 3 SW
129th Avenue, Suite 400, Pembroke Pines, FL 33027 (“Mortgagor”) and Credit Suisse, a national
banking association, with a mailing address at 11 Madison Avenue, New York, NY 10010, in its
capacity as Administrative Agent for certain lenders (collectively, the “Lenders” and, each
individually, a “Lender”) that are from time to time party to the Credit Agreement (as defined
below) (together with its successors and assigns in such capacity, “Agent”).

WITNESSETH:

     WHEREAS, Mortgagor is the fee owner of the Premises (as defined below);

     WHEREAS, pursuant to that certain Credit Agreement dated as of May 29, 2007 among Borrower (as
defined therein), Bauble Holdings Corp., Agent, Lenders and the other parties named therein
(together with all amendments, restatements, amendments and restatements, modifications,
supplements, extensions and renewals thereof, the “Credit Agreement”) the Lenders have agreed to
make to or for the account of the Borrower certain Loans (as defined below);

     WHEREAS, Mortgagor is a subsidiary of Borrower and Mortgagor will receive substantial benefits
from the execution, delivery and performance of the Loan Documents and is, therefore, willing to
enter into this Mortgage;

     WHEREAS, it is a condition to (i) the obligations of the Lenders to make the Loans under the
Credit Agreement and (ii) the performance of the obligations of the Secured Parties under the Loan
Documents that Mortgagor execute and deliver this Mortgage; and

     WHEREAS, this Mortgage is given by Mortgagor to Agent, for its benefit and the benefit of the
other Secured Parties to secure the payment and performance of the Obligations (as defined below).

     NOW, THEREFORE, to secure the performance and observance by Borrower of all covenants and
conditions in the Credit Agreement, this Mortgage and in all other instruments securing the Credit
Agreement and for and in consideration of the indebtedness hereinabove set forth and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor, to
the extent of its interest in the Premises (as defined below), or any portion thereof, does hereby
grant, bargain, sell, alien, release, remise, convey, assign, transfer, mortgage, hypothecate,
pledge, deliver, set over, warrant and confirm unto Agent, for the benefit of Agent and the Secured
Parties (as hereinafter defined), in trust with power of sale (to the extent permitted by
applicable law), all of the following described land and interests in land, estates, easements,
rights, improvements, personal property, fixtures and appurtenances (hereinafter collectively
referred to as the “Premises”):

2

 

     (a) All that tract(s) or parcel(s) of land more particularly described in Exhibit
A attached hereto and made a part hereof (the “Real Property”);

     (b) All minerals, crops, trees, timber and other emblements now or hereafter located on
or under any of the Real Property;

     (c) All buildings, structures and other improvements now or hereafter located on the
Real Property (the “Improvements”);

     (d) All and singular easements, rights-of-way, strips and gores of land, vaults,
streets, alleys, passages, water rights, sewer rights and powers, and all estates, rights,
interests, royalties, tenements and appurtenances whatsoever, in any way and at any time
relating to any of the Real Property;

     (e) All building materials, machinery, equipment, fixtures and appliances (whether
trade, ornamental, domestic or permanent fixtures) owned by Mortgagor now or hereafter
located on the Real Property (all of the foregoing, together with all additions thereto,
replacements thereof and substitutions therefor and proceeds thereof, hereinafter referred
to collectively as “Personal Property Collateral”);

     (f) All Leases (as hereinafter defined); and

     (g) All monies and proceeds derived by Mortgagor from the Real Property, Improvements,
Personal Property Collateral and Leases, including all Rents (as hereinafter defined),
revenues, issues, insurance proceeds, profits, awards or judgments at any time arising out
of or relating to any of the foregoing Premises.

ARTICLE 1.

          1.1 Secured Obligations. This Mortgage secures the unconditional guarantee of
Mortgagor to Agent and each Lender of the prompt payment of the Obligations and the timely
performance of all other obligations under the Loan Documents. This Mortgage is intended to secure
not only presently existing obligations but also future advances, whether such advances are
obligatory or to be made at the option of Agent, or otherwise, as are made within 20 years from the
date hereof to the same extent as if such future advances were made on the date of the execution of
this Mortgage and although there may be no advance made at the time of execution of this Mortgage
and although there may be no obligations secured hereby outstanding at the time any advance is
made. Accordingly, to the fullest extent permitted by law, the lien of this Mortgage shall be valid
as to all obligations secured hereby, including future advances, from the time of its filing for
record in the recorder’s or registrar’s office of the county in which the real estate is located.
The total amount of obligations secured hereby may increase or decrease from time to time, but the
total unpaid balance secured hereby plus interest thereon and any disbursements which Agent or
Lenders may make under this Mortgage, the Credit Agreement or any other document with respect
hereto or thereto (e.g., for payment of taxes, special assessments or insurance on the real estate)
and interest on such disbursements shall not, at any one time outstanding, exceed the total sum of
One Billion Six Hundred Fifty Million Dollars ($1,650,000,000). This Mortgage is intended to and
shall be valid and have priority over all

3

 

subsequent liens and encumbrances, including statutory liens,
excepting solely taxes and assessments levied on the real estate, to the extent of the maximum
amount secured hereby.

