Document:

Exhibit 10.25

 

EXECUTION COPY

 

 

 

AMENDED AND RESTATED U.S.
SECURITY AGREEMENT

 

 

among

 

 

WILLIAMS SCOTSMAN
INTERNATIONAL, INC.,

 

WILLIAMS SCOTSMAN, INC.,

 

CERTAIN SUBSIDIARIES

 

 

and

 

 

BANK OF AMERICA, N.A.

as COLLATERAL AGENT

 

 

 

Dated as of March 26,
2002

 

and

 

Amended and Restated as
of August 18, 2003

 

and

 

Amended and Restated as
of June 28, 2005

 

 

 

 

 

AMENDED AND RESTATED U.S.
SECURITY AGREEMENT

 

AMENDED AND RESTATED U.S. SECURITY AGREEMENT, dated as of March 26,
2002, amended and restated as of August 18, 2003, and amended and restated
as of June 28, 2005 (such date hereinafter being referred to as the “Amendment
and Restatement Effective Date”), made by each of the undersigned assignors
(each an “Assignor” and, together with any other entity that becomes an
assignor hereunder pursuant to Section 10.14 hereof, the “Assignors”) in
favor of Bank of America, N.A. (“BofA”), as Collateral Agent, for the
benefit of the Secured Creditors (as defined below), and acknowledged and
agreed to by U.S. Bank National Association, as trustee (together with any
successor trustee, the “Senior Secured Notes Trustee”) for the benefit
of the holders from time to time of the Senior Secured Notes (as defined
below).  Except as otherwise defined
herein, all capitalized terms used herein and defined in the Credit Agreement
(as defined below) shall be used herein as therein defined (or, at any time on
or after the first date when all Credit Document Obligations (as defined below)
shall have been repaid in full and all Letters of Credit have been terminated
or cash collateralized in a manner satisfactory to the Administrative Agent and
the Total Commitments under the Credit Agreement have been terminated and
thereafter for so long as no Credit Agreement is in effect, the Credit Agreement
as in effect on such date immediately prior to such repayment and termination,
provided that all determinations required to be made to the satisfaction of the
Administrative Agent and all matters required to be acceptable to the
Administrative Agent in each case as provided in any such definition shall,
after such date, instead be required to be made to the satisfaction of the
Collateral Agent or be required to be acceptable to the Collateral Agent, as
the case may be).

 

W I T N E S S E T H:

 

WHEREAS, Williams Scotsman International, Inc. (formerly known as
Scotsman Holdings, Inc.) (“Holdings”) and Williams Scotsman, Inc. (the “Borrower”)
are parties to a certain Credit Agreement, dated as of March 26, 2002, with the
lenders party thereto, Deutsche Bank Trust Company Americas (“DBTCA”),
as administrative agent, and certain other Persons, as amended by a First
Amendment, dated as of February 27, 2003, a Second Amendment, dated as of
August 11, 2003, a Third Amendment, dated as of December 22, 2003, a Fourth
Amendment, dated as of September 24, 2004 and a Fifth Amendment, dated as of
April 15, 2005 (as so amended, the “Existing Credit Agreement”);

 

WHEREAS, the Assignors (other than Holdings) and the Senior Secured
Notes Trustee have entered into an Indenture, dated as of August 18, 2003 (as
amended, modified or supplemented from time to time, the “Senior Secured
Notes Indenture”), providing for (i) the issuance by the Borrower of its
10% Senior Secured Notes due 2008 and all Senior Secured Notes issued upon any
exchange offer as contemplated in the Senior Secured Notes Indenture (the “Senior
Secured Notes”) to the holders thereof from time to time (the “Senior
Secured Noteholders” and, together with the Senior Secured Notes Trustee,
the “Second Lien Creditors” and, together with the First Lien Creditors,
the “Secured Creditors”) and (ii) the guaranty by the Guarantors (as
defined in the Senior Secured Notes Indenture) and the Subordinated Guarantor

 

 

(as defined in the Senior Secured Notes Indenture) of
the Borrower’s obligations under the Senior Secured Notes Indenture and the
Senior Secured Notes (each such guaranty, together with the Senior Secured
Notes Indenture and the Senior Secured Notes, are herein called the “Senior
Secured Notes Documents”);

 

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

 

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

 

WHEREAS, each Assignor and DBTCA, as collateral agent, entered into the
U.S. Security Agreement, dated as of March 26, 2002 and amended and restated as
of August 18, 2003 (as amended, modified or supplemented through, but
not including, the Amendment and Restatement Effective Date, the “Original
U.S. Security Agreement”), pursuant to which the Assignors granted a security
interest in the Collateral for the benefit of the Secured Creditors under, and
as defined in, the Original U.S. Security Agreement;

 

WHEREAS, it was a condition precedent to the making of loans to, and
the issuance of, and participation in, letters of credit for the account of the
Borrower under the Existing Credit Agreement that each Assignor shall have
executed and delivered to the Collateral Agent (as defined therein) the
Original U.S. Security Agreement;

 

WHEREAS, it was a condition precedent to the issuance of the Senior
Secured Notes by the Borrower under the Senior Secured Notes Indenture that
each Assignor (other than Holdings) shall have executed and delivered the
Original U.S. Security Agreement;

 

WHEREAS, BofA and DBTCA have purchased from the other lenders party to
the Existing Credit Agreement all of such lenders’ right, title and interest in
and to the Existing Credit Agreement and the documents and instruments executed
and delivered in connection therewith (with certain exceptions), all pursuant
to a certain Assignment and Assumption Agreement (the “Bank Assignment
Agreement”), dated as of the Amendment and Restatement Effective Date,
among BofA, DBTCA, the other lenders party to the Existing Credit Agreement,
the administrative agent and collateral agent under the Existing Credit
Agreement, the Borrower and Holdings;

 

WHEREAS, Holdings, the Borrower, the financial institutions from time
to time party thereto (the “Lenders”), BofA, as Administrative Agent
(together with any successor administrative agent, the “Administrative Agent”),
DBTCA, as Syndication Agent, Citicorp USA, Inc., Wells Fargo Bank, N.A. and
Lehman Commercial Paper, Inc., as Co-Documentation Agents, and Banc of America
Securities LLC and Deutsche Bank Securities Inc., as Co-Lead Arrangers and
Joint Book Runners, desire to amend and restate the Existing Credit Agreement
in its entirety and have entered into an Amended and Restated Credit Agreement,
dated as of the Amendment and Restatement Effective Date, (as further amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, and including any agreement or

 

2

 

agreements extending the maturity of, or refinancing
or restructuring (including, but not limited to, the inclusion of additional
borrowers or guarantors thereunder or any increase in the amount borrowed) all
or any portion of, the indebtedness under such agreement or any successor
agreement or agreements, whether or not with the same agent, trustee,
representative, lenders or holders, the “Credit Agreement”), providing
for the amendment and restatement of the Existing Credit Agreement and the
making of Loans and the issuance of, and participation in, Letters of Credit
for the account of the Borrower as contemplated therein (the Lenders, each
Issuing Lender, the Administrative Agent and its affiliates, the Collateral
Agent and each other Agent (as defined in the Credit Agreement) are herein
called the “Bank Creditors”);

 

WHEREAS, the Borrower may from time to time be party to one or more
interest rate agreements (including, without limitation, interest rate swaps,
caps, floors, collars, and similar agreements) (collectively, the “Interest
Rate Agreements”) with BofA, any Lender, any affiliate thereof or a
syndicate of financial institutions organized by BofA or an affiliate of BofA
(even if BofA or any such Lender ceases to be a Lender under the Credit
Agreement for any reason), and any institution that participates, and in each
case their subsequent assigns, in such Interest Rate Agreement (collectively,
the “Interest Rate Creditors”, and the Interest Rate Creditors together
with the Bank Creditors, collectively, the “First Lien Creditors”);

 

WHEREAS, pursuant to the Bank Assignment Agreement, DBTCA, as
collateral agent under the Original U.S. Security Agreement, assigned and
transferred all of its right, title and interest in and to the Original U.S.
Security Agreement to the Collateral Agent.

 

WHEREAS, it is a condition precedent to the amendment and restatement
of the Existing Credit Agreement as contemplated by the Credit Agreement and to
the making of Loans to, and the issuance of, and participation in, Letters of
Credit for the account of the Borrower under the Credit Agreement that the
Original U.S. Security Agreement be amended and restated in its entirety;

 

NOW, THEREFORE, the parties hereto agree that the Original U.S.
Security Agreement shall be and hereby is amended and restated in its entirety
as follows:

 

ARTICLE I

 

SECURITY INTERESTS

 

1.1.  Grant
of Security Interests.  (a)  As security for
the prompt and complete payment and performance when due of all of its
Obligations, each Assignor does hereby assign and transfer unto the Collateral
Agent, and does hereby pledge and grant to the Collateral Agent, for the
benefit of the Secured Creditors (and, to the extent the following constitutes “Collateral”
under, and as defined in, the Original U.S. Security Agreement, does hereby
reconfirm (without interruption) its assignment, transfer, pledge and grant to
the Collateral Agent under the Original U.S. Security Agreement of), a
continuing security interest in all of the right, title and interest of such
Assignor in, to and under all of the following personal property and fixtures
(and all rights therein) of such Assignor, or in which or to which such
Assignor has any rights, in each case whether now existing or hereafter from
time to time acquired:

 

3

 

	
  (i)

  	
  each and every
  Account;

  
	
   

  	
   

  
	
  (ii)

  	
  all cash;

  
	
   

  	
   

  
	
  (iii)

  	
  the Cash
  Collateral Account and all moneys, securities, Instruments and other
  investments deposited or required to be deposited in the Cash Collateral
  Account;

  
	
   

  	
   

  
	
  (iv)

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

  
	
   

  	
   

  
	
  (v)

  	
  all Commercial
  Tort Claims;

  
	
   

  	
   

  
	
  (vi)

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

  
	
   

  	
   

  
	
  (vii)

  	
  all Contracts,
  together with all Contract Rights arising thereunder;

  
	
   

  	
   

  
	
  (viii)

  	
  all Copyrights;

  
	
   

  	
   

  
	
  (ix)

  	
  all Equipment;

  
	
   

  	
   

  
	
  (x)

  	
  all Units and
  Unit Certificates and MSO’s;

  
	
   

  	
   

  
	
  (xi)

  	
  all Documents;

  
	
   

  	
   

  
	
  (xii)

  	
  all General
  Intangibles;

  
	
   

  	
   

  
	
  (xiii)

  	
  all Goods;

  
	
   

  	
   

  
	
  (xiv)

  	
  all Instruments;

  
	
   

  	
   

  
	
  (xv)

  	
  all Inventory;

  
	
   

  	
   

  
	
  (xvi)

  	
  all Investment
  Property;

  
	
   

  	
   

  
	
  (xvii)

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

  
	
   

  	
   

  
	
  (xviii)

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

  
	
   

  	
   

  
	
  (xix)

  	
  all Patents;

  
	
   

  	
   

  
	
  (xx)

  	
  all Permits;

  

 

4

 

	
  (xxi)

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

  
	
   

  	
   

  
	
  (xxii)

  	
  all Supporting
  Obligations;

  
	
   

  	
   

  
	
  (xxiii)

  	
  all of such
  Assignor’s Collection Accounts and Lock Box Addresses and all of such
  Assignor’s interest in any Collection Account, and all moneys, securities and
  instruments deposited or required to be deposited in such Collection Accounts
  or Lock Box Addresses;

  
	
   

  	
   

  
	
  (xxiv)

  	
  the Disbursement
  Account and all moneys deposited or required to be deposited in such
  Disbursement Account;

  
	
   

  	
   

  
	
  (xxv)

  	
  the
  Concentration Account and all moneys, securities and instruments deposited or
  required to be deposited in such Concentration Account;

  
	
   

  	
   

  
	
  (xxvi)

  	
  each Collection
  Bank Agreement to which such Assignor is a party and each other agreement
  entered into by such Assignor with any Collection Bank and all rights of such
  Assignor under each such agreement;

  
	
   

  	
   

  
	
  (xxvii)

  	
  the
  Concentration Account Agreement and each other agreement entered into by such
  Assignor with the Concentration Account Bank and all rights of such Assignor
  under each such agreement;

  
	
   

  	
   

  
	
  (xxviii)

  	
  the BofA Account
  and all moneys, securities and instruments deposited or required to be
  deposited in the BofA Account;

  
	
   

  	
   

  
	
  (xxix)

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

  
	
   

  	
   

  
	
  (xxx)

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

  

 

(b)                                                         The security interest of the Collateral
Agent under this Agreement extends to all Collateral which any Assignor may
acquire, or with respect to which any Assignor may obtain rights, at any time
during the term of this Agreement.

 

(c)                                                          Notwithstanding anything to the contrary
contained in this Section 1.1 or elsewhere in this Agreement, in the event of
any conflict between the provisions of this Agreement, the Intercreditor
Agreement or any other Collateral Document and the provisions of the Senior
Secured Notes Documents, the terms of this Agreement, the Intercreditor
Agreement and the other Collateral Documents shall prevail.

 

5

 

(d)                                                         Notwithstanding anything to the contrary
contained above or elsewhere in this Agreement, with respect to each
Non-Canadian Foreign Subsidiary, if, at any time, the pledge and assignment as
otherwise contemplated herein of more than 66-2/3% of the voting capital stock
of such Non-Canadian Foreign Subsidiary would give rise to “deemed dividend”
tax consequences under Section 956 of the Code, then not more 65% of the
outstanding voting capital stock (plus 100% of the non-voting capital stock) of
such Non-Canadian Foreign Subsidiary shall be required to be pledged pursuant
to this Agreement.

 

(e)                                                          Notwithstanding anything to the contrary
contained in this Agreement, (w) the Second Lien Creditors shall not have
a security interest in, and the grant of security interests pursuant to this
Agreement for the benefit of the Second Lien Creditors shall not extend to, any
Second Lien Excluded Collateral, and with respect to the Second Lien Creditors
the term “Collateral” shall not include the Second Lien Excluded Collateral,
(x) the term “Collateral” with respect to the Second Lien Obligations shall not
include any Collateral owned by Holdings or in which Holdings has any direct
right, title or interest, the grant or pledge of security interests hereunder
by Holdings shall be solely for the benefit of the First Lien Creditors and
shall not secure any of the Second Lien Obligations and Holdings shall not be
an Assignor with respect to the Second Lien Obligations for any purpose
whatsoever, (y) to the extent that the granting or perfecting of any assets or
property of the Assignors acquired after August 18, 2003 requires the consent
of a third party that has not been obtained after the Assignors (other than
Holdings) have used commercially reasonable efforts to obtain such consent, the
Second Lien Creditors shall not have a security interest in, and the grant of
security interest pursuant to this Agreement for the benefit of the Second Lien
Creditors shall not extend to, any such property or assets and (z) to the
extent that a security interest in favor of the Second Lien Creditors cannot be
granted or perfected in certain assets or property of the Assignors under
applicable law, the Second Lien Creditors shall not have a security interest
in, and the grant of security interest pursuant to this Agreement for the
benefit of the Second Lien Creditors shall not extend to, any such assets or
property.

 

(f)                                                            Notwithstanding anything to the contrary
contained in this Agreement, to the extent that the granting or perfecting of
any Contracts or Contract Rights requires the consent of a third party that has
not been obtained, the Secured Creditors shall not have a security interest in,
and the grant of security interest pursuant to this Agreement for the benefit
of the Secured Creditors shall not extend to, any of such Assignor’s rights or
interests in any such Contract to which any Assignor is a party or any of its
Contract Rights thereunder if and for so long as the grant of such security
interest shall constitute or result in (i) the abandonment, invalidation
or unenforceability of any right, title or interest of any Assignor therein or
(ii) in a breach or termination pursuant to the terms of, or a default under,
any such Contract (other than to the extent that any provision prohibiting such
Assignor from granting a security interest in its rights and interests
thereunder in favor of the Collateral Agent would be rendered ineffective
pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor
provision or provisions) of any relevant jurisdiction or any other applicable
law (including the Bankruptcy Code) or principles of equity); provided
that such security interest shall attach immediately at such time as the
condition causing such abandonment, invalidation or unenforceability shall be
remedied and to the extent severable, shall attach immediately to any portion
of such Contract and Contract Rights that does not result in any of the
consequences specified in (i) or (ii) above; provided,

 

6

 

further, that any Account or any money or other
amounts due or to become due to such Assignor under any such license, contract
or agreement shall at no time be excluded from the Collateral or the security
interest granted by such Assignor hereunder in favor of the Collateral
Agent.  The Assignors shall use
commercially reasonable efforts to obtain any consent referred to in the
preceding sentence.

 

(g)                                                         Notwithstanding anything to the contrary
contained in this Agreement, the Secured Creditors shall not have a security
interest in, and the grant of security interest pursuant to this Agreement for
the benefit of the Secured Creditors shall not extend to, and the term “Collateral”
shall not include any Holdings Excluded Collateral.

 

1.2.  Power of Attorney. 
Each Assignor hereby constitutes and appoints the Collateral Agent its
true and lawful attorney, irrevocably, with full power after the occurrence of
and during the continuance of an Event of Default (in the name of such Assignor
or otherwise) to act, require, demand, receive, compound and give acquittance
for any and all moneys and claims for moneys due or to become due to such
Assignor under or arising out of the Collateral, to endorse any checks or other
instruments or orders in connection therewith, to make changes in the Unit
Certificate of any Unit which the Collateral Agent deems necessary or
advisable, including, without limitation, changing the ownership thereof to the
Collateral Agent or making a notation of the Collateral Agent’s interest
thereon, and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be necessary or advisable to protect the
interests of the Secured Creditors, which appointment as attorney is coupled
with an interest.

 

ARTICLE II

 

GENERAL
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

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

 

2.1.  Necessary Filings. 
Except as set forth in Section 11.19(a) and (b) of the Credit Agreement
and any consents to assignments of any Government Lease, all filings,
registrations, recordings and other actions necessary or appropriate to create,
preserve and perfect the security interest granted by such Assignor to the
Collateral Agent hereby in respect of the Collateral have been accomplished and
the security interest granted to the Collateral Agent pursuant to this
Agreement in and to the Collateral creates a valid and, together with all such
filings, registrations, recordings and other actions, a perfected security
interest therein prior to the rights of all other Persons therein and subject
to no other Liens (other than Permitted Liens) and is entitled to all the
rights, priorities and benefits afforded by the Uniform Commercial Code or
other relevant law as enacted in any relevant jurisdiction to perfected
security interests; it being understood and agreed that no actions have been
taken under Section 9-104 of the UCC to establish “control” of any Deposit
Accounts (other than (x) the Concentration Account, (y) the
Collection Accounts, (z) the Cash Collateral Account and Deposit Accounts
maintained with the Collateral Agent) except as required pursuant to Section
3.14(a).

 

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2.2.  No Liens. 
Such Assignor is, and as to all Collateral acquired by it from time to
time after the Amendment and Restatement Effective Date such Assignor will be,
the owner (or in the case of any Collateral in respect of which such Assignor
is the licensee, the licensee) of all Collateral free from any Lien, security
interest, encumbrance or other right, title or interest of any Person (other
than Permitted Liens), and such Assignor shall defend the Collateral against
all claims and demands of all Persons at any time claiming the same or any
interest therein adverse to the Collateral Agent.

 

2.3.  Other
Financing Statements.  As of the Amendment and
Restatement Effective Date, there is no financing statement (or similar
statement or instrument of registration under the law of any jurisdiction)
covering or purporting to cover any interest of any kind in the Collateral
(other than financing statements filed in respect of Permitted Liens), and so
long as the Termination Date has not occurred, such Assignor will not execute
or authorize to be filed in any public office any financing statement (or
similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security interests
granted hereby by such Assignor or in connection with Permitted Liens.

 

2.4.  Chief Executive Office, Record Locations. 
The chief executive office of such Assignor on the Amendment and
Restatement Effective Date is located at the address indicated on Annex A
hereto for such Assignor.

 

2.5.  Location of Inventory and Equipment and
Units.  All Inventory, Equipment and Units held on
the Amendment and Restatement Effective Date are located at one of the
locations shown on Annex B hereto for such Assignor.

 

2.6.  Units.  Subject to
Section 11.19(a) of the Credit Agreement, to the extent any Unit is, or under
applicable law is required to be, covered by any Unit Certificate and to the
extent that any action under applicable state law in lieu of or in addition to
the filing of financing statements under the Uniform Commercial Code of the
relevant State are required to be taken so that the security interests in the
respective Units created pursuant to this Agreement are fully perfected under
applicable state law, all such actions have been taken.  Subject to Section 11.19(a) of the Credit
Agreement, in the event any change in applicable law in any State where any
Unit is located, or a decision, opinion, ruling, regulation, decree or order of
a court, or administrative, regulatory or governmental authority, of any State
in which any Unit is located (whether involving any Assignor or any unrelated
third person) shall render any of the information provided pursuant to the
preceding sentence inaccurate in any respect, then the Assignor that owns any
Unit for which the information provided in the preceding sentence is no longer
accurate shall inform (in writing) the Collateral Agent of the respective
change and shall promptly take such actions or cause such actions to be taken
as the Collateral Agent shall request in order to create, maintain, establish
or preserve the perfection of the security interest of the Collateral Agent in
such Unit.  Subject to Section 11.19(a)
of the Credit Agreement, as new Units are acquired after the date of this
Agreement, or to the extent that Units are moved to different states after the
date of this Agreement, the relevant Assignor shall take all actions with
respect thereto (including, to the extent required under applicable law, causing
a Unit Certificate to be issued which contains a notation of the security
interest of the Collateral Agent thereon) as

 

8

 

shall be required under
applicable State law to ensure that the security interests of the Collateral
Agent therein are perfected under relevant law. 
Each Assignor shall also comply with the covenants contained in Section
7.18 of the Credit Agreement, which are deemed to be incorporated by reference herein.

 

2.7.  Legal Names; Type of Organization (and
Whether a Registered Organization and/or a Transmitting Utility); Jurisdiction of Organization;
Location; Organizational Identification Numbers; Changes Thereto; etc.  The exact legal name of each Assignor, the
type of organization of such Assignor, whether or not such Assignor is a
Registered Organization, the jurisdiction of organization of such Assignor,
such Assignor’s Location, the organizational identification number (if any) of
each Assignor, and whether or not such Assignor is a Transmitting Utility, is
listed on Annex C hereto for such Assignor. 
No Assignor shall change its legal name, its type of organization
(including without limitation its status as (x) a Registered Organization, in
the case of each Registered Organization or (y) a Transmitting Utility or a
Person which is not a Transmitting Utility, as the case may be), its
jurisdiction of organization, its Location or its organizational identification
number (if any) from that listed on Annex C hereto for such Assignor or those
that may have been established after the date of this Agreement in accordance
with the immediately succeeding sentence of this Section 2.7.  No Assignor shall change its legal name, its
type of organization, its status as a Registered Organization (in the case of a
Registered Organization), its status as a Transmitting Utility or as a Person
which is not a Transmitting Utility, as the case may be, its jurisdiction of
organization, its Location, or its organizational identification number (if
any), except that any such changes shall be permitted (so long as not in
violation of the applicable requirements of the Secured Debt Agreements and so
long as same do not involve (x) a Registered Organization ceasing to constitute
same or (y) any Assignor changing its jurisdiction of organization or Location
from the United States or a State thereof to a jurisdiction of organization or
Location, as the case may be, outside the United States or a State thereof) if
(i) it shall have given to the Collateral Agent 
not less than 15 days’ prior written notice of each change to the
information listed on Annex C (as adjusted for any subsequent changes thereto
previously made in accordance with this sentence), together with a supplement
to Annex C which shall correct all information contained therein for the
respective Assignor, and (ii) in connection with the respective such change or
changes, it shall have taken all action reasonably requested by the Collateral
Agent to maintain the security interests of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.  In addition, to
the extent that any Assignor does not have an organizational identification
number on the Amendment and Restatement Effective Date and later obtains one,
such Assignor shall promptly thereafter notify the Collateral Agent of such
organizational identification number and shall take all actions reasonably
satisfactory to the Collateral Agent to the extent necessary to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby fully perfected and in full force and effect.

 

2.8.  Trade Names; etc.  No Assignor has or operates in any jurisdiction under,
or in the preceding twelve months has had or has operated in any jurisdiction
under, any trade names, fictitious names or other names except its legal name
as specified in Annex C and such other trade or fictitious names as are listed
on Annex D hereto for such Assignor.  No
Assignor shall assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) it shall have given to the Collateral Agent
not less than 30 days’ written notice of its intention so

 

9

 

to do, clearly describing
such new name and the jurisdictions in which such new name will be used and
providing such other information in connection therewith as the Collateral
Agent may reasonably request and (ii) with respect to such new name, it shall
have taken all action reasonably requested by the Collateral Agent to maintain
the security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.

 

2.9.  As-Extracted Collateral; Timber-to-be-Cut. 
On the Amendment and Restatement Effective Date, no Assignor owns, or
expects to acquire, any property which constitutes, or would constitute,
As-Extracted Collateral or Timber-to-be-Cut. 
If at any time after the date of this Agreement any Assignor owns,
acquires or obtains rights to any As-Extracted Collateral or Timber-to-be-Cut,
such Assignor shall furnish the Collateral Agent with prompt written notice
thereof (which notice shall describe in reasonable detail the As-Extracted
Collateral and/or Timber-to-be-Cut and the locations thereof) and shall take
all actions as may be deemed reasonably necessary or desirable by the
Collateral Agent to perfect the security interest of the Collateral Agent
therein.

 

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

 

2.11.  Recourse. 
This Agreement is made with full recourse to each Assignor (subject, in
the case of any Assignor party to the U.S. Subsidiaries Guaranty, to the limits
set forth therein) and pursuant to and upon all the warranties,
representations, covenants and agreements on the part of such Assignor
contained herein, in the other Credit Documents, in the Interest Rate
Agreements and otherwise in writing in connection herewith or therewith.

 

ARTICLE III

 

SPECIAL PROVISIONS
CONCERNING ACCOUNTS; CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER AND CERTAIN
OTHER COLLATERAL

 

3.1.  Additional Representations and Warranties. 
As of the time when each of its Accounts arises, each Assignor shall be
deemed to have represented and warranted that each such Account, and all
records, papers and documents relating thereto (if any) are genuine and what
they purport to be, and that all papers and documents (if any) relating thereto
(i) will, to the knowledge of such Assignor, represent the genuine, legal,
valid and binding obligation of the account debtor evidencing indebtedness
unpaid and owed by the respective account debtor arising out of the performance
of labor or services or the sale or lease and delivery of the merchandise
listed therein, or both, (ii) will be the only original writings evidencing and

 

10

 

embodying such obligation
of the account debtor named therein (other than copies created for general
accounting purposes), (iii) will, to the knowledge of such Assignor, evidence
true and valid obligations, enforceable in accordance with their respective
terms subject to adjustments customary in the business of such Assignor in
accordance with past practice, and (iv) will be in compliance and will conform
with all applicable material federal, state and local laws and applicable
material laws of any relevant foreign jurisdiction.

 

3.2.  Maintenance of Records. 
Each Assignor will keep and maintain at its own cost and expense
accurate records of its Accounts and Contracts, including, but not limited to,
originals of all documentation (including each Contract) with respect thereto,
records of all payments received, all credits granted thereon, all merchandise
returned and all other dealings therewith, and such Assignor will make the same
available on such Assignor’s premises to the Collateral Agent for inspection,
at such Assignor’s own cost and expense, at any and all reasonable times upon
prior notice to such Assignor and otherwise on a basis consistent with the
respective Secured Debt Agreements.  Upon
the occurrence and during the continuance of an Event of Default, at the
request of the Collateral Agent, such Assignor shall, at its own cost and
expense, deliver all tangible evidence of its Accounts and Contract Rights
(including, without limitation, copies of all documents evidencing the Accounts
and all Contracts) and such books and records to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be retained
by such Assignor, such copies to be certified as true and complete by an
appropriate officer of such Assignor). 
Upon the occurrence and during the continuance of an Event of Default
and if the Collateral Agent so directs, such Assignor shall legend, in form and
manner satisfactory to the Collateral Agent, the Accounts and the Contracts, as
well as books, records and documents (if any) of such Assignor evidencing or
pertaining to such Accounts and Contracts with an appropriate reference to the
fact that such Accounts and Contracts have been assigned to the Collateral
Agent and that the Collateral Agent has a security interest therein.

 

3.3.  Modification
of Terms; etc.  No Assignor shall rescind or cancel any indebtedness
evidenced by any Account of such Assignor or under any Contract of such
Assignor, or modify any term thereof or make any adjustment with respect
thereto, or extend or renew the same, or compromise or settle any material
dispute, claim, suit or legal proceeding relating thereto, or, except as
permitted by the respective Secured Debt Agreements, sell any Account or
Contract of such Assignor, or interest therein, without the prior written
consent of the Collateral Agent, except as permitted by Section 3.4
hereof.  Each Assignor will duly fulfill
all obligations on its part to be fulfilled under or in connection with the
Accounts and Contracts of such Assignor and will do nothing to impair the
rights of the Collateral Agent in such Accounts or Contracts.

 

3.4.  Collection. 
Each Assignor shall, in accordance with its ordinary business practices,
endeavor to cause to be collected from the account debtor named in each of its
Accounts or obligor under any Contract of such Assignor, as and when due (including,
without limitation, amounts, services or products which are delinquent, such
amounts, services or products to be collected in accordance with generally
accepted lawful collection procedures) any and all amounts, services or
products owing under or on account of such Account or Contract, and apply
forthwith upon receipt thereof all such amounts, services or products as
are so

 

11

 

collected to the
outstanding balance of such Account or under such Contract, except that, so
long as no Event of Default is then in existence, any Assignor may allow in the
ordinary course of business as adjustments to amounts, services or products
owing under its Accounts and Contracts (i) an extension or renewal of the time
or times of payment, or settlement for less than the total unpaid balance,
which such Assignor finds appropriate in accordance with reasonable business
judgment and (ii) a refund or credit due as a result of returned or
damaged merchandise or improperly performed services or such other adjustments
which such Assignor deems appropriate in the exercise of its commercially
reasonable business judgment.  The costs
and expenses (including, without limitation, reasonable attorneys’ fees) of
collection, whether incurred by an Assignor or the Collateral Agent, shall be
borne by such Assignor.

