Document:

Exhibit 4.5

 

EXECUTION COPY

 

 

SECURITY AGREEMENT

 

from

 

RDA HOLDING CO.,

 

THE READER’S DIGEST ASSOCIATION, INC.

 

and

 

THE GRANTORS IDENTIFIED HEREIN,

 

to

 

JPMORGAN CHASE BANK, N.A.,

 

as Administrative Agent

under the Credit Agreement referred to herein,

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Trustee

under the Indenture referred to herein

 

and

 

WILMINGTON TRUST FSB,

 

as Collateral Agent

for the Secured Parties referred to herein

 

Dated as of February 19, 2010

 

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section I

  	
  DEFINED TERMS

  	
  1

  
	
  1.1.

  	
  Definitions

  	
  1

  
	
  1.2.

  	
  Other Definitional Provisions

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section II

  	
  GRANT OF SECURITY INTEREST

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section III

  	
  REPRESENTATIONS AND WARRANTIES

  	
  11

  
	
  3.1.

  	
  Title; No Other Liens

  	
  11

  
	
  3.2.

  	
  Perfected First Priority Liens

  	
  12

  
	
  3.3.

  	
  Jurisdiction of Organization

  	
  12

  
	
  3.4.

  	
  Inventory and Equipment

  	
  12

  
	
  3.5.

  	
  Farm Products

  	
  12

  
	
  3.6.

  	
  Investment Property

  	
  12

  
	
  3.7.

  	
  Receivables

  	
  13

  
	
  3.8.

  	
  Intellectual Property

  	
  13

  
	
  3.9.

  	
  Commercial Tort Claims

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section IV

  	
  COVENANTS

  	
  14

  
	
  4.1.

  	
  Delivery of Instruments, Certificated Securities and
  Chattel Paper

  	
  14

  
	
  4.2.

  	
  Maintenance of Insurance

  	
  14

  
	
  4.3.

  	
  [Reserved]

  	
  14

  
	
  4.4.

  	
  Maintenance of Perfected Security Interest; Further
  Documentation

  	
  14

  
	
  4.5.

  	
  Changes in Locations, Name, etc.

  	
  15

  
	
  4.6.

  	
  Notices

  	
  15

  
	
  4.7.

  	
  Investment Property

  	
  15

  
	
  4.8.

  	
  Receivables

  	
  16

  
	
  4.9.

  	
  Intellectual Property

  	
  17

  
	
  4.10.

  	
  Commercial Tort Claims

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section V

  	
  REMEDIAL PROVISIONS

  	
  19

  
	
  5.1.

  	
  Certain Matters Relating to Receivables

  	
  19

  
	
  5.2.

  	
  Communications with Obligors; Grantors Remain Liable

  	
  19

  
	
  5.3.

  	
  Pledged Equity

  	
  20

  
	
  5.4.

  	
  Proceeds to be Turned Over to Collateral Agent

  	
  21

  
	
  5.5.

  	
  Application of Proceeds

  	
  21

  
	
  5.6.

  	
  Code and Other Remedies

  	
  22

  
	
  5.7.

  	
  Registration Rights

  	
  23

  
	
  5.8.

  	
  Deficiency

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section VI

  	
  THE AGENTS

  	
  24

  
	
  6.1.

  	
  Collateral Agent’s Appointment as Attorney-in-Fact, etc.

  	
  24

  
	
  6.2.

  	
  Duty of Collateral Agent

  	
  25

  
	
  6.3.

  	
  Execution of Financing Statements

  	
  26

  
	
  6.4.

  	
  Authority of Collateral Agent

  	
  26

  
	
  6.5.

  	
  Enforcement by the Collateral Agent

  	
  26

  
	
  6.6.

  	
  Competing Instructions to the Collateral Agent

  	
  27

  
	
  6.7.

  	
  Exemption

  	
  27

  

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  6.8.

  	
  Termination and Resignation of Collateral Agent

  	
  28

  
	
  6.9.

  	
  Agents’ and Collateral Agent’s Duties; Reliance

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section VII

  	
  PARI PASSU OBLIGATIONS

  	
  30

  
	
  7.1.

  	
  Actions with Respect to Collateral; Prohibition on
  Contesting Liens

  	
  30

  
	
   

  	
   

  	
   

  
	
  Section VIII

  	
  MISCELLANEOUS

  	
  32

  
	
  8.1.

  	
  Amendments; Waivers; Additional Grantors; Additional
  Secured Parties, etc.

  	
  32

  
	
  8.2.

  	
  Notices

  	
  33

  
	
  8.3.

  	
  Enforcement Expenses; Indemnification

  	
  33

  
	
  8.4.

  	
  Successors and Assigns

  	
  34

  
	
  8.5.

  	
  Set-Off

  	
  34

  
	
  8.6.

  	
  Counterparts

  	
  35

  
	
  8.7.

  	
  Severability

  	
  35

  
	
  8.8.

  	
  Section Headings

  	
  35

  
	
  8.9.

  	
  Integration

  	
  35

  
	
  8.10.

  	
  GOVERNING LAW

  	
  35

  
	
  8.11.

  	
  Submission To Jurisdiction; Waivers

  	
  35

  
	
  8.12.

  	
  Acknowledgments

  	
  36

  
	
  8.13.

  	
  Additional Grantors

  	
  36

  
	
  8.14.

  	
  Releases

  	
  36

  
	
  8.15.

  	
  WAIVER OF JURY TRIAL

  	
  37

  

 

	
  SCHEDULES

  	
   

  
	
  Schedule 1

  	
  Notice
  Addresses

  
	
  Schedule 2

  	
  Investment
  Property

  
	
  Schedule 3

  	
  Perfection
  Matters

  
	
  Schedule 4

  	
  Jurisdictions
  of Organization and Chief Executive Offices

  
	
  Schedule 5

  	
  Inventory
  and Equipment Locations

  
	
  Schedule 6

  	
  Intellectual
  Property

  
	
   

  	
   

  
	
  ANNEX

  	
   

  
	
  Annex 1

  	
  Intellectual
  Property Short Form Security Agreement

  
	
  Annex 2

  	
  Form of
  Security Agreement Supplement

  
	
  Annex 3

  	
  Secured
  Party Security Agreement Supplement

  

 

ii

 

SECURITY AGREEMENT, dated as of February 19, 2010, among RDA
HOLDING CO., a Delaware corporation (“Holdings”), THE READER’S DIGEST
ASSOCIATION, INC., a Delaware corporation (the “Borrower”), the
other Persons listed on the signature pages hereof (together with the
Borrower, Holdings, and any other entity that may become a party hereto as
provided herein, the “Grantors”), JPMORGAN CHASE BANK, N.A., as
administrative agent (in such capacity, together with any successor
administrative agent, the “Administrative Agent”) for the “Secured
Parties” (as defined in the Credit Agreement referred to below), WELLS FARGO
BANK, NATIONAL ASSOCIATION, as trustee (in such capacity, together with any
successor trustee, the “Trustee”) for the holders of the Notes (together
with the Trustee, the “Bond Secured Parties”) and WILMINGTON TRUST FSB,
as collateral agent for the Secured Parties (in such capacity, together with
any successor collateral agent pursuant to Section 6.8, the “Collateral
Agent”).

 

W  I  T  N  E
S  S  E  T  H:

 

WHEREAS, Holdings, the Borrower and certain subsidiaries of the
Borrower have entered into the Revolving Credit and Guarantee Agreement dated
of even date herewith (as it may hereafter be amended, amended and restated,
supplemented, waived or otherwise modified from time to time, the “Credit
Agreement”) with the Administrative Agent and the other agents party
thereto;

 

WHEREAS, Holdings, the Borrower and certain subsidiaries of the
Borrower have entered into the Indenture dated as of February 11, 2010 (as
it may hereafter be amended, amended and restated, supplemented, waived or
otherwise modified from time to time, the “Indenture”) with the Trustee;

 

WHEREAS, pursuant to the Credit Agreement, the Grantors are entering
into this Agreement in order to grant to the Collateral Agent (on behalf of the
Administrative Agent, for the ratable benefit of the Bank Secured Parties), a
security interest in the Collateral (as hereinafter defined) to secure their
respective Secured Obligations (as hereinafter defined), and pursuant to the
Indenture, the Grantors are entering into this Agreement in order to grant to
the Collateral Agent (on behalf of the Trustee, for the ratable benefit of the
Bond Secured Parties), a security interest in the Collateral to secure their
respective Secured Obligations;

 

WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;

 

WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit Agreement
and the Notes; and

 

NOW, THEREFORE, each Grantor hereby agrees with the Collateral Agent,
for the ratable benefit of the Secured Parties, as follows:

 

SECTION I            DEFINED TERMS

 

1.1.          Definitions.  Unless otherwise defined herein, terms
defined in the Credit Agreement as in effect on the date hereof and used herein
shall have the meanings given to them in the Credit Agreement and the following
terms are used herein as defined in the New York UCC:  Accounts, Certificated Security, Chattel
Paper, Commercial Tort Claims, Documents, Equipment, Farm Products, Fixtures,
General Intangibles, Instruments, Inventory, Letter of Credit Rights
and Supporting Obligations.

 

 

(a)           The following terms shall have the
following meanings:

 

“Additional Agent”:  as defined in Section 8.1(b).

 

“Additional Lenders”: as defined in a
Secured Party Security Agreement Supplement.

 

“Additional Loan Documents”: as
defined in a Secured Party Security Agreement Supplement.

 

“Additional Secured Obligations”:  the obligations owing pursuant to the
Additional Loan Documents.

 

“Additional Secured Parties”:  the Additional Agent and the Additional
Lenders.

 

“Administrative Agent”: as defined in
the introductory paragraph to this Agreement.

 

“Agents”:  the Trustee, the First Priority
Representative and the Additional Agent.

 

“Agreement”:  this Security Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.

 

“Applicable Authorized Representative”:  (i) initially the Largest Holder at such
time, (ii) following the date hereof, subject to clause (iii) below,
upon the occurrence of a Larger Holder Event, the Authorized Representative in
respect of the Series of Pari Passu Obligations with the then largest
principal amount outstanding, and (iii) from and after the Non-Controlling
Authorized Representative Enforcement Date, the Major Non-Controlling
Authorized Representative.

 

“Authorized Representative” means
(i) in the case of any Bond Obligations or the Bond Secured Parties, the
Trustee and (ii) in the case of any Additional Secured Obligations that
are Pari Passu Obligations, the applicable Additional Agent.

 

“Applicable Governmental Authority”:  as defined in Section 4.8(b).

 

“Bank Additional Obligations”:  any obligations described in clauses
(a) and (b) of the definition of Bank Priority Obligations to the
extent such obligations are not permitted to be “Priority Payment Lien
Obligations” or “Pari Passu Payment Lien Obligations” pursuant to the Indenture
(it being understood that, in all events, the obligations described in clause
(a) of the definition of “Obligations” in the Credit Agreement will
constitute Bank Priority Obligations).

 

“Bank Obligations”:  the Bank Priority Obligations and the Bank
Additional Obligations.

 

“Bank Priority Obligations Discharge Date”:  the first date on which (a) the Bank
Priority Obligations (other than unasserted contingent indemnity obligations)
have been paid in cash in full, (b) all commitments to extend credit under
each First Priority Agreement have been terminated, (c) there are no
outstanding letters of credit (unless cash collateralized or otherwise
supported in a manner reasonably acceptable to the issuer thereof) or similar
instruments issued under any First Priority Agreement, and (d) the First
Priority Representative has delivered a written notice to the Collateral Agent
stating that the events described in clauses (a), (b) and (c) hereof
have occurred to the reasonable satisfaction of the First Priority
Representative (the First Priority Representative hereby agrees that promptly
following occurrence of the events described 

 

2

 

in clauses (a), (b) and (c) hereof to its reasonable satisfaction,
it will deliver such written notice to the Collateral Agent).

 

“Bank Priority Obligations”:  means (a) with respect to the Credit
Agreement, all “Secured Obligations” as defined in the Credit Agreement and
(b) with respect to each other First Priority Agreement (i) all
principal of and interest (including without limitation any Post-Petition
Interest) and premium (if any) on all loans made pursuant to the First Priority
Agreement, (ii) all reimbursement obligations (if any) and interest
thereon (including without limitation any Post-Petition Interest) with respect
to any letter of credit or similar instruments issued pursuant to the First
Priority Agreement, (iii) all monetary Hedging Obligations, (iv) all
monetary Cash Management Obligations and (v) all guarantee obligations,
fees, expenses and other amounts payable from time to time pursuant to the
First Priority Documents, in each case whether or not allowed or allowable in
an Insolvency or Liquidation Proceeding, in the case of each of clauses (a) and
(b), to the extent such obligations are permitted to be “Priority Payment Lien
Obligations” pursuant to the Indenture; provided that the obligations
described in clause (a) of the definition of “Obligations” in the Credit
Agreement will, in any event, constitute Bank Priority Obligations.

 

“Bank Secured Parties”:  the “Secured Parties”, as defined in the
Credit Agreement and any other holders of Bank Obligations.

 

“Bankruptcy Code”:  Title
11 of the United States Code, as amended.

 

“Bankruptcy Law”:  the Bankruptcy Code and any similar Federal,
state or foreign law for the relief of debtors.

 

“Bond Additional Excluded Property”:  any Capital Stock and other securities of a
Subsidiary of the Borrower to the extent that the pledge of such Capital Stock
and other securities results in the Borrower being required to file separate
financial statements of such Subsidiary with the SEC (or any other governmental
agency), but only to the extent necessary not to be subject to such
requirement.  In the event that 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 (or any other governmental agency) of separate financial
statements of any Subsidiary of the Borrower due to the fact that such
Subsidiary’s Capital Stock secures the Bond Obligations, then the Capital Stock
of such Subsidiary shall automatically be deemed to be “Bond Additional
Excluded Property” without consent from any Bond Secured Party, but only to the
extent necessary to not be subject to such requirement.  In the event that 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
Subsidiary’s Capital Stock to secure the Bond Obligations in excess of the
amount then pledged without the filing with the SEC (or any other governmental
agency) of separate financial statements of such Subsidiary, then the Capital
Stock of such Subsidiary shall automatically cease to be deemed “Bond
Additional Excluded Property”.

 

“Bond Obligations”:  (i) any principal, interest, penalties
(if any), fees, premiums (if any), indemnifications, reimbursements, guarantees
and other liabilities payable under and pursuant to the terms in the Notes, the
Indenture and the Security Documents (as defined in the Indenture), in each
case, whether now or hereafter existing, renewed or restructured, whether or
not from time to time decreased or extinguished and later increased, created or
incurred, whether or not arising on or after the commencement of an Insolvency
or Liquidation Proceeding (including Post-Petition Interest) and whether or not
allowed or allowable as a claim in any such proceeding and 

 

3

 

(ii) all obligations and liabilities of each Subsidiary Guarantor
(as defined in the Indenture) which may arise under, out of, or in connection
with this Agreement, and the guarantee by each Subsidiary Guarantor of the
Notes, in each case whether on account of guarantee obligations, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise but to the extent
provided for and in accordance with the terms thereunder (including, without
limitation, all fees and disbursements of counsel to the Collateral Agent or
any Secured Party that are required to be paid by such Subsidiary Guarantor
pursuant to the terms of any of the foregoing agreements).

 

“Bond Secured Parties”: as defined in
the introductory paragraph to this Agreement.

 

“Borrower”:  as defined in the introductory paragraph to
this Agreement.

 

“Cash Management Obligations”:  obligations owed by any Grantor to any Bank
Secured Party (or any of its affiliates) in respect of any overdraft and
related liabilities arising from treasury, depository and cash management
services or any automated clearing house transfers of funds.

 

“Collateral”:  as defined in Section II.

 

“Collateral Account”:  any collateral account established by the
Collateral Agent as provided in Section 5.1 or 5.4.