          1.2 Maturity Date. The Obligations shall be due and payable no later than the
maturity date established in the Credit Agreement.

          1.3 Definitions. As used herein, the following terms shall have the following
meanings:

     “Credit Agreement” shall have the meaning ascribed to it in the Recitals
hereof.

     “Improvements” shall have the meaning ascribed to it earlier in this Mortgage.

     “Leases” shall have the meaning ascribed to it in Section 2.4(a)
hereof.

     “Loan Documents” shall have the meaning ascribed to it in the Credit Agreement.

     “Loans” shall have the meaning ascribed to it in the Credit Agreement.

     “Material Adverse Effect” shall have the meaning ascribed to it in the Credit
Agreement.

     “Obligations” shall have the meaning ascribed to it in the Credit Agreement.

     “Permitted Liens” shall have the meaning ascribed to it in the Credit
Agreement.

     “Person” shall have the meaning ascribed to it in the Credit Agreement.

     “Personal Property Collateral” shall have the meaning ascribed to it earlier in
this Mortgage.

     “Premises” shall have the meaning ascribed to it earlier in this Mortgage.

     “Real Property” shall have the meaning ascribed to it earlier in this Mortgage.

     “Rents” shall have the meaning ascribed to it in Section 2.4(b) hereof.

     “Secured Party” or “Secured Parties” shall have the meaning ascribed to
it in the Credit Agreement.

     “Taxes” shall have the meaning ascribed to it in the Credit Agreement.

          1.4 Rules of Construction. The terms “herein,” “hereof,” and “hereunder” and other
words of similar import refer to this Mortgage as a whole and not to any particular section,
paragraph or subdivision. Any pronoun used herein shall be deemed to cover all genders. All
references to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations; all references to any of the Loan Documents shall include any
and all amendments, restatements, amendments and restatements, modifications, supplements,
extensions and renewals thereof; all references to any Persons shall mean and include the

4

 

successors and permitted assigns of such Persons; all references to “including” and “include” shall
be understood to mean “including, without limitation”; and all references to the time of day shall
mean the time of day on the day in question in New York, New York, unless otherwise expressly
provided in this Mortgage or the Credit Agreement, in which case the Credit Agreement shall
control.

ARTICLE 2.

          2.1 Payments by Mortgagor. Mortgagor will pay all Taxes, insurance premiums, permit
fees, inspection fees, license fees, water and sewer charges, franchise fees and equipment rents
and any other charges or fees against it or the Premises (and Mortgagor, upon request of Agent,
will submit to Agent receipts evidencing said payments) in accordance with the terms of the Credit
Agreement. Mortgagor shall pay all mortgage recording fees, documentary taxes or similar fees or
taxes upon presentation of this Mortgage for recording.

          2.2 General Representations and Warranties. Mortgagor hereby represents and warrants
to Agent and Lenders:

     (a) Mortgagor has good and marketable fee simple title to the Premises subject only to
Permitted Liens;

     (b) Mortgagor has full power and lawful authority to encumber the Premises in the
manner and in the form set forth herein; and

     (c) Except for fixtures that may be owned by tenants of the Real Property, Mortgagor
owns all Personal Property Collateral now or hereafter comprising part of the Premises,
including any substitutions or replacements thereof, free and clear of all liens except
Permitted Liens.

          2.3 Ownership, Use and Care of the Premises.

     (a) Except in each case to the extent permitted by the Credit Agreement, Mortgagor
shall not sell, convey, transfer, mortgage or otherwise dispose of or encumber any part of
the Premises or any interest therein and, except for Permitted Liens, Mortgagor shall keep
the Premises free and clear of all liens.

     (b) Mortgagor shall maintain and keep the Improvements now or hereafter erected on the
Property in good condition and repair (ordinary wear and tear and casualty events excepted),
shall not commit or suffer any waste, and shall cause the Premises and Mortgagor’s use
thereof to be in compliance in all material respects with applicable law.

     (c) Mortgagor shall promptly notify Agent of any loss, damage or destruction to, or
condemnation or taking of, the Premises (whether by fire or any other cause) in accordance
with the Credit Agreement and any insurance proceeds or awards shall be applied in
accordance with the Credit Agreement.

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     (d) Agent or its representative is hereby authorized to enter upon and inspect the
Premises as provided for in the Credit Agreement.

          2.4 Rents and Leases.

     (a) Mortgagor hereby sells, assigns, sets over and transfers to Agent, for the benefit
of Secured Parties, Mortgagor’s interest in any and all leases, usufructs, tenant contracts
and rental agreements and other contracts, licenses and permits (all of which are sometimes
herein referred to as the “Leases”) now or hereafter affecting or in any manner relating to
the Premises, or any part thereof. Mortgagor agrees to execute and deliver such other
instruments as Agent may reasonably require evidencing the assignment of the Leases.