 

3.5.  Direction to Account Debtors; etc. 
To the extent permitted by applicable law, each Assignor (other than
Holdings) agrees (x) to cause all payments on account of the Accounts and
Contracts to be made directly to the relevant Lockbox Addresses, (y) that the
Collateral Agent may, at its option, directly notify the obligors with respect
to any Accounts and/or under any Contracts to make payments with respect
thereto as provided in preceding clause (x) and (z) that upon the occurrence
and during the continuance of an Event of Default the Collateral Agent may
enforce collection of any such Accounts and Contracts and may adjust, settle or
compromise the amount of payment thereof.  Without prior notice to or assent by any
Assignor, upon the occurrence and during the continuance of an Event of Default
the Collateral Agent may apply any or all amounts then in, or thereafter
deposited in, the relevant Collection Account in the manner provided in Section
7.4 of this Agreement.  The costs and
expenses (including attorneys’ fees) of collection, whether incurred by any
Assignor or the Collateral Agent, shall be borne by such Assignor.

 

3.6.  Instruments. 
If any Assignor (other than Holdings to the extent such Instrument
constitutes Holdings Excluded Collateral) owns or acquires any Instrument in
excess of $100,000 constituting Collateral, such Assignor will within 10
Business Days notify the Collateral Agent thereof, and upon request by the
Collateral Agent will promptly deliver such Instrument to the Collateral Agent
appropriately endorsed to the order of the Collateral Agent.

 

3.7.  Collection Accounts. 
Each Assignor (other than Holdings) has established Collection Accounts
with one or more banking institutions (each, a “Collection Bank”) in the
manner set forth in the Credit Agreement and has notified each such Collection
Bank that any Collection Account maintained with such Collection Bank is under
the exclusive dominion and control of the Collateral Agent and that all moneys,
securities, and instruments deposited in such Collection Account are to be held
by such banking institution for the benefit of the Collateral Agent.  Furthermore, each Assignor (other than
Holdings) and each Collection Bank has duly executed and delivered to the
Collateral Agent a Collection Bank Agreement which Collection Bank Agreement
acknowledges the security interest of the Collateral Agent in each Collection
Account established with such Collection Bank and contains the agreement of
such Collection Bank to transmit daily to the Collateral Agent for deposit in
the Concentration Account all cash, instruments and other securities and all
collected funds received in respect of any securities or instruments deposited
in each Collection Account established with such Collection Bank.  Each Assignor (other than Holdings) hereby
represents and warrants that, except as otherwise expressly provided in the
Credit Agreement, it does not now maintain, and will not in the future

 

12

 

maintain, any other
account with any Collection Bank other than the Collection Accounts.  Each Assignor has, as of the execution and
delivery hereof, notified each obligor with respect to its Accounts to make
payments with respect thereto directly into one or more Collection Accounts,
except as otherwise expressly provided in the Credit Agreement.

 

3.8.  Concentration Account. 
The Borrower, as an Assignor, has established with BofA (the “Concentration
Account Bank”), in the name of the Collateral Agent for the benefit of the
Secured Creditors, a non-interest bearing account (the “Concentration
Account”), which account shall be under the exclusive dominion and control
of the Collateral Agent and into which there shall be deposited all payments
made with respect to the Collateral (including, without limitation, all moneys,
securities and instruments received in each Collection Account in the manner
set forth in each Collection Bank Agreement, as the case may be).  All moneys, securities and instruments at any
time deposited or held in the Concentration Account hereunder shall be held by
the Concentration Account Bank for the benefit of the Collateral Agent and the
Secured Creditors.  Furthermore, the
Borrower and the Concentration Account Bank have duly executed and delivered to
the Collateral Agent a Concentration Account Agreement which Concentration
Account Agreement acknowledges the security interest and exclusive dominion and
control of the Collateral Agent in the Concentration Account established with
the Concentration Account Bank and contains the agreement of the Concentration
Account Bank to transmit daily to the Collateral Agent for deposit in the BofA
Account all cash, instruments and other securities and all collected funds
received in respect of any securities or instruments deposited in the
Concentration Account.  Without notice to
or assent by any Assignor, the Collateral Agent may apply any or all amounts
then in, or thereafter deposited in, the BofA Account in the manner provided in
Section 7.4 of this Agreement.  The costs
and expenses (including attorney’s fees) of collection, whether incurred by an
Assignor or the Collateral Agent, shall be borne by such Assignor.  If BofA is a Collection Bank, the
Concentration Account may be the same account as a Collection Account at BofA.

 

3.9.  BofA Account. 
The Collateral Agent has established with BofA, in the name of the
Collateral Agent for the benefit of the Secured Creditors, a non-interest
bearing account with respect to the Assignors (the “BofA Account”),
which account shall be under the exclusive dominion and control of the
Collateral Agent and into which there shall be deposited all payments made with
respect to the Collateral (including, without limitation, all moneys,
securities and instruments received in each Collection Account and the
Concentration Account in the manner set forth in each Collection Bank Agreement
or the Concentration Account Agreement, as the case may be).  All moneys, securities and instruments at any
time deposited or held in the BofA Account hereunder shall be held by the
Collateral Agent as Collateral for all purposes of this Agreement.  Without notice to or assent by any Assignor,
the Collateral Agent may apply any or all amounts then in, or thereafter
deposited in, the BofA Account in the manner provided in Section 7.4 of this
Agreement.  The costs and expenses
(including attorney’s fees) of collection, whether incurred by an Assignor or
the Collateral Agent, shall be borne by such Assignor.

 

3.10.  Receipt of Payments. 
In the event an Assignor (other than Holdings) shall otherwise receive
any payment in respect of its Collateral, such Assignor shall promptly (but in
no event more than five Business Days of actual receipt thereof) deposit such
payment into a

 

13

 

Collection Account.  No Assignor shall deposit or permit to be
deposited, into any Collection Account, or the Concentration Account, any funds
or other amounts except funds or other amounts received representing proceeds
of the Collateral.

 

3.11.  Account Inspection. 
Each Assignor (other than Holdings) will permit the Collateral Agent or
its agents to verify from time to time the balances of any and all of the accounts
of such Assignor (including, without limitation, the Collection Accounts and
the Lock Box Addresses).

 

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

 

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

 

3.14.  Deposit Accounts; etc.  (a)  No
Assignor (other than Holdings) maintains, or at any time after the date of this
Agreement shall establish or maintain, any demand, time, savings, passbook or
similar account, except for such accounts which are both (x) maintained
with a bank (as defined in Section 9-102 of the UCC) whose jurisdiction
(determined in accordance with Section 9-304 of the UCC) is within a State of
the United States and (y) permitted pursuant to Section 8.16 of the Credit
Agreement.  Annex E hereto
accurately sets forth, as of the Amendment and Restatement Effective Date, for
each Assignor, each Deposit

 

14

 

Account maintained by
such Assignor (including a description thereof and the respective account
number), the name of the respective bank with which such Deposit Account is
maintained, and the jurisdiction of the respective Bank with respect to such
Deposit Account.  For each Deposit
Account (including any Deposit Account at any time established pursuant to
following clause (b), but excluding (x) the Concentration Account,
(y) the Collection Accounts and (z) the Cash Collateral Account or
any other Deposit Account maintained with the Collateral Agent), the respective
Assignor (other than Holdings) shall cause the bank with which the Deposit
Account is maintained to execute and deliver to the Collateral Agent, within 30
days after the Collateral Agent’s request therefor, a “control agreement” in
the form of Annex F hereto (appropriately completed), with such changes thereto
as may be acceptable to the Collateral Agent. 
If any bank with which such a Deposit Account is maintained refuses to,
or does not, enter into such a “control agreement”, then the respective
Assignor shall promptly (and in any event within 30 days after the date of the
respective request) close the respective Deposit Account and transfer all
balances therein to the Cash Collateral Account or another Deposit Account
meeting the requirements of this Section 3.14 (with respect to which a “control
agreement” meeting the foregoing requirements has been entered into and is in
full force and effect).  If any bank with
which a Deposit Account is maintained refuses to subordinate all its claims
with respect to such Deposit Account to the Collateral Agent’s security
interest therein on terms satisfactory to the Collateral Agent, then the
Collateral Agent, at its option, may (x) require that such Deposit Account be
terminated in accordance with the immediately preceding sentence or (y) agree
to a “control agreement” without such subordination, provided that in such
event the Collateral Agent may at any time, at its option, subsequently require
that such Deposit Account be terminated (within 30 days after notice from the
Collateral Agent) in accordance with the requirements of the immediately
preceding sentence.

 

(b)                                 After the date of this Agreement, except
as permitted pursuant to Section 8.16(c) of the Credit Agreement, no Assignor
shall establish any new demand, time, savings, passbook or similar account,
except for (x) Collection Accounts and Concentration Accounts established
in accordance with the requirements of the Credit Agreement and
(y) Deposit Accounts established and maintained with banks and meeting the
requirements of preceding clause (a).  At
the time any Deposit Account as described in clause (y) of the preceding
sentence is established, to the extent so requested by the Collateral Agent,
the appropriate “control agreement” shall be entered into in accordance with
the requirements of preceding clause (a) and the respective Assignor shall
furnish to the Collateral Agent a supplement to Annex E hereto containing the
relevant information with respect to the respective Deposit Account and the
bank with which same is established.

 

(c)                                  The Collateral Agent agrees that it
(x) shall not deliver a Notice of Exclusive Control (as defined in the
Form of Control Agreement Regarding Deposit Accounts attached hereto as Annex
F) pursuant to any “control agreement” (other than with respect to the
Concentration Account, any Collection Accounts, the Cash Collateral Account or
any other Deposit Account maintained with the Collateral Agent) to any bank
with which any Assigner has established a Deposit Account unless an Event of
Default then exists and is continuing, (y) shall not give any instructions (as
contemplated in the first sentence of Section 2 of Annex F) as to the
withdrawal or disposition of funds in any Deposit Account subject to such “control
agreement” (other than with respect to the Concentration Account, any
Collection Account, the Cash

 

15

 

Collateral Account or any Deposit Account maintained
with the Collateral Agent) unless an Event of Default then exists and is continuing
and (z) shall provide the Borrower with a copy of any such Notice of Exclusive
Control delivered pursuant to any such “control agreement.”

 

3.15.  Letter-of-Credit
Rights.  If any Assignor is at any time a beneficiary
under a letter of credit with a stated amount of $100,000 or more, such
Assignor shall promptly notify the Collateral Agent thereof and, at the request
of the Collateral Agent, such Assignor shall, pursuant to an agreement in form
and substance reasonably satisfactory to the Collateral Agent, use its
commercially reasonable efforts to (i) arrange for the issuer and any confirmer
of such letter of credit to consent to an assignment to the Collateral Agent of
the proceeds of any drawing under such letter of credit or (ii) arrange
for the Collateral Agent to become the transferee beneficiary of such letter of
credit, with the Collateral Agent agreeing, in each case, that the proceeds of
any drawing under the letter of credit are to be applied as provided in this
Agreement after the occurrence and during the continuance of an Event of
Default.

 

3.16.  Commercial
Tort Claims.  All Commercial Tort Claims of each Assignor
in existence on the Amendment and Restatement Effective Date are described in
Annex G hereto.  If any Assignor shall at
any time after the date of this Agreement acquire a Commercial Tort Claim in an
amount (taking the greater of the aggregate claimed damages thereunder or the
reasonably estimated value thereof) of $500,000 or more, such Assignor shall
promptly notify the Collateral Agent thereof in a writing signed by such
Assignor and describing the details thereof and shall grant to the Collateral
Agent in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to the Collateral Agent.

 

3.17.  Chattel Paper. 
Upon the request of the Collateral Agent made at any time or from time
to time, each Assignor shall promptly furnish to the Collateral Agent a list of
all Electronic Chattel Paper held or owned by such Assignor.  Furthermore, if requested by the Collateral
Agent, each Assignor shall promptly take all actions which are reasonably
practicable so that the Collateral Agent has “control” of all Electronic Chattel
Paper in accordance with the requirements of Section 9-105 of the UCC.  Upon the request of the Collateral Agent made
at any time while an Event of Default then exists and is continuing, each
Assignor will promptly (and in any event within 10 days) deliver all of its
Tangible Chattel Paper to the Collateral Agent.

 

3.18.  Further Actions. 
Each Assignor will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, certificates, reports and other assurances
or instruments and take such further steps, including any and all actions as
may be necessary or required under the Federal Assignment of Claims Act,
relating to its Accounts, Contracts, Instruments and other property or rights
covered by the security interest hereby granted, as the Collateral Agent may
reasonably require to give effect to the purposes of this Agreement.

 

16

 

ARTICLE IV

 

SPECIAL PROVISIONS
CONCERNING TRADEMARKS

 

4.1.  Additional Representations and Warranties. 
Each Assignor represents and warrants that it is the true and lawful
owner of or otherwise has the right to use the registered Marks and
applications for Marks listed in Annex H hereto for such Assignor and that said
listed Marks include all United States marks and applications for United States
marks registered or listed in the United States Patent and Trademark Office
that such Assignor owns or uses in connection with its business as of the
Amendment and Restatement Effective Date. 
Each Assignor represents and warrants that it owns, is licensed to use
or otherwise has the right to use, all Marks that it uses that are material to
such Assignor’s business.  Each Assignor
further warrants that it has no knowledge of any third party claim received by
it that any aspect of such Assignor’s present or contemplated business
operations infringes or will infringe any trademark, service mark or trade name
of any other Person other than as could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  Each Assignor represents and warrants that
all U.S. trademark registrations and applications listed in Annex H hereto are
valid, subsisting, have not been canceled and that such Assignor is not aware
of any third-party claim that any of said registrations is invalid or
unenforceable, and is not aware that there is any reason that any of said
registrations is invalid or unenforceable, except for the registrations and
applications relating to the Marks licensed under the Trade Name and Service
Mark License Agreement.  Each Assignor hereby
grants to the Collateral Agent an absolute power of attorney to sign, upon the
occurrence and during the continuance of an Event of Default, any document
which may be required by the United States Patent and Trademark Office in order
to effect an absolute assignment of all right, title and interest in each Mark,
and record the same.

 

4.2.  Licenses
and Assignments.  Except as otherwise permitted by the Secured
Debt Agreements, each Assignor hereby agrees not to divest itself of any right
under any material Mark of such Assignor (other than in the ordinary course of
business in accordance with its reasonable business judgment) absent prior
written approval of the Collateral Agent, which approval shall not be
unreasonably withheld or delayed.

 

4.3.  Infringements. 
Each Assignor agrees, promptly upon learning thereof, to notify the
Collateral Agent in writing of the name and address of, and to furnish such
pertinent information that may be available with respect to, any party who such
Assignor believes is infringing or diluting or otherwise violating any of such
Assignor’s rights in and to any Mark in any manner that could reasonably be
expected to have a Material Adverse Effect, or with respect to any party
claiming that such Assignor’s use of any Mark material to such Assignor’s
business violates in any material respect any property right of that
party.  Each Assignor further agrees to
prosecute in accordance with reasonable business practices any Person
infringing any Mark in any manner that could reasonably be expected to have a
Material Adverse Effect.

 

4.4.  Preservation of Marks. 
Each Assignor agrees to use its Marks which are material to such
Assignor’s business in interstate commerce during the time in which this
Agreement is in effect and to take all such other actions as are reasonably necessary
to preserve

 

17

 

such Marks as trademarks
or service marks under the laws of the United States (other than any such Marks
which such Assignor determines, in its reasonable business judgment, are no longer
used or useful in its business or operations).

 

4.5.  Maintenance
of Registration.  Each Assignor shall, at its own expense,
diligently process all documents reasonably required to maintain trademark
registrations, including but not limited to affidavits of use and applications
for renewals of registration in the United States Patent and Trademark Office
for all of its material registered Marks, and shall pay all fees and
disbursements in connection therewith and shall not abandon any such filing of affidavit
of use or any such application of renewal prior to the exhaustion of all
administrative and judicial remedies without prior written consent of the
Collateral Agent (other than with respect to registrations and applications
that such Assignor determines, in its reasonable business judgment, are no
longer useful or prudent to pursue).

 

4.6.  Remedies. 
If an Event of Default shall occur and be continuing, the Collateral
Agent may, by written notice to the relevant Assignor, take any or all of the
following actions:  (i) declare the
entire right, title and interest of such Assignor in and to each of the Marks,
together with all trademark rights and rights of protection to the same, vested
in the Collateral Agent for the benefit of the Secured Creditors, in which
event such rights, title and interest shall immediately vest, in the Collateral
Agent for the benefit of the Secured Creditors, and the Collateral Agent shall
be entitled to exercise the power of attorney referred to in Section 4.1 hereof
to execute, cause to be acknowledged and notarized and record said absolute
assignment with the applicable agency; (ii) take and use or sell the Marks and
the goodwill of such Assignor’s business symbolized by the Marks and the right
to carry on the business and use the assets of such Assignor in connection with
which the Marks have been used; and (iii) direct such Assignor to refrain, in
which event such Assignor shall refrain, from using the Marks in any manner
whatsoever, directly or indirectly, and such Assignor shall execute such
further documents that the Collateral Agent may reasonably request to further
confirm this and to transfer ownership of the Marks and registrations and any
pending trademark application in the United States Patent and Trademark Office
to the Collateral Agent.

 

4.7.  Future Registered Marks. 
If registration for any Mark which is material and/or necessary to its
business is issued hereafter to any Assignor as a result of any application now
or hereafter pending before the United States Patent and Trademark Office,
within 30 days of receipt of such certificate, such Assignor shall deliver to
the Collateral Agent a copy of such certificate, and a grant of security in
such Mark, to the Collateral Agent and at the expense of such Assignor,
confirming the grant of security in such Mark to the Collateral Agent
hereunder, the form of such security to be substantially in the form of Annex K
hereto or in such other form as may be reasonably satisfactory to the
Collateral Agent.

 

18

 

ARTICLE V

 

SPECIAL PROVISIONS
CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS

 

5.1.  Additional Representations and Warranties. 
Each Assignor represents and warrants that it is the true and lawful
owner of all rights in or otherwise has the right to use (i) all United
States trade secrets and proprietary information necessary to operate the
business of the Assignor (the “Trade Secret Rights”), (ii) the Patents
listed in Annex I hereto for such Assignor and that said Patents include all
the United States patents and applications for United States patents that such
Assignor owns as of the Amendment and Restatement Effective Date and (iii) the
Copyrights listed in Annex J hereto for such Assignor and that said Copyrights constitute
all the United States copyrights registered with the United States Copyright
Office and applications to United States copyrights that such Assignor owns as
of the Amendment and Restatement Effective Date.  Each Assignor further warrants that it has no
knowledge of any third party claim that any aspect of such Assignor’s present
or contemplated business operations infringes or will infringe any patent of
any other Person or that such Assignor has misappropriated any trade secret or
proprietary information which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.  Each Assignor hereby grants to the Collateral
Agent an absolute power of attorney to sign, upon the occurrence and during the
continuance of any Event of Default, any document which may be required by the
United States Patent and Trademark Office in order to effect an absolute
assignment of all right, title and interest in each Patent, and to record the
same.

 

5.2.  Licenses
and Assignments.  Except as otherwise permitted by the Secured
Debt Agreements, each Assignor hereby agrees not to divest itself of any right
under any material Patent or Copyright other than in the ordinary course of
business absent prior written approval of the Collateral Agent.

 

5.3.  Infringements. 
Each Assignor agrees, promptly upon learning thereof, to furnish the
Collateral Agent in writing with all pertinent information available to such
Assignor with respect to any infringement, contributory infringement or active
inducement to infringe in any Patent or Copyright or to any claim that the
practice of any Patent or use of any Copyright violates any property right of a
third party, or with respect to any misappropriation of any Trade Secret Right
or any claim that practice of any Trade Secret Right violates any property
right of a third party, in each case, in any manner which, either individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.  Each Assignor further agrees,
absent direction of the Collateral Agent to the contrary, to diligently
prosecute, in accordance with its reasonable business judgment, any Person
infringing any Patent or Copyright or any Person misappropriating any Trade
Secret Right, in each case to the extent that such infringement or
misappropriation, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

5.4.  Maintenance of Patents or Copyright. 
At its own expense, each Assignor shall make timely payment of all
post-issuance or other fees required pursuant to 35 U.S.C. § 41 or otherwise to
maintain in force its rights under each Patent or Copyright, absent prior
written

 

19

 

consent of the Collateral
Agent (other than any such Patents or Copyrights which are no longer used or
useful in its business or operations).

 

5.5.  Prosecution of Patent Applications. 
At its own expense, each Assignor shall diligently prosecute all
material applications for (i) United States Patents listed in Annex I
hereto and (ii) Copyrights listed on Annex J hereto, in each case for such
Assignor and shall not abandon any such application prior to exhaustion of all
administrative and judicial remedies (other than applications deemed by such
Assignor to be no longer useful or prudent to pursue), absent written consent
of the Collateral Agent.

 

5.6.  Remedies. 
If an Event of Default (or a Default under Section 9.1(e) of the Credit
Agreement) shall occur and be continuing, the Collateral Agent may, by written
notice to the relevant Assignor, take any or all of the following actions:  (i) declare the entire right, title, and
interest of such Assignor in each of the Patents and Copyrights vested in the
Collateral Agent for the benefit of the Secured Creditors, in which event such
right, title, and interest shall immediately vest in the Collateral Agent for
the benefit of the Secured Creditors, in which case the Collateral Agent shall
be entitled to exercise the power of attorney referred to in Section 5.1 hereof
to execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which event
such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such further
documents as the Collateral Agent may reasonably request further to confirm
this and to transfer ownership of the Patents and Copyrights to the Collateral
Agent for the benefit of the Secured Creditors.

 

5.7.  Other
Patents and Copyrights.  Within 30
days of the acquisition or issuance of a United States Patent, registration of
a Copyright, or acquisition of a registered Copyright, or of filing of an
application for a United States Patent or Copyright, in each case, which is
material and/or necessary to its business, the relevant Assignor shall deliver
to the Collateral Agent a copy of said Copyright or Patent, or certificate or
registration of, or application therefor, as the case may be, with a grant of
security as to such Patent or Copyright, as the case may be, to the Collateral
Agent and at the expense of such Assignor, confirming the grant of security, the
form of such assignment for security to be substantially in the form of Annex L
or M hereto, as appropriate, or in such other form as may be reasonably
satisfactory to the Collateral Agent.

 

ARTICLE VI

 

PROVISIONS
CONCERNING ALL COLLATERAL

 

6.1.  Protection of Collateral Agent’s Security. 
Except as otherwise permitted by the Secured Debt Agreements, each
Assignor will do nothing to impair the rights of the Collateral Agent in the
Collateral.  Each Assignor will at all
times maintain insurance, at such Assignor’s own expense to the extent and in
the manner provided in the Secured Debt Agreements.  Except to the extent otherwise permitted to
be retained by such Assignor or applied by such Assignor pursuant to the terms
of the Secured Debt Agreements, the Collateral Agent shall, at the time any
proceeds of such insurance are distributed to the Secured Creditors, apply such
proceeds in accordance with Section 7.4 hereof. 
Each Assignor assumes all liability and

 

20

 

responsibility in
connection with the Collateral acquired by it and the liability of such
Assignor to pay the Obligations shall in no way be affected or diminished by
reason of the fact that such Collateral may be lost, destroyed, stolen, damaged
or for any reason whatsoever unavailable to such Assignor.

 

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

 

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

 

6.4.  Further Actions. 
Each Assignor will, at its own expense and upon the reasonable request
of the Collateral Agent, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such lists, descriptions and
designations of its Collateral, warehouse receipts, receipts in the nature of
warehouse receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent deems reasonably appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral.

 

6.5.  Financing Statements. 
Each Assignor agrees to execute and deliver to the Collateral Agent such
financing statements, in form reasonably acceptable to the Collateral Agent, as
the Collateral Agent may from time to time reasonably request or as are
reasonably necessary or desirable in the opinion of the Collateral Agent to
establish and maintain a valid, enforceable, perfected security interest in the
Collateral as provided herein and the other rights and security contemplated
hereby.  Each Assignor will pay any
applicable filing fees, recordation taxes and related expenses relating to its
Collateral.  Each Assignor hereby
authorizes the Collateral Agent to file any such financing statements without
the signature of such Assignor where permitted by law (and such authorization
includes describing the Collateral as “all assets” of such Assignor).

 

21

 

ARTICLE VII

 

REMEDIES UPON
OCCURRENCE OF AN EVENT OF DEFAULT

 

7.1.  Remedies; Obtaining the Collateral Upon
Default.  Each Assignor agrees that, if any Event of
Default (or a Default under Section 9.1(e) of the Credit Agreement (or, after
all First Lien Obligations have been paid in full in cash in accordance with
the terms thereof, all Commitments under the Credit Agreement have been
terminated and all Letters of Credit have been terminated or cash
collateralized in a manner satisfactory to the Administrative Agent, Section
6.01(7) or 6.01(8) of the Senior Secured Notes Indenture)) shall have occurred
and be continuing, then and in every such case, the Collateral Agent, in
addition to any rights now or hereafter existing under applicable law and under
the other provisions of this Agreement, shall have all rights as a secured
creditor under any UCC, and such additional rights and remedies to which a
secured creditor is entitled under the laws in effect in all relevant
jurisdictions and may:

 

(i)                                     personally,
or by agents or attorneys, immediately take possession of the Collateral or any
part thereof, from such Assignor or any other Person who then has possession of
any part thereof with or without notice or process of law, and for that purpose
may enter upon such Assignor’s premises where any of the Collateral is located
and remove the same and use in connection with such removal any and all
services, supplies, aids and other facilities of such Assignor;

 

(ii)                                  instruct
the obligor or obligors on any agreement, instrument or other obligation
(including, without limitation, the Accounts and the Contracts) constituting
the Collateral to make any payment required by the terms of such agreement,
instrument or other obligation directly to the Collateral Agent and may
exercise any and all remedies of such Assignor in respect of such Collateral;

 

(iii)                               instruct
all banks which have entered into a control agreement with the Collateral Agent
to transfer all moneys, securities and instruments held by such depositary bank
to the Cash Collateral Account or any other account maintained with or by the
Collateral Agent;

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

(ix)                                register
any of the Units in the name of the Collateral Agent on any Unit Certificate or
make any other notation which the Collateral Agent desires upon any Unit
Certificate applicable to any Unit or direct such Assignor to do same;

 

it being understood that each Assignor’s obligation so to deliver the
Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, the Collateral Agent
shall be entitled to a decree requiring specific performance by such Assignor
of said obligation.  By accepting the
benefits of this Agreement and each other Collateral Document, the Secured
Creditors expressly acknowledge and agree that this Agreement and each other
Collateral Document may be enforced only by the action of the Collateral Agent
acting upon the instructions of the Required Secured Creditors and that no
other Secured Creditor shall have any right individually to seek to enforce
this Agreement or any other Collateral Document or to realize upon the security
to be granted hereby or thereby, it being understood and agreed that such
rights and remedies may be exercised by the Collateral Agent for the benefit of
the Secured Creditors upon the terms of this Agreement, the Intercreditor Agreement
and the other Collateral Documents.

 

7.2.  Remedies; Disposition of the Collateral. 
If any Event of Default shall have occurred and be continuing, then any
Collateral repossessed by the Collateral Agent under or pursuant to Section 7.1
hereof and any other Collateral whether or not so repossessed by the Collateral
Agent may be sold, assigned, leased or otherwise disposed of under one or more
contracts or as an entirety, and without the necessity of gathering at the
place of sale the property to be sold, and in general in such manner, at such
time or times, at such place or places and on such terms as the Collateral
Agent may, in compliance with any mandatory requirements of applicable law,
determine to be commercially reasonable. 
Any of the Collateral may be sold, leased or otherwise disposed of, in
the condition in which the same existed when taken by the Collateral Agent or
after any overhaul or repair at the expense of the relevant Assignor which the
Collateral Agent shall determine to be commercially reasonable.  Any such sale, lease or other disposition may
be effected by means of a public disposition or private disposition, effected
in accordance

 

23

 

with the applicable
requirements (in each case if and to the extent applicable) of Sections 9-610
through 9-613 of the UCC and/or such other mandatory requirements of applicable
law as may apply to the respective disposition. 
The Collateral Agent may, without notice or publication, adjourn any
public or private disposition or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the disposition, and such
disposition may be made at any time or place to which the disposition may be so
adjourned.  To the extent permitted by
any such requirement of law, the Collateral Agent may bid for and become the
purchaser (and may pay all or any portion of the purchase price by crediting
Obligations against the purchase price) of the Collateral or any item thereof,
offered for disposition in accordance with this Section 7.2 without
accountability to the relevant Assignor. 
Each Assignor agrees to do or cause to be done all such other acts and
things as may be reasonably necessary to make such disposition or dispositions
of all or any portion of the Collateral valid and binding and in compliance
with any and all applicable laws, regulations, orders, writs, injunctions,
decrees or awards of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over any such sale
or sales, all at such Assignor’s expense.

 

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

 

                                                 (i)                        all damages occasioned by such taking of
possession or any such disposition except any damages which are the result of
the Collateral Agent’s gross negligence or willful misconduct (as determined by
a court of competent jurisdiction in a final and non-appealable decision);

 

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

 

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

 

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

 

24

 

7.4.  Application of Proceeds. 
(a)  All moneys collected by the Collateral Agent (or, to the
extent the Pledge Agreement or any other Collateral Document requires proceeds
of collateral under such other Collateral Document to be applied in accordance
with the provisions of this Agreement, the Pledgee, the Mortgagee or Collateral
Agent under such other Collateral Document) upon any sale or other disposition
of the Collateral, together with all other moneys received by the Collateral
Agent hereunder and under each other Collateral Document, shall be applied as
follows:

 

(i)                                     first,
to the payment of all amounts owing the Collateral Agent of the type described
in clauses (iv), (v), (vi) and (vii) of the definition of “Obligations”;

 

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

 

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

 

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

 

(v)                                 fifth,
to the extent proceeds remain after the application pursuant to the preceding
clauses (i) through (iv), inclusive, and subject to clause (h) of this Section
7.4, to the payment of all amounts owing the Senior Secured Notes Trustee in
its capacity as such pursuant to the Senior Secured Notes Indenture;

 

(vi)                              sixth,
to the extent proceeds remain after the application pursuant to the preceding
clauses (i) through (v), inclusive, and subject to clause (h) of this Section
7.4 an amount equal to the outstanding Second Lien Obligations shall be paid to
the Second Lien Creditors as provided in Section 7.4(e) hereof, with each
Second Lien Creditor receiving an amount equal to its outstanding Second Lien
Obligations or, if the proceeds are insufficient to pay in full all such Second
Lien Obligations, its Second Lien Creditor Pro Rata Share of the amount
remaining to be distributed; and

 

(vii)                           seventh,
to the extent proceeds remain after the application pursuant to the preceding
clauses (i) through (vi), inclusive, and following the termination of this

 

25

 

Agreement pursuant
to Section 10.8(a) hereof, to the relevant Assignor or to whomever may be
lawfully entitled to receive such surplus.