 

“Collateral Agent”: as defined in the
introductory paragraph to this Agreement.

 

“Collateral Agent Obligations”:  any and all monetary obligations of any
Grantor now or hereafter existing, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
fees, premiums (if any), penalties (if any), indemnifications, contract causes
of action, costs, expenses or otherwise, owed to the Collateral Agent under or
in connection with this Agreement or any other Loan Document, Indenture
Document or Additional Loan Document, if any.

 

“Consultation Period”: as defined in
Section 6.6(a).

 

“Controlling Secured Parties”:  the Series of Pari Passu Secured Parties
whose Authorized Representative is the Applicable Authorized Representative.

 

“Copyrights”:  (i) all copyrights arising under the
laws of the United States, any other country or any political subdivision
thereof, whether registered or unregistered and whether published or
unpublished (including, without limitation, those listed in Schedule 6),
all registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.

 

“Copyright Licenses”:  all written agreements naming any Grantor as
licensor or licensee (including, without limitation, those listed in Schedule
6), granting any right under any Copyright, including, without limitation,
the grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.

 

“Credit Agreement”:  as defined in the recitals hereof.

 

4

 

“Deposit Account”:  as defined in the Uniform Commercial Code of
any applicable jurisdiction and, in any event, including, without limitation,
any demand, time savings, passbook or like account maintained with a depositary
institution.

 

“Excluded Property”: (i) any
property (including but not limited to the Equity Interests of Direct Holdings
IP L.L.C., a Delaware limited liability company) to the extent that a grant of
a security interest in such property pursuant to this Agreement is prohibited
by any Requirements of Law of a Governmental Authority, requires a consent not
obtained of any Governmental Authority pursuant to such Requirement of Law or
is prohibited by, or constitutes a breach or default under or results in the
termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property, Pledged Equity or
Pledged Note (other than any of the foregoing issued by a Grantor), any
applicable shareholder, joint venture or similar agreement, except, in each
case, to the extent that such Requirement of Law or the term in such contract,
license, agreement, instrument or other document or shareholder or similar
agreement providing for such prohibition, breach, default or termination or
requiring such consent is ineffective under applicable law (including but not
limited to the UCC or the Bankruptcy Code), (ii) any Intellectual Property
to the extent that the grant of a security interest therein would result in the
invalidity, unenforceability, voiding or cancellation thereof (including, without
limitation, any Trademark application filed on an intent to use basis),
(iii) any assets of Foreign Subsidiaries, unless any such Foreign
Subsidiary is required to become a Grantor pursuant to the Credit Agreement,
the Indenture or any Additional Loan Documents, (iv) any assets held by
any Unrestricted Subsidiaries and any other Subsidiary that is not a Grantor,
(v) amounts used to cash collateralize the letters of credit
(a) existing on the Emergence Date (but not any renewals of such letters
of credit) and (b) issued under the Credit Agreement in an amount not to
exceed $26.5 million at any one time, (vi) any capital stock of any
Foreign Subsidiary owned by any Grantor in excess of 65% of the Capital Stock
of such Foreign Subsidiary, (vii) any aircraft or any trucks, trailers,
tractors, service vehicles, automobiles, rolling stock or other registered
mobile equipment of the Grantors or equipment of the Grantors covered by
certificates of title or ownership, (viii) any real property other than
Material Real Property and (ix) any payroll accounts, employee benefit
accounts and tax accounts.

 

“Finance Documents”: the First
Priority Documents, the Indenture Documents and the Additional Loan Documents,
if any.

 

“First Priority Agreement”:  means the collective reference to
(a) the Credit Agreement, (b) any other credit agreement, loan
agreement, note agreement, promissory note, indenture or other agreement or
instrument evidencing or governing the terms of any obligations which are
(i) permitted to be “Priority Payment Lien Obligations” under the
Indenture and have been designated as such and (ii) are permitted to be,
and have been, incurred pursuant to Section 7.02(b)(i) of the Credit
Agreement and (c) any other credit agreement, loan agreement, note
agreement, promissory note, indenture or other agreement or instrument
evidencing or governing the terms of any indebtedness or other financial
accommodation that has been incurred to extend, increase, renew, refund,
replace (whether upon or after termination or otherwise) or refinance
(including by means of sales of debt securities to institutional investors) in
whole or in part from time to time the indebtedness and other obligations
outstanding under the Credit Agreement and/or the agreements or instruments
referred to in clause (b) hereof and/or any other agreement or instrument
referred to in this clause (c) unless such agreement or instrument
expressly provides that it is not intended to be and is not a First Priority
Agreement hereunder (a “Replacement First Priority Agreement”).  Any reference to the Credit Agreement
hereunder shall be deemed a reference to any First Priority Agreement then
extant, as amended, modified and supplemented 

 

5

 

from time to time.  Any reference
to a specific provision of the Credit Agreement hereunder shall be deemed a
reference to any comparable provision in any other First Priority Agreement.

 

“First Priority Documents”: each First
Priority Agreement, each other agreement entered into in favor of the
Collateral Agent for the purpose of securing any Bank Obligations and any
guarantee by any Grantor of any or all of the Bank Obligations (including the
Loan Documents, as defined in the Credit Agreement).

 

“First Priority Representative”:  the Administrative Agent.  In the case of any Replacement First Priority
Agreement, the First Priority Representative shall be the Person identified as
such in such agreement.

 

“Foreign Subsidiary Voting Stock”:  the voting Equity Interests of any Foreign
Subsidiary and of any Domestic Subsidiary substantially all of whose assets
consist of voting Equity Interests of one or more Foreign Subsidiaries.

 

“Grantors”: as defined in the
introductory paragraph to this Agreement, which, notwithstanding anything to
the contrary contained herein, shall not include Direct Holdings IP L.L.C., a
Delaware limited liability company, or any Unrestricted Subsidiary, if any.

 

“Hedging Obligations”:  obligations under any Swap Contract that is
entered into by and between any Grantor and any Bank Secured Party (or any of
its affiliates)

 

“Indemnified Party”: as defined in
Section 8.3(c).

 

“Indenture Documents”: the Indenture
and the Security Documents (as defined in the Indenture).

 

“Indenture”:  as defined in the recitals hereof.

 

“Insolvency or Liquidation Proceeding”
means:

 

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

 

(2) any liquidation, dissolution,
marshalling of assets or liabilities or other winding up of or relating to the
Borrower or any other Grantor, in each case whether or not voluntary and
whether or not involving bankruptcy or insolvency; or

 

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

 

“Intellectual Property”:  the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Patents, and the Trademarks, 

 

6

 

and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.

 

“Intellectual Property Licenses”: the
collective reference to all Copyright Licenses, Patent Licenses and Trademark
Licenses, and all rights to sue at law or in equity for any infringement or
other impairment thereof, including the right to receive all proceeds and damages
therefrom.

 

“Intercompany Note”:  any promissory note evidencing loans made by
any Grantor to Holdings or any of its Subsidiaries.

 

“Investment Property”:  the collective reference to (i) all
“investment property” as such term is defined in Section 9-102(a)(49) of
the New York UCC (other than any Foreign Subsidiary Voting Stock excluded from
the definition of “Pledged Equity”) and (ii) whether or not constituting
“investment property” as so defined, all Pledged Debt and all Pledged Equity,
in each case other than Excluded Property.

 

“Issuers”:  the collective reference to each issuer of
any Investment Property.

 

“Larger Holder Event”:  as of any date of determination, the date
when the applicable Series of Pari Passu Obligations held by the Largest
Holder on such date ceases to represent the largest principal amount
outstanding of any Series of Pari Passu Obligations.

 

“Largest Holder”:  initially, the Trustee, and from time to time
after the date hereof, the Authorized Representative in respect of the Series of
Pari Passu Obligations representing the largest principal amount outstanding of
any then outstanding Series of Pari Passu Obligations.

 

“Major Non-Controlling Authorized
Representative”:  as of any date of
determination, the Non-Controlling Authorized Representative of the
Series of Pari Passu Obligations that constitutes the second largest
outstanding principal amount of any then outstanding Series of Pari Passu
Obligations.

 

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

 

“Non-Controlling Authorized Representative”:  at any time, any Authorized Representative
that is not the Applicable Authorized Representative at such time.

 

“Non-Controlling Authorized Representative
Enforcement Date”:  following the
Bank Priority Obligations Discharge Date, with respect to any Non-Controlling
Authorized Representative, the date which is 90 days (throughout which 90-day
period such Non-Controlling Authorized Representative was the Major
Non-Controlling Authorized Representative) after the occurrence of both
(i) an Event of Default (under and as defined in the Additional Loan
Document or Indenture Document under which such Non-Controlling Authorized
Representative is the Authorized Representative) and (ii) the Collateral
Agent’s and each other Authorized Representative’s receipt of written notice
from such Non-Controlling Authorized Representative certifying that
(x) such Non-Controlling Authorized Representative is the Major
Non-Controlling Authorized Representative and that an Event of Default (under
and as defined in the Additional Loan Document or Indenture Document under
which such Non-Controlling Authorized Representative is the Authorized
Representative) has occurred and is continuing and (y) the Pari Passu Obligations
of the Series with respect to which such Non-Controlling Authorized 

 

7

 

 

Representative is the Authorized Representative are currently due and
payable in full (whether as a result of acceleration thereof or otherwise) in
accordance with the terms of the applicable Additional Loan Document or
Indenture Document; provided that the Non-Controlling Authorized
Representative Enforcement Date shall be stayed and shall not occur and shall
be deemed not to have occurred (1) at any time the Collateral Agent, at
the request of the then Applicable Authorized Representative, has commenced and
is diligently pursuing any enforcement action with respect to the Collateral
with reasonable diligence in light of the then existing circumstances or (2) at
any time a Grantor which has granted a security interest in the Collateral is
then a debtor under or with respect to (or otherwise subject to) any Insolvency
or Liquidation Proceeding.

 

“Non-Controlling Secured Parties”:  the Pari Passu Secured Parties which are not
Controlling Secured Parties.

 

“Notes”:  the Borrower’s Floating Rate Senior Secured Notes
due 2017 issued from time to time pursuant to the Indenture.

 

“Pari Passu Obligations”:  the Bond Obligations and any Additional
Secured Obligations that rank equally with the Bond Obligations with respect to
the receipt of proceeds from the Collateral pursuant to Section 5.5.

 

“Pari Passu Secured Parties”:  (i) the Bond Secured Parties and (ii) the
Additional Secured Parties with respect to each Series of Additional
Secured Obligations that constitute Pari Passu Obligations.

 

“Pari Passu Security Documents”:  the Security Documents (as defined in the
Indenture) and each other agreement entered into in favor of the Collateral
Agent for the purpose of securing any Series of Pari Passu Obligations.

 

“Patents”:  (i) all letters patent of the United
States, any other country or any political subdivision thereof, all reissues
and extensions thereof and all goodwill associated therewith, including,
without limitation, any of the foregoing referred to in Schedule 6, (ii) all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, including,
without limitation, any of the foregoing referred to in Schedule 6, and
including, for each of (i) and (ii), the right to make, use and/or sell
the inventions disclosed or claimed therein and (iii) all rights to obtain
any reissues or extensions of the foregoing.

 

“Patent License”:  all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, use
or sell any invention covered in whole or in part by a Patent, including,
without limitation, any of the foregoing referred to in Schedule 6.

 

“Pledged Debt”:  all promissory notes listed on Schedule 2,
all Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than promissory notes
issued in connection with extensions of trade credit by any Grantor in the
ordinary course of business).

 

“Pledged Equity”:  Equity Interests listed on Schedule 2,
together with any other shares, stock certificates, options, interests or
rights of any nature whatsoever in respect of the Equity Interests of any
Person that may be issued or granted to, or held by, any Grantor while this
Agreement is in effect; provided that, notwithstanding anything herein to the
contrary, in no event 

 

8

 

shall more than 65% of the issued and total outstanding Foreign
Subsidiary Voting Stock of any Foreign Subsidiary or of any Domestic Subsidiary
substantially all of whose assets consist of voting Equity Interests of one or
more Foreign Subsidiaries be required to be pledged hereunder.

 

“Post-Petition Interest” means any
interest or entitlement to fees or expenses or other charges that accrues after
the commencement of any Insolvency or Liquidation Proceeding, whether or not
allowed or allowable in any such proceeding.

 

“Proceeds”:  all “proceeds” as such term is defined in
Section 9-102(a)(64) of the New York UCC and, in any event, shall include,
without limitation, all dividends or other income from Investment Property,
collections thereon or distributions or payments with respect thereto.

 

“Proceeds Collateral Account”:  one or more segregated accounts that is under
the sole control of the Collateral Agent and is free from all other Liens
(other than Liens permitted to be incurred under clauses (30) and (31) under
the definition of “Permitted Liens” in the Credit Agreement as in effect on the
date hereof and Liens securing Bank Obligations, Pari Passu Obligations and
Junior Lien Indebtedness).

 

“Receivable”:  any right to payment for goods sold or leased
or for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account), other than Excluded
Property.

 

“Replacement
First Priority Agreement”:  as
defined in the definition of “First Priority Agreement.”

 

“Secured Obligations”:  the Bank Obligations, the Bond Obligations,
the Collateral Agent Obligations and the Additional Secured Obligations, if
any.

 

“Secured Parties”:  the collective reference to the Bank Secured
Parties, the Bond Secured Parties, the Collateral Agent, and the Additional
Secured Parties, if any.

 

“Secured Party Security Agreement
Supplement” as defined in Section 8.1(b).

 

“Securities Act”:  the Securities Act of 1933, as amended.

 

“Securities Laws”: as defined in
Section 5.7(a).

 

“Security Documents”:  the Collateral Documents and the Pari Passu
Security Documents.

 

“Series”:  (i) with respect to the Pari Passu
Secured Parties, each of (a) the Bond Secured Parties (in their capacities
as such) and (b) the Additional Secured Parties that become subject to
this Agreement after the date hereof that are represented by a common
Authorized Representative (in its capacity as such for such Additional Secured
Parties) and (ii) with respect to any Pari Passu Obligations, each of (a) the
Bond Obligations and (b) the Additional Secured Obligations incurred
pursuant to any Additional Loan Document, which pursuant to any Secured Party
Security Agreement Supplement, are to be represented hereunder by a common
Authorized Representative (in its capacity as such for such Additional Secured
Obligations).

 

9

 

“Swap Contract”:  (a) any and all rate swap transactions,
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether
or not any such transaction is governed by or subject to any master agreement,
and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed
by, any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any
Master Agreement.

 

“Trademarks”:  (i) all trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, service marks, domain names, logos and other source or business
identifiers, and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in Schedule 6, and
(ii) the right to obtain all renewals thereof.

 

“Trademark License”:  any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule
6.

 

“Trustee”:  as defined in the introductory paragraph to
this Agreement.

 

1.2.          Other Definitional Provisions.  (a) The words “hereof,” “herein,”
“hereto” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement
unless otherwise specified.

 

(b)           The meanings given to terms defined
herein shall be equally applicable to both the singular and plural forms of
such terms.

 

(c)           Where the context requires, terms
relating to the Collateral or any part thereof, when used in relation to a
Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.