     (b) Mortgagor hereby sells, assigns, sets over and transfers to Agent, for the benefit
of Secured Parties, all of the rents, tenant reimbursements, issues and profits which shall
hereafter become due or be paid for the use of the Premises or any part thereof, and all
rents, tenant reimbursements, issues and profits arising under the Leases or any thereof
(all of which are sometimes herein referred to as the “Rents”), reserving to Mortgagor a
license to collect the Rents only so long as there is no Event of Default which shall have
occurred and be continuing, said license to be revoked immediately upon the occurrence of an
Event of Default and Agent’s demand for the payment of the Obligations. Mortgagor agrees to
execute and deliver such other instruments as Agent may reasonably require evidencing the
assignment of the Rents.

     (c) Should the Premises be involved in any insolvency, receivership, bankruptcy, or
similar proceedings affecting the possession of the Premises, it is further covenanted and
agreed that Agent shall be entitled to receive for the benefit of Secured Parties all of the
Rents realized from or during any such proceedings. Such Rents shall be treated as cash
collateral.

     (d) Notwithstanding the right to collect the Rents, Mortgagor agrees that Agent, and
not Mortgagor, shall be and shall be deemed to be the creditor of each tenant with respect
to assignments for the benefit of creditors, and bankruptcy, arrangement, reorganization,
insolvency, dissolution or receivership proceedings affecting each such tenant, but without
obligation on the part of Agent or Lenders, however, to file or make timely filings of
claims in any such proceedings, or otherwise to pursue a creditor’s rights therein.

     (e) Agent shall have the right to assign Mortgagor’s right, title and interest in the
Leases to any subsequent holder of this Mortgage, or to any Person acquiring title to any of
the Premises through foreclosure, power of sale, or similar legal process after the
occurrence of an Event of Default. After Mortgagor shall have been barred and foreclosed of
all right, title, interest, and equity of redemption in the Premises, no assignee of
Mortgagor’s interest in the Leases shall be liable to account to Mortgagor for the Rents
thereafter accruing.

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     (f) Nothing contained herein shall be construed to bind Agent or any Lender or obligate
Agent or any Lender to perform any of the terms or provisions contained in the Leases, or
otherwise to impose any obligation on Agent or any Lender whatsoever. Prior to actual entry
and taking possession of the Premises by Agent, this assignment shall not operate to make
Agent a “mortgagee-in-possession” or to place any responsibility for the control, care,
management, or repair of the Premises upon Agent or any Lender.

     (g) Mortgagor shall duly perform and discharge each respective covenant, condition and
obligation under the Leases, except where such noncompliance could not reasonably be
expected to have a Material Adverse Effect. Mortgagor will give written notice to Agent of
any material default under the Leases known to Mortgagor, and shall furnish Agent with
complete copies of all notices with respect thereto given or received by Mortgagor. If
requested by Agent after the occurrence and during the continuance of an Event of Default,
Mortgagor will enforce the Leases and remedies available to Mortgagor thereunder in the
event of a default thereunder, and, if Mortgagor shall fail to so exercise such remedies
upon request, Agent may, at its sole option and without obligation to do so, and without
waiving any Event of Default of Mortgagor hereunder with respect thereto, enforce the same
at Mortgagor’s expense.

          2.5 Insurance.

          (a) Mortgagor shall maintain, during the term of this Mortgage, such insurance,
including flood insurance, related to the Premises as is required pursuant to, and in
accordance with, the Credit Agreement.

          (b) All such insurance policies with respect to the Premises shall contain a standard,
non-contributory mortgagee clause naming Agent, and its successors and assigns, as an additional
insured under all liability insurance policies, as the first mortgagee and loss payee on all
property insurance policies, and as the sole loss payee on all rental loss or business interruption
insurance policies. Mortgagor shall not take out separate insurance with respect to the Premises
concurrent in form or contributing in the event of loss with that required to be maintained
hereunder or under the Credit Agreement unless Agent is named as an additional insured thereon
under a standard mortgagee clause acceptable to Agent and each such policy is otherwise in form and
substance acceptable to Agent.

          (c) In the event of the foreclosure of this Mortgage, or in the event of any transfer of title
to the Premises, or any part thereof, by foreclosure sale or by power of sale or deed in lieu of
foreclosure, the purchaser of the Premises, or such part thereof, shall succeed to all of
Mortgagor’s rights with respect to the Premises, including any rights to unexpired, unearned or
returnable insurance premiums, subject to limitations on the assignment of blanket policies, but
limited to such rights as relate to the Premises or such part thereof. If Agent acquires title to
the Premises, or any part thereof, in any manner, Agent shall thereupon (as between Mortgagor and
Agent) become the sole and absolute owner of the insurance policies with respect to the Premises,
and all insurance proceeds payable thereunder with respect to the Premises, with the sole right to
collect and retain all unearned or returnable premiums thereon with respect to the Premises, or
such part thereof, if any.