 

(b)  (i) 
For purposes of this Agreement, “First Lien Creditor Pro Rata Share”
shall mean, when calculating a First Lien Creditor’s portion of any
distribution or amount, that amount (expressed as a percentage) equal to a
fraction the numerator of which is the then unpaid amount of such Secured
Creditor’s First Lien Primary Obligations or First Lien Secondary Obligations,
as the case may be, and the denominator of which is the then outstanding amount
of all First Lien Primary Obligations or First Lien Secondary Obligations, as
the case may be.

 

(ii)                                  For the purposes of this Agreement, “Second
Lien Creditor Pro Rata Share” shall mean, when calculating a Second Lien
Creditor’s portion of any distribution or amount, that amount (expressed as a
percentage) equal to a fraction the numerator of which is the then unpaid
amount of such Second Lien Creditor’s Second Lien Obligations and the
denominator of which is the then outstanding amount of all Second Lien
Obligations.

 

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

 

(d)                                 Each of the Secured Creditors, by their
acceptance of the benefits hereof and of the other Collateral Documents, agrees
and acknowledges that if the Bank Creditors receive a distribution on account
of undrawn amounts with respect to Letters of Credit issued under the Credit
Agreement (which shall only occur after all outstanding Revolving Loans under
the Credit Agreement and all unreimbursed drawings made under Letters of Credit
have been paid in full), such amounts shall be paid to the Administrative Agent
under the Credit Agreement and held by it, for the equal and ratable benefit of
the Bank Creditors, as cash security for the repayment of Obligations owing to
the Bank Creditors as such.  If any
amounts are held as cash

 

26

 

security pursuant to the immediately preceding
sentence, then upon the termination of all outstanding Letters of Credit under
the Credit Agreement, and after the application of all such cash security to
the repayment of all Obligations owing to the Bank Creditors after giving
effect to the termination of all such Letters of Credit, if there remains any
excess cash, such excess cash shall be returned by the Administrative Agent to
the Collateral Agent for distribution in accordance with Section 7.4(a) hereof.

 

(e)                                  All payments required to be made
hereunder shall be made (x) if to the 
Bank Creditors, to the Administrative Agent for the account of the Bank
Creditors, (y) if to the Interest Rate Creditors, to the trustee, paying agent
or other similar representative (each a “Representative”) for the
Interest Rate Creditors or, in the absence of such a Representative, directly
to the Interest Rate Creditors and (z) if to the Second Lien Creditors, to the
Senior Secured Notes Trustee under the Senior Secured Notes Indenture for the
account of the Second Lien Creditors.

 

(f)                                    For purposes of applying payments
received in accordance with this Section 7.4, the Collateral Agent shall be
entitled to rely upon (i) the Administrative Agent, (ii) the
Representative or, in the absence of such a Representative, upon the Interest
Rate Creditors and (iii) the Senior Secured Notes Trustee for a determination
(which the Administrative Agent, each Representative, the Interest Rate
Creditors and the Senior Secured Notes Trustee agree (or shall agree) to
provide upon request of the Collateral Agent) of the outstanding Obligations
owed to the Bank Creditors, the Interest Rate Creditors or the Second Lien
Creditors, as the case may be.  Unless it
has received written notice from a Bank Creditor or an Interest Rate Creditor
to the contrary, the Administrative Agent and each Representative, in
furnishing information pursuant to the preceding sentence, and the Collateral
Agent, in acting hereunder, shall be entitled to assume that no First Lien
Secondary Obligations are outstanding. Unless it has written notice from an
Interest Rate Creditor to the contrary, the Collateral Agent, in acting
hereunder, shall be entitled to assume that no Interest Rate Agreements are in
existence.

 

(g)                                 This Agreement is made with full recourse
to each Assignor (including, without limitation, with full recourse to all
assets of such Assignor) and pursuant to and upon all the warranties,
representations, covenants and agreements on the part of such Assignor
contained herein, in the other Secured Debt Agreements and otherwise in writing
in connection herewith or therewith.  It
is understood that the Assignors shall remain jointly and severally liable to
the extent of any deficiency between the amount of the proceeds of the
Collateral and the aggregate amount of the Obligations.

 

(h)                                 Notwithstanding anything to the contrary
contained in this Agreement or in the other Collateral Documents, the Second
Lien Creditors, by accepting the benefits of this Agreement and the other
Collateral Documents, hereby expressly acknowledge and agree that (x) the
aggregate amount that they shall be entitled to receive from the exercise of
remedies in respect of the Collateral under this Agreement and the Collateral
Documents, will not exceed $150,000,000 in aggregate principal amount (plus
accrued and unpaid interest and fees thereon and indemnity and expense reimbursement
claims to the extent set forth in this Agreement, the other Collateral
Documents and the Senior Secured Notes Documents) (or such greater principal
amount as is expressly permitted at such time by the terms of the Credit
Agreement (or, if the

 

27

 

Credit Agreement is no longer in effect, such greater
principal amount as is permitted at such time by the terms of the other Secured
Debt Agreements), in each case so long as such greater principal amount is otherwise
permitted to be so secured by the terms of the relevant Secured Debt
Agreements), and (y) they shall not be entitled to receive any application
pursuant to Section 7.4(a) hereof in respect of any Second Lien Excluded
Collateral.

 

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

 

7.6.  Discontinuance of Proceedings. 
In case the Collateral Agent shall have instituted any proceeding to
enforce any right, power or remedy under this Agreement by foreclosure, sale,
entry or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Collateral Agent, then and in every such case the relevant Assignor, the
Collateral Agent and each holder of any of the Obligations shall be restored to
their former positions and rights hereunder with respect to the Collateral
subject to the security interest created under this Agreement, and all rights,
remedies and powers of the Collateral Agent shall continue as if no such
proceeding had been instituted.

 

ARTICLE VIII

 

INDEMNITY

 

8.1.  Indemnity. 
(a)  Each Assignor jointly and severally agrees to indemnify,
reimburse and hold the Collateral Agent, each other Secured Creditor that is an
indemnitee under Section 6 of Annex N hereto and their respective successors,
assigns, employees, affiliates and agents (hereinafter in this Section 8.1
referred to individually as “Indemnitee,” and collectively as “Indemnitees”)
harmless from any and all liabilities, obligations, damages, injuries,
penalties, claims, demands, actions, suits, judgments and any and all costs and
expenses (including reasonable fees and disbursements of counsel and other
professionals) (for the purposes of this Section 8.1 the foregoing are
collectively called “expenses”) of whatsoever kind and nature

 

28

 

imposed on, asserted
against or incurred by any of the Indemnitees in any way relating to or arising
out of this Agreement, any other Secured Debt Agreement or any other document
executed in connection herewith or therewith or in any other way connected with
the administration of the transactions contemplated hereby or thereby or the
enforcement of any of the terms of, or the preservation of any rights under any
thereof, or in any way relating to or arising out of the manufacture,
ownership, ordering, purchase, delivery, control, acceptance, lease, financing,
possession, operation, condition, sale, return or other disposition, or use of
the Collateral (including, without limitation, latent or other defects, whether
or not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for losses, damages or liabilities to the
extent caused by the gross negligence or willful misconduct of such Indemnitee
(as determined by a court of competent jurisdiction in a final and
non-appealable decision).  Each Assignor
agrees that upon written notice by any Indemnitee of the assertion of such a
liability, obligation, damage, injury, penalty, claim, demand, action, suit or
judgment, the relevant Assignor shall assume full responsibility for the
defense thereof.  Each Indemnitee agrees
to use its best efforts to promptly notify the relevant Assignor of any such
assertion of which such Indemnitee has knowledge.

 

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

 

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

 

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

 

29

 

8.2.  Indemnity Obligations Secured by
Collateral; Survival.  Any amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement shall
constitute Obligations secured by the Collateral.  The indemnity obligations of each Assignor
contained in this Article VIII shall continue in full force and effect
notwithstanding the full payment of all of the other Obligations and
notwithstanding the full payment of all the Notes issued, and Loans made, under
the Credit Agreement, the termination of all Letters of Credit issued under the
Credit Agreement, the termination of all Interest Rate Agreements entered into
with the Interest Rate Creditors, the full repayment of all the outstanding
Senior Secured Notes and the payment of all other Obligations and
notwithstanding the discharge thereof.

 

ARTICLE IX

 

DEFINITIONS

 

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

 

“Account” shall mean any “account” as such term is defined in
the Uniform Commercial Code as in effect on the Amendment and Restatement
Effective Date in the State of New York, and in any event shall include
but shall not be limited to, all rights to payment of any monetary obligation,
whether or not earned by performance, (i) for property that has been or is to
be sold, leased, licensed, assigned or otherwise disposed of, (ii) for services
rendered or to be rendered, (iii) for a policy of insurance issued or to be
issued, (iv) for a secondary obligation incurred or to be incurred, (v) for
energy provided or to be provided, (vi) for the use or hire of a vessel under a
charter or other contract, (vii) arising out of the use of a credit or charge
card or information contained on or for use with the card, or (viii) as
winnings in a lottery or other game of chance operated or sponsored by a State,
governmental unit of a State, or person licensed or authorized to operate the
game by a State or governmental unit of a State.  Without limiting the foregoing, the term “account”
shall include all Health Care Insurance Receivables (if any).

 

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

 

“Agreement” shall mean this Amended and Restated U.S. Security
Agreement as the same may be modified, supplemented or amended from time to
time in accordance with its terms.

 

“Amendment and Restatement Effective Date” shall have the
meaning found in the preamble to this Agreement.

 

“Applicable Value” shall mean, with respect to any Subsidiary of
the Borrower, the aggregate amount, par value, book value as carried by the
Borrower or the market value, whichever is greater, of the capital stock or
other securities of such Subsidiary.

 

“As-Extracted Collateral” shall mean “as-extracted collateral”
as such term is defined in the Uniform Commercial Code as in effect on the
Amendment and Restatement Effective Date in the State of New York.

 

30

 

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

 

“Bank Assignment Agreement” shall have the meaning provided in
the recitals of this Agreement.

 

“Bank Creditors” shall have the meaning provided in the recitals
of this Agreement.

 

“BofA” shall mean Bank of America, N.A. (and shall include any
successor thereto).

 

“BofA Account” shall have the meaning provided in Section 3.9.

 

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

 

“BTCC” shall mean BT Commercial Corporation (and shall include
any successor thereto).

 

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

 

“Chattel Paper” shall mean “chattel paper” as such term is
defined in the Uniform Commercial Code as in effect on the Amendment and Restatement
Effective Date in the State of New York. 
Without limiting the foregoing, the term “Chattel Paper” shall in any
event include all Tangible Chattel Paper and all Electronic Chattel Paper.

 

“Class” shall have the meaning provided in Section 10.2 of this
Agreement.

 

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

 

“Collateral Agent” shall mean BofA (and any successor Collateral
Agent) acting as Collateral Agent pursuant to this Agreement and any other
Collateral Documents, and shall include any affiliate of BofA acting as a
sub-collateral agent pursuant to the Collateral Documents and shall also
include DBTCA and BTCC acting as sub-collateral agents as provided herein.  As appropriate, references to the Collateral
Agent shall also include any additional sub-collateral agents or co-collateral
agents as may be appointed from time to time by the Collateral Agent for
purposes of this Agreement in accordance with the provisions of Section 10.11
of the Credit Agreement.

 

 “Collection Bank” shall
have the meaning provided in Section 3.7.

 

 “Commercial Tort Claims”
shall mean “commercial tort claims” as such term is defined in the Uniform
Commercial Code as in effect on the Amendment and Restatement Effective Date in
the State of New York.

 

“Concentration Account” shall have the meaning provided in
Section 3.8.

 

31

 

 “Concentration Account Bank”
shall have the meaning provided in Section 3.8.

 

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

 

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

 

“Copyrights” shall mean any United States copyright owned by any
Assignor, including any registrations of any copyrights, in the United States
Copyright Office or any foreign equivalent office, as well as any application
for a copyright registration now or hereafter made with the United States
Copyright Office or any foreign equivalent office by any Assignor.

 

“Credit Agreement” shall have the meaning provided in the
recitals of this Agreement.

 

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

 

“DBTCA” shall mean Deutsche Bank Trust Company Americas
(formerly known as Bankers Trust Company), and shall include any successor
thereto.

 

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

 

“Deposit Accounts” shall mean all “deposit
accounts” as such term is defined in the Uniform Commercial Code as in effect
on the Amendment and Restatement Effective Date in the State of New York.

 

“Documents” shall mean “documents” as such term is defined in
the Uniform Commercial Code as in effect on the Amendment and Restatement
Effective Date in the State of New York.

 

“Electronic Chattel Paper” shall mean “electronic chattel paper”
as such term is defined in the Uniform Commercial Code as in effect on the Amendment
and Restatement Effective Date in the State of New York.

 

“Equipment” shall mean any “equipment” as such term is defined
in the Uniform Commercial Code as in effect on the Amendment and Restatement
Effective Date in the State of New York, and in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, fixtures
and vehicles now or hereafter owned by any Assignor and any and all additions,
substitutions and replacements of any of the foregoing, wherever located, together

 

32

 

with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.

 

“Event of Default” shall mean any Event of Default (or similar
term) under, and as defined in, the Credit Agreement or any Interest Rate
Agreement entered into with an Interest Rate Creditor and shall in any event
include, without limitation, (i) any payment default under the Credit
Agreement, any Interest Rate Agreement or any Senior Secured Notes Document
after the expiration of any applicable grace period and (ii) at any time after
the First Lien Obligations have been paid in full, all Letters of Credit have
been terminated or cash collateralized in a manner satisfactory to the
Administrative Agent and all Commitments have been terminated, any “Event of
Default” (or similar term) under, and as defined in, the Senior Secured Notes
Indenture.

 

“Existing Credit Agreement” shall have the meaning provided in
the recitals of this Agreement.

 

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

 

“First Lien Creditors” shall have the meaning provided in the
recitals of this Agreement.

 

“First Lien Obligations” shall mean all Credit Document Obligations
and all Interest Rate Obligations.

 

“First Lien Primary Obligations” shall mean all principal of,
premium (if any), and interest (including without limitation, all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of any
Assignor at the rate provided for in the respective documentation, whether or
not a claim from post-petition interest is allowed in such proceeding) on, all
Loans under the Credit Agreement, all drawings under Letters of Credit issued
pursuant to the Credit Agreement that have not been reimbursed by the Borrower,
the contingent obligation to reimburse all drawings that may occur with respect
to outstanding Letters of Credit under the Credit Agreement and all fees owing
pursuant to the Credit Agreement.

 

“First Lien Secondary Obligations” shall mean all First Lien
Obligations other than First Lien Primary Obligations.

 

“General Intangibles” shall mean “general intangibles” as such
term is defined in the Uniform Commercial Code as in effect on the Amendment
and Restatement Effective Date in the State of New York.

 

“Goods” shall mean “goods” as such term is defined in the
Uniform Commercial Code as in effect on the Amendment and Restatement Effective
Date in the State of New York.

 

33

 

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

 

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

 

“Holdings Excluded Collateral” shall mean all of Holding’s
right, title and interest in and to all cash and cash equivalents (including,
without limitation, Cash Equivalents) and any Deposit Accounts and all other
collateral described in clause (xxix) of Section 1.1 (in each instance, so long
as, with respect to any cash or cash equivalents contributed, distributed or
otherwise transferred to Holdings by the Borrower or any of its Subsidiaries
(whether or not in a Deposit Account or any other account referred to in clause
(xxix) of Section 1.1), the distribution, contribution or other transfer of any
such cash and cash equivalents to Holdings was not prohibited by the terms of
any Credit Document).

 

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

 

“Instrument” shall mean “instruments” as such term is defined in
the Uniform Commercial Code as in effect on the Amendment and Restatement
Effective Date in the State of New York.

 

“Interest Rate Agreements” shall have the meaning provided in
the recitals of this Agreement.

 

“Interest Rate Creditors” shall have the meaning provided in the
recitals of this Agreement.

 

“Interest Rate Obligations” shall have the meaning provided in
the definition of “Obligations” in this Article IX.

 

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

 

“Investment Property” shall mean “investment property” as such
term is defined in the Uniform Commercial Code as in effect on the Amendment
and Restatement Effective Date in the State of New York.

 

34

 

“Lease” shall mean
any agreement between an Assignor and any other Person for the lease or rental
of Rental Equipment, Inventory or other assets or property, whether (x) by
such Assignor to such Person or (y) by such Person to such Assignor.

 

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

 

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

 

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

 

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

 

“Lockbox Addresses”
shall mean “Lockbox Addresses” and “P.O. Boxes” as such terms are defined
in applicable Collection Bank Agreement.

 

“Marks” shall mean
all right, title and interest in and to any trademarks, service marks and trade
names now held or hereafter acquired by any Assignor, including any
registration of any trademarks and service marks in the United States Patent
and Trademark Office or in any equivalent foreign office and any trade dress
including logos and/or designs used by any Assignor, however, that Marks shall
exclude in all cases all intent-to-use United States trademark applications for
which an amendment to allege use or statement of use has not been filed under
15 U.S.C. §1051(c) or (d), respectively, or if filed, has not been deemed
in conformance with 15 U.S.C. §1051(a) or examined and accepted,
respectively, by the United States Patent and Trademark Office, provided that,
upon such filing and acceptance, such intent-to-use applications shall be
included in the definition of “Marks”.

 

“MSO” shall mean
each manufacturer’s statement or certificate of origin with respect to any
Units.

 

“Obligations”
shall mean and include all of the following:

 

(i)                                     the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations, liabilities and indebtedness (including, without limitation,
principal, premium, interest (including, without limitation, all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of any
Assignor at the rate provided for in the respective documentation, whether or
not a claim for post-petition interest is allowed in any such proceeding),
reimbursement obligations under Letters of Credit, fees, costs and indemnities)
of each Assignor to the Bank Creditors, whether now existing or hereafter
incurred under, arising out of, or in connection with, the Credit Agreement and
the other Credit Documents to which such Assignor is a party (including, in the
case of each Assignor that is a Guarantor, all such obligations, liabilities
and

 

35

 

indebtedness of such Assignor under the respective
Guaranty to which it is a party) and the due performance and compliance by such
Assignor with all of the terms, conditions and agreements contained in the
Credit Agreement and in such other Credit Documents (all such obligations,
liabilities and indebtedness under this clause (i), except to the extent
consisting of obligations or indebtedness with respect to Interest Rate
Agreements, being herein collectively called the “Credit Document Obligations”);

 

(ii)                                  the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations, liabilities and indebtedness (including, without limitation, all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency, reorganization or similar
proceeding of any Assignor at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding) owing by such Assignor to the Interest Rate Creditors
under, or with respect to (including, in the case of each Assignor that is a
Guarantor, all such obligations, liabilities and indebtedness of such Assignor
under the respective Guaranty to which it is a party), each Interest Rate
Agreement, whether such Interest Rate Agreement is now in existence or
hereafter arising, and the due performance and compliance by such Assignor with
all of the terms, conditions and agreements contained therein (all such obligations,
liabilities and indebtedness described in this clause (ii) being herein
collectively called the “Interest Rate Obligations”);

 

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

 

(iv)                              any and all sums advanced by the
Collateral Agent in order to preserve the Collateral or preserve its security
interest in the Collateral;

 

(v)                                 in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
such Assignor referred to in clauses (i) through (iii) above, after
an Event of Default shall have occurred and be continuing, the reasonable
expenses of retaking, holding, preparing for sale or lease, selling or
otherwise

 

36

 

disposing of or realizing on the Collateral, or of any
exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys’ fees and court costs;

 

(vi)                              all amounts paid by any Indemnitee as to
which such Indemnitee has the right to reimbursement under Section 8.1 of
this Agreement; and

 

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

 

it being
acknowledged and agreed that the “Obligations” shall include extensions of
credit of the types described above, whether outstanding on the date of this Agreement
or extended from time to time after the date of this Agreement.

 

“Original U.S.
Security Agreement” shall have the meaning provided in the recitals of this
Agreement.

 

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

 

“Permits” shall
mean all licenses, permits, rights, orders, variances, franchises or
authorizations of or from any governmental authority or agency, except to the
extent the grant by the respective Assignor of a security interest therein
pursuant to this Agreement requires the consent of any such governmental
authority or agency or would give such governmental authority or agency the
right to terminate such permit.

 

 “Proceeds” shall mean all “proceeds” as
such term is defined in the Uniform Commercial Code as in effect in the State of
New York on the Amendment and Restatement Effective Date and, in any
event, shall also include, but not be limited to, (i) any and all proceeds
of any insurance, indemnity, warranty or guaranty payable to the Collateral
Agent or any Assignor from time to time with respect to any of the Collateral, (ii) any
and all payments (in any form whatsoever) made or due and payable to any
Assignor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.

 

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

 

“Rental Equipment”
shall mean all Units which are sold or leased, or held for sale or lease, by
any Assignor to one or more third persons.

 

“Rentals” shall
mean all rents payable under the Leases in respect of the use of any Rental
Equipment by account debtors as lessees of such Rental Equipment to an Assignor
as the lessor of such Rental Equipment.

 

37

 

“Representative”
shall have the meaning provided in Section 7.4(e) of this Agreement.

 

“Required Second Lien
Creditors” shall mean the holders of at least a majority of the then
outstanding principal amount of all Senior Secured Notes.

 

“Required Secured Creditors”
shall mean (i) at any time when any Credit Document Obligations are
outstanding or any Commitments or Letters of Credit under the Credit Agreement
exist, the Required Lenders (or, to the extent required by Section 11.10
of the Credit Agreement, each of the Lenders), (ii) at any time after all
of the Credit Document Obligations have been paid in full in cash in accordance
with the terms thereof and all Commitments and Letters of Credit under the
Credit Agreement have been terminated, the holders of a majority of the
Interest Rate Obligations and (iii) at any time after all Credit Document
Obligations and Interest Rate Obligations have been paid in full in cash in
accordance with the terms thereof and all Commitments and Letters of Credit
under the Credit Agreement have been terminated, the Senior Secured Notes
Trustee acting at the direction of the Required Second Lien Creditors.

 

“Requisite Creditors”
shall have the meaning provided in Section 10.2 of this Agreement.

 

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

 

“Second Lien Creditors”
shall have the meaning provided in the recitals of this Agreement.

 

“Second Lien Excluded
Collateral” shall mean and include (i) any property or assets owned by
any Unrestricted Subsidiary (as defined in the Senior Secured Notes Indenture),
(ii) all capital stock or other securities of the Borrower or any
Unrestricted Subsidiary and (iii) all capital stock or other securities of
Restricted Subsidiaries (as defined in the Senior Secured Notes Indenture) to
the extent the Applicable Value of such capital stock or other securities (on a
Subsidiary by Subsidiary basis) is equal to or greater than 20% of the then
aggregate principal amount of the Senior Secured Notes outstanding and (iv) all
proceeds and products from any and all of the foregoing excluded Collateral
described in clauses (i) through (iii), unless such proceeds or products
would otherwise constitute Collateral without regard to preceding clauses (i) through
(iii); provided, however, in the event that Rule 3-10
or Rule 3-16 of Regulation S-X under the Securities Act is amended,
modified or interpreted by the SEC to require (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted, which would
require) the filing with the SEC of separate financial statements of any
Restricted Subsidiary of the Borrower due to the fact that such Restricted
Subsidiary’s capital stock or other securities secure the Senior Secured Notes,
then the capital stock or other securities of such Restricted Subsidiary shall
automatically be deemed not to be part of the Collateral in which the Second
Lien Creditors have a security interest and shall automatically be deemed to be
part of the Second Lien Excluded Collateral, but only to the extent necessary
to not be subject to such requirement. 
In such event, the applicable Collateral Documents shall be deemed to be
amended or modified (without the consent of any Secured Creditor) to include as
Second Lien Excluded Collateral the shares of capital stock or other securities
that are so deemed to no longer constitute

 

38

 

part of the
Collateral.  In the event that Rule 3-10
or Rule 3-16 of Regulation S-X under the Securities Act is amended,
modified or interpreted by the SEC to permit (or are replaced with another rule or
regulation or any other law, rule or regulation is adopted, which would
permit) such Restricted Subsidiary’s capital stock and other securities to
secure the Senior Secured Notes in excess of the amount or value then pledged
pursuant to the Collateral Documents without the filing with the SEC of
separate financial statements of such Restricted Subsidiary, then the capital
stock and other securities of such Restricted Subsidiary shall automatically be
deemed to be a part of the Collateral, but only to the greatest extent which
would not cause the financial statements of such Restricted Subsidiary to be
subject to any such financial statement requirement.

 

“Second Lien
Obligations” shall have the meaning provided in the definition of “Obligations”
in this Article IX.

 

 “Secured Creditor Grantors” shall have
the meaning provided in Section 10.17 of this Agreement.

 

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

 

“Secured Debt
Agreements” shall mean and include this Agreement, the other Credit
Documents, the Interest Rate Agreements entered into with an Interest Rate
Creditor and the Senior Secured Notes Documents.

 

“Security Bond
Obligations” shall have the meaning provided in Section 10.17 of this
Agreement.

 

“Senior Secured
Noteholders” shall have the meaning provided in the recitals of this
Agreement.

 

“Senior Secured Notes”
shall have the meaning provided in the recitals of this Agreement.

 

“Senior Secured Notes
Documents” shall have the meaning provided in the recitals of this
Agreement.

 

“Senior Secured Notes
Indenture” shall have the meaning provided in the recitals of this
Agreement.

 

“Senior Secured Notes
Trustee” shall have the meaning provided in the preamble of this Agreement.

 

“Software” shall
mean “software” as such term is defined in the Uniform Commercial Code as in
effect on the Amendment and Restatement Effective Date in the State of New York.

 

“Supporting
Obligations” shall mean any “supporting obligation” as such term is defined
in the Uniform Commercial Code as in effect on the Amendment and Restatement

 

39

 

Effective Date in
the State of New York, now or hereafter owned by any Assignor, or in which
any Assignor has any rights, and, in any event, shall include, but shall not be
limited to all of such Assignor’s rights in any Letter-of-Credit Right or
secondary obligation that supports the payment or performance of, and all
security for, any Account, Chattel Paper, Document, General Intangible,
Instrument or Investment Property.

 

“Tangible Chattel
Paper” shall mean “tangible chattel paper” as such term is defined in the
Uniform Commercial Code as in effect on the Amendment and Restatement Effective
Date in the State of New York.

 

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

 

“Timber-to-be-Cut”
shall mean “timber-to-be-cut” as such term is used in the Uniform Commercial
Code as in effect on the Amendment and Restatement Effective Date in the State
of New York.

 

“Trade Name and
Service Mark License Agreement” shall mean the Trade Name and Service Mark
License Agreement, dated as of September 1, 1998, among Space Master
International, Inc. as licensor, Space Master Building Systems, LLC, Space
Master Manufacturing, Inc., Space Master Manufacturing of Pennsylvania, Inc.
and Raymond A. Wooldridge, collectively as licensee.

 

“Trade Secret Rights”
shall have the meaning provided in Section 5.1 of this Agreement.

 

“Transmitting Utility”
shall mean a “transmitting utility” as such term is used in the Uniform
Commercial Code as in effect on the Amendment and Restatement Effective Date in
the State of New York.

 

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

 

“Unit Certificates”
shall mean certificates of title, certificates of ownership or other
registration certificates issued or required to be issued under the certificate
of title or other similar laws of any State for any of the Units owned or
leased by any Assignor.

 

“Units” shall mean
the mobile structures, modular units and containers generally constructed of
steel or using a steel frame and undercarriage with an exterior of wood or
aluminum and similar products owned by an Assignor used to provide office,
classroom, storage, commercial or other space, whether in single units or
physically attached to other such units (and including in such form, storage
containers, mobile offices and modular structures and related equipment), which
structures are capable of being transported to and assembled on remote sites,
and which may be equipped with air conditioning and heating, electrical
outlets, floors, partitions, plumbing, carpeting, moldings, wall coverings,
lighting and other accessories.

 

40

 

ARTICLE X

 

MISCELLANEOUS

 

10.1.  Notices. 
Except as otherwise specified herein, all notices, requests, demands or other
communications to or upon the respective parties hereto shall be sent or
delivered by mail, telegraph, telex, telecopy, cable or courier service and all
such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by courier, be effective when deposited in the
mails, delivered to the telegraph company, cable company or overnight courier,
as the case may be, or sent by telex or telecopier, except that notices and
communications to the Collateral Agent or any Assignor shall not be effective
until received by the Collateral Agent or such Assignor, as the case may
be.  All notices and other communications
shall be in writing and addressed as follows:

 

(a)           if to any Assignor, c/o:

 

Williams Scotsman, Inc.

8211 Town Center Drive

Baltimore, Maryland  21236

Attention:  John
Ross

Telephone No.: 
(410) 931-6000

Telecopier No.: 
(410) 931-6117

 

(b)           if to the Collateral Agent, at:

 

Bank of America, N.A.