 

SECTION II           GRANT OF SECURITY INTEREST

 

Each Grantor hereby collaterally grants to the Collateral Agent (for
the benefit of the Secured Parties) a security interest in such Grantor’s
right, title and interest in and to the following property, in each case, as to
each type of property described below, whether now owned or hereafter acquired
by such Grantor, wherever located, and whether now or hereafter existing or
arising 

 

10

 

(collectively,
the “Collateral”), as collateral security for the prompt and complete
payment and performance when due of such Grantor’s Secured Obligations, as
applicable:

 

(a)           all Accounts;

 

(b)           all
Chattel Paper;

 

(c)           all
Deposit Accounts;

 

(d)           all
Documents (other than title
documents with respect to Vehicles);

 

(e)           all
Equipment;

 

(f)            all
Fixtures;

 

(g)           all
General Intangibles;

 

(h)           all
Instruments;

 

(i)            all
Intellectual Property and
Intellectual Property Licenses;

 

(j)            all
Inventory;

 

(k)           all
Investment Property;

 

(l)            all
Letter of Credit Rights;

 

(m)          all
other property not otherwise described above (except for any property
specifically excluded from any clause in this Section, and any property
specifically excluded from any defined term used in this Section);

 

(n)           all
books and records pertaining to the Collateral; and

 

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

 

provided, however,
that notwithstanding any of the other provisions set forth in this Section II
and elsewhere to the contrary, this Agreement shall not constitute a grant of a
security interest in any Excluded Property; provided, further,
that notwithstanding anything to the contrary contained herein or in the other
Finance Documents, this Agreement shall not constitute a grant of a security
interest in any Bond Additional Excluded Property to secure any Bond
Obligations.

 

SECTION III          REPRESENTATIONS AND WARRANTIES

 

Each Grantor hereby represents and warrants that:

 

3.1.          Title; No Other Liens.  Except for the security interest granted to
the Collateral Agent (for the benefit of the Secured Parties) pursuant to this
Agreement and the other Liens permitted to exist on the Collateral by all
applicable Finance Documents, such Grantor owns or has a license or other right
to use, each item of the Collateral free and clear of any and all Liens.  No financing statement or 

 

11

 

other
public notice with respect to all or any part of the Collateral is on file or
of record in any public office, except (i) such as have been filed in
favor of the Collateral Agent (for the benefit of the Secured Parties) pursuant
to this Agreement, (ii) as are permitted by all applicable Finance
Documents or (iii) such as were filed with respect to Liens that shall
have been eliminated after giving effect to the Reorganization Plan and the
Effective Date.  For the avoidance of
doubt, it is understood and agreed that any Grantor may, as part of its
business, grant licenses to third parties to use Intellectual Property owned or
developed by a Grantor.  For purposes of
this Agreement and the other Finance Documents, such licensing activity shall
not constitute a “Lien” on such Intellectual Property, provided that
such licensing activity is not intended to create a security interest of any
kind or nature whatsoever.  Each of the
Collateral Agent and each other Secured Party understands that any such
licenses may be exclusive to the applicable licensees, and such exclusivity
provisions may limit the ability of the Collateral Agent to utilize, sell,
lease or transfer the related Intellectual Property or otherwise realize value
from such Intellectual Property pursuant hereto.

 

3.2.          Perfected First Priority Liens.  The security interests granted pursuant to
this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the Collateral
Agent (or arrangements reasonably satisfactory to the Collateral Agent have
been made for such delivery) in completed and, where required, duly executed
form) will constitute valid perfected security interests in all of the
Collateral in favor of the Collateral Agent (for the benefit of the Secured
Parties) (if and to the extent perfection may be achieved by such filings and
actions and provided that additional filings may be necessary to perfect the
Collateral Agent’s security interest in any Intellectual Property acquired
after the date hereof), as collateral security for such Grantor’s Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor
(subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing) and (b) are prior to all other Liens on the Collateral in
existence on the date hereof except for, in the case of Collateral other than
Pledged Equity, Liens permitted by all applicable Finance Documents, to have
priority over the Liens on the Collateral.

 

3.3.          Jurisdiction of Organization.  On the date hereof, such Grantor’s
jurisdiction of organization, identification number from the jurisdiction of
organization (if any), and, if such Grantor is not a registered organization,
the location of such Grantor’s chief executive office or sole place of
business, as the case may be, are specified on Schedule 4.  Such Grantor has furnished to the Collateral
Agent a certified charter, certificate of incorporation or other organization
document, as applicable, and long-form good standing certificate as of a date
which is recent to the date hereof.

 

3.4.          Inventory and Equipment.  On the date hereof, the Inventory and the
Equipment of each Grantor are kept at the locations listed on Schedule 5.  The provisions of this Section 3.4 shall
not apply to Equipment or Inventory in transit, that has been sold (including
sales on consignment or approval in the ordinary course of business), that is
out for repair, that is at other locations for purposes of onsite maintenance
or repair or at locations where Equipment and Inventory with less than
$2,500,000 in aggregate value is located.

 

3.5.          Farm Products.  None of the Collateral constitutes, or is the
Proceeds of, Farm Products.

 

3.6.          Investment Property.  (a) On the date hereof, the shares of
Pledged Equity pledged by such Grantor hereunder constitute all the issued and
outstanding shares of all classes of the 

 

12

 

Equity
Interests of each Issuer owned by such Grantor or, in the case of Foreign
Subsidiary Voting Stock, if less, 65% of the outstanding Foreign Subsidiary
Voting Stock of each relevant Issuer.

 

(b)           All the shares of the Pledged Equity
have been duly and validly issued and, if applicable, are fully paid and
nonassessable.

 

(c)           To
the best of such Grantor’s knowledge, each of the Pledged Debt constitutes the
legal, valid and binding obligation
of the obligor with respect thereto, enforceable in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.

 

(d)           Such
Grantor is the record and beneficial owner of, and has good and marketable
title to, the Investment Property pledged by it hereunder, free of any and all
Liens or options in favor of, or claims of, any other Person, except the security interest created
by this Agreement or the other Finance Documents or nonconsensual Liens
permitted pursuant to the terms under all applicable Finance Documents.

 

3.7.          Receivables No amount
payable to such Grantor under or in connection with any Receivable is evidenced
by any Instrument or Chattel Paper in excess, individually or in the aggregate,
of $1,000,000 which has not been delivered to the Collateral Agent.

 

3.8.          Intellectual Property.  (a) Schedule 6
lists all Intellectual Property (other than domain names) that is registered in
the United States or for which application for registration in the United
States has been filed owned by such Grantor in its own name on the date hereof.

 

(b)           On the date hereof, all material
Intellectual Property owned by such Grantor is valid, subsisting, unexpired and
enforceable, has not been abandoned and neither the conduct of each Grantor’s business
nor the use of their Intellectual Property infringes on the Intellectual
Property rights of any other Person, except in each case as could not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the value of any material Intellectual Property owned by such
Grantor.

 

(c)           On
the date hereof, no holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of,
or such Grantor’s rights in, any Intellectual Property owned by such Grantor in
any respect that could reasonably be expected to have a material adverse effect
on the value of any material Intellectual
Property owned by such Grantor.

 

(d)           On
the date hereof, no action or proceeding is pending, or, to the knowledge of
such Grantor, threatened, on the date hereof (i) seeking to cancel or contesting the validity of
any material Intellectual Property owned by such Grantor (other than routine
office actions issued in the ordinary course of prosecution before the United
States Patent and Trademark Office), or (ii) which, if adversely
determined, would have a material adverse effect on the value of any material Intellectual Property owned
by such Grantor.

 

3.9.          Commercial Tort Claims.  On the date hereof, no Grantor has knowledge
of rights in any Commercial Tort Claim as to which it reasonably expects to
recover more than $2,500,000.

 

13

 

SECTION IV          COVENANTS

 

Each Grantor covenants and agrees with the Collateral Agent and the
other Secured Parties that, from and after the date of this Agreement until the
Secured Obligations (other than contingent indemnification and contingent
expense reimbursement obligations and Secured Obligations in respect of Hedge
Obligations and Cash Management Obligations that are not due and payable) shall
have been paid in full and the Revolving Credit Commitments shall have
terminated:

 

4.1.          Delivery of Instruments,
Certificated Securities and Chattel Paper.  If any amount in excess of $1,000,000
payable, individually or in the aggregate, under or in connection with any of
the Collateral shall be or become evidenced by any Instrument, Certificated
Security or Chattel Paper, such Instrument, Certificated Security or Chattel Paper,
shall be delivered as soon as reasonably practicable to the Collateral Agent,
duly indorsed in a manner reasonably satisfactory to the Collateral Agent, to
be held as Collateral pursuant to this Agreement.

 

4.2.          Maintenance of Insurance.  (a) Such Grantor will maintain with
financially sound and reputable insurance companies (provided, that if
any such insurance company shall at any time cease to be financially sound and
reputable, there shall be no breach of this provision in the event that such
Grantor promptly (and in any event within sixty (60) days of such date) obtains
insurance from an alternative insurance carrier that is financially sound and
reputable), insurance with respect to its properties and business against loss
or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts (after giving
effect to any self-insurance reasonable and customary for similarly situated
Persons engaged in the same or similar businesses as the Borrower and its
Subsidiaries) and with deductible levels as are customarily carried under
similar circumstances by such other Persons and ensure that the Collateral
Agent is an additional insured and/or loss payee under such liability and
property insurance as reasonably requested by the Collateral Agent.

 

(b)           (i) Such Grantor shall use
commercially reasonable efforts to cause all such insurance to provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by the
Collateral Agent of written notice thereof and (ii) such Grantor shall
cause all such insurance to name the Collateral Agent as additional insured or
loss payee.

 

4.3.          [Reserved].

 

4.4.          Maintenance of Perfected Security
Interest; Further Documentation.  (a) Such Grantor shall take all actions
reasonably requested by the Collateral Agent to maintain the security interest
created by this Agreement as a perfected security interest having the priority
described in Section 3.2 and shall take all commercially reasonable
actions to defend such security interest against the claims and demands of all
Persons whomsoever, subject in each case, (i) in the case of Collateral
consisting of Pledged Equity and Pledged Debt, nonconsensual Liens permitted by
all applicable Finance Documents and (ii) in the case of Collateral other
than Pledged Equity and Pledged Debt, Liens permitted by all applicable Finance
Documents and to the rights of such Grantor under the Finance Documents to
dispose of the Collateral.

 

(b)           Such Grantor will furnish to the
Collateral Agent from time to time statements and schedules further identifying
and describing the assets and property of such Grantor and such other reports
in connection therewith as the Collateral Agent may reasonably request, all in
reasonable detail.

 

14

 

(c)           At
any time and from time to time, upon the written request of the Collateral
Agent, and at the sole expense of such Grantor, such Grantor will promptly and
duly execute and deliver, and have recorded, such further instruments and
documents and take such further actions as the Collateral Agent may reasonably
request for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including, without
limitation, (i) filing any financing or continuation statements under the
Uniform Commercial Code (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby, (ii) in the case of
Investment Property, Deposit Accounts, Letter-of-Credit Rights and any other
relevant Collateral, taking any additional actions necessary to enable the
Collateral Agent to obtain “control” (within the meaning of the applicable
Uniform Commercial Code) with respect thereto, and (iii) in the case of
registered and applied for Intellectual Property, filing an Intellectual
Property Short Form Security Agreement substantially in the form of Annex
1 hereto with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable.

 

4.5.          Changes in Locations,
Name, etc.  Such Grantor
will furnish to the Collateral Agent promptly (and in any event within 30 days
of such change) written notice of any change in such Grantor’s (i) legal
name, (ii) jurisdiction of organization or formation, (iii) identity
or form of legal entity or (iv) organizational identification number.  Such Grantor will not effect or permit any
change referred to in the preceding sentence unless all additional financing
statements and other documents reasonably requested by the Collateral Agent to
maintain the validity, perfection and priority of the security interests
provided for herein have been filed prior to or substantially simultaneously
with the effectiveness of such change.

 

4.6.          Notices.  (a) Such Grantor will advise the
Collateral Agent promptly, in reasonable detail:

 

(i)            of any Lien (other than security
interests created hereby or Liens permitted under all applicable Finance
Documents) on any of the Collateral which would adversely affect the ability of
the Collateral Agent to exercise any of its remedies hereunder; and

 

(ii)           the occurrence of
any other event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the security interests
created hereby.

 

4.7.          Investment Property.  (a) If such Grantor shall become
entitled to receive or shall receive any certificate (including, without
limitation, any certificate representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Equity Interests of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Equity, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Collateral Agent and the Secured Parties, hold the
same in trust for the Collateral Agent and the Secured Parties and deliver the
same promptly to the Collateral Agent in the exact form received, duly indorsed
by such Grantor to the Collateral Agent, if required, together with an undated
stock power covering such certificate duly executed in blank by such Grantor to
be held by the Collateral Agent, subject to the terms hereof, as additional
collateral security for the Secured Obligations.  If an Event of Default under any Finance
Document shall have occurred and be continuing, any sums paid upon or in
respect of the pledged Investment Property upon the liquidation or dissolution
of any Issuer shall be paid over to the Collateral Agent to be held by it
hereunder as additional collateral security for the Secured Obligations, and in
case any distribution of capital shall be made on or in respect of the pledged
Investment Property or any property shall be distributed upon or with respect
to the pledged Investment Property pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the reorganization
thereof, 

 

15

 

the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Collateral Agent, be delivered to the Collateral Agent
to be held by it hereunder as additional collateral security for the Secured
Obligations.  If any sums of money or
property so paid or distributed in respect of the pledged Investment Property
shall be received by such Grantor upon the occurrence and during the
continuation of an Event of Default under any Finance Document, such Grantor
shall, until such money or property is paid or delivered to the Collateral
Agent, hold such money or property in trust for the Collateral Agent and the
Secured Parties, segregated from other funds of such Grantor, as additional
collateral security for the Secured Obligations.

 

(b)           Without the prior written consent of
the Collateral Agent, such Grantor will not (i) except as permitted by all
applicable Finance Documents, vote to enable, or take any other action to
permit, any Issuer to issue any Equity Interests of any nature or to issue any
other securities convertible into or granting the right to purchase or exchange
for any Equity Interests of any nature of any Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Investment Property or Proceeds thereof (except pursuant to a
transaction expressly permitted by all applicable Finance Documents or the
Reorganization Plan (where applicable)), (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Investment Property or Proceeds thereof, or any interest
therein, except for the security interests created by this Agreement or
permitted under all applicable Finance Documents or (iv) except as
permitted by all applicable Finance Documents, enter, subsequent to the date
upon which such Investment Property becomes Collateral hereunder, into any
agreement (other than any Finance Documents or the Reorganization Plan (where
applicable)) or undertaking restricting the right or ability of such Grantor or
the Collateral Agent to sell, assign or transfer any of the Investment Property
required to be included in Collateral or Proceeds thereof.

 

(c)           In the case of each Grantor which is
an Issuer, such Issuer agrees that (i) it will be bound by the terms of
this Agreement relating to the Investment Property constituting Collateral
issued by it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Collateral Agent promptly in
writing of the occurrence of any of the events described in Section 4.7(a) with
respect to the Investment Property issued by it and (iii) the terms of
Sections 5.3(c) and 5.7 shall apply to it, mutatis  mutandis,
with respect to all actions that may be required of it pursuant to
Section 5.3(c) or 5.7 with respect to the Investment Property issued
by it.

 

(d)           No Grantor shall permit any security
interest in certificated Pledged Equity of any Issuer that is not a Subsidiary
to be perfected by possession in favor of a Person other than the Collateral
Agent.

 

4.8.          Receivables.

 

(a)           Such Grantor will deliver to the
Collateral Agent a copy of each material written demand, notice or document
received by it that questions or calls into doubt the validity or
enforceability of more than 20% of the aggregate amount of the then-outstanding
Receivables that constitute Collateral.