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          2.6 Condemnation. In the case of any taking, condemnation or other proceeding in the
nature thereof, Agent may, at its option, participate in any proceedings or negotiations which
might result in any taking or condemnation and Mortgagor shall deliver or cause to be delivered to
Agent all instruments reasonably requested by it to permit such participation. Agent may be
represented by counsel reasonably satisfactory to it at the reasonable expense of the Mortgagor in
connection with any such participation. Mortgagor shall pay all reasonable fees, costs and
expenses incurred by Agent in connection therewith and in seeking and obtaining any award or
payment on account thereof. Mortgagor shall take all steps necessary to notify the condemning
authority of such assignment.

          2.7 Expenses. Mortgagor shall pay, or reimburse Agent and Lenders, upon demand, for
all reasonable attorneys’ fees, costs and expenses incurred by Agent or any Lender in any action,
suit, legal proceeding or dispute of any kind, affecting this Mortgage or the interest created
hereby, in accordance with the terms of the Credit Agreement.

          2.8 Subrogation. Agent shall be subrogated to the claims and liens of all Persons
whose claims or liens are discharged or paid with the proceeds of the Loans or any other
indebtedness secured hereby.

          2.9 Performance by Agent of Defaults by Mortgagor. If Mortgagor shall default in the
payment of any Tax or insurance premium, in the procurement of insurance coverage and the delivery
of the insurance policies required hereunder, or in the performance or observance of any other
covenant, condition or term of this Mortgage, then Agent, at its option, may perform or pay the
same, and all payments made or costs incurred by Agent in connection therewith shall be secured
hereby and shall be, without demand, immediately repaid by Mortgagor to Agent with interest thereon
at the highest rate of interest in effect from time to time under the Credit Agreement. Agent
shall reasonably determine the legality, validity and priority of any such Tax, claim and premium,
of the necessity for any such actions, and of the amount necessary to be paid in satisfaction
thereof. Agent is hereby empowered to enter upon and to authorize others to enter upon the
Premises, or any part thereof, for the purpose of performing or observing any such defaulted
covenant or obligation, without thereby becoming liable to Mortgagor or any Person in possession
holding under Mortgagor other than for the gross negligence or willful misconduct of Agent.

          2.10 Further Assurances. Mortgagor shall promptly execute and deliver, or cause to be
promptly executed and delivered, to Agent, such further mortgages, deeds, instruments, notice
filings, documents, certificates, agreements, letters, representations and other writings, and
shall promptly take or cause to be taken such actions, as Agent may, from time to time, reasonably
request to effectuate, complete, correct, perfect or continue and preserve the obligations of
Mortgagor under the lien and security interest of Agent hereunder. Upon any failure by Mortgagor
to do so, Agent may make, execute, record, file, re-record, and refile any and all such writings
for and in the name of Mortgagor, and Mortgagor hereby irrevocably appoints Agent the
attorney-in-fact of Mortgagor so to do.

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ARTICLE 3.

          3.1 Event of Default. The occurrence of an Event of Default under (and as defined in)
the Credit Agreement shall constitute an “Event of Default” hereunder.

          3.2 Right of Agent to Enter and Take Possession.

     (a) Upon the occurrence and during the continuance of an Event of Default, Mortgagor,
upon demand of Agent, shall forthwith surrender to Agent the actual possession of the
Premises, and if and to the extent permitted by law, Agent, or by such officers or agents as
Agent may appoint, may enter upon and take possession of all the Premises without the
appointment of a receiver, or an application therefor, and may exclude Mortgagor and its
agents and employees wholly therefrom.

     (b) If Mortgagor shall for any reason lawfully fail to surrender or deliver the
Premises or any part thereof after such demand by Agent pursuant to Section 3.2(a),
above, Agent may obtain a judgment or decree conferring upon Agent the right to immediate
possession or requiring Mortgagor to deliver immediate possession of the Premises to Agent,
to the entry of which judgment of decree Mortgagor hereby specifically consents. Mortgagor
will pay to Agent, upon demand, all expenses of obtaining such judgment or decree, including
reasonable compensation to Agent and Agent’s attorneys and Agents; and all such expenses and
compensation shall, until paid, be secured by this Mortgage.