335 Madison Avenue

New York, NY 
10017

Attention:  Business Capital/URGENT

Telephone No.:  (212) 503-7632

Telecopier No.:  (212) 503-7330

 

(c)                                  if to any Bank Creditor other than the
Collateral Agent, at such address as such Bank Creditor shall have specified in
the Credit Agreement;

 

(d)                                 if to any Interest Rate Creditor, at such
address as such Interest Rate Creditor shall have specified in writing to each
Assignor and the Collateral Agent;

 

(e)                                  if to the Senior Secured Notes Trustee or
any other Second Lien Creditor, at:

 

U.S.
Bank National Association

60 Livingston Avenue

EP MN WS3C

St. Paul, Minnesota 55107-2292

Attention:  Richard Prokosch

Telephone
No.: (651) 495-3918

Telecopier No.: (651) 495-8097

 

41

 

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

 

10.2.  Waiver;
Amendment.  Except as provided in Sections 10.8 and
10.14, none of the terms and conditions of this Agreement, any other Collateral
Document, the Intercreditor Agreement, or any of the defined terms contained in
the Credit Agreement that are incorporated herein or in any such other
Collateral Document pursuant to the terms of this Agreement or in any such
other Collateral Document (but only insofar as such terms are used in this
Agreement or in any such other Collateral Document) may be changed, waived,
modified or varied in any manner whatsoever unless in writing duly signed by
each Assignor and the Collateral Agent (with the written consent of the
Required Secured Creditors); provided, however, that (i) the
terms and conditions of the Intercreditor Agreement may be changed, waived,
modified or varied without the consent of any Assignor, (ii) any change,
waiver, modification or variance (x) affecting the rights and benefits of
a single Class of First Lien Creditors (and not all First Lien Creditors
in a like or similar manner) also shall require the written consent of the
Requisite Creditors of such affected Class of First Lien Creditors and (y)
materially and adversely affecting the rights and benefits of the Second Lien
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors of the Second Lien
Creditors and (iii) notwithstanding anything to the contrary in clause (ii) above,
in any other provision of this Agreement or in any other Secured Debt
Agreement, the provisions of this Agreement and each of the other Collateral
Documents may be changed, modified, supplemented or varied with the consent of
the Assignors directly affected thereby and the Collateral Agent (with the
written consent of the Required Secured Creditors (but excluding the Second
Lien Creditors in their capacity as such)) to secure additional extensions of
credit and add new creditors as “Secured Creditors” hereunder (either as part
of an existing Class of Secured Creditors or as a newly created class), in
each case without any obligation to give any notice to, or receive any consent
from, the Second Lien Creditors in their capacities as such so long as such
change, modification or variance does not expressly violate the provisions of
the Credit Agreement or Article IV or V of the Senior Secured Notes
Indenture.  For the purpose of this
Agreement and each other Collateral Document, the term “Class” shall
mean each class of Secured Creditors, i.e., whether (x) the Bank
Creditors as holders of the Credit Document Obligations, (y) the Interest Rate
Creditors as the holders of the Interest Rate Obligations or (z) the
Second Lien Creditors as holders of the Second Lien Obligations.  For the purpose of this Agreement, the term “Requisite
Creditors” of any Class shall mean each of (x) with respect to the
Credit Document Obligations, the Required Lenders (or all of the Lenders if
required by Section 11.10 of the Credit Agreement), (y) with respect
to the Interest Rate Obligations, the holders of at least a majority of all
Interest Rate Obligations outstanding from time to time under the respective
Interest Rate Agreements and (z) with respect to the Second Lien Obligations,
the Senior Secured Notes Trustee (acting at the direction of the Required
Second Lien Creditors).

 

10.3.  Obligations
Absolute.  The obligations of each Assignor hereunder
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any

 

42

 

bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of such Assignor; (b) any exercise or
non-exercise, or any waiver of, any right, remedy, power or privilege under or
in respect of this Agreement or any other Secured Debt Agreement; or (c) any
amendment to or modification of any Secured Debt Agreement or any security for
any of the Obligations; whether or not such Assignor shall have notice or
knowledge of any of the foregoing.

 

10.4.  Successors
and Assigns.  This Agreement shall be binding upon each
Assignor and its successors and assigns (although no Assignor may assign its rights
and obligations hereunder except in accordance with the provisions of the
Secured Debt Agreements) and shall inure to the benefit of the Collateral Agent
and the other Secured Creditors and their respective successors and assigns.  All agreements, statements, representations
and warranties made by each Assignor herein or in any certificate or other
instrument delivered by such Assignor or on its behalf under this Agreement
shall be considered to have been relied upon by the Secured Creditors and shall
survive the execution and delivery of this Agreement and the other Secured Debt
Agreements regardless of any investigation made by the Secured Creditors or on
their behalf.

 

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

 

10.6.  GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL.  (a)  THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.  ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH ASSIGNOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION
OF THE AFORESAID COURTS.  EACH ASSIGNOR
HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK
JURISDICTION OVER SUCH ASSIGNOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS
JURISDICTION OVER SUCH ASSIGNOR.  EACH
ASSIGNOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH
ASSIGNOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 10.1 ABOVE,
SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.  EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES
NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING

 

43

 

COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH
SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
COLLATERAL AGENT UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST ANY ASSIGNOR IN ANY OTHER JURISDICTION.

 

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

 

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

 

10.7.  Assignor’s
Duties.  It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any
manner to perform or fulfill any of the obligations of any Assignor under or
with respect to any Collateral.

 

10.8.  Termination;
Release.  (a)  On the Termination Date, this
Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation in Section 8.1 hereof and in Section 6
of Annex N hereto, shall survive such termination) and the Collateral
Agent, at the request and expense of the respective Assignor, will promptly
execute and deliver to such Assignor a proper instrument or instruments
(including Uniform Commercial Code termination statements on form UCC-3)
acknowledging the satisfaction and termination of this Agreement, and will duly
assign, transfer and deliver to such Assignor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Collateral Agent and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement. 
As used in this Agreement, “Termination Date” shall mean the date
upon which the Total Commitments under the Credit Agreement have been
terminated and all Interest Rate Agreements entered into with any Interest Rate
Creditor have been terminated (or cash collateralized in a manner reasonably
satisfactory to the Administrative Agent), no Note under the Credit Agreement
is outstanding and all Loans thereunder have been repaid in full in cash in
accordance with the terms thereof, all Letters of Credit issued under the
Credit Agreement have been terminated (or cash collateralized in a manner
satisfactory to the Administrative Agent), all

 

44

 

Second Lien Obligations have been paid in full in cash (or defeased or
discharged) in accordance with the terms thereof and all other Obligations then
due and payable have been paid in full; provided, however, at
such time as (x) all First Lien Obligations have been paid in full in cash
in accordance with the terms thereof and all Commitments under the Credit
Agreement have been terminated and all Letters of Credit have been terminated
or cash collateralized in a manner satisfactory to the Administrative Agent or
(y) the First Lien Creditors have released their Liens on all of the
Collateral then, in either case, this Agreement and the security interests
created hereby shall terminate (provided that all indemnities set forth herein
(including, without limitation, in Section 8.1 hereof) and in Section 6
of Annex N hereto shall survive such termination) unless, in the case of
preceding clause (x), any Event of Default under the Senior Secured Notes
Indenture exists as of the date on which the First Lien Obligations are repaid
in full and terminated as described in such clause (x), in which case the
security interests created under this Agreement in favor of the Second Lien
Creditors will not be released except to the extent the Collateral or any
portion thereof was disposed of in order to repay the First Lien Obligations
(although the security interests created in favor of the Second Lien Creditors
will be released when such Event of Default and all other Events of Default
under the Senior Secured Notes Indenture cease to exist).

 

(b)                                 In the event that any part of the
Collateral is sold, transferred or otherwise disposed of (by dividend,
contribution or otherwise) (other than to Holdings (other than cash or cash
equivalents distributed to Holdings in accordance with the terms of the Credit
Agreement), the Borrower or any of the Borrower’s Domestic Subsidiaries or Canadian
Subsidiaries) in accordance with the terms of the Secured Debt Agreements or is
otherwise released with the consent of the Collateral Agent or the Required
Secured Creditors and the proceeds of such sale, transfer or other disposition,
or from such release, are applied in accordance with the provisions of the
respective Secured Debt Agreements, to the extent required to be so applied,
such Collateral will be sold, transferred or otherwise disposed of free and
clear of the Liens created by this Agreement and the Collateral Agent, at the
request and expense of the relevant Assignor, will duly and promptly assign,
transfer and deliver to such Assignor or its designee (without recourse and
without any representation or warranty) such of the Collateral as is then being
(or has been) so sold, transferred or otherwise disposed of, or released, and
as may be in the possession of the Collateral Agent and has not theretofore
been released pursuant to this Agreement. 
In the event that any capital stock or other equity interests (or any
interest therein) held by Holdings in an Unrestricted Subsidiary or any other
foreign Person that is not a Subsidiary of the Borrower constituting Collateral
are sold, transferred or otherwise disposed of (by dividend, contribution or
otherwise), so long as (i) no Default or Event of Default is continuing
and (ii) the Administrative Agent and Collateral Agent have received a
certificate, in form and substance reasonably satisfactory to the
Administrative Agent, signed by a Responsible Officer of Holdings certifying
that such Collateral is being sold, transferred or otherwise disposed of by
Holdings for a business purpose (including, without limitation, that it is
being pledged in connection with local financing, sold (in whole or in part),
liquidated, exchanged or contributed to a joint venture), such Collateral will
be sold, transferred or otherwise disposed of free and clear of the Liens
created by this Agreement, and the Collateral Agent, at the request and expense
of Holdings, will duly and promptly assign, transfer and deliver to Holdings or
its designee (without recourse and without any representation or warranty) such
of the Collateral as is then being (or has been) so sold, transferred or
otherwise disposed of, or released, and as may

 

45

 

be in the
possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement.  Furthermore,
upon the release of any Subsidiary Guarantor from the Subsidiaries Guaranty in
accordance with the provisions thereof, such Assignor (and the Collateral at
such time assigned by the respective Assignor pursuant hereto) shall be
released from this Agreement.

 

(c)                                  To the extent not otherwise provided in
preceding clauses (a) and (b), the Collateral Agent shall without the
consent of any Secured Creditor release all or any portion of the Collateral
securing the Second Lien Obligations to the extent provided in the Senior
Secured Note Indenture.

 

(d)                                 At any time that an Assignor desires that
the Collateral Agent take any action to acknowledge or give effect to any
release of Collateral pursuant to the foregoing Section 10.8(a), (b) or
(c) such Assignor shall deliver to the Collateral Agent a certificate
signed by a senior officer of such Assignor stating that the release of the
respective Collateral is permitted pursuant to such Section 10.8(a), (b) or
(c).  At any time that the Borrower or
the respective Assignor desires that a Subsidiary of the Borrower which has
been released from the Subsidiaries Guaranty be released hereunder as provided
in the last sentence of Section 10.8(b), it shall deliver to the
Collateral Agent a certificate signed by a Responsible Officer of the Borrower
and the respective Assignor stating that the release of the respective Assignor
(and its Collateral) is permitted pursuant to such Section 10.8(b).

 

(e)                                  The Collateral Agent shall have no
liability to any Secured Creditor for any release of Collateral by it which is
in accordance with, or which the Collateral Agent in good faith believes to be
in accordance with, the provisions of this Section 10.8.  Upon any release of Collateral pursuant to Section 10.8(a) or
(b), none of the Secured Creditors shall have any continuing right or interest
in such Collateral.

 

(f)                                    Without limiting the foregoing provisions
of this Section 10.8, to the extent applicable following the qualification
of the Senior Secured Notes Indenture under the Trust Indenture Act (but only
insofar as this Agreement applies to the Second Lien Creditors), the parties
hereto agree that if any amendments to this Agreement or any other Security
Document are required in order to comply with the applicable provisions of the
Trust Indenture Act, such parties shall cooperate and act in good faith to effect
such amendments as promptly as practicable.

 

10.9.  Limited
Obligations.  It is the desire and intent of each Assignor
and the Secured Creditors that this Agreement shall be enforced against each
Assignor to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.  Notwithstanding anything to the contrary
contained herein, in furtherance of the foregoing, it is noted that the
obligations of each Assignor that is a Subsidiary of the Borrower and which has
executed a guaranty of any of the Obligations pursuant to a Secured Debt
Agreement may have been limited as provided therein.  To the extent not otherwise
provided in a guaranty given by an Assignor in respect of the Second Lien Obligations,
each Assignor, other than the Borrower (collectively, the “second lien
assignors”), the Senior Secured Notes Trustee and each other Second Lien
Creditor hereby confirm that it is the intention of all such Persons that the
grant of the security interest hereunder by the second lien assignors with
respect to the Second Lien Obligations and the Second Lien Obligations of

 

46

 

each such second lien assignor hereunder does
not constitute a fraudulent transfer or conveyance for purposes of any
Bankruptcy Law (as defined in the Senior Secured Notes Indenture), the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
foreign, federal or state law to the extent applicable to this Agreement and
the Second Lien Obligations of the second lien assignors hereunder.  To effectuate the foregoing intention, the
Senior Secured Notes Trustee, the other Second Lien Creditors and the second
lien assignors hereby irrevocably agree that the Second Lien Obligations of the
second lien assignors hereunder at any time shall be limited to the maximum
amount (after taking into account any guaranty of the First Lien Obligations by
the second lien assignors) as will result in the Second Lien Obligations of the
second lien assignors hereunder not constituting a fraudulent transfer or
conveyance.

 

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

 

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

 

10.12.  The Collateral Agent and the other Secured
Creditors.  (a)  The Collateral Agent will hold
in accordance with this Agreement all items of the Collateral at any time
received under this Agreement.  It is
expressly understood and agreed that the obligations of the Collateral Agent as
holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement and in Annex N hereto.  The Collateral Agent shall act hereunder and
thereunder on the terms and conditions set forth herein and in Annex N
hereto.

 

(b)                                 In addition to the provisions of clause (a) of
this Section 10.12 and the other provisions of this Agreement and the
other Collateral Documents, the Secured Creditors (by their acceptance of the
benefits of this Agreement and the other applicable Collateral Documents) also
expressly acknowledge and agree to the other provisions of Annex N hereto.

 

10.13.  Benefit
of Agreement.  This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of and be enforceable by each of the parties hereto and its
successors and assigns.

 

10.14.  Additional Assignors.  It is understood and agreed that any
Subsidiary of the Borrower that is required to become a party to this Agreement
after the Amendment and Restatement Effective Date pursuant to the requirements
of the respective Secured Debt Agreements, shall become an Assignor hereunder
by (x) executing a counterpart of a U.S. Subsidiary Joinder Agreement
substantially in the form of Exhibit N to the Credit Agreement, and
delivering same to the Collateral Agent, (y) delivering supplements to Annexes
A through E,

 

47

 

inclusive,
and G through J, inclusive, hereto as are necessary to cause Annexes to be
complete and accurate with respect to such additional Assignor on such date and
(z) taking all actions specified in this Agreement as would have been taken by
such Assignor had it been an original party to this Agreement, in each case
with all documents required above to be delivered to the Collateral Agent and
with all documents and actions above to be taken to the reasonable satisfaction
of the Collateral Agent.

 

10.15.  Appointment of DBTCA and BTCC as
Sub-collateral Agents.  (a)  Each of DBTCA
and BTCC is hereby appointed by the Collateral Agent to act, and each of DBTCA
and BTCC agrees that it shall act, as a sub-collateral agent of the Collateral
Agent hereunder with respect to any and all Units of any Assignor which from
time to time, or at any time, are evidenced by a (or have a related)
Certificate of Title which reflects DBTCA or BTCC, as the case may be, as the
secured party.  Each Assignor, and each
of the Secured Creditors, agrees to the appointment of each of DBTCA and BTCC
as provided in this Section 10.15. 
All parties hereto agree that DBTCA and BTCC shall have a perfected
security interest in the Units described above, which security interest shall
be created pursuant to this Agreement and held for the benefit of the Secured
Creditors in accordance with the terms of this Agreement.

 

(b)                                 The parties hereto acknowledge and agree
that, with respect to Certificated Units held by the Assignors prior to the
Amendment and Restatement Effective Date, the related Certificates of Title may
reflect either DBTCA or BTCC as the secured party thereon.  Unless and until the Collateral Agent
requests the Assignors to alter the secured party to directly name the
Collateral Agent, such certificates may continue to reflect DBTCA or BTCC, as
the case may be, as secured party so long as DBTCA or BTCC, as the case may be,
continues to act as a sub-collateral agent of the Collateral Agent hereunder.

 

(c)                                  With respect to all Units acquired by any
Assignor on or after the Amendment and Restatement Effective Date, or where the
interest of the Collateral Agent (or a sub-collateral agent) is to be noted
thereon on or after the Amendment and Restatement Effective Date, the Assignor
shall cause the Collateral Agent to be directly named as the secured party;
provided that if for any reason DBTCA or BTCC is named as the secured party it
shall act as sub-collateral agent of the Collateral Agent with respect thereto
as provided above in this Section 10.15.

 

(d)                                 With respect to all Units of each
Assignor where DBTCA or BTCC is listed as the secured party, DBTCA or BTCC, as
applicable, hereby agrees, for the benefit of the Collateral Agent and the
Secured Creditors, that its holds such security interests as sub-collateral
agent of the Collateral Agent for the benefit of the Secured Creditors
hereunder.

 

(e)                                  In
its capacity as sub-collateral agent of the Collateral Agent hereunder, each of
DBTCA and BTCC shall have all of the rights specified in Annex N to this
Agreement (and shall act in accordance with the terms and conditions set forth
herein and in said Annex N).  So long as
each of DBTCA and BTCC executes and delivers to the Collateral Agent a copy of
this Agreement, no further instrument need be signed by DBTCA or BTCC to
evidence, or with respect to, its appointment as sub-collateral agent pursuant
to this Section 10.15.

 

48

 

10.16.  Custodian
Agreement.  (a)  The parties hereto acknowledge
and agree that, pursuant to the Custodian Agreement, the Custodians defined
therein shall act as provided therein, and shall hold certain Collateral on
behalf of the Collateral Agent.  Each
Assignor acknowledges and agrees that it shall cause all Unit Certificates and
MSOs with respect to its Units, and all its Leases, to be delivered to the
Custodians to be held by them pursuant to the Custodian Agreement.  All Collateral so held by the Custodians
shall be subject to the security interests created pursuant hereto.  Each Assignor shall use good faith efforts to
cause the Custodian Agreement to be complied with at all times by the
Custodians, and shall at all times cause one or more Custodians to be acting
pursuant thereto.

 

(b)                                 Any Person which becomes an Assignor
after the date of this Agreement pursuant to Section 10.14 shall also
become a party to the Custodian Agreement, as a “Company”, in accordance with
the relevant provisions thereof.

 

10.17.  Acknowledgements Regarding Security Bond
Obligations.  For greater certainty, and without limiting
the powers of the Collateral Agent hereunder or under any of the other Credit
Documents, the Borrower hereby acknowledges that the Collateral Agent shall,
for purposes of holding any security interest granted by any Credit Party in
any of its property or assets pursuant to the laws of the Province of Quebec to
secure obligations of such Credit Party under any debenture or bond (any such
obligations, “Security Bond Obligations”), be the holder of an
irrevocable power of attorney (fondé de
pouvoir) (within the meaning of the Civil
Code of Quebec, as amended) for each of the First Lien Creditors and
the Senior Secured Notes Trustee (on behalf of the Second Lien Creditors) and
in particular for all present and future holders of any debenture or bond (the
First Lien Creditors and the Senior Secured Notes Trustee (on behalf of the
Second Lien Creditors) and any such holders, collectively, the “Secured
Creditor Grantors”).  In accepting
the benefits afforded to it hereunder, each Secured Creditor Grantor hereby
constitutes, to the extent necessary, the Collateral Agent as the holder of an
irrevocable power of attorney (fondé de
pouvoir) (within the meaning of Article 2692 of the Civil Code of Quebec, as amended) in order
to hold security granted by any Credit Party in the Province of Quebec to
secure Security Bond Obligations.  Each
assignee of any Secured Creditor Grantor shall be deemed to have confirmed and
ratified the constitution of the Collateral Agent as the holder of such
irrevocable power of attorney (fondé de
pouvoir) upon becoming a Lender under the Credit Agreement as
contemplated in Section 11.6(b)(A) thereof or becoming a Senior
Secured Noteholder in accordance with the terms of the Senior Secured Notes
Indenture, as the case may be, and/or by receiving the benefits of the
Collateral Documents.  Notwithstanding
the provisions of Section 32 of An Act
Respecting the Special Powers of Legal Persons (Quebec), the
Collateral Agent may acquire and be the holder of any debenture or bond.  The Borrower hereby acknowledges that such
debenture or bond constitutes a title of indebtedness, as such term is used in Article 2692
of the Civil Code of Quebec, as
amended.

 

 

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

 

49

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed and delivered by their
duly authorized officers as of the Amendment and Restatement Effective Date.

 

 

	
   

  	
  WILLIAMS
  SCOTSMAN

  INTERNATIONAL, INC. (formerly known as

  SCOTSMAN HOLDINGS, INC.),

  as an Assignor 

  
	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  By:

  	
  /s/ Robert C.
  Singer

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
					

 

	
   

  	
  WILLIAMS
  SCOTSMAN, INC.,

  as an Assignor 

  
	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  By:

  	
  /s/ Robert C.
  Singer

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
					

 

	
   

  	
  WILLSCOT
  EQUIPMENT, LLC,

  as an Assignor

  
	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  By:

  	
  WILLIAMS
  SCOTSMAN, INC.,

  
	
   

  	
   

  	
  as Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  By: 

  	
  /s/ Robert C.
  Singer

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
					

 

	
   

  	
  SPACE MASTER
  INTERNATIONAL, INC.,

  as an Assignor

  
	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  By:

  	
  /s/ Robert C.
  Singer

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
					

 

 

	
   

  	
  TRUCK & TRAILER SALES, INC.,

  as an Assignor

  
	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  By:

  	
  /s/ Robert C.
  Singer

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
					

 

	
   

  	
  EVERGREEN MOBILE COMPANY,

  as an Assignor

  
	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  By:

  	
  /s/ Robert C.
  Singer

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
					

 

	
  Accepted and Agreed to:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BANK OF AMERICA, N.A., as Collateral

  Agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kevin W. Corcoran

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title: Vice President

  	
   

  	
   

  	
   

  	
   

  
							

 

	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS (formerly known as Bankers

  Trust Company), as a sub-collateral agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Frank Fazio

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title: Director

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  BT COMMERCIAL
  CORPORATION,

  as a sub-collateral agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mark E. Funk

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
							

 

	
  U.S. BANK
  NATIONAL ASSOCIATION,

  as Senior Secured Notes Trustee for the Second

  Lien Creditors

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Richard H.
  Prokosch

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  
							

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I SECURITY
  INTERESTS

  	
   

  
	
   

  	
   

  
	
  1.1. Grant of
  Security Interests

  	
   

  
	
  1.2. Power of Attorney

  	
   

  
	
   

  	
   

  
	
  ARTICLE II
  GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
   

  
	
  2.1. Necessary Filings

  	
   

  
	
  2.2.
  No Liens

  	
   

  
	
  2.3. Other Financing
  Statements

  	
   

  
	
  2.4.
  Chief Executive Office, Record Locations

  	
   

  
	
  2.5.
  Location of Inventory and Equipment and Units

  	
   

  
	
  2.6.
  Units

  	
   

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

  	
   

  
	
  2.8. Trade Names; etc.

  	
   

  
	
  2.9.
  As-Extracted Collateral; Timber-to-be-Cut

  	
   

  
	
  2.10.
  Collateral in the Possession of a Bailee

  	
   

  
	
  2.11. Recourse

  	
   

  
	
   

  	
   

  
	
  ARTICLE III
  SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS; INSTRUMENTS; CHATTEL
  PAPER AND CERTAIN OTHER COLLATERAL

  	
   

  
	
   

  	
   

  
	
  3.1.
  Additional Representations and Warranties

  	
   

  
	
  3.2. Maintenance of Records

  	
   

  
	
  3.3. Modification of
  Terms; etc.

  	
   

  
	
  3.4. Collection

  	
   

  
	
  3.5. Direction
  to Account Debtors; etc.

  	
   

  
	
  3.6. Instruments

  	
   

  
	
  3.7. Collection Accounts

  	
   

  
	
  3.8. Concentration Account

  	
   

  
	
  3.9. BofA Account

  	
   

  
	
  3.10. Receipt of Payments

  	
   

  
	
  3.11. Account Inspection

  	
   

  
	
  3.12.
  Assignors Remain Liable Under Accounts

  	
   

  
	
  3.13.
  Assignors Remain Liable Under Contracts

  	
   

  
	
  3.14. Deposit Accounts;
  etc.

  	
   

  
	
  3.15. Letter-of-Credit
  Rights

  	
   

  
	
  3.16. Commercial Tort
  Claims

  	
   

  
	
  3.17. Chattel Paper

  	
   

  
	
  3.18. Further Actions

  	
   

  

 

i

 

	
  ARTICLE IV
  SPECIAL PROVISIONS CONCERNING TRADEMARKS

  	
   

  
	
   

  	
   

  
	
  4.1.
  Additional Representations and Warranties

  	
   

  
	
  4.2. Licenses and
  Assignments

  	
   

  
	
  4.3. Infringements

  	
   

  
	
  4.4. Preservation of Marks

  	
   

  
	
  4.5. Maintenance of
  Registration

  	
   

  
	
  4.6. Remedies

  	
   

  
	
  4.7. Future Registered
  Marks

  	
   

  
	
   

  	
   

  
	
  ARTICLE V
  SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS

  	
   

  
	
   

  	
   

  
	
  5.1.
  Additional Representations and Warranties

  	
   

  
	
  5.2. Licenses and
  Assignments

  	
   

  
	
  5.3. Infringements

  	
   

  
	
  5.4.
  Maintenance of Patents or Copyright

  	
   

  
	
  5.5.
  Prosecution of Patent Applications

  	
   

  
	
  5.6. Remedies

  	
   

  
	
  5.7. Other Patents
  and Copyrights

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI
  PROVISIONS CONCERNING ALL COLLATERAL

  	
   

  
	
   

  	
   

  
	
  6.1.
  Protection of Collateral Agent’s Security

  	
   

  
	
  6.2. Warehouse
  Receipts Non-negotiable

  	
   

  
	
  6.3. Additional
  Information.

  	
   

  
	
  6.4. Further Actions

  	
   

  
	
  6.5. Financing Statements

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII
  REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT

  	
   

  
	
   

  	
   

  
	
  7.1.
  Remedies; Obtaining the Collateral Upon Default

  	
   

  
	
  7.2.
  Remedies; Disposition of the Collateral

  	
   

  
	
  7.3. Waiver of Claims

  	
   

  
	
  7.4. Application of Proceeds

  	
   

  
	
  7.5. Remedies Cumulative

  	
   

  
	
  7.6. Discontinuance
  of Proceedings

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII INDEMNITY

  	
   

  
	
   

  	
   

  
	
  8.1. Indemnity

  	
   

  
	
  8.2.
  Indemnity Obligations Secured by Collateral; Survival

  	
   

  

 

ii

 

	
  ARTICLE IX DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE X
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  10.1. Notices

  	
   

  
	
  10.2. Waiver; Amendment

  	
   

  
	
  10.3. Obligations Absolute

  	
   

  
	
  10.4. Successors and
  Assigns

  	
   

  
	
  10.5. Headings Descriptive

  	
   

  
	
  10.6.
  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL

  	
   

  
	
  10.7. Assignor’s Duties

  	
   

  
	
  10.8. Termination; Release

  	
   

  
	
  10.9. Limited Obligations

  	
   

  
	
  10.10. Counterparts

  	
   

  
	
  10.11. Severability

  	
   

  
	
  10.12.
  The Collateral Agent and the other Secured Creditors

  	
   

  
	
  10.13. Benefit of
  Agreement

  	
   

  
	
  10.14. Additional
  Assignors

  	
   

  
	
  10.15.
  Appointment of DBTCA and BTCC as Sub-collateral Agents

  	
   

  
	
  10.16. Custodian Agreement

  	
   

  
	
  10.17.
  Acknowledgements Regarding Security Bond Obligations

  	
   

  
	
   

  	
   

  
	
  ANNEX A

  	
  Schedule of Chief
  Executive Offices Address(es) of Chief Executive Office

  	
   

  
	
  ANNEX B

  	
  Schedule of
  Inventory, Equipment and Unit Locations

  	
   

  
	
  ANNEX C

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

  	
   

  
	
  ANNEX D

  	
  Schedule of Trade
  and Fictitious Names

  	
   

  
	
  ANNEX E

  	
  Schedule of
  Deposit Accounts

  	
   

  
	
  ANNEX F

  	
  Form of Control
  Agreement Regarding Deposit Accounts

  	
   

  
	
  ANNEX G

  	
  Schedule of
  Commercial Tort Claims

  	
   

  
	
  ANNEX H

  	
  Schedule of Marks

  	
   

  
	
  ANNEX I

  	
  Schedule of
  Patents

  	
   

  
	
  ANNEX J

  	
  Schedule of
  Copyrights

  	
   

  
	
  ANNEX K

  	
  Grant of Security
  Interest in United States Trademarks

  	
   

  
	
  ANNEX L

  	
  Grant of Security
  Interest in United States Patents

  	
   

  
	
  ANNEX M

  	
  Grant of Security
  Interest in United States Copyrights

  	
   

  
	
  ANNEX N

  	
  The Collateral Agent

  	
   

  

 

iiiExhibit 10.26

 

 

WILLIAMS SCOTSMAN OF CANADA, INC.

 

as Obligor

 

 

and

 

 

BANK OF
AMERICA, N.A.

as Collateral Agent

 

 

AMENDED AND RESTATED CANADIAN SECURITY AGREEMENT

 

June 28, 2005

 

 

DAVIES
WARD PHILLIPS & VINEBERG LLP

 

 

TABLE OF
CONTENTS

 

	
   

  	
  ARTICLE 1

  INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Defined
  Terms

  	
   

  
	
  Section 1.2

  	
  Terms
  Incorporated by Reference

  	
   

  
	
  Section 1.3

  	
  Statutes

  	
   

  
	
  Section 1.4

  	
  Certain
  Phrases, etc.

  	
   

  
	
  Section 1.5

  	
  Gender and
  Number

  	
   

  
	
  Section 1.6

  	
  Headings,
  etc.