 

(b)           If
such Grantor shall enter into any contract or other transaction with an
Applicable Governmental Authority (as defined below) which will result in an
Applicable Governmental Authority becoming an obligor on any Receivable
required to be included in
Collateral of an amount greater than $500,000, such Grantor shall (i) promptly thereafter notify the Collateral Agent thereof, (ii) provide
to the Collateral Agent all such
documents and instruments, and take all such actions, as reasonably
required by the Collateral Agent, to enable the Collateral Agent to comply with the
requirements of the Federal Assignment of Claims Act or any other applicable
Law to perfect its security interest in such Receivables and (iii) otherwise
comply with its obligations under Section 4.4(c) with 

 

16

 

respect thereto. 
As used in this paragraph, the term “Applicable Governmental Authority”
shall mean any Governmental Authority the Law applicable to which provides
that, for a creditor of a Person to which such Governmental Authority has an
obligation to pay money, whether pursuant to a Receivable, a General Intangible
or otherwise, to perfect such creditor’s Lien on such obligation and/or to
obtain the full benefits of such Lien and such Law, certain notice, filing,
recording or other similar actions other than the filing of a financing
statement under the Uniform Commercial Code must be given, executed, filed,
recorded, delivered or completed, including, without limitation, any federal
Governmental Authority to which the Federal Assignment of Claims Act of 1940 is
applicable.

 

4.9.          Intellectual Property.  (a) Such Grantor (either itself or
through licensees) will, in the exercise of its reasonable business judgment
(i) continue to use each material Trademark owned or exclusively licensed
by such Grantor on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price lists to
the extent necessary to maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain as in the
past the quality of products and services offered under such Trademark, (iii) use
such Trademark with the appropriate notice of registration and all other
notices and legends required by applicable Requirements of Law, (iv) not
adopt or use any mark which is confusingly similar or a colorable imitation of
such Trademark unless the Collateral Agent (for the benefit of the Secured
Parties) shall obtain a perfected security interest (subject to the
qualifications set forth in Section 3.2) in such mark pursuant to this
Agreement, and (v) not (and not permit any licensee or sublicensee thereof
to) do any act or knowingly omit to do any act whereby such material Trademark
may become invalidated or impaired in any material way, in each case of the
foregoing, except as could not reasonably be expected to have a material adverse effect to the aggregate value of the Intellectual
Property in the Collateral.

 

(b)           Such Grantor (either itself or
through licensees) will not do any act, or omit to do any act, whereby any
material Patent owned or exclusively licensed by such Grantor may become
prematurely invalidated, forfeited, abandoned or dedicated to the public, in
each case of the foregoing, except as could not reasonably be expected to have
a material adverse effect to the aggregate value of
the Intellectual Property in the Collateral.

 

(c)           Such
Grantor (either itself or through licensees) (i) will use copyright
notices in connection with each Copyright owned or exclusively licensed by such
Grantor as required by applicable Requirements of Law, (ii) will not (and
will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of the Copyrights owned by such Grantor may become invalidated
or otherwise impaired, in each case of
the foregoing, except as could not reasonably be expected to have a material
adverse effect to the aggregate value of the Intellectual
Property in the Collateral.  Such
Grantor will not (either itself or through licensees) do any act whereby any
material portion of the Copyrights owned or exclusively licensed by such
Grantor may fall into the public domain,
in each case of the foregoing, except as could not reasonably be expected to
have a material adverse effect to the aggregate value of
the Intellectual Property in the Collateral.

 

(d)           Such
Grantor (either itself or through licensees) will not knowingly do any act that
uses any material Intellectual Property to infringe the intellectual property
rights of any other Person.

 

(e)           Such
Grantor will notify the Collateral Agent
promptly if it knows, or has reason to know, that any material Intellectual Property owned or
exclusively licensed by such Grantor may become forfeited, abandoned or
dedicated to the public, or of any adverse determination or material adverse
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal
in any country, but excluding routine office actions or similar determinations
in the ordinary course of prosecution before the United States Patent and
Trademark 

 

17

 

 

Office or any foreign counterpart) regarding such
Grantor’s ownership of, or the validity of, any material Intellectual Property
owned or exclusively licensed by such Grantor or such Grantor’s right to
register the same or to own and maintain the same.

 

(f)            In
the event such Grantor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency in any other
country or any political subdivision
thereof, such Grantor shall report such filing to the Collateral Agent and the
Agents within 45 days after the end of each fiscal quarter of the
Borrower (or such later date as consented to by the Collateral Agent).  Upon request of the Collateral Agent, such
Grantor shall execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as the Collateral Agent may reasonably request to evidence and perfect
the Collateral Agent’s and the
Secured Parties’ security interest in any Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby, in each case, to the extent that such shall constitute
part of the Collateral in accordance with the terms hereof.

 

(g)           Such
Grantor will, subject to and in the exercise of its reasonable business
judgment, take all reasonable and necessary steps including, without
limitation, in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain and pursue
each application for registration of any material Intellectual Property owned
by such Grantor and any material Intellectual Property License where such
Grantor is an exclusive licensee (and to obtain the relevant registration) and
to maintain each registration of the material Intellectual Property owned by such
Grantor and of any material Intellectual Property License where such Grantor is
an exclusive licensee, including, without limitation, filing of applications
for renewal, affidavits of use and affidavits of incontestability, payment of
maintenance fees and opposition and interference and cancellation proceedings; provided,
however, that such Grantor shall not be required to take any of the
foregoing actions with respect to licensed Intellectual Property to the extent
such action would not be permitted by the terms of the applicable license.

 

(h)           In
the event that any material Intellectual Property owned or exclusively licensed
by such Grantor is infringed, misappropriated or diluted by a third party, such
Grantor shall (i) take such actions as such Grantor shall reasonably deem
appropriate under the circumstances to protect such Intellectual Property and
(ii) promptly notify the Collateral
Agent and the Agents after
it learns thereof and, to the extent such Grantor shall reasonably deem it to
be appropriate under the circumstances, sue for infringement, misappropriation
or dilution, to seek injunctive relief where appropriate and to recover any and
all damages for such infringement, misappropriation or dilution.

 

(i)            For
the avoidance of doubt, nothing in this Section 4.9 shall prohibit a sale,
transfer or disposition of any Intellectual Property made in accordance with all applicable Finance Documents.

 

4.10.        Commercial Tort Claims.  If such Grantor shall obtain an interest in
any Commercial Tort Claim as to which it determines that it reasonably expects
to recover more than $2,500,000, such Grantor shall within 30 days of making
such determination (or such other period reasonably satisfactory to the
Collateral Agent) sign and deliver documentation reasonably acceptable to the
Collateral Agent granting a security interest under the terms and provisions of
this Agreement in and to such Commercial Tort Claim.

 

18

 

4.11.        Proceeds Collateral Account.

 

(a)           Such Grantor will deposit the Net
Proceeds from Asset Sales of Collateral in the Proceeds Collateral Account to
the extent required and in accordance with the terms of the applicable Finance
Documents.

 

(b)           (i) Any Net Award or Net
Insurance Proceeds shall be invested in Replacement Assets (which may include
performance of a restoration of the Collateral) and (ii) pending such
investment, any Net Award or Net Insurance Proceeds in an aggregate amount in
excess of $10,000,000 shall be deposited in the Proceeds Collateral Account.

 

(c)           Amounts deposited in the Proceeds
Collateral Account pursuant to clauses (a) and (b) of this Section 4.11
shall be released in accordance with the terms of the applicable Finance
Documents.

 

SECTION V           REMEDIAL PROVISIONS

 

5.1.          Certain Matters Relating to
Receivables.  (a) The
Collateral Agent shall have the right annually (or, if an Event of Default
under any Finance Document has occurred and is continuing, at any time) to make
test verifications of the Receivables required to be included in the Collateral
in any manner and through any medium that it reasonably considers advisable,
and each Grantor shall furnish all such assistance and information as the
Collateral Agent may reasonably require in connection with such test
verifications.  Annually (or if an Event
of Default under any Finance Document has occurred and is continuing, at any
time), upon the Collateral Agent’s reasonable written request and at the
expense of the relevant Grantor, such Grantor shall cause independent public
accountants or others reasonably satisfactory to the Collateral Agent to
furnish to the Collateral Agent and the Agents reports showing reconciliations,
aging and test verifications of, and trial balances for, such Receivables.

 

(b)           The Collateral Agent hereby
authorizes each Grantor to collect such Grantor’s Receivables and the
Collateral Agent may curtail or terminate said authority upon written notice at
any time after the occurrence and during the continuance of an Event of Default
under any Finance Document.  If required
by the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default under any Finance Document, any payments of
Receivables that constitute Collateral, when collected by any Grantor, (i) shall
be forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Collateral Agent if required, in a Collateral Account maintained under the sole
dominion and control of the Collateral Agent, subject to withdrawal by the
Collateral Agent for the account of the Secured Parties only as provided in
Section 5.5, and (ii) until so turned over, shall be held by such
Grantor in trust for the Collateral Agent and the Secured Parties, segregated
from other funds of such Grantor.  Each
such deposit of Proceeds of Receivables shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.

 

(c)           If
an Event of Default under any Finance
Document has occurred and is continuing, at the Collateral Agent’s reasonable written request, each Grantor shall
deliver to the Collateral Agent,
to the extent available, all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Receivables that constitute
Collateral, including, without limitation, all original orders, invoices and
shipping receipts.

 

5.2.          Communications with Obligors;
Grantors Remain Liable.  (a) The
Collateral Agent in its own name or in the name of others may at any time after
the occurrence and during the continuance of an Event of Default under any
Finance Document, communicate with obligors under the 

 

19

 

Receivables
that constitute Collateral to verify with them to the Collateral Agent’s
satisfaction the existence, amount and terms of any such Receivables.

 

(b)           Upon the request of the Collateral
Agent at any time after the occurrence and during the continuance of an Event of
Default under any Finance Document, each Grantor shall notify obligors on the
Receivables that constitute Collateral that such Receivables have been
collaterally assigned to the Collateral Agent (for the benefit of the Secured
Parties) and that payments in respect thereof shall be made directly to the
Collateral Agent.

 

(c)           Anything
herein to the contrary notwithstanding, each Grantor shall remain liable under
each of the Receivables to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise thereto.  Neither the Collateral Agent nor any Secured Party shall have any obligation
or liability under any Receivable (or any agreement giving rise thereto) by
reason of or arising out of this Agreement or the receipt by the Collateral Agent or any Secured Party
of any payment relating thereto, nor shall the Collateral Agent or any Secured Party be obligated in any manner
to perform any of the obligations of any Grantor under or pursuant to any
Receivable (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 it
or as to the sufficiency of any performance by any party thereunder, 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 it or to which it
may be entitled at any time or times.

 

5.3.          Pledged Equity.  (a) Unless an Event of Default under any
Finance Document shall have occurred and be continuing and the Collateral Agent
shall have given written notice to the relevant Grantor of the Collateral
Agent’s intent to exercise its corresponding rights pursuant to 5.3(b), each
Grantor shall be permitted to receive all cash dividends paid in respect of the
Pledged Equity and all payments made in respect of the Pledged Debt, in each
case to the extent otherwise permitted in all applicable Finance Documents, and
to exercise all voting and corporate or other organizational rights with
respect to the Investment Property; provided, however, that such Grantor will
not be entitled to exercise any such right if the result thereof could
materially and adversely affect the rights and remedies of the Collateral Agent
or the Secured Parties under any Finance Document or the ability of the
Collateral Agent or the Secured Parties to exercise the same.

 

(b)           If an Event of Default under any
Finance Document shall occur and be continuing and the Collateral Agent has
given written notice of its intent to exercise the following rights to the
relevant Grantor or Grantors: (i) the Collateral Agent shall have the
right to receive any and all cash dividends, payments (including sums paid upon
the liquidation or dissolution of any Issuer or in connection with any
distribution of capital) or other Proceeds paid in respect of the pledged
Investment Property and make application thereof to the Secured Obligations in
accordance with Section 5.5, and (ii) any or all of the pledged
Investment Property shall be registered in the name of the Collateral Agent or
its nominee, and the Collateral Agent or its nominee may thereafter exercise
(x) all voting, corporate and other rights pertaining to such Investment
Property at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of the
pledged Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other organizational
structure of any Issuer, or upon the exercise by any Grantor or the Collateral
Agent of any right, privilege or option pertaining to such Investment Property,
and in connection therewith, the right to deposit and deliver any and all of
the pledged Investment Property with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Collateral Agent may determine), all without liability except to account for 

 

20

 

property actually received
by it, but the Collateral Agent shall have no duty to any Grantor to exercise
any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing. 
If any sums of money paid or distributed in respect of any pledged
Investment Property, which the Collateral Agent shall be entitled to receive
pursuant to clause (i) above, shall be received by a Grantor, such Grantor
shall, until such money is paid to the Collateral Agent, hold such money in
trust for the Collateral Agent and the Secured Parties as additional collateral
for the Secured Obligations.

 

(c)           Each Grantor hereby authorizes and
instructs each Issuer of any Investment Property pledged by such Grantor
hereunder to (i) comply with any instruction received by it from the
Collateral Agent in writing that (x) states that an Event of Default has
occurred and is continuing and (y) is otherwise in accordance with the
terms of this Agreement, without any other or further instructions from such
Grantor, and each Grantor agrees that each Issuer shall be fully protected in
so complying, and (ii) unless otherwise expressly permitted hereby, pay
any dividends or other payments with respect to the pledged Investment Property
directly to the Collateral Agent pursuant to the terms hereof.

 

5.4.          Proceeds to be Turned Over to
Collateral Agent.  In addition
to the rights of the Collateral Agent and the Secured Parties specified in
Section 5.1 with respect to payments of Receivables, if an Event of
Default under any Finance Document shall occur and be continuing and the
Collateral Agent so requests, all Proceeds of the Collateral received by any
Grantor consisting of cash, checks and other near-cash items shall be held by
such Grantor in trust for the Collateral Agent and the Secured Parties,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Collateral Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Collateral
Agent, if required).  All such Proceeds
received by the Collateral Agent hereunder shall be held by the Collateral
Agent in a Collateral Account maintained under its sole dominion and control.  All Proceeds while held by the Collateral
Agent in a Collateral Account (or by such Grantor in trust for the Collateral
Agent and the Secured Parties) shall continue to be held as collateral security
for all the Secured Obligations and shall not constitute payment thereof until
applied as provided in Section 5.5.

 

5.5.          Application of Proceeds.  The proceeds of any collection, sale,
disposition or other realization of Collateral upon the enforcement of the
security for the Secured Obligations (including for these purposes
distributions of cash, securities or other property on account of the value of
the Collateral in a bankruptcy case of any Grantor), including any Collateral
consisting of cash, shall be applied as follows (or as this Section 5.5
may be amended from time to time with the consent of the First Priority
Representative, the Trustee and the Additional Agent, if any, to the extent
necessary to permit additional junior debt):

 

FIRST, to the payment of all
costs and reasonable expenses incurred by the Collateral Agent in connection
with such collection or sale or otherwise in connection with this Agreement or
any other Finance Document, including all and the reasonable and documented
out-of-pocket court costs fees and documented expenses of its agents and one
lead legal counsel in each relevant jurisdiction, the repayment of all advances
made by the Collateral Agent hereunder or under any other Finance Document on
behalf of any Grantor and any other reasonable and documented out-of-pocket
costs or expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Finance Document;

 

SECOND, to the payment in
full of all Obligations constituting fees, indemnities, expenses and other
amounts (other than principal and interest) owed to the Agents in their capacities
as such;

 

21

 

THIRD, to the payment in
full of all of the remaining Bank Priority Obligations (other than the amounts
referred to in the immediately following paragraph), the amounts so applied to
be distributed among the Bank Secured Parties in accordance with Section 8.03
of the Credit Agreement;

 

FOURTH, to the payment in
full of all interest or entitlement to fees or expenses or other charges that
accrue on the Bank Priority Obligations after the commencement of any
Insolvency or Liquidation Proceeding with respect to Holdings or any of its
Subsidiaries, whether or not allowed or allowable in any such proceeding (it
being understood that if it is held that the Bank Priority Obligations and the
Bond Obligations constitute only one secured class (rather than separate
classes for the Bank Priority Obligations and the Bond Obligations), all
distributions pursuant to this provision FOURTH shall be made as if there were
separate classes of claims);

 

FIFTH, to the payment in
full of all of the Pari Passu Obligations, the amounts so applied to be
distributed among the Bond Secured Parties in accordance with Section 6.10
of the Indenture and among the Additional Secured Parties in accordance with
any comparable provision in the Additional Loan Documents, as applicable;

 

SIXTH, to the payment in
full of all interest or entitlement to fees or expenses or other charges that
accrue on the Pari Passu Obligations after the commencement of any Insolvency
or Liquidation Proceeding with respect to Holdings or any of its Subsidiaries,
whether or not allowed or allowable in any such proceeding;

 

SEVENTH, to the payment in
full of all of the Bank Additional Obligations, the amounts so applied to be
distributed among the Bank Secured Parties in accordance with Section 8.03
of the Credit Agreement;

 

EIGHTH, to the payment in
full of all interest or entitlement to fees or expenses or other charges that
accrue on the Bank Additional Obligations after the commencement of any Insolvency
or Liquidation Proceeding with respect to Holdings or any of its Subsidiaries,
whether or not allowed or allowable in any such proceeding; and

 

NINTH, to the Grantors,
their successors or assigns, or as a court of competent jurisdiction may
otherwise direct.