     (c) Upon every such entering and taking of possession pursuant to Sections
3.2(a) or 3.2(b) above, subject to and in accordance with the terms of the
Credit Agreement, Agent may hold, store, use, operate, manage, control, and maintain the
Premises and conduct the business thereof and, from time to time, (i) make all necessary and
proper repairs, replacements, additions, and improvements thereto and thereon and purchase
or acquire additional fixtures, personalty and other property, (ii) insure or keep the
Premises insured, (iii) manage and operate the Premises and exercise all the rights and
powers of Mortgagor in its name or otherwise, with respect to the same, and (iv) enter into
any and all agreements with respect to the exercise by others of any of the powers herein
granted Agent, all as Agent may from time to time determine to be to its best advantage; and
Agent may collect and receive all of the income, rents, profits, issues and revenues of the
Premises, including, without limitation, the past due as well as those accruing thereafter
and, after deducting (A) all expenses of taking, holding, managing and operating the
Premises (including, without limitation, compensation for services of all Persons employed
for such purposes), (B) the cost of all such maintenance, repairs, replacements, additions,
improvements, purchases, and acquisitions, (C) the cost of such insurance, (D) such Taxes
prior to the lien of this Mortgage as Agent may determine to pay, (E) other proper charges
upon the Premises or any part thereof, and (F) the reasonable fees and expenses of attorneys
and Agents of Agent, shall apply the remainder of the money so received by Agent to any
balance of the Obligations outstanding.

     (d) For the purpose of carrying out the provisions of this Section 3.2, upon
the occurrence and during the continuance of an Event of Default, Mortgagor hereby
irrevocably constitutes and appoints Agent (or any designee of Agent) the true and lawful

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attorney-in-fact of Mortgagor to do and perform, from time to time, any and all actions
necessary and incidental to such purpose (including, without limitation, Mortgagor’s right
and power to cancel, accept the surrender of or modify any of the terms of any of the
Leases), and does, by these presents, ratify and confirm any and all action of said
attorney-in-fact.

     (e) Mortgagor irrevocably consents that the tenant(s) under the Leases, upon demand and
notice from Agent to such tenants(s) of an Event of Default, shall pay all Rents under the
Leases to Agent, without liability of the tenant(s) for the determination of the actual
occurrence of any Event of Default claimed by Agent. Mortgagor hereby irrevocably
authorizes and directs the tenant(s), upon receipt of any notice of Agent stating that an
Event of Default has occurred and for so long as such Event of Default is continuing, to pay
to Agent the Rents due and to become due under the Leases. Mortgagor agrees that the
tenant(s) shall have the right to rely upon any such notices of Agent, and that tenant(s)
shall pay such Rents to Agent, without any obligation and without any right to inquire as to
whether an Event of Default has actually occurred, and notwithstanding any claim of or
notice by Mortgagor to the contrary. Mortgagor shall have no claim against tenant(s) for
any Rents paid by such tenant(s) to Agent.

     (f) Nothing herein contained in this Section 3.2 shall be construed to obligate
Agent or Lenders to discharge or perform the duties of a landlord to any tenant or to impose
liability upon Agent or Lenders as the result of any exercise by Agent of its rights under
this Mortgage, and Agent shall be liable to account only for the Rents, incomes and profits
actually received by Agent.

          3.3 Judicial Proceedings; Right to Receiver. Upon the occurrence and during the
continuance of an Event of Default, to the extent permitted by applicable law, Agent shall have the
right to proceed by suit to foreclose its lien on, security interest in, and assignment of, the
Premises, to sue Mortgagor for damages on account of or arising out of said default or breach, or
for specific performance of any provision contained herein, or to enforce any other appropriate
legal or equitable right or remedy. Upon the occurrence and during the continuance of an Event of
Default, to the extent permitted by applicable law, Agent shall be entitled, as a matter of right
(upon bill filed or other proper legal proceedings being commenced for the foreclosure of this
Mortgage, to the extent required by law), to the appointment by any competent court or tribunal,
without notice to Mortgagor or any other party, of a receiver of the rents, issues and profits of
the Premises, with power to lease and control the Premises and with such other powers as may be
deemed necessary and, to the extent permitted by applicable law, Mortgagor hereby waives any
requirement of applicable law that Agent post a bond or similar deposit in connection with the
appointment of such a receiver. Mortgagor shall pay to Agent, on demand, all expenses, including
receiver’s fees, attorneys’ fees, costs and Agent’s compensation, incurred by Agent or Lenders
pursuant to this Section 3.4, and any such amounts paid by Agent shall be added to the
Obligations and shall be secured by this Mortgage.

          3.4 Power of Sale. Upon the occurrence and during the continuance of an Event of
Default, to the extent permitted by applicable law, Agent may sell the Premises, or any part
thereof or any interest therein separately, at Agent’s discretion, with or without taking