  	
   

  
	
  Section 1.7

  	
  Schedules

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 2

  SECURITY

  	
   

  
	
  Section 2.1

  	
  Grant of
  Security

  	
   

  
	
  Section 2.2

  	
  Obligations
  Secured

  	
   

  
	
  Section 2.3

  	
  Attachment

  	
   

  
	
  Section 2.4

  	
  Scope of
  Security Interest

  	
   

  
	
  Section 2.5

  	
  Grant of
  Licence to Use Intellectual Property

  	
   

  
	
  Section 2.6

  	
  Care and
  Custody of Collateral

  	
   

  
	
  Section 2.7

  	
  Rights of
  the Obligor

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 3

  ENFORCEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Enforcement

  	
   

  
	
  Section 3.2

  	
  Remedies

  	
   

  
	
  Section 3.3

  	
  Additional
  Rights

  	
   

  
	
  Section 3.4

  	
  Receiver’s
  Powers

  	
   

  
	
  Section 3.5

  	
  Appointment
  of Attorney

  	
   

  
	
  Section 3.6

  	
  Dealing
  with the Collateral

  	
   

  
	
  Section 3.7

  	
  Standards
  of Sale

  	
   

  
	
  Section 3.8

  	
  Dealings
  by Third Parties

  	
   

  
	
  Section 3.9

  	
  Registration
  Rights

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 4

  REPRESENTATIONS, WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  General
  Representations, Warranties and Covenants

  	
   

  
	
  Section 4.2

  	
  After
  Acquired Receivables

  	
   

  
	
  Section 4.3

  	
  Maintenance
  of Records for Receivables and Contracts

  	
   

  
	
  Section 4.4

  	
  Modification
  of Terms, etc.

  	
   

  
	
  Section 4.5

  	
  Collection

  	
   

  

 

i

 

	
  Section 4.6

  	
  Obligor
  Remains Liable

  	
   

  
	
  Section 4.7

  	
  Collateral
  in the Possession of a Bailee

  	
   

  
	
  Section 4.8

  	
  Intellectual
  Property

  	
   

  
	
  Section 4.9

  	
  Representations
  and Warranties Concerning Trade-marks

  	
   

  
	
  Section 4.10

  	
  Trade-mark
  Licenses and Assignments

  	
   

  
	
  Section 4.11

  	
  Trade-mark
  Infringements

  	
   

  
	
  Section 4.12

  	
  Preservation
  of Trade-marks

  	
   

  
	
  Section 4.13

  	
  Maintenance
  of Trade-mark Registration

  	
   

  
	
  Section 4.14

  	
  Future
  Registered Trade-marks

  	
   

  
	
  Section 4.15

  	
  Representations
  and Warranties Concerning Patents, Copyrights and Designs

  	
   

  
	
  Section 4.16

  	
  Patent,
  Copyright and Design Licenses and Assignments

  	
   

  
	
  Section 4.17

  	
  Patent,
  Copyright and Design Infringements

  	
   

  
	
  Section 4.18

  	
  Maintenance
  of Patents, Copyrights and Designs

  	
   

  
	
  Section 4.19

  	
  Prosecution
  of Patent, Copyright and Design Applications

  	
   

  
	
  Section 4.20

  	
  Future
  Patents, Copyrights and Designs

  	
   

  
	
  Section 4.21

  	
  Remedies
  Concerning Intellectual Property

  	
   

  
	
  Section 4.22

  	
  Status
  of Accounts Collateral

  	
   

  
	
  Section 4.23

  	
  Business
  Outside Certain Jurisdictions

  	
   

  
	
  Section 4.24

  	
  Insurance

  	
   

  
	
  Section 4.25

  	
  Perfection
  and Protection of Security Interest

  	
   

  
	
  Section 4.26

  	
  Additional
  Security

  	
   

  
	
  Section 4.27

  	
  Financing
  Statements

  	
   

  
	
  Section 4.28

  	
  Deposit
  Accounts

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE 5

  GENERAL

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Notices

  	
   

  
	
  Section 5.2

  	
  Discharge

  	
   

  
	
  Section 5.3

  	
  No
  Merger, Survival of Representations and Warranties

  	
   

  
	
  Section 5.4

  	
  Further
  Assurances

  	
   

  
	
  Section 5.5

  	
  Supplemental
  Security

  	
   

  
	
  Section 5.6

  	
  Successors
  and Assigns

  	
   

  
	
  Section 5.7

  	
  Severability

  	
   

  
	
  Section 5.8

  	
  Waivers,
  etc.

  	
   

  
	
  Section 5.9

  	
  Collateral
  Agent and/or Secured Creditors not a Partner or Limited Liability Company
  Member

  	
   

  
	
  Section 5.10

  	
  Application
  of Proceeds

  	
   

  
	
  Section 5.11

  	
  Indemnity

  	
   

  
	
  Section 5.12

  	
  Indemnity
  Obligations Secured by Collateral; Survival

  	
   

  
	
  Section 5.13

  	
  Collateral
  Agent

  	
   

  
	
  Section 5.14

  	
  Governing
  Law

  	
   

  
	
  Section 5.15

  	
  Conflicts

  	
   

  

 

ii

 

	
  Section 5.16

  	
  Acknowledgement
  and Confirmation

  	
   

  

 

ADDENDA

 

	
  SCHEDULE 2.1(1)(f)

  	
  SECURITIES AND
  INSTRUMENTS

  	
   

  
	
  SCHEDULE 2.1(1)(h)

  	
  INTELLECTUAL
  PROPERTY

  	
   

  
	
  SCHEDULE 4.1(a)

  	
  FORM OF
  CONFIRMATION OF SECURITY INTEREST IN INTELLECTUAL PROPERTY

  	
   

  
	
  EXHIBIT “A”
  TO CONFIRMATION TRADE-MARKS/PATENTS/COPYRIGHTS/INDUSTRIAL DESIGNS

  	
   

  
	
  SCHEDULE 4.1(c)

  	
  FINANCING
  STATEMENTS

  	
   

  
	
  SCHEDULE 4.1(d)

  	
  LOCATION OF
  CHIEF EXECUTIVE OFFICE AND CORPORATE MATTERS

  	
   

  
	
  SCHEDULE 4.1(e)

  	
  LOCATION OF INVENTORY AND EQUIPMENT

  	
   

  
	
  SCHEDULE 4.1(g)

  	
  TRADE NAMES

  	
   

  
	
  SCHEDULE 4.28

  	
  DEPOSIT
  ACCOUNTS

  	
   

  
	
  EXHIBIT “A”
  TO SCHEDULE 4.28 FORM OF CONTROL AGREEMENT REGARDING DEPOSIT
  ACCOUNTS

  	
   

  

 

iii

 

AMENDED
AND RESTATED CANADIAN SECURITY AGREEMENT

 

Amended and
restated security agreement dated as of March 26, 2002, amended and
restated as of August 18, 2003 and amended and restated as of June 28,
2005, made by Williams Scotsman of Canada, Inc.
(the “Obligor”), a corporation
incorporated and existing under the laws of the Province of Ontario, to and in
favour of Bank of America, N.A. (“BofA”),
as Collateral Agent for the benefit of the Secured Creditors (as defined
herein).

 

WHEREAS:

 

(a)           Williams
Scotsman International, Inc. (formerly known as Scotsman Holdings, Inc.)
(“Holdings”) and Williams Scotsman, Inc. (the “Borrower”), are parties to
a certain Credit Agreement, dated as of March 26, 2002, with the lenders
party thereto, Deutsche Bank Trust Company Americas (“DBTCA”), as
administrative agent, and certain other Persons, as amended by a First
Amendment, dated as of February 27, 2003, a Second Amendment, dated as of August 11,
2003, a Third Amendment, dated as of December 22, 2003, a Fourth
Amendment, dated as of September 24, 2004 and a Fifth Amendment, dated as
of April 15, 2005 (as so amended, the “Existing Credit Agreement”);

 

(b)           the
Borrower, Willscot Equipment, LLC, Space Master International, Inc., Truck &
Trailer Sales, Inc., Evergreen Mobile Company and the Senior Secured Notes
Trustee have entered into an Indenture, dated as of August 18, 2003 (as
amended, modified or supplemented from time to time, the “Senior Secured
Notes Indenture”), providing for (i) the issuance by the Borrower of
its 10% Senior Secured Notes due 2008 and all Senior Secured Notes issued upon any
exchange offer as contemplated in the Senior Secured Notes Indenture (the “Senior
Secured Notes”) to the holders thereof from time to time (the “Senior
Secured Noteholders” and, together with the Senior Secured Notes Trustee,
the “Second Lien Creditors” and, together with the First Lien Creditors,
the “Secured Creditors”) and (ii) the guaranty by the Guarantors
(as defined in the Senior Secured Notes Indenture) and the Subordinated
Guarantor (as defined in the Senior Secured Notes Indenture) of the Borrower’s
obligations under the Senior Secured Notes Indenture and the Senior Secured
Notes (each such guaranty, together with the Senior Secured Notes Indenture and
the Senior Secured Notes, are herein called the “Senior Secured Notes
Documents”);

 

(c)           pursuant
to the Canadian Subsidiaries Guaranty (as defined in the Existing Credit
Agreement), the Obligor has guaranteed to the First

 

 

Lien Creditors the payment when due of all Guaranteed Obligations as
described therein;

 

(d)           the
Obligor and DBTCA, as the collateral agent entered into the Canadian Security
Agreement, dated as of March 26, 2002 and amended and restated as of August 18,
2003 (as amended, modified or supplemented through, but not including, the date
hereof, the “Original Canadian Security Agreement”), pursuant to which
the Obligor granted a security interest in the Collateral for the benefit of
the Secured Creditors under, and as defined in, the Original Canadian Security
Agreement;

 

(e)           it was
a condition precedent to the making of loans to, and the issuance of, and
participation in, letters of credit for the account of the Borrower under the
Existing Credit Agreement that the Obligor shall have executed and delivered to
the Collateral Agent (as defined therein) the Original Canadian Security Agreement;

 

(f)            it
was a condition precedent to the issuance of the Senior Secured Notes by the
Borrower under the Senior Secured Notes Indenture that the Obligor shall have
executed and delivered the Original Canadian Security Agreement;

 

(g)           BofA
and DBTCA have purchased from the other lenders party to the Existing Credit
Agreement all of such lenders’ right, title and interest in and to the Existing
Credit Agreement and the documents and instruments executed and delivered in
connection therewith (with certain exceptions), all pursuant to a certain
Assignment and Assumption Agreement (the “Bank Assignment Agreement”),
dated as of the Effective Date, among BofA, DBTCA, the other lenders party to
the Existing Credit Agreement, the administrative agent and collateral agent
under the Existing Credit Agreement, the Borrower and Holdings, and which was
acknowledged and accepted therein, inter
alia, by the Obligor;

 

(h)           Holdings,
the Borrower, the financial institutions from time to time party thereto (the “Lenders”),
BofA, as Administrative Agent (together with any successor administrative
agent, the “Administrative Agent”), DBTCA, as Syndication Agent,
Citicorp USA, Inc., Wells Fargo Bank, N.A. and Lehman Commercial Paper
Inc., as Co-Documentation Agents, and Banc of America Securities LLC and
Deutsche Bank Securities Inc., as Co-Lead Arrangers and Joint Book Runners,
desire to amend and restate the Existing Credit Agreement in its entirety and
have entered into an Amended and Restated Credit Agreement, dated

 

2

 

as of
the Effective Date, (as further amended, modified, extended, renewed, replaced,
restated or supplemented from time to time, and including any agreement or
agreements extending the maturity of, or refinancing or restructuring
(including, but not limited to, the inclusion of additional borrowers or
guarantors thereunder or any increase in the amount borrowed) all or any
portion of, the indebtedness under such agreement or any successor agreement or
agreements, whether or not with the same agent, trustee, representative,
lenders or holders, the “Amended and Restated  Credit Agreement”),
providing for the making of Loans and the issuance of, and participation in,
Letters of Credit for the account of the Borrower as contemplated therein (the
Lenders, each Issuing Lender, the Administrative Agent and its affiliates, the
Collateral Agent and each other Agent (as defined in the Amended and Restated
Credit Agreement) are herein called the “Bank Creditors”);

 

(i)            the
Borrower may from time to time be party to one or more interest rate agreements
(including, without limitation, interest rate swaps, caps, floors, collars, and
similar agreements) (collectively, the “Interest Rate Agreements”) with
BofA, any Lender, any affiliate thereof or a syndicate of financial
institutions organized by BofA or an affiliate of BofA (even if BofA or any
such Lender ceases to be a Lender under the Amended and Restated Credit
Agreement for any reason), and any institution that participates, and in each
case their subsequent assigns, in such Interest Rate Agreement (collectively,
the “Interest Rate Creditors”, and the Interest Rate Creditors together
with the Bank Creditors, collectively, the “First Lien Creditors”);

 

(j)            it is
a condition precedent to the amendment and restatement of the Existing Credit
Agreement as contemplated by the Amended and Restated Credit Agreement and to
the making of Loans to, and the issuance of, and participation in, Letters of
Credit for the account of the Borrower under the Amended and Restated Credit
Agreement, that the Original Canadian Security Agreement and the Canadian
Subsidiaries Guaranty be amended and restated in their entirety.

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual agreements contained herein (the
receipt and adequacy of which are acknowledged), the parties hereto agree that
the Original Canadian Security Agreement be amended and restated in its
entirety as follows:

 

3

 

ARTICLE 1

INTERPRETATION

 

Section 1.1            Defined Terms.

 

As used in
this security agreement and the recitals hereto, the following terms have the
following meanings:

 

“Administrative Agent” means BofA acting as administrative
agent for the Lenders under the Amended and Restated Credit Agreement and any
successor appointed pursuant to the Amended and Restated Credit Agreement.

 

“Amended and
Restated Credit Agreement” has the meaning ascribed
thereto in the recitals of this security agreement.

 

“Applicable Value” means, with respect
to any Subsidiary of the Borrower, the aggregate amount, par value, book value
as carried by the Borrower or the market value, whichever is greater, of the
capital stock or other securities of such Subsidiary.

 

“Bank Assignment Agreement” has the meaning ascribed thereto
in the recitals of this security agreement.

 

“Bank Creditors” means, collectively, the Lenders, the
Collateral Agent, the Issuing Lender, the Syndication Agent, the
Co-Documentation Agents, the Administrative Agent and the Co-Lead Arrangers and
Joint Book Runners.

 

“Borrower” means Williams Scotsman, Inc., a corporation
incorporated and existing under the laws of the State of Maryland, and its
successors and permitted assigns.

 

“Business Day” means any day excluding Saturday, Sunday and
any day which shall be in the City of New York a legal holiday or a day in
which banking institutions are authorized by law or other governmental actions
to close.

 

“Co-Documentation Agents”
means Citicorp USA, Inc., Wells Fargo Bank, N.A. and Lehman Commercial
Paper Inc. acting as co-documentation agents under the Amended and Restated
Credit Agreement and any successors appointed pursuant to the Amended and
Restated Credit Agreement, and their respective permitted assigns.

 

“Co-Lead Arrangers and Joint Book Runners”
means Banc of America Securities LLC and Deutsche Bank Securities Inc., as the
co-lead arrangers and joint book managers, and their respective successors and
permitted assigns.

 

4

 

“Collateral” has the meaning ascribed thereto in Section 2.1(1).

 

“Collateral Agent” means BofA acting as collateral agent for
the Secured Creditors, and any successor thereto, or sub-collateral agent,
appointed pursuant to the Amended and Restated Credit Agreement, and its
permitted assigns.

 

“Confidential Information” means all trade secrets,
confidential information, proprietary information, and confidential know-how
including all unpatented inventions, all customer and supplier lists, all
unpublished studies and data, prototypes, drawings, design and construction
specifications and production, operating and quality control manuals, all
marketing strategies and business plans, all current or proposed business
opportunities, and all documents, material and media embodying other items of
Confidential Information.

 

“Contract Rights” means all rights of the Obligor (including
all Rentals and all other rights to payment) under each Contract.

 

“Contracts” means all contracts between the Obligor and one
or more additional parties (including any and all Interest Rate Agreements,
Leases, licensing agreements and any partnership agreements, joint venture
agreements and limited liability company agreements).

 

“Copyrights” means all copyrights, all registrations and
applications that have been or shall be made or filed in the Canadian
Intellectual Property Office - Copyrights or any similar office in any country
and all records thereof and all reissues, extensions or renewals thereof, and
all common law and other rights in the foregoing.

 

“Credit Document Obligations” has the meaning provided in the
definition of Obligations.

 

“Credit Documents” means the Amended and Restated Credit
Agreement and each other Credit Document under and as defined in the Amended
and Restated Credit Agreement.

 

“Credit Parties” means, collectively,
Holdings, the Borrower and the Subsidiary Guarantors.

 

“DBTCA” means Deutsche Bank Trust
Company Americas, formerly named Bankers Trust Company, and any successor
thereto and its permitted assigns.

 

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

 

5

 

“Designs” means all industrial designs and other designs and
all registrations and applications that have been or shall be made or filed in
the Canadian Intellectual Property Office – Designs or any similar office in
any country and all records thereof and all reissues, extensions or renewals
thereof, and all common law and other rights in the foregoing.

 

“Effective Date” means June 28, 2005.

 

“Event of Default” means any Event of Default (or similar
term) under, and as defined in, the Amended and Restated Credit Agreement or
any Interest Rate Agreement entered into with an Interest Rate Creditor and shall
in any event include (i) any payment default on any of the Obligations (as
defined in the respective agreements) under the Amended and Restated Credit
Agreement, any Interest Rate Agreement or any Senior Secured Notes Document
after the expiration of any applicable grace period and (ii) at any time
after the First Lien Obligations have been paid in full, all Letters of Credit
have been terminated or cash collateralized in a manner satisfactory to the
Administrative Agent and all Commitments have been terminated, any “Event of
Default” (or similar term) under, and as defined in, the Senior Secured Notes
Indenture.

 

“Existing Credit Agreement” has the meaning provided in the
recitals of this security agreement.

 

“First Lien Creditors” means, collectively, the Bank
Creditors and the Interest Rate Creditors.

 

“First Lien Obligations” means all
Credit Document Obligations and all Interest Rate Obligations.

 

“Governmental Entity” means any (i) multinational,
federal, provincial, state, municipal, local or other government, governmental
or public department, central bank, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) any subdivision or authority of
any of the foregoing, or (iii) any quasi-governmental or private body exercising
any regulatory, expropriation or taxing authority under or for the account of
any of the above.

 

“Guarantee” means the guarantee dated March 26, 2002
made by the Obligor in favour of the First Lien Creditors and the Collateral
Agent, as amended and restated as of June 28, 2005 and as further amended,
modified, extended, restated or supplemented from time to time.

 

“Holdings” means Williams Scotsman
International, Inc. and its successors.

 

“Indemnitees” has the meaning ascribed thereto in Section 5.11(1).

 

6

 

“Instruments” means, (i) a bill,
note or cheque within the meaning of the Bills
of Exchange Act (Canada) or any other writing that evidences a right
to the payment of money and is of a type that in the ordinary course of
business is transferred by delivery with any necessary endorsement or
assignment, or (ii) a letter of credit and an advice of credit if the
letter or advice states that it must be surrendered upon claiming payment
thereunder, or (iii) chattel paper or any other writing that evidences
both a monetary obligation and a security interest in or a lease of specific
goods, or (iv) documents of title or any other writing that purports to be
issued by or addressed to a bailee and purports to cover such goods in the
bailee’s possession as are identified or fungible portions of an identified
mass, and that in the ordinary course of business is treated as establishing
that the person in possession of it is entitled to receive, hold and dispose of
the document and the goods it covers, or (v) any document or writing
commonly known as an instrument.

 

“Intellectual Property” has the meaning ascribed thereto in Section 2.1(1)(h).

 

“Intercreditor Agreement” means the
intercreditor agreement dated August 18, 2003 among the Collateral Agent,
the Administration Agent and the Senior Secured Notes Trustee as the same may
from time to time be amended, modified, restated or supplemented.

 

“Interest Rate Agreement” means any interest rate agreement
(including interest rate swaps, caps, floors, collars and similar agreements)
between the Borrower and any Interest Rate Creditor.

 

“Interest Rate Creditors” means, collectively, any Lender,
any affiliate thereof or a syndicate of financial institutions organized by BofA
or an affiliate of BofA (even if BofA or any such Lender subsequently ceases to
be a Lender under the Amended and Restated Credit Agreement for any reason) and
any institution that participates, and in each case their subsequent assigns,
in any Interest Rate Agreement with the Borrower.

 

“Interest Rate Obligations” has the meaning provided in the
definition of Obligations.

 

“Inventory” means (i) merchandise,
inventory and goods, and all additions, substitutions and replacements thereof
and all accessions thereto, wherever located, together with all goods,
supplies, incidentals, packaging materials, labels, materials and any other
items used or usable in manufacturing, processing, packaging or shipping same,
in all stages of production from raw materials through work in process to
finished goods, and all products and proceeds of whatever sort and wherever
located and any portion thereof which may be returned, rejected, reclaimed or
repossessed by the Collateral

 

7

 

Agent from the
Obligor’s customers, and (ii) any and all other “inventory” as such term
is defined in the PPSA as in effect on the Effective Date.

 

“Leases” means any agreement between the Obligor and any
other Person for the lease or rental of Rental Equipment, Inventory or other
assets or property, whether (x) by the Obligor to such Person or
(y) by such Person to the Obligor.

 

“Lenders” means, collectively, the financial institutions
listed from time to time on Schedule I to the Amended and Restated Credit
Agreement, as lenders, as well as any Person which becomes a Lender pursuant to
Section 11.6 of the Amended and Restated Credit Agreement, and their
respective successors and assigns.

 

“Licensed Trade-marks” has the meaning
ascribed thereto in Section 4.9.

 

“Lien” means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), security agreement
of any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the PPSA or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).

 

“Negotiable Collateral” has the meaning ascribed thereto in Section 2.3(3).

 

“Obligations” means:

 

(i)            the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness (including principal, premium, interest (including all interest
that accrues after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency, reorganization or similar proceeding of
the Obligor at the rate provided for in the respective documentation, whether
or not a claim for post-petition interest is allowed in any such proceeding),
reimbursement obligations under Letters of Credit, fees, costs and indemnities)
of the Obligor owing to the Bank Creditors, now existing or hereafter incurred
under, arising out of or in connection with any Credit Document to which the
Obligor is a party (including all such obligations, liabilities and
indebtedness under the Guarantee) and the due performance and compliance by the
Obligor, with the terms, conditions and agreements of each such Credit Document
(all such obligations and liabilities under this paragraph (i), except to the
extent guaranteeing obligations of the Borrower under Interest Rate Agreements,

 

8

 

being herein collectively called the “Credit Document Obligations”);

 

(ii)           the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness (including all interest that accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of the Obligor at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such proceeding) of the Obligor owing to the Interest Rate
Creditors, now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Agreement, whether such Interest Rate
Agreement is now in existence or hereafter arising, and the due performance and
compliance by the Obligor with all of the terms, conditions and agreements of
each Interest Rate Agreement including all obligations, liabilities and
indebtedness under the Guarantee (all such obligations and liabilities under
this paragraph (ii) being herein collectively called the “Interest Rate Obligations”);

 

(iii)          the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, indebtedness and
liabilities (including principal, premium and interest (including all interest
that accrues after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency, reorganization or similar proceeding of
the Obligor at the rate provided for in the respective documentation, whether
or not a claim for post-petition interest is allowed in any such proceeding))
owing by the Obligor to the Second Lien Creditors, whether now existing or
hereafter incurred under, arising out of, or in connection with the Senior
Secured Notes and the other Senior Secured Notes Documents to which the Obligor
is a party (including all such obligations, indebtedness and liabilities of the
Obligor under any guaranty constituting a Senior Secured Notes Document) and
the due performance and compliance by the Obligor with all of the terms,
conditions and agreements contained in the Senior Secured Notes and in such
other Senior Secured Notes Documents (all such obligations, indebtedness and
liabilities under this clause (iii) being herein collectively called the “Second Lien Obligations”);

 

9

 

(iv)          any and all sums advanced by the Collateral Agent in order to
preserve the Collateral or preserve its security interest in the Collateral;

 

(v)           in the event of any proceeding for the collection or enforcement of
any indebtedness, obligations or liabilities of the Obligor referred to in
paragraphs (i), (ii) and (iii) above, after an Event of Default shall
have occurred and be continuing, the reasonable expenses of re-taking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing the
Collateral, or of any exercise by the Collateral Agent of its rights hereunder,
together with reasonable attorneys’ fees and court costs;

 

(vi)          all amounts paid by an Indemnitee as to which such Indemnitee has
the right to reimbursement under Section 5.11 of this security agreement;
and

 

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

 

it being
acknowledged and agreed that the “Obligations”
shall include extensions of credit of the types described above,
whether outstanding on Effective Date or extended from time to time after the
Effective Date.

 

“Obligor” means Williams Scotsman of Canada, Inc., a corporation
incorporated and existing under the laws of the Province of Ontario and its
successors and permitted assigns.

 

“Original Canadian Security Agreement” has the meaning provided in the recitals of this security agreement.

 

 “Owned Trade-marks” has the meaning ascribed thereto in Section 4.9.

 

“Patents” means all letters patent for an invention and all
registrations and applications that have been or shall be made or filed in the
Canadian Intellectual Property Office - Patents or any similar office in any
country and all records thereof and all renewals, reissues, extensions,
divisions, continuations and continuations-in-part thereof and any and all
resulting letters patent and all other rights in the foregoing.

 

“Person” means a natural person, partnership, corporation,
joint stock company, trust, unincorporated association, joint venture or other
entity or Governmental Entity, and pronouns have a similarly extended meaning.

 

“PPSA” has the meaning ascribed
thereto in Section 1.2.

 

10

 

“Receivables” means, collectively:

 

(a)           any “account” as such term is defined in the Personal
Property  Security Act
(Ontario) as in effect on the Effective Date and any right to payment for goods
sold or leased or services performed whether now in existence or arising from
time to time hereafter, including any right evidenced by an account, note,
contract, security agreement, chattel paper or other evidence of indebtedness
or security; and

 

(b)           all (i) security pledged, assigned, hypothecated or granted to
or held by the Obligor to secure the accounts and rights described in paragraph
(a); (ii) right, title and interest in and to any goods, the sale of which
gave rise to the accounts and rights described in paragraph (a); (iii) guarantees,
endorsements and indemnifications on, or of, any of the accounts and rights
described in paragraph (a); (iv) powers of attorney for the execution of
any evidence of indebtedness or security or other writing in connection with
the accounts and rights described in paragraph (a); (v) books, records,
ledger cards, and invoices relating to the accounts and rights described in
paragraph (a); (vi) evidences of the filing of financing statements and
other statements and the registration of other instruments in connection with
the accounts and rights described in paragraph (a) and amendments to the
accounts and rights described in paragraph (a), notices to other creditors or
secured parties, and certificates from filing or other registration officers; (vii) credit
information, reports and memoranda relating to the accounts and rights
described in paragraph (a); and (viii) other writings related in any way
to the accounts and rights described in paragraph (a) and this paragraph
(b).

 

“Rental Equipment” means all Units which are sold or leased
or held for sale or lease, by the Obligor to one or more third persons.

 

“Rentals” means all rents payable under the Leases in respect
of the use of any Rental Equipment by account debtors as lessees of such Rental
Equipment to the Obligor as the lessor of such Rental Equipment.

 

“Representative” means, with respect
to the Interest Rate Creditors, the trustee, paying agent or other similar
representative for the Interest Rate Creditors.

 

“Required Second Lien Creditors” means
the holders of at least a majority of the then outstanding principal amount of
all Senior Secured Notes.

 

“Required Secured Creditors” shall
mean (i) at any time when any Credit Document Obligations are outstanding
or any Commitments or Letters of

 

11

 

Credit under
the Amended and Restated Credit Agreement exist, the Required Lenders (or, to
the extent required by Section 11.10 of the Amended and Restated Credit
Agreement, each of the Lenders), (ii) at any time after all of the Credit
Document Obligations have been paid in full in cash in accordance with the
terms thereof and all Commitments and Letters of Credit under the Amended and
Restated Credit Agreement have been terminated, the holders of a majority of
the Interest Rate Obligations and (iii) at any time after all Credit
Document Obligations and Interest Rate Obligations have been paid in full in
cash in accordance with the terms thereof and all Commitments and Letters of
Credit under the Amended and Restated Credit Agreement have been terminated,
the Senior Secured Notes Trustee acting at the direction of the Required Second
Lien Creditors.

 

“Restricted Asset” has the meaning ascribed thereto in Section 2.4(1).

 

“Second Lien Creditors” means collectively,
the Senior Secured Noteholders and the Senior Secured Notes Trustee.

 

“Second Lien Excluded Collateral” means
and includes (i) any property or assets owned by any Unrestricted
Subsidiary (as defined in the Senior Secured Notes Indenture), (ii) all
capital stock or other securities of the Borrower or any Unrestricted
Subsidiary, (iii) all capital stock or other securities of Restricted
Subsidiaries (as defined in the Senior Secured Notes Indenture) to the extent
the Applicable Value of such capital stock or other securities (on a Subsidiary
by Subsidiary basis) is equal to or greater than 20% of the then aggregate
principal amount of the Senior Secured Notes outstanding, and (iv) all
proceeds and products from any and all of the foregoing excluded Collateral
described in clauses (i) through (iii), unless such proceeds or products
would otherwise constitute Collateral without regard to preceding clauses (i) through
(iii); provided, however, in the event that Rule 3-10 or Rule 3-16 of
Regulation S-X under the Securities Act is amended, modified or interpreted by
the SEC to require (or is replaced with another rule or regulation, or any
other law, rule or regulation is adopted, which would require) the filing
with the SEC of separate financial statements of any Restricted Subsidiary of
the Borrower due to the fact that such Restricted Subsidiary’s capital stock or
other securities secure the Senior Secured Notes, then the capital stock or
other securities of such Restricted Subsidiary shall automatically be deemed
not to be part of the Collateral in which the Second Lien Creditors have a
security interest and shall automatically be deemed to be part of the Second
Lien Excluded Collateral, but only to the extent necessary to not be subject to
such requirement.  In such event, the
applicable Collateral Documents shall be deemed to be amended or modified
(without the consent of any Secured Creditor) to include as Second Lien
Excluded Collateral the shares of capital stock or other securities that are so
deemed to

 

12

 

no longer
constitute part of the Collateral.  In
the event that Rule 3-10 or Rule 3-16 of Regulation S-X under the
Securities Act is amended, modified or interpreted by the SEC to permit (or is
replaced with another rule or regulation or any other law, rule or
regulation is adopted, which would permit) such Restricted Subsidiary’s capital
stock and other securities to secure the Senior Secured Notes in excess of the
amount or value then pledged pursuant to the Collateral Documents without the
filing with the SEC of separate financial statements of such Restricted
Subsidiary, then the capital stock and other securities of such Restricted
Subsidiary shall automatically be deemed to be a part of the Collateral, but
only to the greatest extent which would not cause the financial statements of
such Restricted Subsidiary to be subject to any such financial statement
requirement.