 

5.6.          Code and Other Remedies.  If an Event of Default under any Finance
Document occurs and is continuing, the Collateral Agent, on behalf of the
Secured Parties, may exercise, in addition to all other rights and remedies
granted to them in this Agreement, the Finance Documents and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law.  Without
limiting the generality of the foregoing, if an Event of Default under any
Finance Document occurs and is continuing, the Collateral Agent, without demand
of performance or other demand, presentment, protest, advertisement or notice
of any kind (except any notice required by law referred to below) to or upon
any Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, license, sublicense, lease, assign,
give an option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of the Collateral Agent or any Secured Party or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk.  The Collateral Agent or
any Secured Party shall 

 

22

 

have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released.  Each Grantor further agrees, at the
Collateral Agent’s request following and during the continuance of an Event of
Default under any Finance Document, to assemble the Collateral and make it
available to the Collateral Agent at places which the Collateral Agent shall
reasonably select, whether at such Grantor’s premises or elsewhere.  The Collateral Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 5.6, after
deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Collateral Agent and the Secured Parties hereunder, including, without
limitation, reasonable attorneys’ fees and disbursements, to the payment in whole
or in part of the Obligations, in the order provided in Section 5.5, and
only after such application and after the payment by the Collateral Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-615(a)(3) of the New York UCC, need the
Collateral Agent account for the surplus, if any, to any Grantor.  To the extent permitted by applicable law,
each Grantor waives all claims, damages and demands it may acquire against the
Collateral Agent or any Secured Party arising out of the exercise by them of
any rights hereunder.  If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition.

 

5.7.          Registration Rights.  (a) If the Collateral
Agent shall determine to exercise its rights to sell all or any of the Pledged
Equity pursuant to Section 5.6, and if in the opinion of the Collateral
Agent it is necessary or advisable to have the Pledged Equity, or that portion
thereof to be sold, registered under the provisions of the Securities Act or
other applicable laws (together with the Securities Act, the “Securities
Laws”), the relevant Grantor 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 Collateral Agent, necessary or
advisable to register the Pledged Equity, or that portion thereof to be sold,
under the provisions of the relevant Securities Laws, (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 Pledged Equity, 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 Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the relevant Securities
Laws and the rules and regulations of the SEC or any other United States
securities regulator applicable thereto. 
Each Grantor agrees to cause such Issuer to comply with the provisions
of the securities or “Blue Sky” laws of any and all jurisdictions which the
Collateral Agent shall designate and to make available to its security holders,
as soon as practicable, an earnings statement (which need not be audited) which
will satisfy the provisions of Section 11(a) of the Securities Act.

 

(b)           Each Grantor recognizes that the
Collateral Agent may be unable to effect a public sale of any or all the
Pledged Equity, by reason of certain prohibitions contained in the Securities
Act and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof.  Each Grantor
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner.  The Collateral Agent shall be under no
obligation to delay a sale of any of the Pledged Equity for the period of time
necessary to permit the Issuer thereof to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.

 

23

 

(c)           Each Grantor agrees to use its best
efforts to do or cause to be done all such other acts as may be necessary to
make such sale or sales of all or any portion of the Pledged Equity pursuant to
this Section 5.7 valid and binding and in compliance with any and all
other applicable Requirements of Law. 
Each Grantor further agrees that a breach of any of the covenants
contained in this Section 5.7 will cause irreparable injury to the
Collateral Agent and the Secured Parties, that the Collateral Agent and the
Secured Parties have no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained in this
Section 5.7 shall be specifically enforceable against such Grantor, and
such Grantor hereby waives, to the fullest extent permitted by law, and agrees
not to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default under any Finance
Document has occurred and is continuing and a defense in respect of payment in
full.

 

5.8.          Deficiency.  Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the reasonable fees and
disbursements of any attorneys employed by the Collateral Agent or any Secured
Party to collect such deficiency.

 

SECTION VI          THE AGENTS

 

6.1.          Collateral Agent’s Appointment as
Attorney-in-Fact, etc.  (a) Each Grantor hereby irrevocably
constitutes and appoints the Collateral Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of such Grantor and
in the name of such Grantor or in its own name, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, each Grantor hereby gives the Collateral Agent
the power and right, on behalf of such Grantor, without notice to or assent by
such Grantor, to do any or all of the following:

 

(i)            in the name of such Grantor or its
own name, or otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of moneys due
under any Receivable that constitutes Collateral or with respect to any other
Collateral and file any claim or take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Collateral Agent
for the purpose of collecting any and all such moneys due under any such
Receivable or with respect to any other Collateral whenever payable;

 

(ii)           in the case of any pledged
Intellectual Property, execute and deliver, and have recorded, any and all
agreements, instruments, documents and papers as the Collateral Agent may request to
evidence and perfect the Collateral Agent’s and the Secured Parties’ security interest in such Intellectual
Property
and the goodwill and general intangibles of such Grantor relating thereto or
represented thereby;

 

(iii)          pay or discharge taxes and Liens
levied or placed on or threatened against the Collateral, effect any repairs or
any insurance called for by the terms of this Agreement and pay all or any part
of the premiums therefor and the costs thereof;

 

(iv)          execute, in connection with any sale
or license provided for in Section 5.6 or 5.7, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the Collateral;
and

 

24

 

(v)           (1) direct
any party liable for any payment under any of the Collateral to make payment of
any and all moneys due or to become due thereunder directly to the Collateral Agent or as the Collateral Agent shall direct; (2) ask
or demand for, collect, and receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect of
or arising out of any Collateral; (3) sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, notices and other documents
in connection with any of the Collateral; (4) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to enforce
any other right in respect of any Collateral; (5) defend any suit, action
or proceeding brought against such Grantor with respect to any Collateral; (6) settle,
compromise or adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Collateral
Agent may deem appropriate; (7) subject
to any licenses (and the rights granted therein) existing at the time of such
assignment, assign any Copyright, Patent or Trademark (along with the goodwill
of the business to which any such Intellectual Property pertains), owned by
such Grantor, throughout the world for such term or terms, on such conditions,
and in such manner, as the Collateral Agent shall in its sole discretion determine; and (8) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Collateral Agent were the absolute
owner thereof for all purposes, and do, at the Collateral
Agent’s option and such Grantor’s expense,
at any time, or from time to time, all acts and things which the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the Collateral Agent’s and the Secured
Parties’ security interests therein and to effect the intent of this Agreement,
all as fully and effectively as such Grantor might do.

 

Notwithstanding anything in this Section 6.1(a) or in any
other Finance Document to the contrary, the Collateral Agent agrees that it
will not exercise any rights under the power of attorney provided for in this
Section 6.1(a) (other than pursuant to clause (ii) thereof)
unless an Event of Default under any Finance Document shall have occurred and
be continuing.

 

(b)           If any Grantor fails to perform or
comply with any of its agreements contained herein, the Collateral Agent, at
its option, but without any obligation so to do, may perform or comply, or
otherwise cause performance or compliance, with such agreement.

 

(c)           The
expenses of the Collateral Agent
incurred in connection with actions undertaken as provided in this Section 6.1
shall be payable in accordance with the terms of Section 8.3.

 

(d)           Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to
be done by virtue hereof.  All powers, authorizations and agencies contained
in this Agreement are coupled with an interest and are irrevocable until this
Agreement is terminated and the security interests created hereby are released
in accordance with Section 8.14.

 

6.2.          Duty of Collateral Agent.  The Collateral Agent’s sole duty with respect
to the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the New York UCC or otherwise, shall be
to deal with it in the same manner as the Collateral Agent deals with similar
property for its own account.  Neither
the Collateral Agent, any Secured Party nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect
or realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.  The powers conferred on the Collateral Agent
and the Secured Parties hereunder are solely to protect the Collateral Agent’s
and the Secured Parties’ interests in the Collateral and shall not impose any
duty upon the Collateral Agent or any 

 

25

 

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

 

6.3.          Execution of Financing Statements.  Pursuant to Section 9-509 of the New
York UCC and any other applicable law, each Grantor authorizes the Collateral
Agent to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral without the signature
of such Grantor in such form and in such offices in any jurisdiction as the
Collateral Agent determines appropriate to perfect the security interests of
the Collateral Agent under this Agreement. 
A photographic or other reproduction of this Agreement shall, if and to
the extent effective under applicable law in the relevant jurisdiction, be
sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any such jurisdiction.  Each Grantor authorizes the Collateral Agent
to use the collateral description “all personal property”, “all personal
property, whether now owned or hereafter acquired”, “all assets” or words of
similar meaning in any such financing statements.  Each Grantor hereby ratifies and authorizes
the filing by the Collateral Agent of any financing statement with respect to
the Collateral made prior to the date hereof. 
Notwithstanding the foregoing, the Collateral Agent shall be under no
obligation whatsoever to prepare or file any financing or confirmation
statements or record any documents or instruments in any public office at any
time or times or otherwise to perfect or maintain the perfection of any
security interest in the Collateral.

 

6.4.          Authority of Collateral Agent.  Each Grantor acknowledges that the rights and
responsibilities of the Collateral Agent under this Agreement with respect to
any action taken by the Collateral Agent or the exercise or non-exercise by the
Collateral Agent of any option, voting right, request, judgment or other right
or remedy provided for herein or resulting or arising out of this Agreement
shall, as between the Collateral Agent and the Secured Parties, be governed by
the Credit Agreement and the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Grantors, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.

 

6.5.          Enforcement by the Collateral Agent.  (a) If any Event of Default under any
Finance Document shall have occurred and be continuing, the Collateral Agent
shall act in relation to the Collateral in accordance with the instructions of
(i) on or prior to the Bank Priority Obligations Discharge Date, the First
Priority Representative and the Applicable Authorized Representative and (ii) after
the Bank Priority Obligations Discharge Date, the Applicable Authorized
Representative.

 

(b)        The Collateral Agent shall disregard any
instructions from any other Person to exercise any right or remedy hereunder
with respect to the Collateral if those instructions are inconsistent with this
Agreement.

 

(c)         Any Person entitled to instruct the
Collateral Agent to exercise any right or remedy hereunder with respect to the
Collateral may give or refrain from giving instructions to the Collateral Agent
to exercise or refrain from exercising the Collateral as it sees fit in
accordance with the other provisions of this Agreement; provided that
the consent of the Applicable Authorized Representative and, if such
instruction is delivered to the Collateral Agent on or prior to the occurrence
of the Bank Priority Obligations Discharge Date, the First Priority
Representative, shall be required before the Collateral Agent is entitled to
rely on or follow such instruction.

 

26

 

(d)        Subject to paragraph (e) below, before
giving any instructions to the Collateral Agent to exercise any right or remedy
hereunder with respect to the Collateral, the First Priority Representative and
the Applicable Authorized Representative shall consult with one another and
with the Collateral Agent in good faith, with a view to coordinating those
instructions, for a period of up to 45 days or such shorter period as the First
Priority Representative and the Applicable Authorized Representative may agree.

 

(e)         The First Priority Representative and
the Applicable Authorized Representative shall not be obliged to consult in
accordance with paragraph (d) above if the First Priority Representative
and the Applicable Authorized Representative determine in good faith (and give
the Collateral Agent prior notice in writing) that to enter into such
consultations and thereby delay the commencement of enforcement of the
Collateral could reasonably be expected to have a material adverse effect on
their ability to enforce any of the Collateral or the realization of any
proceeds of any enforcement of the Collateral.

 

(f)            The Collateral Agent shall inform
each other Agent on receiving any instructions under this Section 6.5 to
enforce the Collateral.

 

6.6.          Competing Instructions to the
Collateral Agent

 

(a)           If the instructions given to the
Collateral Agent by the First Priority Representative and the Applicable
Authorized Representative conflict with the instructions given to the
Collateral Agent by the other such party: (i) the Collateral Agent shall
promptly notify the First Priority Representative and the Applicable Authorized
Representative; and (ii) following such notification, the First Priority
Representative and the Applicable Authorized Representative shall consult with
one another in good faith for at least 15 days (the “Consultation Period”)
with a view to resolving the conflict in such instructions, provided that the
Consultation Period shall end immediately if the First Priority Representative
and the Applicable Authorized Representative determine in good faith (and give
the Collateral Agent prior notice in writing) that such consultation and
thereby the delay in the enforcement of the Collateral could reasonably be
expected to have a material adverse effect on (A) their ability to enforce
any of the Collateral or (B) the realization of any proceeds of any
enforcement of the Collateral.

 

(b)           If, following the end of the
Consultation Period, the Collateral Agent has not received consistent
instructions from the First Priority Representative and the Applicable
Authorized Representative, the Collateral Agent shall enforce the Collateral in
accordance with the instructions of the First Priority Representative as
evidenced in a written certificate delivered to the Collateral Agent.

 

6.7.          Exemption.

 

(a)           No Agent or Secured Party shall be responsible to any
other Agent or Secured Party with respect to any instructions given or not
given to the Collateral Agent in relation or in connection with any of the
Security Documents, provided in each case they act in good faith and in all
material respects in accordance with their obligations under this Agreement and
the applicable Finance Documents.

 

(b)           None of the Agents or Secured Parties
shall be liable for any loss or damage suffered by any Grantor as a result of
any instructions given or not given by such Agent or such Secured Party in
relation or in connection with any of the Security Documents.

 

27

 

 

6.8.          Termination and Resignation of
Collateral Agent.

 

(a)           Subject to clause (f) below, the
Collateral Agent may resign its appointment under this Agreement at any time by
giving notice to the First Priority Representative, the Trustee, the Additional
Agent (if any) and the Borrower.

 

(b)           A successor Collateral Agent shall be
selected (i) by the retiring Collateral Agent nominating one of its
Affiliates, following consultation with the First Priority Representative, the
Trustee, the Additional Agent (if any) and, so long as no Event of Default
under any Finance Document has occurred and is continuing, the Borrower, as
successor Collateral Agent in its notice of resignation, (ii) if the
retiring Collateral Agent makes no such nomination, by the First Priority
Representative, the Trustee, the Additional Agent (if any) and, so long as no
Event of Default under any Finance Document has occurred and is continuing, the
Borrower or (iii) if a Collateral Agent is not appointed pursuant to sub
clause (i) or (ii) above, the Collateral Agent may (at the expense of
the Grantors), at its option, petition a court of competent jurisdiction for
appointment of a successor Collateral Agent, which must be a bank or trust
company that has a combined capital and surplus of at least $500,000,000 and
maintains an office in New York, New York.