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possession thereof, at public sale before the courthouse door of the county in which the
Premises, or a part thereof, is located, to the highest bidder for cash, after first giving notice
of the time, place and terms of such sale by advertisement published once a week for four weeks
(without regard for the number of days) in a newspaper in which advertisements of sheriff’s sales
are published in such county. The advertisement so published shall be notice to Mortgagor, and
Mortgagor hereby waives all other notices. Agent may bid and purchase at any such sale, and Agent
may execute and deliver to the purchaser or purchasers at any such sale a sufficient conveyance of
the Premises or the part thereof or interest therein sold, and to this end Mortgagor makes,
constitutes and appoints Agent the agent and attorney-in-fact, with full power of substitution, to
make such sale and conveyance and thereby to divest Mortgagor of all right, title and equity that
Mortgagor may have in and to the Premises and to vest the same in the purchaser or purchasers at
such sale or sales. Agent’s conveyance may contain recitals as to the occurrence of an Event of
Default under this Mortgage, which recitals shall be presumptive evidence that all preliminary acts
prerequisite to such sale and conveyance were duly complied with in all respects. The recitals
made by Agent shall be binding and conclusive upon Mortgagor, and the sale and conveyance made by
Agent shall divest Mortgagor of all right, title, interest or equity that Mortgagor may have had
in, to and under the Premises, or the part thereof or interest therein sold, and shall vest the
same in the purchaser or purchasers at such sale. Agent may hold one or more sales hereunder until
the Obligations have been satisfied in full. Mortgagor hereby ratifies and confirms all of the
acts and doings of Agent as Mortgagor’s agent and attorney-in-fact hereunder and expressly waives,
to the extent allowed by law, all right to have the Premises marshaled upon any sale under the
Power granted herein. Agent’s agency and power as attorney-in-fact hereunder are coupled with an
interest, cannot be revoked by death, incompetence, reorganization, insolvency, or otherwise, and
shall not be exhausted until the Obligations have been satisfied in full. The proceeds of each
sale by Agent hereunder shall be applied first to the costs and expenses of the sale and of all
proceedings in connection therewith including the fees and expenses of Agent’s attorneys in
connection therewith), and the balance shall be applied to the remainder of the Obligations. Any
excess shall be paid to Mortgagor or as otherwise required by law. In the event of any sale
pursuant to the agency and power herein granted, Mortgagor shall be and become a tenant holding
over and shall deliver possession of the Premises, or the part thereof or interest therein sold, to
the purchaser or purchasers at the sale or be summarily dispossessed in accordance with the
provisions of law applicable to tenants holding over.

          3.5 Discontinuance of Proceedings and Restoration of the Parties. If Agent shall have
proceeded to enforce any right, power or remedy under this Mortgage by foreclosure, entry or
otherwise or in the event Agent commences advertising of the intended exercise of the sale under
power provided hereunder, and such proceedings or advertisement shall have been withdrawn,
discontinued or abandoned for any reason, or shall have been determined adversely to Agent, then in
any such event, to the extent permitted by applicable law, Mortgagor and Agent shall be restored to
their former positions and rights hereunder without waiver of any default (unless determined
adversely to Agent) and without novation, and all rights, powers and remedies of Agent shall
continue as if no such proceeding had been taken.

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          3.6 Suits to Protect the Premises. Agent shall have the power to institute and
maintain such suits and proceedings which it deems, in its reasonable credit judgment, necessary
(a) upon the occurrence and during the continuance of an Event of Default, to prevent any
impairment of the Premises by any threatened act that may be unlawful or that may constitute an
Event of Default or any actual act that is unlawful or that constitutes an Event of Default, (b) to
preserve or protect its interest in the Premises and (c) to restrain the enforcement of or
compliance with any legislation or other governmental enactment, rule or order that is reasonably
likely to be unconstitutional or otherwise invalid, if the enforcement of or compliance with any
such enactment, rule or order would materially impair the security hereunder or be materially
prejudicial to the interest of Agent in the Premises.

          3.7 Remedies Cumulative. All rights and remedies set forth in this Mortgage are
cumulative of and in addition to any right or remedy provided for by statute, or in any other
instrument, document, agreement or other writing heretofore, concurrently herewith or in the future
executed by or binding upon Mortgagor in connection with any transaction resulting in any part of
the Obligations, including the right of Agent to take legal action to collect the Obligations
without taking action with respect to the Premises. Agent may, at Agent’s election and at Agent’s
discretion, exercise each and every such right and remedy concurrently or separately or in any
combination.

ARTICLE 4.

          4.1 Successors and Assigns. The word “Mortgagor” as used in this Mortgage shall
include the successors and assigns of the party herein named as Mortgagor. The word “Agent” as
used in this Mortgage shall include the successors, transferees and assigns of the parties herein
named as Agent as provided for in the Credit Agreement. The word “Lender” as used in this Mortgage
shall include the successors, transferees and assigns of the parties named as a Lender as provided
for in the Credit Agreement. The word “Secured Party” as used in this Mortgage shall include the
successors, transferees and assigns of the parties named as a Secured Party as provided for in the
Credit Agreement. All provisions and covenants of this Mortgage shall run with the land and shall
be binding upon the Mortgagor, and all rights, powers, privileges and options of Agent under this
Mortgage shall inure to the benefit of its successors, transferees and assigns as provided for in
the Credit Agreement. If ever there shall be more than one Mortgagor, all of their undertakings
hereunder shall be joint and several.