 

“Second Lien Obligations” has the
meaning provided in the definition of Obligations.

 

“Secured Creditors” means, collectively, the First Lien
Creditors and the Second Lien Creditors.

 

“Secured Debt Agreements” shall mean
and include this security agreement, the other Credit Documents, the Interest
Rate Agreements entered into with an Interest Rate Creditor and the Senior
Secured Notes Documents.

 

“Securities” means a document that is,
(i) issued in bearer, order or registered form, (ii) of a type
commonly dealt in upon securities exchanges or markets or commonly recognized
in any area in which it is issued or dealt in as a medium for investments, (iii) one
of a class or series or by its terms is divisible into a class or series of
documents, and (iv) evidence of a share, participation or other interest
in property or in an enterprise or is evidence of an obligation of the issuer,
and includes an uncertificated security.

 

“security agreement” means this
Amended and Restated Canadian Security Agreement as the same may modified,
supplemented or amended from time to time in accordance with its terms.

 

“Security Interest” has the meaning ascribed thereto in Section 2.2(1).

 

“Senior Secured Noteholders” means
collectively, the holders from time to time of the Senior Secured Notes.

 

“Senior Secured Notes Documents” means
collectively, the guarantee by the Obligor, inter
alia, of the Borrower’s obligations under the Senior Secured Notes,
the Senior Secured Notes Indenture and the Senior Secured Notes.

 

13

 

“Senior Secured Notes Indenture” means
the indenture, dated August 18, 2003 among, the Senior Secured Notes
Trustee and the Obligor, inter alia,
as the same may from time to time be amended, modified or supplemented.

 

“Senior Secured Notes” means
collectively, the 10% senior secured notes of the Borrower due 2008 and all
Senior Secured Notes issued upon the exchange offer contemplated in the Senior
Secured Notes Indenture.

 

“Senior Secured Notes Trustee” means
U.S. Bank National Association and any successor trustee;

 

“Software” means all computer programs and databases and
portions thereof, in whatever form and on whatever medium those programs or
databases are expressed, fixed, embodied or stored from time to time, and the
copyright therein including, the object code and source code versions of each such
program and portions thereof and all corrections, updates, enhancements,
translations, modifications, adaptations and new versions thereof together with
both the media upon or in which such programs, databases and portions thereof
are expressed, fixed, embodied or stored (such as disks, diskettes, tapes and
semiconductor chips) and all flow charts, manuals, instructions, documentation
and other material relating thereto.

 

“Syndication Agent” means DBTCA acting as syndication agent
for the Lenders under the Amended and Restated Credit Agreement and any
successor appointed pursuant to the Amended and Restated Credit Agreement, and
its permitted assigns.

 

“Termination Date” means the date upon which
the Total Commitments under the Amended and Restated Credit Agreement have been
terminated and all Interest Rate Agreements entered into with any Interest Rate
Creditor have been terminated (or cash collateralized Collateral in a manner
reasonably satisfactory to the Administrative Agent), no Note under the Amended
and Restated Credit Agreement is outstanding and all Loans thereunder have been
repaid in full in cash in accordance with the terms thereof, all Letters of
Credit issued under the Amended and Restated Credit Agreement have been
terminated (or cash collateralized in a manner satisfactory to the
Administrative Agent), all Second Lien Obligations have been paid in full in
cash (or defeased or discharged) in accordance with the terms thereof and all
other Obligations then due and payable have been paid in full; provided,
however, at such time as (x) all First Lien Obligations have been paid in full
in cash in accordance with the terms thereof and all Commitments under the
Amended and Restated Credit Agreement have been terminated and all Letters of
Credit have been terminated or cash collateralized in a manner satisfactory to
the Administrative Agent or (y) the First Lien Creditors have

 

14

 

released their
Liens on all of the Collateral then, in either case, this security agreement
and the security interests created hereby shall terminate (provided that all
indemnities set forth herein (including in Section 5.11 hereof) and in Section 6
of Annex N of the U.S. Security Agreement shall survive such termination) unless,
in the case of preceding clause (x), any Event of Default under the Senior
Secured Notes Indenture exists as of the date on which the First Lien
Obligations are repaid in full and terminated as described in such clause (x),
in which case the security interests created under this security agreement in
favour of the Second Lien Creditors will not be released except to the extent
the Collateral or any portion thereof was disposed of in order to repay the
First Lien Obligations (although the security interests created in favour of
the Second Lien Creditors will be released when such Event of Default and all
other Events of Default under the Senior Secured Notes Indenture cease to
exist).

 

“Trade-marks” means: (i) trade-marks, whether registered
or unregistered and whether in use or proposed; (ii) designs, logos,
indicia, trade names, corporate names, company names, business names, trade
styles and other source or business identifiers; (iii) fictitious
characters and names; (iv) prints and labels on which any of the foregoing
have appeared or appear or shall appear; (v) all registrations and
applications that have been or shall be made or filed in the Canadian
Intellectual Property Office - Trade-marks or any similar office in any country
and all records thereof and all reissues, extensions, or renewals thereof, and (vi) all
goodwill associated with or symbolized by any of the above and all common law
and other rights in the foregoing.

 

“Trade-mark License Agreement” means the trade-mark licence
agreement dated November 23, 1998 between the Obligor and the Borrower
pursuant to which the Borrower has licensed the Trade-marks to the Obligor.

 

“Units” means the mobile structures generally constructed of
steel or using a steel frame and undercarriage with an exterior of wood or
aluminium owned by the Obligor used to provide office, classroom, storage,
commercial or other space, whether in single units or physically attached to
such other units (and including in such form, storage containers, mobile
offices and modular structures and related equipment), which structures are
capable of being transported to and assembled on remote sites, and which may be
equipped with air conditioning and heating, electrical outlets, floors,
partitions, plumbing, carpeting, moldings, wall coverings, lighting and other
accessories.

 

“U.S. Security Agreement” has the meaning ascribed thereto in
Section 3.2(i).

 

15

 

Section 1.2            Terms Incorporated by Reference.

 

(1)           Terms defined in the Personal Property Security
Act (Ontario) (as amended from time to time, the “PPSA”) and used but not otherwise defined in this security
agreement shall have the same meanings.

 

(2)           Except as otherwise defined herein, all capitalized terms used
herein and defined in the Amended and Restated Credit Agreement shall be used
herein as therein defined (or, at any time on or after the first date when all
Credit Document Obligations shall have been repaid in full and all Letters of
Credit have been terminated or cash collateralized in a manner satisfactory to
the Administrative Agent and the Total Commitments under the Amended and
Restated Credit Agreement have been terminated and thereafter for so long as no
Amended and Restated Credit Agreement is in effect, the Amended and Restated
Credit Agreement as in effect on such date immediately prior to such repayment
and termination, provided that all determinations required to be made to the
satisfaction of the Administrative Agent and all matters required to be
acceptable to the Administrative Agent in each case as provided in any such
definition shall, after such date, instead be required to be made to the
satisfaction of the Collateral Agent or be required to be acceptable to the
Collateral Agent, as the case may be).

 

Section 1.3            Statutes.

 

Unless
specified otherwise, reference in this security agreement to a statute refers
to that statute as it may be amended, or to any restated or successor
legislation of comparable effect.

 

Section 1.4            Certain Phrases, etc.

 

In this
security agreement the words “including” and
“includes” mean “including
(or includes) without limitation”.

 

Section 1.5            Gender and Number.

 

Any reference
in this security agreement to gender shall include all genders and words
importing the singular number only shall include the plural and vice versa.

 

Section 1.6            Headings, etc.

 

The division
of this security agreement into Articles and Sections and the insertion of
headings are for convenient reference only and are not to affect its
interpretation.  The expressions “Article”
and “Section” followed by a number mean and refer to the specified Articles or Section of
this security agreement.

 

Section 1.7            Schedules.

 

The Schedules
attached to this security agreement shall, for all purposes of this security
agreement, form an integral part of it.

 

16

 

ARTICLE 2

SECURITY

 

Section 2.1            Grant of Security.

 

(1)           Subject to Section 2.4, the Obligor charges, assigns,
hypothecates, pledges and transfers to the Collateral Agent, and grants to the
Collateral Agent for the benefit of the Secured Creditors (and, to the extent
the following constitutes “Collateral” under, and as defined in, the Original
Canadian Security Agreement, does hereby reconfirm (without interruption) its
charge, assignment, hypothecation, pledge, transfer and grant to the Collateral
Agent under the Original Canadian Security Agreement of), a security interest
in all the Obligor’s right, title and interest in and to the personal property
and undertaking of the Obligor now owned or hereafter acquired (collectively,
the “Collateral”) including any and all of
the Obligor’s:

 

(a)           Inventory including goods held for sale, lease or resale, goods
furnished or to be furnished to third parties under contracts of lease, consignment
or service, goods which are raw materials or work in process, goods used in or
procured for packing and materials used or consumed in the business of the
Obligor;

 

(b)           equipment, machinery, furniture, fixtures, plant, vehicles and other
goods of every kind and description and all licences and other rights and all
records, files, charts, plans, drawings, specifications, manuals and documents
relating thereto;

 

(c)           Units;

 

(d)           Receivables and all agreements, books, accounts, invoices, letters,
documents and papers recording, evidencing or relating thereto;

 

(e)           money, documents of title and chattel paper;

 

(f)            Securities and Instruments, including the Securities listed in Schedule 2.1(1)(f);

 

(g)           intangibles including all security interests, goodwill, choses in
action, Contracts, Contract Rights, Software and other contractual benefits;

 

(h)           Copyrights, Designs, Patents, Confidential Information, Trade Secret
Rights and Trade-marks and other intellectual property (collectively, the “Intellectual Property”) including the Intellectual Property
described in Schedule 2.1(1)(h);

 

(i)            insurance policies;

 

17

 

(j)            substitutions and replacements of and increases, additions and,
where applicable, accessions to the property described in Section 2.1(1)(a) through
Section 2.1(1)(i), inclusive; and

 

(k)           proceeds in any form derived directly or indirectly from any dealing
with all or any part of the property described in Section 2.1(1)(a),
through Section 2.1(1)(j), inclusive, or the proceeds of such proceeds.

 

(2)           The security interest of the Collateral Agent under this security
agreement extends to all Collateral of the kind which is the subject of this
security agreement which the Obligor may acquire at any time during the
continuation of this security agreement.

 

(3)           Notwithstanding anything to the contrary contained in this security
agreement, (x) the Second Lien Creditors shall not have a security
interest in, and the grant of security interests pursuant to this security
agreement for the benefit of the Second Lien Creditors shall not extend to, any
Second Lien Excluded Collateral, and with respect to the Second Lien Creditors
the term “Collateral” shall not include the Second Lien Excluded Collateral,
(y) to the extent that the granting or perfecting of any assets or
property of the Obligor acquired after the Effective Date requires the consent
of a third party that has not been obtained after the Obligor has used
commercially reasonable efforts to obtain such consent, the Second Lien
Creditors shall not have a security interest in, and the grant of security
interest pursuant to the security agreement for the benefit of the Second Lien
Creditors shall not extend to, any such property or assets and (z) to the
extent that a security interest in favour of the Second Lien Creditors cannot
be granted or perfected in certain assets or property of the Obligor under
applicable law, the Second Lien Creditors shall not have a security interest
in, and the grant of security interest pursuant to this security agreement for
the benefit of the Second Lien Creditors that not extend to, any such assets or
property.

 

Section 2.2            Obligations Secured.

 

(1)           The security interest granted hereby (the “Security
Interest”) secures the payment and performance of all Obligations.

 

Section 2.3            Attachment.

 

(1)           The Obligor acknowledges that (i) value has been given, (ii) it
has rights in the Collateral (other than after-acquired Collateral), (iii) it
has not agreed to postpone the time of attachment of the Security Interest, and
(iv) it has received a duplicate original copy of this security agreement.

 

(2)           If any Security or Instrument is now or at any time hereafter
becomes evidenced, in whole or in part, by uncertificated securities registered
or recorded in records maintained by or on behalf of the Issuer thereof in the
name of a clearing agency or a custodian or of a nominee of either, the Obligor

 

18

 

shall, at the request of the Collateral Agent, cause
the Security Interest to be entered in the records of the clearing agency or
custodian and provide evidence of such notation to the Collateral Agent.

 

(3)           The Obligor hereby deposits with the Collateral Agent any and all
certificates evidencing the Securities listed in Schedule 2.1(1)(f), duly
endorsed for transfer in blank.  If the
Obligor acquires any Instrument, Security or negotiable document of title
constituting Collateral (collectively, “Negotiable Collateral”),
the Obligor will, within 10 Business Days after receipt, notify the Collateral
Agent thereof, and upon request by the Collateral Agent will promptly deliver
to the Collateral Agent the Negotiable Collateral as security for the
Obligations and shall, at the request of the Collateral Agent (i) cause
the transfer of the Negotiable Collateral to the Collateral Agent to be
registered wherever, in the reasonable opinion of the Collateral Agent, such
registration may be required or advisable, (ii) duly endorse the same for
transfer in blank or as the Collateral Agent may reasonably direct, and (iii) upon
request of the Collateral Agent, use commercially reasonable efforts to deliver
to the Collateral Agent any and all consents or other documents which may be
necessary to effect the transfer of the Negotiable Collateral to the Collateral
Agent or any third party.

 

(4)           The Obligor will promptly inform the Collateral Agent in writing of
the acquisition by the Obligor of any personal property which is not adequately
described in Section 2.1(1), and the Obligor will execute and deliver, at
its own expense, from time to time, amendments to this security agreement and
its schedules or additional security agreements or schedules as may be
reasonably required by the Collateral Agent.

 

Section 2.4            Scope of Security Interest.

 

(1)           To the extent that an assignment of amounts payable and other
proceeds arising under or in connection with any agreement, license, permit or
quota of the Obligor (each, a “Restricted Asset”)
is prohibited by the terms thereof, the Security Interest created hereunder
will constitute a trust created in favour of the Collateral Agent and the
Secured Creditors pursuant to which the Obligor shall hold as trustee all
proceeds arising under or in connection with the Restricted Asset in trust for
the Collateral Agent on the following basis:

 

(a)           until the Security Interest has become enforceable, the Obligor
shall be entitled to receive all such proceeds; and

 

(b)           whenever the Security Interest has become enforceable, all rights of
the Obligor to receive such proceeds shall cease, the Obligor shall at the
request of the Collateral Agent take all such actions to collect and enforce
payment and other rights arising under the Restricted Asset in accordance with
the instructions of the Collateral Agent and all such proceeds arising under or
in connection with the Restricted Asset shall

 

19

 

be immediately paid over to the Collateral Agent for
the benefit of the Secured Creditors.

 

The Obligor shall not exercise any rights of set off
with respect to amounts payable by it under or in connection with any
Restricted Asset and shall use commercially reasonable efforts to ensure that
no other party to the Restricted Asset shall exercise any rights of set off against
any such amounts.  The Obligor shall use commercially
reasonable efforts to obtain the consent of
each other party to the Restricted Asset to the assignment of the Restricted
Asset to the Collateral Agent in accordance with this security agreement and
shall use commercially reasonable efforts to ensure that all agreements entered
into on and after the Effective Date expressly permit assignments of the
benefits of such agreement as collateral security to the Collateral Agent in
accordance with the terms of this security agreement.

 

(2)           Until the Security Interest shall have become enforceable, the grant
of the Security Interest in the Intellectual Property shall not affect in any
way the Obligor’s rights to commercially exploit the Intellectual Property,
defend it, enforce the Obligor’s rights in it or with respect to it against
third parties in any court or claim and be entitled to receive any damages with
respect to any infringement of it.

 

(3)           The Security Interest shall not extend to consumer goods.

 

(4)           The Security Interest shall not extend or apply to the last day of
the term of any lease or sublease or any agreement for a lease or sublease, now
held or hereafter acquired by the Obligor in respect of real property, but the
Obligor shall stand possessed of any such last day upon trust to assign and
dispose of it as the Collateral Agent may reasonably direct.

 

Section 2.5            Grant of Licence to Use Intellectual Property.

 

Solely for
purposes of enabling the Collateral Agent to exercise its rights and remedies
pursuant to Article 3 but subject to the next following sentence, and for
no other purpose, the Obligor grants to the Collateral Agent an irrevocable,
nonexclusive licence (exercisable without payment of royalty or other
compensation to the Obligor) to use, assign or sublicense, at any time after
the Security Interest shall have become enforceable, any of the Intellectual
Property owned or licensed by the Obligor wherever the same may be located,
including in such licence access to (i) all media in which any of the
licensed items may be recorded or stored, and (ii) all Software used for
compilation or print-out.  To the extent
that the grant of a license under this Section 2.5 would constitute a
breach or permit the acceleration or termination of any Intellectual Property
licensed by the Obligor, such Intellectual Property shall not be subject to the
licence in favour of the Collateral Agent but the Obligor shall, upon the
reasonable request therefor from the Collateral Agent, use commercially
reasonable efforts to obtain the consent of the third party to such
Intellectual Property to the grant of the licence to the Collateral Agent
hereunder

 

20

 

and,
upon obtaining such consent, the Obligor shall grant a license as set forth in
this Section 2.5 to the Collateral Agent.

 

Section 2.6            Care and Custody of Collateral.

 

(1)           The Collateral Agent and the Secured Creditors shall have no
obligation to keep fungible Collateral in their possession identifiable, but
shall be bound to exercise in the keeping of the Collateral the same degree of
care as it would exercise with respect to similar property owned by it.

 

(2)           The Collateral Agent may, after the Security Interest shall have
become enforceable, (i) notify any Person obligated on any Receivable or
on chattel paper or any obligor on an instrument or under any Contract to make
payments to the Collateral Agent, whether or not the Obligor was previously
making collections on such Receivables, chattel paper, instruments or
Contracts, (ii) assume control of any proceeds arising from the
Collateral, (iii) direct the Obligor to cause, and the Obligor shall
cause, all payments on account of the Receivables, chattel paper, instruments
and Contracts to be made directly to the Cash Collateral Account, and (iv) direct
the Obligor to promptly (and in any event within 10 days) deliver all of its
chattel paper to the Collateral Agent.

 

(3)           The Collateral Agent need not see to the collection of dividends on,
or exercise any option or right in connection with, the Securities and
Instruments that are Collateral hereunder and need not protect or preserve them
from depreciating in value or becoming worthless and is released from all
responsibility for any loss of value. 
The Collateral Agent shall be bound to exercise in the physical keeping
of such Collateral only the same degree of care as it would exercise with
respect to its own securities.

 

Section 2.7            Rights of the Obligor.

 

(1)           Until the Security Interest has become enforceable, the Obligor
shall be entitled to vote the Securities and to receive all cash
dividends.  In order to allow the Obligor
to vote the Securities, the Collateral Agent shall from time to time, at the
request and the expense of the Obligor, (i) execute valid proxies
appointing proxyholders to attend and act at meetings of shareholders, and (ii) execute
resolutions in writing, all pursuant to the relevant provisions of the Issuer’s
governing legislation.  Whenever the
Security Interest has become enforceable, all rights of the Obligor to vote
(under any proxy given by the Collateral Agent (or its nominee) in connection
herewith or otherwise) or to receive dividends shall cease and all such rights
shall become vested solely and absolutely in the Collateral Agent.

 

(2)           Any dividends received by the Obligor contrary to Section 2.7(1) or
any other moneys or property which may be received by the Obligor after the
Security Interest has become enforceable for, or in respect of, the Collateral
shall be

 

21

 

received as trustee for the Collateral Agent and the
Lenders and shall be immediately paid over to the Collateral Agent.

 

ARTICLE 3

ENFORCEMENT

 

Section 3.1            Enforcement.

 

The Security
Interest shall be and become enforceable against the Obligor upon the
occurrence and during the continuance of an Event of Default.

 

Section 3.2            Remedies.

 

Whenever the
Security Interest has become enforceable, the Collateral Agent may realize upon
the Collateral and enforce the rights of the Collateral Agent and the Secured
Creditors by:

 

(a)           entry onto any premises where Collateral consisting of tangible
personal property may be located;

 

(b)           entry into possession of the Collateral by any method permitted by
law;

 

(c)           sale or lease of all or any part of the Collateral;

 

(d)           exercise and enforce all rights and remedies of a holder of the
Securities and Instruments as if the Collateral Agent were the absolute owner
thereof (including, if necessary, causing the Collateral to be registered in
the name of the Collateral Agent or its nominee if not already done);

 

(e)           collection of any proceeds arising in respect of the Collateral;

 

(f)            collection, realization or sale of, or other dealing with, the
Receivables;

 

(g)           subject to the terms of any Intellectual Property licenses and
consents with respect thereto obtained pursuant to Section 2.5, license or
sublicense, whether on an exclusive or nonexclusive basis, any Intellectual
Property owned or licensed by the Obligor for such term and on such conditions
and in such manner as the Collateral Agent shall in its sole judgment determine
(taking into account such provisions as may be necessary to protect and
preserve such Intellectual Property);

 

(h)           instruction to all banks which have entered into a control agreement
with the Collateral Agent to transfer all moneys, securities and instruments
held by such depositary bank to an account maintained with or by the Collateral
Agent;

 

(i)            application of any moneys constituting Collateral or proceeds
thereof in accordance with Section 7.4 of the amended and restated
security agreement dated as of March 26, 2002, amended and restated as of
the

 

22

 

August 18, 2003 date and amended and restated as
of the Effective Date (as such agreement may be amended, restated, modified
and/or supplemented from time the “U.S. Security Agreement”)
among Holdings, the Borrower, the other assignors party thereto and BofA, as
collateral agent for the secured creditors referred to therein.  Section 7.4 of the U.S. Security
Agreement is hereby incorporated herein by reference and all of the provisions
of such section shall apply hereto, mutatis
mutandis;

 

(j)            appointment by instrument in writing of a receiver (which term as
used in this security agreement includes a receiver and manager) or agent of
all or any part of the Collateral and removal or replacement from time to time
of any receiver or agent;

 

(k)           institution of proceedings in any court of competent jurisdiction
for the appointment of a receiver of all or any part of the Collateral;

 

(l)            institution of proceedings in any court of competent jurisdiction
for sale or foreclosure of all or any part of the Collateral;

 

(m)          filing of proofs of claim and other documents to establish claims to
the Collateral in any proceeding relating to the Obligor; and

 

(n)           any other remedy or proceeding authorized or permitted under the
PPSA or otherwise by law or equity.

 

Such remedies may be exercised from time to time separately or in
combination and are in addition to, and not in substitution for, any other
rights of the Collateral Agent and the Secured Creditors however created.  The Collateral Agent shall not be bound to
exercise any right or remedy, and the exercise of rights and remedies shall be
without prejudice to the rights of the Collateral Agent and the Secured
Creditors in respect of the Obligations including the right to claim for any
deficiency.  By accepting the benefits of
this security agreement and each other Collateral Document, the Secured Creditors
expressly acknowledge and agree that this security agreement and each other
Collateral Document may be enforced only by the action of the Collateral Agent
acting upon the instructions of the Required Lenders (or, if no Credit Document
Obligations remain outstanding, the holders of at least a majority of the
outstanding Interest Rate Obligations) and that no other Secured Creditor shall
have any right individually to seek to enforce this security agreement or any
other Collateral Document or to realize upon the security to be granted hereby
or thereby, it being understood and agreed that such rights and remedies may be
exercised by the Collateral Agent for the benefit of the Secured Creditors upon
the terms of this security agreement, the Intercreditor Agreement and the other
Collateral Documents.

 

23

 

Section 3.3            Additional
Rights.

 

In addition to the remedies set forth in
Section 3.2, the Collateral Agent may, whenever the Security Interest has
become enforceable:

 

(a)           require the Obligor, at the Obligor’s expense, to assemble the
Collateral at a place or places designated by notice in writing and the Obligor
agrees to so assemble the Collateral;

 

(b)           require the Obligor, by notice in writing, to disclose to the
Collateral Agent the location or locations of the Collateral and the Obligor
agrees to make such disclosure when so required;

 

(c)           repair, process, modify, complete or otherwise deal with the
Collateral and prepare for the disposition of the Collateral, whether on the
premises of the Obligor or otherwise;

 

(d)           carry on all or any part of the business of the Obligor and, to the
exclusion of all others including the Obligor (excluding any tenant leases or
other occupancy agreements entered into by the Obligor, to the extent permitted
by the Amended and Restated Credit Agreement, in accordance with the Amended
and Restated Credit Agreement), enter upon, occupy and use all or any of the
premises, buildings, and other property of or used by the Obligor for such time
as the Collateral Agent sees fit, free of charge, and, except as required by
applicable law, the Collateral Agent and the Secured Creditors shall not be
liable to the Obligor for any act, omission or negligence (other than wilful
misconduct and gross negligence (as determined by a court of competent
jurisdiction in a final and non-appealable decision) in so doing or for any
rent, charges, depreciation or damages incurred in connection with or resulting
from such action;

 

(e)           borrow for the purpose of carrying on the business of the Obligor or
for the maintenance, preservation or protection of the Collateral and grant a
security interest in the Collateral, whether or not in priority to the Security
Interest, to secure repayment; and

 

(f)            commence, continue or defend any judicial or administrative
proceedings for the purpose of protecting, seizing, collecting, realizing or
obtaining possession or payment of the Collateral, and give good and valid
receipts and discharges in respect of the Collateral and compromise or give
time for the payment or performance of all or any part of the accounts or any
other obligation of any third party to the Obligor.

 

24

 

Section 3.4            Receiver’s
Powers.

 

(1)           Any receiver appointed by the Collateral Agent shall be vested with
the rights and remedies which could have been exercised by the Collateral Agent
in respect of the Obligor or the Collateral and such other powers and
discretions as are granted in the instrument of appointment and any
supplemental instruments.  The identity
of the receiver, its replacement and its remuneration shall be within the sole
and unfettered discretion of the Collateral Agent.

 

(2)           Any receiver appointed by the Collateral Agent shall act as agent
for the Collateral Agent for the purposes of taking possession of the
Collateral, but otherwise and for all other purposes (except as provided
below), as agent for the Obligor.  The
receiver may sell, lease, or otherwise dispose of Collateral as agent for the
Obligor or as agent for the Collateral Agent as the Collateral Agent may
determine in a commercially reasonable manner. 
The Obligor agrees to indemnify the receiver in respect of all such
actions (except for actions constituting gross negligence and/or wilful
misconduct as determined in a final and unappealable decision by a court of
competent jurisdiction).

 

(3)           The Collateral Agent, in appointing or refraining from appointing
any receiver, shall not incur liability to the receiver, the Obligor or
otherwise and shall not, except as required by applicable law, be responsible
for any misconduct or negligence of such receiver.

 

Section 3.5            Appointment
of Attorney.

 

The Obligor hereby irrevocably appoints the
Collateral Agent (and any officer thereof) as attorney of the Obligor (with
full power of substitution) to exercise in the name of and on behalf of the
Obligor, after the Security Interest shall have become enforceable, any of the
Obligor’s right (including the right of disposal), title and interest in and to
the Collateral including the execution, endorsement, assignment, delivery and
transfer of the Collateral to the Collateral Agent, its nominees or
transferees, and the Collateral Agent and its nominees or transferees are
hereby empowered to exercise all rights and powers and to perform all acts of
ownership with respect to the Collateral to the same extent as the Obligor
might do.  The attorney shall not be
liable for any act, failure to act or any other matter or thing, except for its
own gross negligence or wilful misconduct (as determined by a court of
competent jurisdiction in a final and non-appealable decision).  This appointment and power of substitution,
being coupled with an interest, are irrevocable and shall not terminate upon
the bankruptcy, dissolution, winding up or insolvency of the Obligor.

 

Section 3.6            Dealing
with the Collateral.

 

(1)           The Collateral Agent and the Secured Creditors shall not be obliged
to exhaust their recourse against the Obligor or any other Person or against
any other security they may hold in respect of the Obligations before realizing
upon or

 

25

 

otherwise dealing with the Collateral in such manner
as the Collateral Agent may consider desirable.

 

(2)           The Collateral Agent and the Secured Creditors may grant extensions
or other indulgences, take and give up securities, accept compositions, grant
releases and discharges and otherwise deal with the Obligor and with other
Persons, sureties or securities as they may see fit without prejudice to the
Obligations, the liability of the Obligor or the rights of the Collateral Agent
and the Secured Creditors in respect of the Collateral.

 

(3)           Except as otherwise provided by law or this security agreement
(including Section 2.6(3), the Collateral Agent and the Secured Creditors
shall not be (i) liable or accountable for any failure to collect, realize
or obtain payment in respect of the Collateral, (ii) bound to institute
proceedings for the purpose of collecting, enforcing, realizing or obtaining
payment of the Collateral or for the purpose of preserving any rights of any persons
in respect of the Collateral, (iii) responsible for any loss occasioned by
any sale or other dealing with the Collateral or by the retention of or failure
to sell or otherwise deal with the Collateral, or (iv) bound to protect
the Collateral from depreciating in value or becoming worthless.

 

Section 3.7            Standards
of Sale.

 

Without prejudice to the ability of the
Collateral Agent to dispose of the Collateral in any manner which is
commercially reasonable, the Obligor acknowledges that, to the extent not
prohibited by law:

 

(a)           Collateral may be disposed of in whole or in part;

 

(b)           Collateral may be disposed of by public auction, public tender or
private contract;

 

(c)           any assignee of such Collateral may be the Collateral Agent, a
Secured Creditor or a customer of any such Person;

 

(d)           a disposition of Collateral may be on such terms and conditions as
to credit or otherwise as the Collateral Agent, in its sole discretion, may
deem advantageous; and

 

(e)           the Collateral Agent may establish an upset or reserve bid or price
in respect of Collateral.

 

Section 3.8            Dealings
by Third Parties.

 

(1)           No Person dealing with the Collateral Agent, any of the Secured
Creditors or an agent or receiver shall be required to determine
(i) whether the Security Interest has become enforceable,
(ii) whether the powers which such Person is purporting to exercise have
become exercisable, (iii) whether any money remains due to the Collateral
Agent or the Secured Creditors by the Obligor,

 

26

 

(iv) the necessity or expediency of the
stipulations and conditions subject to which any sale or lease is made,
(v) the propriety or regularity of any sale or other dealing by the
Collateral Agent or any Secured Creditor with the Collateral, or (vi) how
any money paid to the Collateral Agent or the Secured Creditors has been
applied.