 

(c)           The appointment of the Collateral
Agent may be terminated and a successor Collateral Agent appointed at any time
with the consent of the First Priority Representative, the Trustee, the Additional
Agent (if any) and, so long as no Event of Default under any Finance Document
has occurred and is continuing, the Borrower on at least 30 days prior written
notice being given to the Collateral Agent.

 

(d)           The resignation of the retiring
Collateral Agent and the appointment of the successor Collateral Agent will
become effective only upon the successor Collateral Agent accepting its
appointment as Collateral Agent, and upon the execution of all documents
necessary to substitute the successor as holder of the security comprised in
the Security Documents and the relevant Additional Loan Documents, if any, at
which time, (i) the successor Collateral Agent will become bound by all
the obligations of the Collateral Agent and become entitled to all the rights,
privileges, powers, authorities and discretions of the Collateral Agent under
this Agreement, (ii) the agency of the retiring Collateral Agent will
terminate (but without prejudice to any liabilities which the retiring
Collateral Agent may have incurred prior to the termination of its agency) and
(iii) the retiring Collateral Agent will be discharged from any further
liability or obligation under or in connection with this Agreement or the other
Security Documents.

 

(e)           The retiring Collateral Agent will
cooperate with the successor Collateral Agent in order to ensure that its
functions are transferred to the successor Collateral Agent without disruption
to the service provided to the Agents, the Secured Parties and the Borrower and
will promptly make available to the successor Collateral Agent the documents
and records which have been maintained in connection with this Agreement and
the other Security Documents in order that the successor Collateral Agent is
able to discharge its functions.

 

(f)            The Collateral Agent may resign its
appointment upon appointment of a successor Collateral Agent and such successor
Collateral Agent having accepted the role of the Collateral Agent under this
Agreement. Any such new appointment and all powers to be granted to the
Collateral Agent will be granted pursuant to an accession agreement
satisfactory to the Borrower, the Administrative Agent, the Trustee and the
Additional Agent (if any).

 

(g)           The provisions of this Agreement will
continue in effect for the benefit of any retiring Collateral Agent in respect
of any actions taken or omitted to be taken by it or any event occurring before
the termination of its agency.

 

28

 

6.9.          Agents’ and Collateral Agent’s
Duties; Reliance.  (a) The
powers conferred on the Agents and the Collateral Agent hereunder are solely to
protect the Secured Parties’ interest in the Collateral and shall not impose
any duty upon any of them to exercise any such powers.  Except for the safe custody of any Collateral
in its possession and the accounting for moneys actually received by it
hereunder, the Agents and the Collateral Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not any Secured Party has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral.  Each of the Agents and the Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which it accords its own property, and
will not be liable or responsible for any loss or damage to any Collateral, or
for any diminution in the value thereof, by reason of any act or omission of
any sub-agent or bailee selected by it in good faith, except to the extent that
such liability arises from its own gross negligence or willful misconduct as
determined pursuant to a final order of a court of competent jurisdiction.

 

(b)           Whenever in the performance of its
duties hereunder the Collateral Agent shall deem it necessary or desirable that
a matter be proved or established with respect to any Grantor or any other
Person in connection with the taking, suffering or omitting of any action
hereunder by the Collateral Agent, the Collateral Agent shall be entitled to
rely upon such matter that is proved or established by a certificate executed
by an officer of such Person which is believed by the Collateral Agent to be
genuine and to have been signed or sent by the proper Person or a written
opinion from legal counsel acceptable to the Collateral Agent, and the
Collateral Agent shall have no liability with respect to any action taken, not
taken, suffered or omitted in reliance thereon.

 

(c)           The Collateral Agent may consult with
counsel and shall be entitled to take or not to take any action hereunder in
good faith in relying upon any advice of such counsel.  The Collateral Agent shall have the right but
not the obligation at any time to seek instructions concerning the administration
of this Agreement, the duties created hereunder or the Collateral from the
Collateral Agent or any Representative or any court of competent jurisdiction.

 

(d)           The Collateral Agent shall not incur
any liability in relying upon any resolution, statement, certificate (including
any certificate delivered pursuant to Section 6.6(b)), instrument,
opinion, report, notice, request, consent, order or other paper or document
which it in good faith believes to be genuine and to have been signed or
presented by the proper party.  The
Collateral Agent may rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificate (including
any certificate delivered pursuant to Section 6.6(b)) or opinions that are
believed by the Collateral Agent to be genuine and signed or furnished by the
proper Person furnished to the Collateral Agent in connection with this
Agreement.

 

(e)           The Collateral Agent shall not be
deemed to have actual, constructive, direct or indirect notice or knowledge of
the occurrence of any Event of Default unless and until the Collateral Agent
shall have received written notice thereof from any Grantor, Agent or any
Secured Party.  The Collateral Agent
shall have no obligation whatsoever either prior to or after receiving such a
notice which is believed by the Collateral Agent to be genuine and to have been
signed or sent by the proper Person to inquire whether an Event of Default has,
in fact, occurred and shall be entitled to rely, and shall be fully protected
in so relying, on any such notice so furnished to it.

 

(f)            Anything herein contained to the
contrary notwithstanding, the Grantors shall remain liable under each of the
agreements to which they are a party to perform all of their duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, and the Collateral 

 

29

 

Agent shall have no
obligation or liability under any such agreements to perform any of the
obligations or duties of the Grantors thereunder. Notwithstanding anything
contained herein to the contrary, the right of the Collateral Agent to perform
any discretionary act enumerated herein (including the right to consent to or
approve of any action or document) shall not be construed as giving rise to any
expressed or implied duty. Beyond the exercise of reasonable care in the
custody thereof, the Collateral Agent shall have no duty as to any Collateral
in its possession or control or in the possession or control of any agent or
bailee or any income thereon or as to preservation of rights against prior
parties or any other rights pertaining thereto. 
The Collateral Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the liens in any of the Collateral, whether
impaired by operation of law or by reason of any of any action or omission to
act on its part hereunder, except to the extent such action or omission
constitutes gross negligence or willful misconduct on the part of the
Collateral Agent. Nor shall the Collateral Agent be responsible for the
validity or sufficiency of the Collateral, for the validity of the title of the
Grantors to the Collateral, for insuring the Collateral or for the payment of
taxes, charges, assessments or liens upon the Collateral or otherwise as to the
maintenance of the Collateral.

 

(g)           Nothing set forth in this Agreement
or any other document, nor the exercise by the Collateral Agent of any of the
rights or remedies hereunder, shall relieve any Grantor from the performance of
any term, covenant, condition or agreement on such Grantor’s part to be
performed or observed under or in respect of any of the Collateral or from any
liability to any person under or in respect of any of the Collateral or shall
impose any obligation on either of the Collateral Agent or any other Secured
Party to perform or observe any such term, covenant, condition or agreement on
such Grantor’s part to be so performed or observed or shall impose any
liability on either of the Collateral Agent or any other Secured Party for any
act or omission on the part of such Grantor relating thereto or for any breach
of any representation or warranty on the part of such Grantor contained in this
Agreement, the Indenture or any other documents, or under or in respect of the
Collateral or made in connection herewith or therewith. Anything herein to the
contrary notwithstanding, neither the Collateral Agent nor any other Secured
Party shall have any obligation or liability under any contracts, agreements
and other documents included in the Collateral by reason of this Agreement, nor
shall the Collateral Agent or any other Secured Party be obligated to perform
any of the obligations or duties of any Grantor thereunder or to take any
action to collect or enforce any such contract, agreement or other document
included in the Collateral hereunder.

 

SECTION VII        PARI PASSU OBLIGATIONS

 

7.1.          Actions with Respect to Collateral;
Prohibition on Contesting Liens.

 

(a)           Subject to the provisions of Section 6.5,
(i) the Collateral Agent shall not follow any instructions with respect to
the Collateral from any Non-Controlling Authorized Representative (or any other
Pari Passu Secured Party other than the Applicable Authorized Representative)
and (ii) no Non-Controlling Authorized Representative or other Pari Passu
Secured Party (other than the Applicable Authorized Representative) shall or
shall instruct the Collateral Agent to, commence any judicial or nonjudicial
foreclosure proceedings with respect to, seek to have a trustee, receiver,
liquidator or similar official appointed for or over, attempt any action to
take possession of, exercise any right, remedy or power with respect to, or
otherwise take any action to enforce its security interest in or realize upon,
or take any other action available to it in respect of, any Collateral, whether
under any Pari Passu Security Document, applicable law or otherwise, it being
agreed that only the Collateral Agent, acting on the instructions of the
Applicable Authorized Representative (and, if prior to the Bank Priority
Obligations 

 

30

 

Discharge Date, the First
Priority Representative) and in accordance with the applicable Pari Passu
Security Documents, shall be entitled to take any such actions or exercise any
such remedies with respect to the Collateral. 
Notwithstanding the equal priority of the Liens securing the Pari Passu
Obligations and subject to the provisions of Section 6.5, with respect to
the Pari Passu Obligations the Collateral Agent (acting on the instructions of
the Applicable Authorized Representative) may deal with the Collateral as if
such Applicable Authorized Representative had a senior Lien on the Collateral.  No Non-Controlling Authorized Representative
or Non-Controlling Secured Party will contest, protest or object to any
foreclosure proceeding or action brought by the Collateral Agent, Applicable
Authorized Representative or Controlling Secured Party or any other exercise by
the Collateral Agent, Applicable Authorized Representative or Controlling
Secured Party of any rights and remedies relating to the Collateral, or to
cause the Collateral Agent to do so.

 

(b)           Each of the Authorized
Representatives agrees that it will not accept any Lien on any Collateral for
the benefit of any Series of Pari Passu Obligations (other than funds
deposited for the redemption, discharge or defeasance of the Bond Secured
Obligations or any Additional Secured Obligations) other than pursuant to the
Pari Passu Security Documents, and by executing this Agreement (or a Secured
Party Security Agreement Supplement), each Authorized Representative and the
Series of Pari Passu Secured Parties for which it is acting hereunder
agree to be bound by the provisions of this Agreement and the other Pari Passu
Security Documents applicable to it.

 

(c)           Each of the Pari Passu Secured
Parties agrees that it will not (and hereby waives any right to) question or
contest or support any other Person in contesting, in any proceeding (including
any Insolvency or Liquidation Proceeding), the perfection, priority, validity
or enforceability of a Lien held by or on behalf of any of the Pari Passu
Secured Parties in all or any part of the Collateral, or any of the provisions
of the Secured Party Security Agreement Supplement or this Agreement; provided
that nothing in this Agreement shall be construed to prevent or impair the
rights of any of the Collateral Agent or any Authorized Representative to
enforce this Agreement.

 

(d)           Each Non-Controlling Secured Party
acknowledges and agrees that, subject to the provisions of Section 6.5,
the Collateral Agent shall be entitled, for the benefit of the Pari Passu
Secured Parties, to sell, transfer or otherwise dispose of or deal with any
Collateral as provided herein without regard to any rights to which the holders
of the Non-Controlling Secured Obligations would otherwise be entitled as a
result of such Non-Controlling Secured Obligations.  Without limiting the foregoing, each Non-Controlling
Secured Party agrees that none of the Collateral Agent, the Applicable
Authorized Representative or any other Pari Passu Secured Party shall have any
duty or obligation first to marshal or realize upon any type of Collateral, or
to sell, dispose of or otherwise liquidate all or any portion of the Collateral
in any manner that would maximize the return to the Non-Controlling Secured
Parties, notwithstanding that the order and timing of any such realization,
sale, disposition or liquidation may affect the amount of proceeds actually
received by the Non-Controlling Secured Parties from such realization, sale,
disposition or liquidation.  Each of the
Pari Passu Secured Parties waives any claim it may now or hereafter have
against the Collateral Agent or the Authorized Representative of any other
Series of Pari Passu Obligations or any other Pari Passu Secured Party of
any other Series arising out of (i) any actions which the Collateral
Agent, any Authorized Representative or any Pari Passu Secured Party takes or
omits to take (including, actions with respect to the creation, perfection or
continuation of Liens on any Collateral, actions with respect to the
foreclosure upon, sale, release or depreciation of, or failure to realize upon,
any of the Collateral and actions with respect to the collection of any claim
for all or any part of the Pari Passu Obligations from any account debtor,
guarantor or any other party) in accordance with the Pari Passu Security
Documents or any other agreement or document related thereto or to the
collection of the Pari Passu Obligations or the valuation, use, protection or
release of any security for the Pari Passu Obligations, (ii) any election
by any Applicable Authorized Representative or any holders of Pari Passu
Obligations, in any Insolvency or Liquidation Proceeding, of the application of

 

31

 

Section 1111(b) of
the Bankruptcy Code or (iii) any borrowing by, or grant of a security
interest or administrative expense priority under Section 364 of the
Bankruptcy Code or any equivalent provision of any other Bankruptcy Law by, the
Company or any of its Subsidiaries, as debtor-in-possession.  Notwithstanding any other provision of this
Agreement, the Collateral Agent shall not accept any Collateral in full or
partial satisfaction of any Pari Passu Obligations pursuant to
Section 9-620 of the Uniform Commercial Code of any jurisdiction, without
the consent of each Authorized Representative.

 

(e)           None of the Pari Passu Secured Parties
may institute any suit or assert in any suit, bankruptcy, insolvency or other
proceeding any claim against the Collateral Agent or any other Pari Passu
Secured Party seeking damages from or other relief by way of specific
performance, instructions or otherwise with respect to any Collateral.  In addition, none of the Pari Passu Secured
Parties may seek to have any Collateral or any part thereof marshaled upon any
foreclosure or other disposition of such Collateral.  If any Pari Passu Secured Party obtains
possession of any Collateral or realizes any proceeds or payment in respect
thereof, in each case, as a result of the enforcement of remedies, at any time
prior to the discharge of each of the relevant Pari Passu Obligations
Obligations, then it must hold such Collateral, proceeds or payment in trust
for the other Secured Parties and promptly transfer such Collateral, proceeds
or payment to the Collateral Agent to be distributed in accordance with the
applicable Security Documents.

 

SECTION VIII       MISCELLANEOUS

 

8.1.          Amendments; Waivers; Additional
Grantors; Additional Secured Parties, etc.  (a)Except as otherwise expressly specified
herein, no amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by each Grantor to
which such amendment or waiver is to apply, the Applicable Authorized
Representative (with the consent of the requisite number of holders of Pari
Passu Obligations specified in the Indenture or the relevant Additional Loan
Document), the Collateral Agent and, prior to the Bank Priority Obligations
Discharge Date, the First Priority Representative (with the consent of the
requisite number of Lenders specified in the Credit Agreement), and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.  No
failure on the part of the Collateral Agent, any Agent or any other Secured
Party to exercise, and no delay in exercising any right hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of
any other right.