          4.2 Notices. All notices, requests and demands to or upon a party hereto shall be
delivered in accordance with the terms of the Credit Agreement.

          4.3 No Implied Waivers. No delay or omission by Agent or any Lender or by any holder
of all or any part of the Obligations to exercise any right, power or remedy accruing upon any
Event of Default shall exhaust or impair any such right, power or remedy or shall be construed to
be a waiver of any such Event of Default, or acquiescence therein, and every right, power and
remedy given by this Mortgage to Agent may be exercised from time to time and as often as may be
deemed expedient by Agent. No consent or waiver, expressed or implied, by

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Agent to or of any Event of Default by Mortgagor hereunder shall be deemed or construed to be
a consent or waiver to or of any other Event of Default in the performance of the same or any other
obligations of Mortgagor hereunder.

          4.4 Power of Agent to Reconvey or Consent. Without affecting the liability of
Mortgagor or any other Person for the payment of the Obligations or any part thereof, including
such of the Obligations as may be due at the time of or after any reconveyance of the Premises to
Mortgagor or the lien of this Mortgage upon any remainder of the Premises which has not been so
reconveyed for the full amount of the Obligations then or thereafter secured hereby, or the rights
and powers of Agent with respect to such remainder of the Premises, Agent or Lenders may, at their
option, do or cause to be done any one or more of the following: release all or any part of the
Obligations; extend the time or otherwise alter the terms of payment of all or any part of the
Obligations; reduce the payments thereon; release any party primarily or secondarily liable on any
of the Obligations; accept additional or substitute security hereunder; substitute for or release
all or any part of the Premises as security hereunder; reconvey to Mortgagor all or any part of the
Premises; consent to the making of any map or plat of all or any part of the Premises; join in
the granting of any easement upon all or any part of the Premises; and join in any extension
agreement or any agreement subordinating or otherwise affecting the lien or charge hereof or the
priority thereof. Mortgagor shall pay Agent a reasonable service charge, together with such title
insurance premiums and attorneys’ fees as may be incurred by Agent for any such action taken at
Mortgagor’s request. No reconveyance or release of this Mortgage shall be valid or effectual unless
it shall be countersigned by Agent.

          4.5 Enforcement. Notwithstanding anything to the contrary in this Agreement, Agent
shall neither demand payment pursuant to this Mortgage nor enforce the security constituted hereby
unless and until it is entitled to do so pursuant to the terms of the Credit Agreement, but if so
entitled, Agent may at any time and from time to time exercise and enforce all of its rights and
remedies hereunder without further notice or delay, except as may be required by applicable law or
the Credit Agreement.

          4.6 Assignment. This Mortgage is assignable by Agent as permitted under the Credit
Agreement and any assignment hereof by Agent shall operate to vest in the assignee all rights and
powers herein conferred upon and granted to Agent.

          4.7 Counterparts. This Mortgage may be executed in any number of counterparts, each
of which shall be deemed to be an original document and all of which taken together shall
constitute one and the same instrument.

          4.8 Amendments. This Mortgage may be amended only by written agreement between
Mortgagor and Agent.

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          4.9 Severability. If any clause or provisions herein contained operates or would
prospectively operate to invalidate this Mortgage in whole or in part, then such clause or
provision shall be ineffective only to the extent of such invalidity, without invalidating the
remaining provisions of this Mortgage.

          4.10 Captions. All captions, headings, numbers and letters preceding the text of
separate parts, paragraphs and subparagraphs of this Mortgage are solely for reference purposes and
shall not affect the meaning, construction or effect of the text in any way.

          4.11 Governing Law. This Mortgage shall be governed by and construed and enforced in
accordance with the internal laws of the State of Illinois.

          4.12 No Merger. So long as any part of the Obligations remain unpaid, unperformed or
undischarged, the fee, easement and leasehold estates to the Premises shall not merge but rather
shall remain separate and distinct, notwithstanding the union of such estates either in Mortgagor,
Agent, any lessee, any third-party purchaser or otherwise.

ARTICLE 5.

          5.1 Principle of Construction. In the event of any inconsistencies between the terms
and conditions of this Article 5 and the other terms and conditions of this Mortgage, the terms and
conditions of this Article 5 shall control and be binding.