 

(2)           Any bona fide purchaser of all or any
part of the Collateral from the Collateral Agent or any receiver or agent shall
hold the Collateral absolutely, free from any claim or right of whatever kind,
including any equity of redemption, of the Obligor, which it specifically
waives (to the fullest extent permitted by law) as against any such purchaser
together with all rights of redemption, stay or appraisal which the Obligor has
or may have under any rule of law or statute now existing or hereafter adopted.

 

Section 3.9            Registration
Rights.

 

If the Administrative Agent shall determine
to exercise its right to sell any or all of the Securities pledged hereunder,
and if in the opinion of the Administrative Agent it is necessary or advisable
to have any such Securities:

 

(a)           qualified for distribution by prospectus pursuant to the applicable
securities legislation in any or all provinces of Canada, the Obligor will
cause the Issuer thereof to (i) use its best efforts to file, and obtain a
receipt from the applicable securities regulatory authorities, for a
preliminary and final prospectus offering for sale such number of Securities as
the Administrative Agent shall direct; and (ii) execute and deliver, and cause
the directors and officers of such Issuer to execute and deliver, all such
certificates, instruments and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Administrative Agent, necessary or
advisable to qualify such Securities for distribution by prospectus pursuant to
the applicable securities legislation in any or all provinces of Canada; or

 

(b)           sold or registered under the provisions of the U.S. Securities Act
of 1933, as amended, the Obligor will cause the Issuer thereof to (i) execute
and deliver, and cause the directors and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of the Administrative Agent,
necessary or advisable to register the Securities pledged hereunder, or that
portion thereof to be sold, under the provisions of the U.S. Securities Act of
1933, as amended, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of
one year from the date of the first public offering of the Securities pledged
hereunder, or that portion thereof to be sold, and (iii) make all amendments
thereto and/or to the related prospectus which, in the opinion of the

 

27

 

Administrative Agent, are necessary or advisable, all
in conformity with the requirements of the U.S. Securities Act of 1933, as
amended, and the rules and regulations applicable thereto.

 

The Obligor agrees to cause such Issuer to
comply with the provisions of the securities legislation in effect in any or
all of the provinces of Canada, the U.S. Securities Act of 1933, as amended,
and the securities or “Blue Sky” laws of any jurisdictions outside Canada, in
each case, which the Administrative Agent shall designate.

 

ARTICLE 4

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 4.1            General
Representations, Warranties and Covenants.

 

The Obligor hereby represents and warrants
and covenants and agrees that:

 

(a)           Necessary Filings. 
Except as
set out forth in Sections 11.19 (a) and (b) of the Amended and Restated Credit
Agreement, all
filings, registrations and recordings necessary or appropriate to create,
preserve and perfect the Security Interest granted hereby in respect of the
Collateral located in jurisdictions (save and except for any filings,
registrations or recordings: (A) in respect of fixtures in the appropriate land
registry office; and (B) in respect of any assignment of Crown debts (as that
term is defined in the Financial
Administration Act (Canada)) to which Part VII of the Financial Administration Act (Canada)
applies), which filings, registrations or recordings the Obligor is not required
to make) have been accomplished or will be accomplished within one Business Day
from the Effective Date and upon such filings, registrations or recordations,
the Security Interest granted hereby in and to the Collateral constitutes or
will constitute a perfected security interest therein prior to the rights of
all other Persons therein and subject to no other Liens (other than Permitted
Liens) and is entitled to all the rights, priorities and benefits afforded by
such relevant laws as enacted in any relevant jurisdiction to perfected
security interests, in each case to the extent that the Collateral consists of
the type of property in which a security interest may be created;

 

(b)           No Liens. The Obligor
is, and as to Collateral acquired by it from time to time after the Effective
Date the Obligor will be, the owner or licensee of all Collateral free from any
Lien, adverse claim or other right, title or interest of any other Person
(other than Permitted Liens and the Security Interest), and the Obligor shall
defend the Collateral to the extent of its rights therein against all claims
and demands of all Persons at any time claiming the same or any interest
therein adverse to the Collateral Agent;

 

28

 

(c)           Other Financing Statements.  As of the Effective Date,
in the Qualified Canadian Jurisdictions, there is no financing statement (or
similar statement or instrument of registration under the law of any
jurisdiction) covering or purporting to cover any interest of any kind in the
Collateral except as disclosed in Schedule 4.1(c), and the Obligor will not
execute or authorize to be filed in any public office any financing statement
(or similar statement or instrument of registration under the law of any jurisdiction)
or statements relating to the Collateral, except financing statements filed or
to be filed in respect of and covering the security interests granted hereby
and by the other Credit Documents to which the Obligor is a party or as
permitted by the Amended and Restated Credit Agreement or in connection with
Permitted Liens;

 

(d)           Chief Executive Office; Records.  The chief executive office
of the Obligor is located at the address indicated on Schedule 4.1(d).  The Obligor will not move its chief executive
office except to such new location as the Obligor may establish in accordance
with the last sentence of this Section 4.1(d).  The originals of all documents evidencing all
Receivables, Contract Rights and Trade Secret Rights of the Obligor and the
only original books of account and records of the Obligor relating thereto are,
and will continue to be, kept at such chief executive office, and/or one or
more of the other record locations set out on Schedule 4.1(d) or at such new
locations as the Obligor may establish in accordance with the last sentence of
this Section 4.1(d).  All
Receivables and Contract Rights and Trade Secret Rights of the Obligor are, and
will continue to be, maintained at, and controlled and directed (including for
general accounting purposes) from, the office locations described above or such
new location established in accordance with the last sentence of this
Section 4.1(d).  The Obligor shall
not establish new locations for such offices until (i) it shall have given
to the Collateral Agent not less than 15 days’ prior written notice (or such
lesser notice as shall be acceptable to the Collateral Agent in the case of a
new record location to be established in connection with newly acquired
Contracts) of its intention to do so, clearly describing such new location and
providing such other information in connection therewith as the Collateral
Agent may reasonably request; (ii) with respect to such new location, it
shall have taken all action, reasonably satisfactory to the Collateral Agent,
to maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force
and effect; and (iii) at the reasonable request of the Collateral Agent,
it shall have furnished an opinion of counsel or other evidence acceptable to
the Collateral Agent to the effect that all financing and continuation
statements and

 

29

 

amendments or supplements thereto (and similar
documents and filings under the law of any relevant jurisdiction) have been
filed in the appropriate filing office or offices, and all other actions
(including the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken, in order to perfect (and
maintain the perfection of and priority of) the Security Interest granted
hereby (subject only to Permitted Liens) in respect of the types of Collateral
referred to in Section 2.1(1);

 

(e)           Location of Inventory and Equipment.  All Inventory and equipment
(including Units) held on the Effective Date by the Obligor (excluding Units at
such time leased to customers) are located at one of the locations shown on
Schedule 4.1(e).  All Units and other
Inventory (including Units at such time leased to customers) are located in one
of the jurisdictions listed on Schedule 4.1(e). 
The Obligor agrees that all Inventory and equipment (including Units)
now held or subsequently acquired by it (excluding Units at such time leased to
customers) shall be kept at (or shall be in transport to or from) any one of
the locations listed on Schedule 4.1(e), or such new location as the Obligor
may establish in accordance with the last sentence of this
Section 4.1(e).  The Obligor may
establish a new location for Inventory and equipment (including Units but
excluding Units leased to customers) if (i) it shall have given to the
Collateral Agent not less than 20 days prior written notice of its intention so
to do, clearly describing such new location and providing such other
information in connection therewith as the Collateral Agent may reasonably
request, (ii) with respect to such new location, it shall have taken all
action reasonably satisfactory to the Collateral Agent to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted
hereby at all times fully perfected and in full force and effect and
(iii) at the reasonable request of the Collateral Agent, it shall have
furnished an opinion of counsel or other evidence acceptable to the Collateral
Agent to the effect that all financing and continuation statements and
amendments or supplements thereto (and similar documents and filings under the
law of any relevant jurisdiction) have been filed in the appropriate filing
office or offices, and all other actions (including the payment of all filing
fees and taxes, if any, payable in connection with such filings) have been
taken, in order to perfect (and maintain the perfection and priority of) the
Security Interest granted hereby (subject only to Permitted Liens);

 

(f)            Recourse.  This security agreement is made with full
recourse to the Obligor and pursuant to and upon all the warranties,
representations, covenants and agreements on the part of the Obligor contained
herein,

 

30

 

in the other Credit Documents to which the Obligor is
a party, in the Interest Rate Agreements, if any, to which the Obligor is a
party, and otherwise in writing in connection herewith or therewith;

 

(g)           Trade Names, Change of Name.  The Obligor has not and
does not operate in any jurisdiction under, or in the preceding twelve months
has not had and has not operated in any jurisdiction under, any trade names,
fictitious names or other names (including any names of divisions or
operations) except its legal name and such other trade, fictitious or other
names as are listed on Schedule 4.1(g) Schedule 4.1(g).  The Obligor has only operated under each name
set forth in Schedule 4.1(g) in the jurisdiction or jurisdictions set forth
opposite each such name on Schedule 4.1(g). 
The Obligor shall not change its legal name or assume or operate in any
jurisdiction under any trade, fictitious or other name except those names
listed on Schedule 4.1(g) in the jurisdictions listed with respect to such
names (including any names of divisions or operations) and new names and/or
jurisdictions established in accordance with the last sentence of this
Section 4.1(g).  The Obligor shall
not assume or operate in any jurisdiction under any new trade, fictitious or
other name or, to the extent such operation might impair the creation,
maintenance, perfection or priority of any Security Interest granted hereunder,
operate under any existing name in any additional jurisdiction until
(i) it shall have given to the Collateral Agent not less than 30 days’
prior written notice of its intention so to do, clearly describing such new
name and/or jurisdiction and, in the case of a new name, the jurisdictions in
which such new name shall be used and providing such other information in
connection therewith as the Collateral Agent may reasonably request; and
(ii) with respect to such new name and/or new jurisdiction, it shall have
taken all action to maintain the Security Interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and
in full force and effect and (iii) at the request of the Collateral Agent, it
shall have furnished an opinion of counsel or other evidence reasonably
acceptable to the Collateral Agent to the effect that all financing and
continuation statements and amendments or supplements thereto (and similar
documents and filings under the law of any relevant jurisdiction) have been
filed in the appropriate filing office or offices, and all other actions
(including the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken, in order to perfect (and
maintain the perfection and priority of) the security interest granted hereby
(subject only to Permitted Liens) in respect of the types of Collateral
referred to in Section 2.1(1).

 

31

 

(h)           Units.  Subject to Section 11.19(a) of the Amended
and Restated Credit Agreement and Section 4.1(a), to the extent any Unit is, or
under applicable law is required to be, covered by any Unit Certificate and to
the extent that any action under any applicable law in lieu of or in addition
to the filing of financing statements under the PPSA or any other personal
property security legislation enacted in any relevant jurisdiction are required
to be taken so that the security interests in the respective Units created
pursuant to this security agreement are fully perfected under such law, all
such actions have been taken.  Subject to
Section 11.19(a) of the Amended and Restated Credit Agreement and Section
4.1(a), in the event any change in applicable law in any relevant jurisdiction
where any Unit is located, or a decision, opinion, ruling, regulation, decree
or order of a court, or administrative, regulatory or governmental authority,
of any relevant jurisdiction in which any Unit is located (whether involving
the Obligor or any unrelated third person) shall render any of the information
provided pursuant to the preceding sentence inaccurate in any respect, then the
Obligor shall inform (in writing) the Collateral Agent of the respective change
and shall promptly take such actions or cause such actions to be taken as the
Collateral Agent shall request in order to create, maintain, establish or
preserve the perfection of the security interest of the Collateral Agent in
such Unit.  Subject to Section 11.19(a)
of the Amended and Restated Credit Agreement and Section 4.1(a), as new
Units are acquired after the date of this security agreement, or to the extent
that Units are moved to different jurisdictions after the date of this security
agreement, the Obligor shall take all actions with respect thereto (including,
to the extent required under applicable law, causing a Unit Certificate to be
issued which contains a notation of the security interest of the Collateral
Agent thereon) as shall be required under applicable law to ensure that the
security interests of the Collateral Agent therein are perfected under relevant
law.  Immediately upon any request of the
Collateral Agent made for the purpose set forth in this sentence, the Obligor
shall provide the serial numbers or vehicle identification numbers, as
applicable, for each Unit and shall promptly take such actions or cause such
actions to be taken as the Collateral Agent shall request in order to create,
maintain, establish or preserve the perfection or priority of the Security
Interest over other creditors or buyers or lessees of the Units in accordance
with the PPSA or the personal property security legislation enacted in any
relevant jurisdiction.  As of the
Effective Date, none of the Units are self-propelled or constitute “motor
vehicles” within the meaning of the PPSA and the Obligor will immediately
notify the Collateral Agent if any Units become self-propelled or become “motor
vehicles” within the meaning of the PPSA.

 

32

 

None of the Units are “equipment” (as that term is
defined in the PPSA) to the Obligor. 
None of the Contracts with account debtors (i) located in the
Province of Ontario for the purposes of the PPSA constitute “security
agreements” as defined therein; or (ii) located outside of the Province of
Ontario for the purposes of the personal property security legislation enacted
in such jurisdiction are subject to the perfection, registration and priority
provisions of such legislation.  Subject
to Section 11.19(a) of the Amended and Restated Credit Agreement and Section
4.1(a), the Obligor will take all such steps as may be necessary to perfect
under the PPSA or the personal property security legislation enacted in any
other relevant jurisdiction its interest in any Contracts which are subject to
the perfection, registration and priority provisions of such legislation.

 

(i)            Securities and Instruments.

 

(i)            The Obligor is the legal
and beneficial owner of, and it has good and marketable title to all Collateral
consisting of one or more Securities and it has sufficient interest in all
Collateral in which a security interest is purported to be created hereunder
for such security interest to attach (subject, in each case, to no Lien, option
or adverse claim whatsoever, except the Security Interest created by this
security agreement);

 

(ii)           No person, firm or
corporation has or will have any written or oral option, warrant, right, call,
commitment, conversion right, right of exchange or other agreement or any right
or privilege (whether by law, pre-emptive or contractual) capable of becoming
an option, warrant, right, call, commitment, conversion right, right of
exchange or other agreement to acquire any right or interest in any of the
Collateral consisting of Securities or Instruments;.

 

(iii)          The Obligor has full power,
authority and legal right to pledge all the Collateral consisting of Securities
and Instruments pledged by it pursuant to this security agreement;

 

(iv)          All of the Collateral
consisting of Securities and Instruments has been duly and validly issued and
acquired, is fully paid and non-assessable and is subject to no options to
purchase or similar rights;

 

(v)           Each of the Instruments
pledged hereunder, constitutes, or when executed by the obligor thereof will to
the knowledge of the Obligor constitute, the legal, valid and binding
obligation of

 

33

 

such obligor, enforceable in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting creditors’ rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law);

 

(vi)          the pledge, collateral
assignment and delivery to the Collateral Agent of the Collateral consisting of
certificated Securities pursuant to this security agreement creates a valid and
perfected first priority security interest in such certificated Securities, and
the proceeds thereof, subject to no prior Lien or to any agreement purporting
to grant to any third party a Lien on the property or assets of such the
Obligor which would include the Securities (other than Permitted Liens) and the
Collateral Agent is entitled to all the rights, priorities and benefits
afforded by the PPSA or other relevant personal property securities legislation
as enacted in any relevant jurisdiction to perfect security interests in
respect of such Collateral; and

 

(vii)         “possession”
(within the meaning of the PPSA) has been obtained by the Collateral Agent over
all Collateral consisting of Securities and Instruments.

 

(j)            Timber.  The Obligor does not own, or expect to
acquire, any property which constitutes, or would constitute, timber.  If at any time after the Effective Date, the
Obligor owns, acquires or obtains rights to any timber, the Obligor shall
furnish the Collateral Agent with prompt written notice thereof (which notice
shall describe in reasonable detail the timber and the locations thereof) and
shall take all actions as may be deemed reasonably necessary or desirable by
the Collateral Agent to perfect the security interest of the Collateral Agent
therein.

 

Section 4.2            After
Acquired Receivables.

 

As of the time when each of its Receivables
arises, the Obligor shall be deemed to have represented and warranted that each
such Receivable, and all records, papers and documents delivered to the
Collateral Agent relating thereto (if any) are genuine and in all respects what
they purport to be, and that all papers and documents (if any) relating thereto
(i) will, to the knowledge of the Obligor, represent the genuine, legal,
valid and binding obligation of the account debtor evidencing indebtedness
unpaid and owed by the respective account debtor arising out of the performance
of labour or services or the sale or lease and delivery of the merchandise
listed therein, or both, (ii) will, to the knowledge of the Obligor, be
the only original writings evidencing and embodying such obligation of the
account debtor named therein

 

34

 

(other than
copies created for general accounting purposes), (iii) will, to the
knowledge of the Obligor, evidence true and valid obligations, enforceable in
accordance with their respective terms, subject to adjustments customary in the
business of the Obligor in accordance with past practice, and (iv) will be
in compliance and will conform with all applicable federal, state and local
laws and material applicable laws of any relevant foreign jurisdiction.

 

Section 4.3            Maintenance
of Records for Receivables and Contracts.

 

The Obligor will keep and maintain at its
own cost and expense accurate records of its Receivables and Contracts,
including the originals of all documentation (including each Contract) with
respect thereto, records of all payments received, all credits granted thereon,
all merchandise returned and all other dealings therewith, and the Obligor will
make the same available to the Collateral Agent for inspection on the Obligor’s
premises, at the Obligor’s own cost and expense, at any and all reasonable
times upon one Business Day’s prior notice. 
Upon the occurrence and during the continuance of an Event of Default,
at the request of the Collateral Agent, the Obligor shall, at its own cost and
expense, deliver all tangible evidence of its Receivables and Contract Rights
(including all documents evidencing its Receivables and all Contracts) and such
books and records to the Collateral Agent or to its representatives (copies of
which evidence and books and records may be retained by the Obligor).  Upon the occurrence and during the continuance
of an Event of Default, if the Collateral Agent so directs, the Obligor shall
legend, in form and manner reasonably satisfactory to the Collateral Agent, its
Receivables and the Contracts, as well as books, records and documents (if any)
of the Obligor evidencing or pertaining to such Receivables with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.

 

Section 4.4            Modification
of Terms, etc.

 

The Obligor shall not rescind or cancel any
indebtedness evidenced by any Receivable or under any Contract, or modify any
term thereof or make any adjustment with respect thereto, or extend or renew
the same, or compromise or settle any material dispute, claim, suit or legal
proceeding relating thereto, or, except as permitted by the respective Secured
Debt Agreements, sell any Receivable or Contract, or interest therein, without
the prior written consent of the Collateral Agent except as permitted by
Section 4.5.  The Obligor will duly
fulfill all obligations on its part to be fulfilled under or in connection with
its Receivables and the Contracts and will do nothing to impair the rights of
the Collateral Agent in the Receivables or Contracts.

 

Section 4.5            Collection.

 

The Obligor shall, in accordance with its
ordinary business practices, endeavour to cause to be collected from the
account debtor named in each of its Receivables or obligor under any Contract,
as and when due (including amounts,

 

35

 

services or
products which are delinquent, such amounts, services or products to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts, services or products owing under or on account of such
Receivable or Contract, and apply forthwith upon receipt thereof all such
amounts as are so collected to the outstanding balance of such Receivable or
under such Contract, except that, prior to occurrence and continuance of an
Event of Default, the Obligor may allow in the ordinary course of business as
adjustments to amounts, services and products owing under its Receivables and
Contracts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which the Obligor finds
appropriate in accordance with reasonable business judgment and (ii) a
refund or credit due as a result of returned or damaged merchandise or
improperly performed services or such other adjustments which the Obligor deems
appropriate in the exercise of its commercially reasonable business
judgment.  The costs and expenses
(including reasonable attorneys’ fees) of collection, whether incurred by the
Obligor or the Collateral Agent, shall be borne by the Obligor.

 

Section 4.6            Obligor
Remains Liable.

 

Anything herein to the contrary
notwithstanding, the Obligor shall remain liable to observe and perform all of
the conditions and obligations to be observed and performed under or with
respect to the Collateral.  Neither the
Collateral Agent nor any Secured Creditor shall have any obligation or
liability under or with respect to any Collateral by reason of or arising out
of this security agreement or the receipt by the Collateral Agent or any
Secured Creditor of any Collateral pursuant hereto, nor shall the Collateral
Agent or any Secured Creditor be obligated in any manner to perform any of the
obligations of the Obligor under or with respect to any Collateral.

 

Section 4.7            Collateral
in the Possession of a Bailee.

 

If any Inventory or other goods are at any
time in the possession of a bailee, the Obligor shall promptly notify the
Collateral Agent thereof and, if requested by the Collateral Agent, shall use
its reasonable best efforts to promptly obtain an acknowledgement from such
bailee, in form and substance reasonably satisfactory to the Collateral Agent,
that the bailee holds such Collateral for the benefit of the Collateral Agent
and shall act upon the instructions of the Collateral Agent, without the
further consent of the Obligor.  The
Collateral Agent agrees with the Obligor that the Collateral Agent shall not
give any such instructions unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by the Obligor
with respect to any such bailee.

 

Section 4.8            Intellectual
Property

 

As of the Effective Date, the Obligor
represents and warrants that, other than the rights to use certain Trade-marks
licensed to the Obligor, as more particularly described in Section 4.9,
there is no other Intellectual Property owned by or licensed

 

36

 

to the Obligor
which is material to and used by the Obligor in the conduct of its business.

 

Section 4.9            Representations
and Warranties Concerning Trade-marks.

 

The Obligor represents and warrants that
(i) pursuant to the Trade-mark License Agreement, it is the authorized
licensee of the Trade-marks listed on Schedule 2.1(1)(h) (the “Licensed Trade-marks”), and the said
trade-mark license is valid, subsisting and has not been cancelled,
(ii) it is the true and lawful owner of the Trade-marks listed on Schedule
2.1(1)(h) (the “Owned Trade-Marks”),
and that such Licensed Trade-marks and Owned Trade-marks constitute all
trade-marks, registrations of trade-marks and applications for registrations of
trade-marks in the Canadian Intellectual Property Office - Trade-marks or the
equivalent thereof in any other country, that the Obligor owns or uses that are
material to its business as of the Effective Date and that said registrations
and applications are valid, subsisting and have not been cancelled.  The Obligor represents and warrants that it
owns, is licensed to use or otherwise has the right to use, all Trade-marks
that it uses.  The Obligor further
warrants that, it has no knowledge of any third party claim received by it,
that any aspect of the Obligor’s present or contemplated business operations
infringes or will infringe any trade-mark, service mark or trade name of any
other Person other than as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  The Obligor represents and warrants that the
Obligor is not aware of any third-party claim that any registration is invalid
or unenforceable, and is not aware that there is any reason that any
registration is invalid or unenforceable. 
The Obligor represents and warrants that upon the recordation of
Confirmation of a Security Interest in Intellectual Property in the form of
Schedule 4.1(a) in the Canadian Intellectual Property Office – Trade-marks,
together with filings of financial statements under the PPSA and pursuant to
the personal property security legislation enacted in Alberta, all filings,
registrations and recordings necessary or appropriate, to the extent permitted
by applicable law, to perfect any security interest granted to the Collateral
Agent in the Owned Trade-marks, if any, covered by this security agreement
under applicable federal and provincial law will have been accomplished.  The Obligor agrees, if and when it owns any
Trade-marks, to execute such Confirmation of Security Interest in Intellectual
Property covering all right, title and interest in any such Owned Trade-marks,
and the associated goodwill, of the Obligor, and to record the same in the
Canadian Intellectual Property Office – Trade-marks.

 

Section 4.10         Trade-mark
Licenses and Assignments.

 

Except as otherwise permitted by the
Amended and Restated Credit Agreement, the Obligor hereby agrees not to divest
itself of any right under any material Trade-mark, including the Licensed
Trade-marks, other than in the ordinary course of business in accordance with
its reasonable business judgment absent the prior written approval of the
Collateral Agent which shall not be unreasonably withheld or delayed.

 

37

 

Section 4.11         Trade-mark
Infringements.

 

The Obligor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect
to, any party who the Obligor believes is infringing, diluting or otherwise
violating any of the Obligor’s rights in and to any material Trade-mark,
including the Licensed Trade-marks, in any manner that could reasonably be
expected to have a Material Adverse Effect, or with respect to any party
claiming that the Obligor’s use of any material Trade-mark, including the
Licensed Trade-marks, violates in any material respect any property right of
that party.  The Obligor further agrees
to prosecute in accordance with reasonable business practices any person
infringing any Trade-mark, including the Licensed Trade-marks, in any manner
that could reasonably be expected to have a Material Adverse Effect.

 

Section 4.12         Preservation
of Trade-marks.

 

The Obligor agrees to use its Trade-marks
in connection with its business sufficiently, and to take all other actions as
are reasonably necessary, to preserve such Trade-marks as trade-marks under the
laws of Canada and any relevant foreign jurisdiction (other than any such
Trade-marks which the Obligor determines, in its reasonable business judgement,
are no longer used or useful in its business or operations), provided that such
use with respect to the Licensed Trade-marks shall be subject to and in
accordance with the terms of the Trade-mark License Agreement.

 

Section 4.13         Maintenance
of Trade-mark Registration.

 

The Obligor shall, at its own expense,
diligently (i) do all things required by the Trade-mark License Agreement
to remain in good standing thereunder, and (ii) process all documents,
filings, applications, affidavits of use and applications for renewal required
by the Trade-marks Act (Canada), or any other
applicable law of Canada or any foreign equivalent thereof, to maintain
registrations in respect of its material registered Trade-marks, if any, and
shall pay all fees and disbursements in connection therewith and shall not
abandon any such filing of affidavit of use or any such application of renewal
prior to the exhaustion of all administrative and judicial remedies without
prior written consent of the Collateral Agent (other than with respect to
registrations and applications that the Obligor determines, in its reasonable
business judgement, are no longer useful or prudent to pursue).

 

Section 4.14         Future
Registered Trade-marks.

 

If registration for any Trade-mark which is
material and/or necessary to its business issues hereafter to the Obligor as a
result of any application now or hereafter pending before the Canadian
Intellectual Property Office – Trade-marks, or equivalent governmental agency
in any foreign jurisdiction, within 30 days of receipt of the certificate
evidencing such registration, the Obligor shall deliver to the Collateral Agent
a copy of such certificate, and a Confirmation of Security Interest in
Intellectual Property in the form of Schedule 4.1(a) in respect of such
Trade-mark, to

 

38

 

the Collateral
Agent and at the expense of the Obligor, confirming the grant of a security
interest in such Trade-mark to the Collateral Agent hereunder.

 

Section 4.15             Representations and
Warranties Concerning Patents, Copyrights and Designs.

 

The Obligor represents and warrants that it
is the true and lawful owner of all rights in or otherwise has the right to use
(i) all trade secrets and proprietary information necessary to operate the
business of the Obligor (the “Trade Secret Rights”),
(ii) the Patents listed on Schedule 2.1(1)(h) and that such listed Patents
include all the patents and applications for patents that the Obligor owns as
of the Effective Date, (iii) the Copyrights listed in Schedule 2.1(1)(h)
and that such listed Copyrights constitute all registrations of copyrights and
applications for copyright registrations that the Obligor now owns, and
(iv) the Designs listed in Schedule 2.1(1)(h) and that such listed Designs
constitute all registrations of industrial designs and applications for
industrial design registrations that the Obligor now owns.  The Obligor further warrants that it has no
knowledge of any third party claim that any aspect of the Obligor’s present or
contemplated business operations infringes or will infringe any patent or any
copyright of any other Person or that the Obligor has misappropriated any trade
secret or proprietary information which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.  The Obligor represents and warrants that upon
the recordation of Confirmation of a Security Interest in Intellectual Property
in the form of Schedule 4.1(a) in the Canadian Intellectual Property Office -
Patents, together with filings of financial statements under the PPSA and
pursuant to the personal property security legislation enacted in Alberta, all
filings, registrations and recordings necessary or appropriate, to the extent
permitted by applicable law, to perfect the security interest granted to the
Collateral Agent in the Patents covered by this security agreement, if any,
under applicable federal and provincial law will have been accomplished.  The Obligor agrees, if and when it owns any
Patents, to execute such Confirmation of Security Interest in Intellectual
Property covering all right, title and interest in each such Patent, and the
associated goodwill, of the Obligor, and to record the same in the Canadian
Intellectual Property Office – Patents.

 

Section 4.16         Patent,
Copyright and Design Licenses and Assignments.

 

Except as otherwise permitted by the Secured
Debt Agreements, the Obligor hereby agrees not to divest itself of any right
under any material Patent or Copyright or Design other than in the ordinary
course of business, absent prior written approval of the Collateral Agent.

 

Section 4.17         Patent, Copyright
and Design Infringements.

 

The Obligor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to the Obligor with respect to any infringement,
contributory infringement or active inducement to infringe in any Patent,
Copyright or Design or with respect to any claim that the practice of any

 

39

 

Patent, or the
use of any Copyright or Design violates any property right of any other Person
or with respect to any misappropriation of any Trade Secret Right or any claim
that practice of any Trade Secret Right violates any property rights of any
Person in each case, in any manner which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.  The Obligor further agrees, absent direction
of the Collateral Agent to the contrary, diligently to prosecute, in accordance
with its reasonable business judgment, any Person infringing or
misappropriating any Patent, Copyright, Design or Trade Secret Right, in each
case, to the extent that such infringement or misappropriation, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

Section 4.18         Maintenance
of Patents, Copyrights and Designs.

 

At its own expense, the Obligor shall make
timely payment of all post-issuance or other fees and take all other actions
necessary to maintain in force its rights under each Patent, Copyright or
Design of the Obligor, if any, absent prior written approval of the Collateral
Agent (other than any such Patents, Copyrights or Designs which are no longer
used or useful in its business or operations).

 

Section 4.19         Prosecution
of Patent, Copyright and Design Applications.

 

At its own expense, the Obligor shall
diligently prosecute all material applications for Patents, Copyrights and
Designs listed in Schedule 2.1(1)(h), and shall not abandon any such
application prior to exhaustion of all administrative and judicial remedies, (other
than applications deemed by the Obligor to be no longer prudent to pursue)
absent written consent of the Collateral Agent.

 

Section 4.20         Future
Patents, Copyrights and Designs.