 

(b)           Upon the execution and delivery, or
authentication, by any Person of a secured party security agreement supplement
in substantially the form of Annex 3 hereto (each a “Secured Party Security
Agreement Supplement”), (i) such Person shall be referred to as, in
the case of an Additional Loan Document, an “Additional Agent” or, in
the case of a Replacement First Priority Agreement, the First Priority Representative and shall
be and become a Secured Party hereunder, (ii) each reference in this
Agreement to “Secured Parties” shall also mean and be a reference to the
Additional Secured Parties or the additional Bank Secured Parties, as
applicable, (iii) each reference in this Agreement of a grant of a
security interest in Grantor’s Collateral to a Secured Party shall also mean a
grant of a security interest to the Additional Secured Parties, or the
additional Bank Secured Parties, as applicable, (iv) in the case of a
Secured Party Security Agreement Supplement delivered by an Additional Agent,
each reference to the First Priority Representative and/or the Trustee shall be
a reference to the First Priority Representative, the Trustee and/or the
Additional Agent, (v) in the case of a Secured Party Security Agreement
Supplement delivered by an Additional Agent, each reference to Agents shall be
a reference to the First Priority Representative, the Trustee and the
Additional Agent, (vi) Section 5.5 may be amended from time to time
with the consent of the First Priority Representative and the Applicable
Authorized Representative 

 

32

 

to the extent necessary to
permit additional junior debt and (vii) Sections 6.5, 6.6, and 6.9 may be
amended and restated if deemed prudent in the reasonable discretion of the
Collateral Agent, the First Priority Representative and the Applicable
Authorized Representative, acting unanimously. 
Among other things the Secured Party Security Agreement Supplement shall
(x) for the avoidance of doubt, appoint the Collateral Agent as the
Additional Secured Parties’, or the additional Bank Secured Parties’, as
applicable, collateral agent pursuant to reasonable terms and conditions agreed
to by the Additional Agent or First Priority Representative, as applicable, and
the Collateral Agent, which terms shall not in any event be inconsistent with
the provisions of this Agreement, and (y) in the case of a Secured Party
Security Agreement Supplement delivered by an Additional Agent, among other
terms define “Obligations”, “Additional Loan Documents” and “Additional
Lenders”.  The execution and delivery of
any such Secured Party Security Agreement Supplement shall not require the
consent of any other party to this Agreement providing the Indebtedness secured
by such Secured Party Security Agreement Supplement is otherwise permitted by
all applicable Finance Documents.  The
rights and obligations of each party to this Agreement shall remain in full
force and effect notwithstanding the addition of any new Secured Party to this
Agreement.

 

8.2.          Notices.  All notices and other communications provided
for hereunder shall be in writing (including telegraphic or telecopy
communication or facsimile transmission) and mailed, telegraphed, telecopied,
telexed, faxed or delivered to it (a) if to any Grantor, addressed to it
in care of the Borrower at the Borrower’s address specified in Section 11.02
of the Credit Agreement and Section 13.2 of the Indenture, (b) if to
the First Priority Representative, at its address specified in the First
Priority Agreement, (c) if to the Trustee, at its address specified in Section 13.2
of the Indenture, (d) if to the Collateral Agent, to Wilmington Trust FSB,
Corporate Client Services, Suite 1290, 50 South Sixth Street, Minnesota,
MN 55402, and (e) if to the Additional Agent (if any) at its address
specified in the Additional Loan Documents (as applicable).  All such notices and other communications
shall be deemed to be given or made at such time as shall be set forth in
Section 11.02 of the Credit Agreement, Section 13.2 of the Indenture
and in the Additional Loan Documents (as applicable).  Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or of
any Security Agreement Supplement or Schedule hereto shall be effective as
delivery of an original executed counterpart thereof.

 

8.3.          Enforcement Expenses;
Indemnification.  (a) 
Each Grantor agrees to pay or reimburse each Bank Secured Party, including the
First Priority Representative, for all its costs and expenses incurred in
collecting against such Grantor under the guarantee contained in Article X
of the Credit Agreement or otherwise enforcing or preserving any rights under
this Agreement and the other First Priority Documents to which such Grantor is
a party, including, without limitation, the fees and disbursements of counsel
to each Bank Secured Party, including the First Priority Representative, in
each case subject to and in accordance with Section 11.04 of the Credit
Agreement.

 

(b)           Each Grantor agrees to pay or
reimburse each Bond Secured Party, including the Trustee, for all its costs and
expenses incurred in collecting against such Grantor under the guarantee
contained in the Indenture or otherwise enforcing or preserving any rights
under this Agreement and the other Indenture Documents to which such Grantor is
a party, including, without limitation, the fees and disbursements of counsel
to each Bond Secured Party, including the Trustee, in each case subject to and
in accordance with Section 10.1 of the Indenture.

 

(c)           Each Grantor agrees to indemnify, defend and save and hold
harmless the Collateral Agent and each of its Affiliates and their respective
officers, directors, employees, agents and advisors (each, an “Indemnified
Party”) from and against, and shall pay within 10 Business Days after
demand therefor, any and all claims, damages (excluding any special, punitive,
indirect or consequential damages), losses, liabilities and out-of-pocket
expenses (including, without limitation, expenses and 

 

33

 

reasonable fees of external counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent such claim, damage, loss, liability or expense has resulted from such
Indemnified Party’s gross negligence, bad faith or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction,
provided however, that such Indemnified Party shall promptly refund any amount
received under this clause (c) to the extent that there is a final
judicial or arbitral determination that such Indemnified Party was not entitled
to indemnification with respect to such payment pursuant to the terms under
this clause (c).

 

(d)           Each Grantor will, within 10 Business
Days after demand therefor, pay to the Collateral Agent the amount of any and
all reasonable and documented out-of-pocket expenses, including, without
limitation, the reasonable and documented out-of-pocket fees and expenses for
one lead counsel and of any experts and agents, that they may incur in
connection with (i) the negotiation and administration of this Agreement
(including, without limitation, reasonable and documented out-of-pocket fees
and expenses for one lead counsel), or (ii) the custody, preservation, use
or operation of, or the sale of, collection from or other realization upon, any
of the Collateral of such Grantor, or (iii) the exercise or enforcement of
any of the rights of the Collateral Agent, the Agents or the other Secured
Parties hereunder.

 

(e)           Each Grantor agrees to pay, and to save the
Collateral Agent and the other Secured Parties harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.

 

(f)            The
agreements in this Section 8.3 shall survive repayment of the Secured
Obligations and all other amounts payable under the Finance Documents.

 

8.4.          Successors and Assigns.  This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Collateral Agent and the Secured Parties and their successors and assigns;
provided that no Grantor may, except pursuant to a merger or consolidation or
other transaction permitted by the Credit Agreement, the Indenture and the
Additional Loan Documents, if any, assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Collateral Agent.

 

8.5.          Set-Off.  In addition to any rights and remedies of the
Secured Parties provided by Law, upon the occurrence and during the continuance
of any Event of Default under any Finance Document, each Secured Party and its
Affiliates is authorized at any time and from time to time, without prior
notice to any Grantor, any such notice being waived by each Grantor to the
fullest extent permitted by applicable Law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by, and other Indebtedness at any time owing by, such Secured Party and
its Affiliates to or for the credit or the account of any Grantor against any
and all Obligations owing to such Secured Party and its Affiliates hereunder or
under any other Finance Document, now or hereafter existing, irrespective of
whether or not such Secured Party or Affiliate shall have made demand under
this Agreement or any other Finance Document and although such Secured
Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or Indebtedness; provided that, in the case of any such deposits or other
Indebtedness for the credit or the account of any Foreign Subsidiary, such
set-off may only be against any Obligations of Foreign Subsidiaries.  Each Secured Party agrees promptly to notify
such Grantor, the Collateral Agent and the Agents after any such set off and
application made by such Secured Party; provided, that the failure to give such
notice shall not 

 

34

 

affect
the validity of such set-off and application. 
The rights of the Secured Parties under this Section 8.5 are in
addition to other rights and remedies (including other rights of set-off) that
the Secured Parties may have.

 

8.6.          Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  Delivery by telecopier or pdf of an executed
counterpart of a signature page to this Agreement shall be effective as
delivery of an original executed counterpart of this Agreement.

 

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

 

8.8.          Section Headings.  The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.

 

8.9.          Integration.  This Agreement, together with the other
Finance Documents, comprises the complete and integrated agreement of the
parties on the subject matter hereof and thereof and supersedes all prior
agreements, written or oral, on such subject matter.

 

8.10.        GOVERNING
LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK.

 

8.11.        Submission To Jurisdiction; Waivers.  (a) Each Grantor hereby irrevocably and
unconditionally:

 

(b)           submits for itself and its property
in any legal action or proceeding relating to this Agreement or for recognition
and enforcement of any judgment in respect thereof, to the non-exclusive
general jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and appellate
courts from any thereof;

 

(c)           consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;

 

(d)           agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail), postage prepaid,
to such Grantor at its address referred to in Section 8.2 or at such other
address of which the Collateral Agent shall have been notified pursuant
thereto;

 

(e)           agrees
that nothing herein shall affect
the right to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and

 

(f)            waives,
to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages.

 

8.12.        Acknowledgments.  (a) Each Grantor hereby acknowledges
that:

 

35

 

(i)            it has been advised by counsel in
the negotiation, execution and delivery of this Agreement and the other Finance
Documents to which it is a party;

 

(ii)           neither the Collateral
Agent nor any other Secured Party has any fiduciary relationship with or duty
to any Grantor arising out of or in connection with this Agreement or any of
the other Finance Documents, and
the relationship between the Grantors, on the one hand, and the Collateral Agent and the other Secured
Parties, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and

 

(iii)          no joint venture is created hereby or by the other Finance Documents or otherwise exists
by virtue of the transactions contemplated hereby among the Secured Parties or
among the Grantors and the Secured Parties.

 

8.13.        Additional Grantors.  Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 6.13 of
the Credit Agreement, Section 3.12 of the Indenture or any comparable
provision in any Additional Loan Document shall become a Grantor for all purposes
of this Agreement upon execution and delivery by such Subsidiary of a Security
Agreement Supplement in the form of Annex 2 hereto.

 

8.14.        Releases.  (a)  If any of the Collateral shall be
sold, transferred or otherwise disposed of by any Grantor in a transaction
otherwise permitted by all applicable Finance Documents, to any Person other
than Holdings, the Borrower or any other Grantors, then the Collateral Agent,
at the request and sole expense of such Grantor, shall promptly execute and
deliver to such Grantor all releases or other documents reasonably necessary or
desirable for the release of the Liens created hereby on such Collateral (but
not on any Proceeds thereof).  A Grantor
shall be automatically released from its obligations hereunder if such Person
ceases to be a Subsidiary as a result of a transaction otherwise permitted by
all applicable Finance Documents and the Liens on the applicable Collateral
pledged by such Grantor hereunder shall be automatically released, in each case
without any further actions by any Person; provided that the Borrower
shall deliver to the Collateral Agent a written notice for release identifying
the relevant Grantor, together with a certification by the Borrower stating
that such transaction is in compliance with the Finance Documents; provided
further that no such release shall occur to the extent such Person is
not released as a guarantor under the First Priority Agreement in accordance
with the terms thereof.

 

(b)           Upon (i) the payment in full in
cash of the Secured Obligations that are Bank Obligations other than Secured
Obligations with respect to Hedge Obligations and Cash Management Obligations
not yet due and payable and contingent indemnification obligations not yet
accrued and payable, (ii) the termination or expiration of all Letters of
Credit that are not Cash Collateralized and (iii) the termination of all
Revolving Commitments, the Lien on all Collateral created under this Agreement
that secures the Secured Obligations with respect to the Bank Obligations shall
automatically terminate and be released and all rights of the First Priority
Representative and the Bank Secured Parties to the Collateral shall
automatically revert to the applicable Grantor, in each case without further
actions by any Person.  Upon any such
termination, the First Priority Representative and the Collateral Agent will,
at the applicable Grantor’s request and expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence
such termination.

 

(c)           To the extent provided in Sections
11.6 of the Indenture, the Lien on all Collateral created under this Agreement
that secures the Secured Obligations with respect to the Bond Obligations shall
automatically terminate and be released and all rights of the Trustee and the
Bond Secured Parties to the Collateral shall automatically revert to the
applicable Grantor, in each case without further actions by an Person.  Upon any such termination, the Trustee and
the Collateral Agent will, at the 

 

36

 

applicable Grantor’s
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.

 

(d)           Upon the occurrence of (i) the
payment in full in cash of the Secured Obligations that are Collateral Agent
Obligations (other than contingent or unliquidated obligations or liabilities)
or (ii) the date when the Collateral Agent consents to the termination of
this Agreement, the Lien on all Collateral created under this Agreement that
secures the Secured Obligations with respect to the Collateral Agent
Obligations shall automatically terminate and all rights of the Collateral
Agent to the Collateral shall automatically revert to the applicable Grantor
without further actions by any Person. 
Upon any such termination, the Collateral Agent will, at the applicable
Grantor’s expense, execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.

 

(e)           Upon the payment in full in cash of
the Additional Secured Obligations (if any) (other than contingent obligations
or liabilities or obligations with respect to Hedge Obligations and Cash
Management Obligations not yet due and payable) as required by the Additional
Loan Documents (if any) the Lien on all Collateral created under this Agreement
that secures the Additional Secured Obligations shall automatically terminate
and all rights of the Additional Secured Parties to the Collateral shall
automatically revert to the applicable Grantor without futher actions by any
Person.  Upon any such termination, the
Additional Agent will, at the applicable Grantor’s expense, execute and deliver
to such Grantor such documents as such Grantor shall reasonably request to
evidence such termination.

 

(f)            Any execution and delivery of
documents pursuant to this Section 8.14 shall be without recourse to or
warranty by the Agents.

 

8.15.        WAIVER
OF JURY TRIAL.  EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
FINANCE DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

[THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK.]

 

37

 

 

 

IN WITNESS WHEREOF, each of the undersigned has caused this Security
Agreement to be duly executed and delivered as of the date first above written.

 

	
   

  	
  RDA
  HOLDING CO.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas A. Williams

  
	
   

  	
   

  	
  Name:
  Thomas A. Williams

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  READER’S DIGEST ASSOCIATION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas A. Williams

  
	
   

  	
   

  	
  Name:
  Thomas A. Williams

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EACH
  OF THE GRANTORS LISTED

  
	
   

  	
  ON
  SCHEDULE I HERETO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas A. Williams

  
	
   

  	
   

  	
  Name:
  Thomas A. Williams

  
	
   

  	
   

  	
  Title:
  Senior Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  

 

[Security
Agreement]

 

 

Alex
Inc.

Allrecipes.com, Inc.

Ardee
Music Publishing, Inc.

Christmas
Angel Productions, Inc.

CompassLearning, Inc.

Direct
Entertainment Media Group, Inc.

Direct
Holdings Americas Inc.

Direct
Holdings Custom Publishing Inc.

Direct
Holdings Customer Service, Inc.

Direct
Holdings Education Inc.

Direct
Holdings Libraries Inc.

Direct
Holdings U.S. Corp.

Funk &
Wagnalls Yearbook Corp.

Gareth
Stevens, Inc.

Home
Service Publications, Inc.

Pegasus
Asia Investments, Inc.

Pegasus
Investment, Inc.

Pegasus
Sales, Inc.

Pleasantville
Music Publishing, Inc.

R.D.
Manufacturing Corporation

RD
Large Edition, Inc.

RD
Publications, Inc.

RD
Walking, Inc.

RDA
Sub Co.

Reader’s
Digest Children’s Publishing, Inc.

Reader’s
Digest Consumer Services, Inc.

Reader’s
Digest Entertainment, Inc.

Reader’s
Digest Financial Services, Inc.

Reader’s
Digest Latinoamerica S.A.

Reader’s
Digest Sales and Services, Inc.

Reader’s
Digest Sub Nine, Inc.

Reader’s
Digest Young Families, Inc.

Reiman
Manufacturing, LLC

Reiman
Media Group, Inc.

Retirement
Living Publishing Company, Inc.

Saguaro
Road Records, Inc.

Taste
of Home Media Group, Inc.

Taste
of Home Productions, Inc.

Travel Publications, Inc.

W.A. Publications, LLC

WAPLA,
LLC

Weekly
Reader Corporation

Weekly
Reader Custom Publishing, Inc.

World
Almanac Education Group, Inc.

World
Wide Country Tours, Inc.

WRC
Media Inc.

 

[Security Agreement]

 

 

	
   

  	
  WILMINGTON
  TRUST FSB, as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Peter Finkel

  
	
   

  	
   

  	
  Name:
  Peter Finkel

  
	
   

  	
   

  	
  Title:
  Vice President

  

 

[Security
Agreement]

 

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Martin Reed

  
	
   

  	
   

  	
  Name:
  Martin Reed

  
	
   

  	
   

  	
  Title:
  Vice President

  

 

[Security
Agreement]

 

 

	
   

  	
  JPMORGAN
  CHASE BANK, N.A., as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Tina Ruyter

  
	
   

  	
   

  	
  Name:
  Tina Ruyter

  
	
   

  	
   

  	
  Title:
  Executive Director

  

 

[Security
Agreement]Exhibit 10.1

 

RDA HOLDING CO.