          5.2 Illinois Mortgage Foreclosure Law. It is the intention of Mortgagor and Agent
that the enforcement of the terms and provisions of this Mortgage shall be accomplished in
accordance with the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1101 et. seq.), as amended
from time to time (the “IMFL”) and with respect to the IMFL, Mortgagor agrees and covenants that:

               (a) Mortgagor and Agent shall have the benefit of all of the provisions of the IMFL, including
all amendments thereto which may become effective from time to time after the date hereof. In the
event any provision of the IMFL which is specifically referred to herein may be repealed, Agent
shall have the benefit of such provision as most recently existing prior to such repeal, as though
the same were incorporated herein by express reference;

               (b) All advances, disbursements and expenditures made or incurred by Agent before and during a
foreclosure, and before and after judgment of foreclosure, and at any time prior to sale, and,
where applicable, after sale, and during the pendency of any related proceedings, for the following
purposes, in addition to those otherwise authorized by this Mortgage, the Credit Agreement or the
other Loan Documents or by the IMFL (collectively “IMFL Protective Advances”), shall have the
benefit of all applicable provisions of the IMFL. All

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IMFL Protective Advances shall be additional indebtedness secured by this Mortgage, and shall
become immediately due and payable without notice and with interest thereon from the date of the
advance until paid at the rate of interest payable after default under the terms of the Credit
Agreement, this Mortgage and the other Loan Documents. This Mortgage shall be a lien for all IMFL
Protective Advances as to subsequent purchasers and judgment creditors from the time this Mortgage
is recorded pursuant to Subsection (b)(5) of Section 15-1302 of the IMFL;

               (c) In addition to any provision of this Mortgage authorizing Agent to take or be placed in
possession of the Premises, or for the appointment of a receiver, Agent shall have the right, in
accordance with Sections 15-1701 and 15-1702 of the IMFL, to be placed in possession of the
Premises or at its request to have a receiver appointed, and such receiver, or Agent, if and when
placed in possession, shall have, in addition to any other powers provided in this Mortgage, all
rights, powers, immunities, and duties as provided for in Sections 15-1701,15-1703 and 15-1704 of
the IMFL; and

               (d) Mortgagor acknowledges that the Premises do not constitute agricultural real estate, as
said term is defined in Section 15-1201 of the IMFL or residential real estate as defined in
Section 15-1219 of the IMFL.

          5.3 Use of Proceeds. Mortgagor represents and agrees that the proceeds of the loans
secured by this Mortgage shall be used for business purposes and that the indebtedness secured
hereby (i) constitutes a business loan which comes within the purview of subparagraph (1)(c) of 815
ILCS 205/4, and a loan secured by a mortgage on real estate which comes within the purview of
subparagraph (1)(l) of 815 ILCS 205/4 and (ii) is exempted from transactions under the
Truth-in-Lending Act, 15 U.S.C. 1601, et seq.

          5.4 Revolving Credit Agreement. This Mortgage secures, among other indebtedness, a
“revolving credit” arrangement within the meaning of 815 ILCS 205/4.1 and 205 ILCS 5/5d. The total
amount of indebtedness may increase or decrease from time to time, as provided in the Credit
Agreement, and any disbursements that Agent or Lenders may make under this Mortgage, the Credit
Agreement, or any other document with respect hereto (e.g., for payment of taxes, insurance
premiums or other advances to protect Agent’s liens and security interests, as permitted hereby)
shall be additional indebtedness secured hereby. This Mortgage is intended to and shall be valid
and have priority over all subsequent liens and encumbrances, including statutory liens, excepting
solely taxes, assessments, and insurance, with interest on such disbursements, levied on the
Premises, to the extent of the maximum amount secured hereby.

          5.5 WAIVER OF CERTAIN RIGHTS. Mortgagor hereby covenants and agrees that it will not
at any time insist upon or plead, or in any manner claim or take any advantage of any stay,
exemption or extension law or any so-called “Moratorium Law” now or at any time hereafter in force
providing for the valuation or appraisement of the Premises, or any part thereof, prior to any sale
or sales thereof to be made pursuant to any provisions herein contained, or to decree, judgment or
order of any court of competent jurisdiction; or, after such sale or sales,

15

 

claim or exercise any rights under any statute now or hereafter in force to redeem the property so
sold, or any part thereof, or relating to the marshalling thereof, upon foreclosure sale or other
enforcement hereof; and without limiting the foregoing:

          (a) Mortgagor hereby expressly waives any and all rights of reinstatement and redemption, if
any, under any order or decree of foreclosure of this Mortgage, on its own behalf and on behalf of
each and every person, it being the intent hereof that any and all such rights of reinstatement and
redemption of the Mortgagor and of all other persons are and shall be deemed to be hereby waived to
the full extent permitted by the provisions of Section 5/15-1601(b) of the IMFL or other applicable
law or replacement statutes; and

          (b) Mortgagor will not invoke or utilize any such law or laws or otherwise hinder, delay or
impede the execution of any right, power or remedy herein or otherwise granted or delegated to
Agent but will suffer and permit the execution of every such right, power and remedy as though no
such law or laws had been made or enacted.

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     IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed and delivered as of
the day and year first written above.

	 	 	 	 	 
	 	CLAIRE’S BOUTIQUES, INC., a Colorado

corporation

 	 
	 	By:  	/s/ Rebecca Orand
 	 
	 	 	Name:  	Rebecca Orand 	 
	 	 	Title:  	Vice President and Secretary 	 
	 

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