 

Within 30 days of the acquisition or
issuance of a Patent, a Copyright registration or Design, or of filing of an
application for a Patent, Copyright or Design, in each case, which is material
or necessary to its business, the Obligor shall deliver to the Collateral Agent
a copy of the certificate of registration of, or application for, such Patent,
Copyright or Design, with a Confirmation of Security Interest in the form of
Schedule 4.1(a) in respect of such Patent, Copyright or Design to the
Collateral Agent and at the expense of the Obligor, confirming the grant of a
security interest in such Patent, Copyright or Design to the Collateral Agent
hereunder.

 

Section 4.21         Remedies
Concerning Intellectual Property.

 

In addition to the remedies set forth in
Article 3, if the Security Interest becomes enforceable, the Collateral
Agent may by written notice to the Obligor, take any or all of the following
actions:

 

(a)           exercise, with respect to the Licensed Trade-marks, its rights
pursuant to Section 2.5;

 

(b)           declare the entire right, title and interest of the Obligor in and
to each of the Owned Trade-marks, if any, together with all trade-mark rights
and

 

40

 

rights of protection to the same, vested in the
Collateral Agent for the benefit of the Secured Creditors, in which event such
rights, title and interest shall immediately vest in the Collateral Agent for
the benefit of the Secured Creditors, and the Collateral Agent shall be
entitled to exercise the power of attorney granted under Section 3.5 to
execute, cause to be acknowledged and notarized and record any document
required by the Canadian Trade-marks Office or any equivalent government agency
or office in any foreign jurisdiction in order to effect an absolute assignment
of all right, title and interest in any Owned Trade-mark to the Collateral
Agent and register the same with the applicable agency;

 

(c)           take and use or sell the Owned Trade-marks and the goodwill of the
Obligor’s business symbolized by the Owned Trade-marks and the right to carry
on the business and use the assets of the Obligor in connection with which the
Owned Trade-marks have been used;

 

(d)           in connection with the exercise of any of the other remedies
provided for in this security agreement or any other Credit Document, direct
the Obligor to refrain, in which event the Obligor shall refrain, from using
the Owned Trade-marks or the Licensed Trade-marks in any manner whatsoever,
directly or indirectly;

 

(e)           direct the Obligor to execute such other and further documents that
the Collateral Agent may reasonably request to further confirm the foregoing
and to transfer ownership of the Trade-marks and registrations and any pending
trade-mark application in the Canadian Intellectual Property Office -
Trade-marks or any equivalent government agency or office in any foreign
jurisdiction to the Collateral Agent;

 

(f)            declare the entire right, title, and interest of the Obligor in each
of the Patents, Copyrights and Designs, if any, vested in the Collateral Agent
for the benefit of the Secured Creditors, in which event such right, title, and
interest shall immediately vest in the Collateral Agent for the benefit of the
Secured Creditors, in which case the Collateral Agent shall be entitled to
exercise the power of attorney granted under Section 3.5 to execute, cause
to be acknowledged and notarized and record any document required by the
Canadian Intellectual Property Office – Patents, - Copyrights or - Industrial
Designs, as the case may be, or any equivalent government agency or office in
any foreign jurisdiction in order to effect an absolute assignment of all
right, title and interest in each Patent, each registered Copyright and each
registered Design, in each case if any, to the Collateral Agent and register
the same with the applicable agency;

 

41

 

(g)           in connection with the exercise of any of the other remedies
provided for in this security agreement or any other Collateral Document, take
and practice or sell the Patents, Copyrights and Designs, if any;

 

(h)           in connection with the exercise of any of the other remedies
provided for in this security agreement or any other Collateral Document,
direct the Obligor to refrain, in which event the Obligor shall refrain, from
practising the Patents, the Copyrights and the Designs, if any, directly or
indirectly; and

 

(i)            the Obligor shall execute such other and further documents as the
Collateral Agent may reasonably request further to confirm the foregoing and to
transfer ownership of the Patents, Copyrights and Designs, if any, to the
Collateral Agent for the benefit of the Secured Creditors.

 

Section 4.22         Status of
Accounts Collateral.

 

The Obligor agrees that it shall, with
respect to the Collateral (i) maintain books and records pertaining to the
Collateral in such detail, form and scope as the Collateral Agent may
reasonably require, and (ii) if any amount payable under or in connection
with any account in excess of Cdn.$150,000 is evidenced by a promissory note,
letter of credit or other instrument, immediately pledge, endorse, assign and
deliver to the Collateral Agent the promissory note or instrument, as
additional Collateral.

 

Section 4.23         Business
Outside Certain Jurisdictions.

 

The Obligor agrees that it shall notify the
Collateral Agent in writing:

 

(a)           at least 10 Business Days prior to any of the following changes
becoming effective, of (i) any proposed change in the location of any
place of business of the Obligor or any of its Subsidiaries and
(ii) tangible property of the Obligor or any of its Subsidiaries being
stored in any place outside the Province(s) of Ontario, Quebec, Alberta,
British Columbia, Manitoba and Saskatchewan; and

 

(b)           of (i) any change, to the knowledge of the Obligor, in the
location of the chief executive office or head office of each account debtor of
the Obligor and each of its Subsidiaries to a jurisdiction other than any
province of Canada or state in the United States of America; or (ii) any
new account debtor with its chief executive office or head office in a
jurisdiction other than any province of Canada or state in the United States of
America; or (iii) any change, to the knowledge of the Obligor, in the
location of Units leased to customers of the Obligor and each of its
Subsidiaries to a jurisdiction other than the jurisdictions specified under the
heading “Leased Units” in Schedule 4.1(d).

 

42

 

Section 4.24         Insurance.

 

Except as otherwise permitted by the Credit
Documents, the Obligor will do nothing to impair the rights of the Collateral
Agent in the Collateral.  The Obligor
will at all times keep its Inventory and equipment (including the Units)
insured in favour of the Collateral Agent, at the Obligor’s own expense to the
extent required by the Amended and Restated Credit Agreement against fire,
theft and all other risks to which such Collateral may be subject; all policies
or certificates with respect to such insurance shall be endorsed to the
Collateral Agent’s reasonable satisfaction for the benefit of the Collateral
Agent (including by naming the Collateral Agent as additional insured and loss
payee) and deposited with the Collateral Agent. 
If the Obligor shall fail to insure such Inventory and equipment
(including the Units) to the extent required by the Amended and Restated Credit
Agreement, or if the Obligor shall fail to so endorse and deposit all policies
or certificates with respect thereto, the Collateral Agent, shall have the
right (but shall be under no obligation), upon five Business Days’ prior
written notice to the Obligor, to procure such insurance and the Obligor agrees
to reimburse the Collateral Agent for all reasonable costs and expenses of
procuring such insurance.  Upon the
occurrence and during the continuance of an Event of Default (or a Default
under Section 9.1(e) of the Amended and Restated Credit Agreement), the
Collateral Agent may apply any proceeds of such insurance required to be
maintained pursuant to this Section 4.24 in accordance with
Section 5.10.  The Obligor assumes
all liability and responsibility in connection with the Collateral acquired by
it and the liability of the Obligor to pay the Obligations shall in no way be
affected or diminished by reason of the fact that such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to the
Obligor.

 

Section 4.25         Perfection
and Protection of Security Interest.

 

The Obligor agrees that it shall perform,
execute and deliver, and cause its Subsidiaries to perform, execute and
deliver, all acts, agreements, and other documents as may be reasonably
requested by the Collateral Agent at any time to register, file, signify,
publish, perfect, maintain, protect, and enforce the Security Interest
including (i) executing, recording and filing of the Credit Documents and
financing or continuation statements in connection therewith, in form and
substance satisfactory to the Collateral Agent, acting reasonably, and pay all
taxes, fees and other charges payable in connection therewith,
(ii) delivering to the Collateral Agent the originals of all instruments,
documents and chattel paper and all other Collateral of which the Collateral
Agent reasonably determines it should have physical possession in order to
perfect and protect the Security Interest, duly endorsed or assigned to the
Collateral Agent, (iii) delivering to the Collateral Agent warehouse
receipts covering any portion of the Collateral located in warehouses and for
which warehouse receipts are listed, (iv) placing notations on its books
of account to disclose the Security Interest, (v) delivering to the
Collateral Agent all letters of credit on which the Obligor or any of its
Subsidiaries is named beneficiary, and (vi) taking

 

43

 

such other
steps as are deemed necessary by the Collateral Agent, acting reasonably, to
maintain the Security Interest.

 

Section 4.26         Additional
Security.

 

The Obligor agrees that it shall grant, and
cause each of its Subsidiaries to grant, to the Collateral Agent, for the
benefit of the Secured Creditors, security interests and mortgages in such
assets and properties of the Obligor or such Subsidiary as are not covered by
the original Credit Documents or as may be reasonably requested from time to
time by the Collateral Agent pursuant to documentation reasonably satisfactory
in form and substance to the Collateral Agent constituting valid and
enforceable perfected security interests superior to and prior to the rights of
all third Persons and subject to no other Liens, except for Permitted Liens.

 

Section 4.27         Financing
Statements.

 

The Obligor agrees to execute and deliver
to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time request or as are necessary in the reasonable opinion of the Collateral
Agent to establish and maintain a valid, enforceable and first priority
(subject only to Permitted Liens) perfected security interest in the Collateral
as provided herein and in the other rights and security contemplated hereby all
in accordance with the PPSA or the personal property security legislation as
enacted in any and all relevant jurisdictions or any other relevant law.  The Obligor will pay any applicable filing
fees, recordation taxes and related expenses relating to its Collateral.  The Obligor hereby authorizes the Collateral
Agent to file any such financing statements without the signature of the
Obligor where permitted by law.

 

Section 4.28         Deposit Accounts.

 

(1)           The Obligor does not maintain, and shall not at any time after the
Effective Date establish or maintain, any demand, time, savings, passbook or
similar account, except for such accounts which are permitted pursuant to
Section 8.16 of the Amended and Restated Credit Agreement.  Schedule 4.28 accurately sets forth each
account maintained by the Obligor (including a description thereof and the
respective account number), the name of the respective bank with which such
account is maintained, and the branch of the bank at which such account is
maintained.  For each account, the
Obligor shall cause the bank with which the account is maintained to execute
and deliver to the Collateral Agent, within 30 days after the Collateral Agent’s
request therefor, a “control agreement” in the form of Exhibit “A” to
Schedule 4.28 (appropriately completed) with such changes thereto as may
be acceptable to the Collateral Agent. 
The Collateral Agent and the Obligor agree that: (i) the control
agreement regarding deposit accounts between the Obligor, The Bank of Nova
Scotia and Bankers Trust Company (now Deutsche Bank Trust

 

44

 

Company Americas), a predecessor in interest of the
Collateral Agent, dated as of May 10, 2002 (the “Existing Control Agreement”), which control agreement has
been assigned by Deutsche Bank Trust Company Americas to the Collateral Agent
by an agreement of even date herewith, constitutes a control agreement for the
purposes of this Section 4.28; and (ii) the Existing Control Agreement is
confirmed in all respects and shall continue in full force and effect.  If any bank with which such account is
maintained refuses to, or does not, enter into such a control agreement, the
Obligor shall promptly (and in any event within 30 days of the date of the
respective request) close the respective account and transfer all balances
therein to another account meeting the requirements of this Section 4.28
(with respect to which a “control agreement” meeting the foregoing requirements
has been entered into and is in full force and effect).  If any bank with which an account is
maintained refuses to subordinate all of its claims with respect to such
account to the Collateral Agent’s security interest therein on terms
satisfactory to the Collateral Agent, then the Collateral Agent, at its option,
may (x) require that such account be terminated in accordance with the
immediately preceding sentence or (y) agree to a control agreement without such
subordination, provided that in such event the Collateral Agent may at any
time, at its option, subsequently require that such account be terminated
(within 30 days after notice from the Collateral Agent) in accordance with the
requirements of the immediately preceding sentence.

 

(2)           The Obligor shall not establish any new demand, time, savings, passbook
or similar accounts, except for accounts established and maintained with banks
and meeting the requirements of Section 4.28(1).  At the time such an account is established,
to the extent so requested by the Collateral Agent, the appropriate control agreement
shall be executed in accordance with the requirements of Section 4.28(1)
and the Obligor shall furnish to the Collateral Agent a supplement to Schedule
4.28 containing the relevant information with respect to the respective account
and the bank with which the same is established.

 

(3)           The Collateral Agent (x) shall not deliver a Notice of
Exclusive Control (as defined in the Form of Control Agreement attached hereto
as Exhibit “B”) pursuant to any “control agreement” (other than with respect to
any account maintained with the Collateral Agent) to any bank with which the
Obligor has established an account unless an Event of Default then exists and
is continuing, (y) shall not give instructions (as contemplated in the
first sentence of Section 2(1) of Exhibit “B”) as to the withdrawal or
disposition of funds in any account in any such “control agreement” (other than
with respect to any account maintained with the Collateral Agent) unless an
Event of Default then exists and is continuing, and (z) shall provide the
Borrower in accordance with the notice provisions in the Amended and Restated
Credit

 

45

 

Agreement with a copy of any such Notice of Exclusive
Control delivered pursuant to any such “control agreement”.

 

ARTICLE 5

GENERAL

 

Section 5.1            Notices.

 

Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be sent or delivered by mail, telegraph, telex, telecopy,
cable or courier service and all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be
effective when deposited in the mails, delivered to the telegraph company,
cable company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to the Collateral Agent or
the Obligor shall not be effective until received by the Collateral Agent or
the Obligor, as the case may be.  All
notices and other communications shall be in writing and addressed as follows:

 

(a)           to the Obligor
at:

 

c/o
Williams Scotsman, Inc.

8211 Town Center Drive

Baltimore, Maryland 21236-5997

 

	
  Attention:

  	
  John B. Ross

  
	
   

  	
   

  
	
  Telephone:

  	
  (410)931-6000 ext.6105

  
	
  Facsimile:

  	
  (410)931-6117

  

 

With a copy
to:

 

Davies
Ward Phillips & Vineberg LLP

1 First Canadian Place

44th Floor

P.O. Box 63

Toronto, Ontario

M5X 1B1

 

	
  Attention:

  	
  Kent F.
  Beattie

  
	
   

  	
   

  
	
  Telephone:

  	
  (416) 367-6927

  
	
  Facsimile:

  	
  (416) 863-0871

  

 

46

 

(b)           to the Collateral Agent
at:

 

Bank of America, N.A.

335 Madison Avenue

New York, New York 10017

 

	
  Attention:

  	
  Business
  Capital/URGENT

  
	
   

  	
   

  
	
  Telephone:

  	
  (212)
  503-7632

  
	
  Facsimile:

  	
  (212)
  503—7330

  

 

(c)           to any Bank Creditor, other than the Collateral Agent, at such
address as such Bank Creditor shall have specified in the Amended and Restated
Credit Agreement;

 

(d)           to any Interest Rate Creditor at such address as such Interest Rate
Creditor shall have specified in writing to the Obligor and the Collateral Agent;

 

(e)           to the Senior Secured Notes Trustee or any other Second Lien
Creditor, at:

 

U.S. Bank, National Association

60 Livingston Avenue

EP-MN-WS3C

St. Paul, MN 55107-2292

 

	
  Attention:   Richard Prokosch

  
	
   

  	
   

  
	
  Telephone:  (651)
  495-3918

  
	
  Facsimile:  (651) 495-8097

  

 

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

 

Section 5.2            Discharge.

 

(1)           The Security Interest shall be discharged upon, but only upon the
Termination Date.  Upon discharge of the
Security Interest and at the request and expense of the Obligor, the Collateral
Agent shall execute and deliver to the Obligor such releases, discharges,
financing statements and other documents or instruments as the Obligor may
reasonably require and transfer and deliver to the Obligor the Collateral in
its possession.

 

(2)           So long as no payment default on any of the Obligations is in
existence or would exist after the application of proceeds as provided below,
the Collateral Agent shall, at the request of the Obligor, release any or all
of the Collateral, provided that (x) such release is permitted by the
terms of the Secured Debt Agreements or otherwise has been approved in writing
by the Required Lenders or, to the extent required, all of the Lenders and
(y) the proceeds of

 

47

 

such Collateral are applied to the extent required
pursuant to the respective Secured Debt Agreements or any consent or waiver
with respect thereto.  Furthermore, upon
the release of the Obligor from the Guarantee in accordance with the provisions
thereof, the Obligor (and the Collateral at such time assigned by the Obligor
pursuant hereto) shall be released from this security agreement.

 

(3)           At any time that the Obligor desires that the Collateral Agent take
any action to give effect to any release of Collateral pursuant to the
foregoing Section 5.2(1) or Section 5.2(2), it shall deliver to the
Collateral Agent a certificate signed by an authorized officer stating that the
release of the respective Collateral is permitted pursuant to
Section 5.2(1) or Section 5.2(2); provided that, so long as no
Default or Event of Default has occurred and is continuing, in the event the Obligor
sells Units or other Inventory in the ordinary course as (and to the extent)
permitted elsewhere in the Credit Documents, the Obligor shall not be required
to deliver a certificate in connection therewith and the release of such Units
or other Inventory shall be effected as contemplated by the Bailee Agreement
and Custodian Agreement.  In the event
that any part of the Collateral is released as provided in Section 5.2(2),
the Collateral Agent, at the request and expense of the Obligor, will duly assign,
transfer and deliver to the Obligor or its designee (without recourse and
without any representation or warranty) such of the Collateral as is then being
(or has been) so sold and as may be in the possession of the Collateral Agent
and has not theretofore been released pursuant to this security agreement.  The Collateral Agent shall have no liability
whatsoever to any Secured Creditor as the result of any release of Collateral
by it as permitted by this Section 5.2. 
Upon any release of Collateral pursuant to Section 5.2(1) or
Section 5.2(2), none of the Secured Creditors shall have any continuing
right or interest in such Collateral, or the proceeds thereof.

 

(4)           To the extent not otherwise provided in preceding clauses, the
Collateral Agent shall without the consent of any Secured Creditor, release all
or any portion of the Collateral securing the Second Lien Obligations to the
extent provided in the Senior Secured Notes Indenture.

 

Section 5.3            No
Merger, Survival of Representations and Warranties.

 

This security agreement shall not operate
by way of merger of any of the Obligations and no judgment recovered by the
Collateral Agent or any of the Secured Creditors shall operate by way of merger
of, or in any way affect, the Security Interest, which is in addition to, and
not in substitution for, any other security now or hereafter held by the
Collateral Agent and the Secured Creditors in respect of the Obligations.  The representations and warranties herein set
forth or contained in any certificates or documents delivered to the Collateral
Agent or the Secured Creditors pursuant to this security agreement or the other
Credit Documents shall not merge in or be prejudiced by and shall survive any
accommodation under

 

48

 

the Amended
and Restated Credit Agreement and shall continue in full force and effect until
the Security Interest has been discharged in accordance with Section 5.2.

 

Section 5.4            Further
Assurances.

 

The Obligor shall from time to time,
whether before or after the Security Interest shall have become enforceable, do
all acts and things and execute and deliver all transfers, assignments and
instruments as the Collateral Agent may reasonably require for
(i) protecting the Collateral, (ii) perfecting the Security Interest,
and (iii) exercising all powers, authorities and discretions conferred
upon the Collateral Agent pursuant to or in connection with this security
agreement, or the other Credit Documents. 
The Obligor shall, from time to time after the Security Interest has
become enforceable, do all acts and things and execute and deliver all
transfers, assignments and instruments as the Collateral Agent may reasonably
require for facilitating the sale or other disposition of the Collateral in
connection with its realization.

 

Section 5.5            Supplemental
Security.

 

This security agreement is in addition and
without prejudice to and supplemental to all other security now held or which
may hereafter be held by the Collateral Agent or the Secured Creditors.

 

Section 5.6            Successors
and Assigns.

 

This security agreement shall be binding
upon the Obligor, its successors and assigns, and shall enure to the benefit of
the Collateral Agent and its successors and assigns.  All rights of the Collateral Agent shall be
assignable and in any action brought by an assignee to enforce any such right,
the Obligor shall not assert against the assignee any claim or defence which
the Obligor now has or hereafter may have against the Collateral Agent or any
of the Secured Creditors.

 

Section 5.7            Severability.

 

If any provision of this security agreement
is deemed by any court of competent jurisdiction to be invalid or void, the
remaining provisions shall remain in full force and effect.

 

Section 5.8            Waivers,
etc.

 

None of the terms and conditions of this
security agreement or any of the other Collateral Documents to which the
Obligor is a party may be changed, waived, modified or varied in any manner
except as provided in the U.S. Security Agreement, provided that for purposes of
this Section 5.8 the term “Assignor” as defined in the U.S. Security Agreement
means “Obligor” as defined herein. 
Nothing in this section shall be interpreted to derogate from the
provisions contained in Section 5.2 of this security agreement.

 

49

 

Section 5.9            Collateral
Agent and/or Secured Creditors not a Partner or Limited Liability Company
Member

 

(1)           Nothing herein shall be construed to make the Collateral Agent or
any other Secured Creditor liable as a member of any limited liability company,
unlimited liability company or partnership and neither the Collateral Agent nor
any other Secured Creditor by virtue of this security agreement or otherwise
(except as referred to in the following sentence) shall have any of the duties,
obligations or liabilities of a member of any limited liability company,
unlimited liability company or partnership. 
The parties hereto expressly agree that, unless the Collateral Agent
shall become the absolute owner of Collateral consisting of the entire interest
owned by the Obligor in a limited liability company, unlimited liability
company or partnership pursuant hereto, this security agreement shall not be
construed as creating a partnership or joint venture among the Collateral
Agent, any other Secured Creditor and/or the Obligor.

 

(2)           Except as provided in the last sentence of Section 5.9(1), the
Collateral Agent, by accepting this security agreement, did not intend to
become a member of any limited liability company, unlimited liability company
or partnership or otherwise be deemed to be a co-venturer with respect to the
Obligor or any limited liability company, unlimited liability company or
partnership either before or after an Event of Default shall have occurred.  The Collateral Agent shall have only those
powers set forth herein and the Secured Creditors shall assume none of the
duties, obligations or liabilities of a member of any limited liability
company, unlimited liability company or partnership or the Obligor except as
provided in the last sentence of Section 5.9(1).

 

(3)           The Collateral Agent and the other Secured Creditors shall not be
obligated to perform or discharge any obligation of the Obligor as a result of
the Security Interest hereby granted.

 

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

 

Section 5.10         Application
of Proceeds.

 

(1)           All monies collected by the Collateral Agent upon any sale or other
disposition of the Collateral, together with all other monies received by the
Collateral Agent hereunder or under any other Collateral Document which
requires proceeds of Collateral to be applied in accordance with this security

 

50

 

agreement, shall be applied and payments shall be made
in accordance with Section 7.4 of the U.S. Security Agreement.

 

(2)           It is understood that the Obligor shall remain liable to the extent
of any deficiency between (x) the amount of the proceeds of the Collateral
and (y) the aggregate outstanding amount of the Obligations.

 

Section 5.11         Indemnity.

 

(1)           The Obligor agrees to indemnify, reimburse and hold the Collateral
Agent, each other Secured Creditor that is an indemnitee under Section 6 of
Annex N to the U.S. Security Agreement and their respective successors,
permitted assigns, employees, affiliates and agents (referred to individually
as “Indemnitee”, and collectively as “Indemnitees”) harmless from any and all liabilities,
obligations, damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all costs and expenses (including reasonable fees and
disbursements of counsel and other professionals) (for the purposes of this
Section 5.11 the foregoing are collectively called “expenses”)
of whatsoever kind and nature imposed on, asserted against or incurred by any
of the Indemnitees in any way relating to or arising out of this security
agreement, any other Secured Debt Agreement to which the Obligor is a party or
any other document executed in connection herewith or therewith to which the
Obligor is a party or in any other way connected with the administration of the
transactions contemplated hereby or thereby or the enforcement of any of the
terms of, or the preservation of any rights hereunder or thereunder, or in any
way relating to or arising out of the manufacture, ownership, ordering,
purchase, delivery, control, acceptance, lease, financing, possession,
operation, condition, sale, return or other disposition, or use of the
Collateral (including latent or other defects, whether or not discoverable),
the violation of laws any country, state, province or other Governmental
Entity, any tort (including claims arising or imposed under the doctrine of
strict liability, or for or on account of injury or death of any Person
(including any Indemnitee), or property damage), or contract claim; provided
that no Indemnitee shall be indemnified pursuant to this Section 5.11(1)
for losses, damages or liabilities to the extent caused by the gross negligence
or wilful misconduct of such Indemnitee (as determined by a court of competent
jurisdiction in a final and unappealable decision).  The Obligor agrees that upon written notice
by any Indemnitee of the assertion of such liability, obligation, damage,
injury, penalty, claim, demand, action, suit or judgement, the Obligor shall
assume full responsibility for the defence thereof.  Each Indemnitee agrees to use its best
efforts to promptly notify the Obligor of any such assertion of which such
Indemnitee has knowledge.

 

(2)           Without limiting the application of Section 5.11(1), the
Obligor agrees to pay, or reimburse the Collateral Agent for any and all
reasonable fees, costs and expenses of whatever kind or nature incurred in
connection with the creation,

 

51

 

preservation or protection of the Collateral Agent’s
Liens on, and the Security Interest in, the Collateral, including all fees and
taxes in connection with the recording or filing of instruments and documents
in public offices, payment or discharge of any taxes or Liens upon or in
respect of the Collateral, premiums for insurance paid by the Collateral Agent
with respect to the Collateral and all other fees, costs and expenses in
connection with protecting, maintaining or preserving the Collateral and the
Collateral Agent’s interest therein, whether through judicial proceedings or otherwise,
or in defending or prosecuting any actions, suits or proceedings arising out of
or relating to the Collateral.

 

(3)           Without limiting the application of Section 5.11(1) or
Section 5.11(2), the Obligor agrees to pay, indemnify and hold each Indemnitee
harmless from and against any loss, costs, damages and expenses which such
Indemnitee may suffer, expend or incur in consequence of or growing out of any
misrepresentation by the Obligor in this security agreement, any other Secured
Debt Agreement to which the Obligor is a party or in any writing contemplated
by or made or delivered pursuant to or in connection with this security
agreement or any other Secured Debt Agreement to which the Obligor is a party.

 

(4)           If and to the extent that the obligations of the Obligor under this
Section 5.11 are unenforceable for any reason, the Obligor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.

 

Section 5.12         Indemnity
Obligations Secured by Collateral; Survival.

 

Any amounts paid by any Indemnitee as to
which such Indemnitee has the right to reimbursement shall constitute
Obligations secured by the Collateral. 
The indemnity obligations of the Obligor contained in Section 5.11
and Section 5.12 shall continue in full force and effect notwithstanding
the full payment of all of the other Obligations and notwithstanding the full
payment of all the Notes issued and Loans made, under the Amended and Restated
Credit Agreement, the termination of all Interest Rate Agreements entered into
with the Interest Rate Creditors, the full repayment of all the outstanding
Senior Secured Notes and the payment of all other Obligations and
notwithstanding the discharge thereof.

 

Section 5.13         Collateral
Agent.

 

By accepting the benefits of this security
agreement, each Secured Creditor acknowledges and agrees that the rights and
obligations of the Collateral Agent shall be as set forth in this security
agreement and in Annex N to the U.S. Security Agreement.  Notwithstanding anything to the contrary
contained in Section 5.8 of this security agreement or Section 11.10 of
the Amended and Restated Credit Agreement, this Section 5.13, and the
duties and obligations of the Collateral Agent

 

52

 

set forth in
this Section 5.13, may not be amended or modified without the consent of
the Collateral Agent.

 

Section 5.14         Governing
Law.

 

This security agreement shall be governed
by and interpreted and enforced in accordance with the laws of the Province of
Ontario and the federal laws of Canada applicable therein.

 

Section 5.15         Conflicts.

 

Notwithstanding anything to the contrary
contained in this security agreement, in the event of any conflict between the
provisions of this security agreement, the Intercreditor Agreement or any other
Collateral Document and the provisions of the Senior Secured Notes Documents,
the terms of this security agreement, the Intercreditor Agreement and the other
Collateral Documents shall prevail.

 

Section 5.16         Acknowledgement
and Confirmation

 

The Obligor hereby acknowledges, confirms
and agrees to and with the Collateral Agent and each of the First Lien
Creditors that:

 

(1)           it has been provided with and has reviewed the terms and conditions
of the Amended and Restated Credit Agreement and hereby consents to the terms
and conditions of the Amended and Restated Credit Agreement;

 

(2)           it has been provided with and has reviewed the terms and conditions
of this security agreement and hereby consents to the terms and conditions of
this security agreement;

 

(3)           the Guarantee extends to, inter
alia, the obligations of the Borrower now or hereafter incurred
under, arising out of or in connection with the Amended and Restated Credit
Agreement, as the same may be from time to time further amended, modified,
extended, renewed, replaced, restated or supplemented and including any
agreement extending the maturity of (including the inclusion of additional
borrowers or guarantors thereunder or any increase in the amount borrowed) all
or any portion of the indebtedness under such agreement or any successor
agreement, whether or not with the same agent, trustee, representative, lenders
or holders; and

 

(4)           the Guarantee and this security agreement are amendments and
restatements of the Canadian Subsidiaries Guaranty and the Original Canadian
Security Agreement, respectively, and do not constitute novations thereof, and
the obligations thereunder are in full force and effect notwithstanding the
amendment and restatement of the Existing Credit Agreement pursuant to the
Amended and Restated Credit Agreement and the amendment and restatement of the
Original Canadian Security Agreement pursuant to this security agreement and
each Credit Document to which it is a party continues

 

53

 

to be and constitutes a legal, valid and binding
obligation of the Obligor enforceable in accordance with its terms.

 

REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK

 

54

 

IN WITNESS WHEREOF each of the Obligor and the Collateral Agent has caused this
security agreement to be executed by its duly authorized officer as of the date
first above written.

 

	
   

  	
  WILLIAMS
  SCOTSMAN OF

  CANADA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tom Bruyea

  	
   

  
	
   

  	
   

  	
  Name: Tom Bruyea

  	
   

  
	
   

  	
   

  	
  Title: Authorized Signing Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as

  Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kevin W. Corcoran

  	
   

  
	
   

  	
   

  	
  Authorized Signing Officer

  	
   

  
	
   

  	
   

  	
  Vice President

  	
   

  
					

 

55

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