 

2010 EQUITY INCENTIVE PLAN

 

ARTICLE I

PURPOSE

 

Purpose of the Plan.  The Plan shall be known
as the RDA Holding Co. 2010 Equity Incentive Plan (the “Plan”).  The Plan is intended to expand the value of
the enterprise by recruiting, retaining and incenting the most critical
employees, Members of the Board and Independent Contractors of RDA Holding Co.
(the “Company”) and its Subsidiaries to participate in the long-term
growth and financial success of the Company through Share ownership.  The Plan is intended to permit the grant of
Awards that constitute Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and
Performance Awards, cash payments and such other forms as the Committee in its
discretion deems appropriate, including any combination of the above.

 

ARTICLE II

DEFINITIONS

 

The following words and phrases shall have
the following meanings unless a different meaning is plainly required by the
context:

 

“1934 Act” means the Securities
Exchange Act of 1934, as amended. 
Reference to a specific section of the 1934 Act or regulation thereunder
shall include such section or regulation, any valid regulation or
interpretation promulgated under such section, and any comparable provision of
any future legislation or regulation amending, supplementing or superseding
such section or regulation.

 

“Affiliate” means any corporation
or any other entity (including, but not limited to, partnerships and joint
ventures) directly or indirectly controlling or controlled by the Company.

 

“Award” means, individually or
collectively, a grant under the Plan of Incentive Stock Options, Non-Qualified
Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units and Performance Awards, cash payments and such other forms as the
Committee in its discretion deems appropriate.

 

“Award Agreement” means the written
agreement setting forth the terms and conditions applicable to an Award.

 

“Base Price” means the price at
which a SAR may be exercised with respect to a Share.

 

“Board” means the Company’s Board
of Directors, as constituted from time to time.

 

 

“Cause” means with respect to a
Participant’s Termination from and after the date hereof, the following: (i) in
the case where there is no employment agreement, consulting agreement, change
in control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the grant of the Award (or where
there is such an agreement but it does not define “cause” (or words of like
import)), termination due to: (a) willful misconduct or gross negligence
of the Participant in the performance of his or her duties to the Company or
any of its Subsidiaries that has or could reasonably be expected to have an
adverse effect on the Company or any of its Subsidiaries; (b) willful
failure to perform his or her duties to the Company of any of its Subsidiaries
or to follow the lawful directions of the Company’s Board or any executive to
which the Participant reports (other than as a result of death or Disability); (c) indictment
for, conviction of, or pleading guilty or nolo  contendere to, a
felony or any crime involving moral turpitude; (d) failure to cooperate in
any audit or investigation of the business or financial practices of the
Company or any of its Subsidiaries; (e) performance of any material act of
theft, embezzlement, fraud, malfeasance, dishonesty or misappropriation of the
property of the Company or any of its Subsidiaries; or (f) breach of any
agreement with the Company of any of its Subsidiaries or a violation of the
Company’s and any of its Subsidiaries’ code of conduct or other written policy;
provided, that in each case no such determination may be made until the
Participant has been given written notice detailing the specific Cause event
and a period of twenty (20) days following receipt of such notice to cure such
event (if susceptible to cure) to the satisfaction of the Company or (ii) in
the case where there is an employment agreement, consulting agreement, change
in control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the grant of the Award that
defines “cause” (or words of like import), “cause” as defined under such
agreement.  With respect to a Participant’s
Termination of Directorship, “cause” means an act or failure to act that
constitutes cause for removal of a director under applicable law.

 

“Change in Control” means the
occurrence of any one or more of the following events:

 

(a)                                  any “person” or “group” as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (other
than the Company, any trustee or other fiduciary holding securities under any
employee benefit plan of the Company, or any company owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of Common Stock of the Company), is or becomes
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than 50%
of the combined voting power of the Company’s then outstanding securities;

 

(b)                                 during any one-year period, individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in paragraph (a), (c) or (d) of this
definition of “Change in Control” or a director whose initial assumption of
office occurs as a result of either an actual or threatened election contest or
other actual or threatened solicitation of proxies or consents by or on behalf
of a person other than the Board) whose election by the Board or nomination for
election by the Company’s shareholders was approved by a vote of at least a
majority of the directors then still in office who either were directors at the
beginning of 

 

2

 

the one-year
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the Board;

 

(c)                                  a merger or consolidation of the Company or a direct or indirect
subsidiary of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation (or the ultimate parent company of the
Company or such surviving entity); provided, however, that a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person (other than those covered by the
exceptions in subparagraph (a)) acquires more than 50% of the combined voting
power of the Company’s then outstanding securities shall not constitute a
Change in Control; or

 

(d)                                 the consummation of a sale or disposition of all or substantially
all of the assets of the Company and its direct and indirect subsidiaries (on a
consolidated basis) immediately prior to such transaction, other than the sale
or disposition of all or substantially all of the assets of the Company to a
person or persons who beneficially own, directly or indirectly, more than 50%
of the combined voting power of the outstanding voting securities of the
Company at the time of the sale.

 

For purposes of prongs (a), (c) and (d) above,
a person or group of persons shall be deemed to beneficially own more than 50%
of the combined voting power of the Company’s then outstanding securities if
such person or group beneficially owns more than 50% of either (i) the
combined voting power of Company’s outstanding securities then entitled to vote
in the election of directors or (ii) the combined voting power of all the
Company’s outstanding securities taking into account for this purpose any
securities that are convertible into voting securities on an as-converted
basis.  Notwithstanding the foregoing,
for Awards that are subject to Section 409A of the Code, for purposes of
settlement and distribution of the Award, an event shall not be considered to
be a Change in Control under the Plan unless such event is also a change in
control event within the meaning of Section 409A of the Code.

 

“Code” means the Internal Revenue
Code of 1986, as amended.  Reference to a
specific section of the Code or regulation thereunder shall include such
section or regulation, any valid regulation or other guidance promulgated under
such section, and any comparable provision of any future legislation or
regulation amending, supplementing or superseding such section or regulation.

 

“Committee” means the Compensation
Committee of the Board.

 

“Disability” means (i) in the case where there is no employment
agreement, consulting agreement, change in control agreement or similar
agreement in effect between the Company or an Affiliate and the Participant at
the time of the grant of the Award (or where there is such an agreement but it
does not define “disability” (or words of like import)), a permanent and total
disability as defined in Section 22(e)(3) of the Code, provided that
a Disability shall only be deemed to occur at the time of the determination by
the Committee (or its designee) of the Disability; or (ii) in the case
where there is an employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Company or an Affiliate

 

3

 

and the Participant at the time of the
grant of the Award that defines “disability” (or words of like import), “disability”
as defined under such agreement. 
Notwithstanding the foregoing, for Awards that are subject to Section 409A
of the Code and that are distributed or settled upon the occurrence of a
Disability, Disability shall mean that a Participant is disabled under Section 409A(a)(2)(C)(i).

 

“Eligible Individual” means any of
the following individuals who is designated by the Committee in its discretion
as eligible to receive Awards subject to the conditions set forth herein:  (a) any Member of the Board, officer or
Employee of the Company or a Subsidiary of the Company, (b) any individual
to whom the Company, or a Subsidiary of the Company, has extended a formal
offer of employment, so long as the grant of any Award shall not become
effective until the individual commences employment or (c) any Independent
Contractor or advisor of the Company or a Subsidiary.

 

“Employee” means an employee of the
Company or a Subsidiary.  Notwithstanding
anything to the contrary contained herein, the Committee may grant Awards to an
individual who has been extended an offer of employment by the Company or a
Subsidiary; provided that any such Award shall be subject to forfeiture if such
individual does not commence employment by a date established by the Committee.

 

“Exercise Price” means the price at
which a Share subject to an Option may be purchased upon the exercise of the
Option.

 

“Fair Market Value” means, except
as otherwise specified in a particular Award Agreement, (a) while the
Shares are readily traded on an established national or regional securities
exchange, the closing transaction price of such a Share as reported by the
principal exchange on which such Shares are traded on the date as of which such
value is being determined or, if there was no reported transaction for such
date, the opening transaction price as reported by the exchange for the first
trading date following the date by which such value is being determined on the
next preceding date for which a transaction was reported, (b) if the
Shares are not readily traded on an established national or regional securities
exchange, the average of the bid and ask prices for such a Share on the date as
of which such value is being determined, where quoted for such Shares, or (c) if
Fair Market Value cannot be determined under clause (a) or clause (b) above,
or if the Board determines in its sole discretion that the Shares are too
thinly traded for Fair Market Value to be determined pursuant to clause (a) or
clause (b), the value as determined by the Board, in its sole discretion, on a
good faith basis, without taking into account any lack of liquidity,
marketability or minority interest discounts. 
If the Participant objects to the Board’s determination of Fair Market
Value pursuant to clause (c) above, the Company shall retain a nationally
recognized firm experienced in the valuation of private companies (the “Independent
Valuator”) to determine Fair Market Value. 
If the Independent Valuator’s determination of Fair Market Value is 110%
or less than the Fair Market Value as determined by the Board, then the Board’s
determination of Fair Market Value shall govern and the Participant will pay
the cost of the Independent Valuator.  If
the Fair Market Value, as determined pursuant to the process described above,
is 110% or more of the Fair Market Value originally determined by the Board,
then the Independent Valuator’s determination of Fair Market Value shall govern
and the Company will pay the cost of the Independent Valuator.

 

“Grant Date” means the date that
the Award is granted.

 

4

 

“Immediate Family” means the
Participant’s children, stepchildren, grandchildren, parents, stepparents,
grandparents, spouse, siblings (including half-brothers and half-sisters),
in-laws (including all such relationships arising because of legal adoption)
and any other person required under applicable law to be accorded a status
identical to any of the foregoing.

 

“Incentive Stock Option” means an
Option that is designated as an Incentive Stock Option and is intended by the
Committee to meet the requirements of Section 422 of the Code.

 

“Independent Contractor” means any
natural person who is an independent contractor or consultant of the Company or
a Subsidiary.  Notwithstanding anything
to the contrary contained herein, the Committee may grant Awards to an
individual who has been extended an offer to become an independent contractor
or consultant by the Company or a Subsidiary; provided that any such Award
shall be subject to forfeiture if such individual does not commence his or her
duties by a date established by the Committee.

 

“Member of the Board” means an
individual who is a member of the Board or of the board of directors of a
Subsidiary.

 

“Non-Qualified Stock Option” means
an Option that is not an Incentive Stock Option.

 

“Option” means an option to
purchase Shares granted pursuant to Article VII.

 

“Participant” means an Employee, Independent
Contractor, or Member of the Board with respect to whom an Award has been
granted and remains outstanding.

 

“Performance Award” means an Award
granted to a Participant pursuant to Article X hereof contingent upon
achieving certain Performance Goals.

 

“Performance Goals” means goals
established by the Committee as contingencies for Awards to vest and/or become
exercisable or distributable.

 

“Performance Period” means the
designated period during which the Performance Goals must be satisfied with
respect to the Award to which the Performance Goals relate.

 

“Period of Restriction” means the
period during which Awards are subject to forfeiture and/or restrictions on
transferability.

 

“Restricted Stock” means a Stock
Award granted pursuant to Article VIII under which the Shares are subject
to forfeiture upon such terms and conditions as specified in the relevant Award
Agreement.

 

“Restricted Stock Unit” or “RSU”
means a Stock Award granted pursuant to Article VIII subject to a period
or periods of time after which the Participant will receive Shares if the
conditions contained in such Stock Award have been met.

 

“Share” means the Company’s common
shares, or any security issued by the Company or any successor in exchange or
in substitution therefore.

 

5

 

“Stock Appreciation Right” or “SAR”
means an Award granted pursuant to Article IX, granted alone or in tandem
with a related Option which is designated by the Committee as a SAR.

 

“Stock Award” means an Award of
Restricted Stock or an RSU pursuant to Article VIII.

 

“Subsidiary” means, with respect to
any person, any corporation, limited liability company, partnership,
association or other business entity of which (a) if a corporation, a
majority of the total voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or indirectly,
by that person or one or more of the other Subsidiaries of that person or a
combination thereof, or (b) if a limited liability company, partnership,
association or other business entity, a majority of the limited liability
company, partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any person or one or more
Subsidiaries of that person or a combination thereof.  For purposes hereof, person or persons shall
be deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such person or persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control the
managing director or general partner of such limited liability company,
partnership, association or other business entity.

 

“Ten Percent Holder” means an
Employee (together with persons whose stock ownership is attributed to the
Employee pursuant to Section 424(d) of the Code) who, at the time an
Option is granted, owns shares representing more than ten percent of the voting
power of all classes of securities of the Company.

 

“Termination” means (i) in the
case of an Employee: (a) a termination of employment of a Participant from
the Company and its Affiliates; or (b) when an entity which is employing a
Participant ceases to be a Subsidiary, unless the Participant otherwise is, or
thereupon becomes, employed by the Company or another Subsidiary at the time
the entity ceases to be a Subsidiary; (ii) in the case of a Consultant: (x) that
the Consultant is no longer acting as a consultant to the Company or a
Subsidiary; or (y) when an entity which is retaining a Participant as a
Consultant ceases to be a Subsidiary unless the Participant otherwise is, or
thereupon becomes, a Consultant to the Company or another Subsidiary at the
time the entity ceases to be a Subsidiary; or (iii) in the case of a
Member of the Board, that individual Director has ceased to be a Member of the
Board.  Notwithstanding the foregoing,
the Committee may, in its sole discretion, otherwise define Termination in the
Award Agreement or, if no rights of a Participant are reduced, may otherwise
define Termination thereafter.

 

Notwithstanding the foregoing, for Awards
that are subject to Section 409A of the Code and are settled or distributed
upon a “Termination,” the foregoing definition shall only apply to the extent
the applicable event would also constitute a “separation from service” under
Code Section 409A

 

“Transfer”
means: (a) when used as a noun,
any direct or indirect transfer, sale, assignment, pledge, hypothecation,
encumbrance or other disposition (including the issuance of equity in a
Person), whether for value or no value and whether voluntary or involuntary
(including by operation of law), and (b) when used as a verb, to directly
or indirectly transfer, sell, assign, pledge, 

 

6

 

encumber, charge, hypothecate or otherwise
dispose of (including the issuance of equity in a Person) whether for value or
for no value and whether voluntarily or involuntarily (including by operation
of law).  “Transferred” and “Transferable”
shall have a correlative meaning.

 

ARTICLE III

ADMINISTRATION

 

3.1                                 The Committee.  The Plan shall be administered by the
Committee.  The Committee shall consist
of one (1) or more Members of the Board and may consist of the entire
Board.  Unless otherwise determined by
the Board, the Committee shall be the Compensation Committee.

 

3.2                                 Authority and Action of the Committee.  It shall be the duty of
the Committee to administer the Plan in accordance with the Plan’s
provisions.  The Committee shall have all
powers and discretion necessary or appropriate to administer the Plan and to
control its operation, including, but not limited to, the full and final
authority in its discretion to (a) determine which Eligible Individuals
shall be eligible to receive Awards and to grant Awards, (b) prescribe the
form, amount, timing and other terms and conditions of each Award, (c) interpret
the Plan and the Award Agreements (and any other instrument relating to the
Plan), (d) adopt such procedures as it deems necessary or appropriate to
permit participation in the Plan by Eligible Individuals, (e) adopt such rules as
it deems necessary or appropriate for the administration, interpretation and
application of the Plan, (f) interpret, amend or revoke any such
procedures or rules, (g) correct any technical defect(s) or technical
omission(s), or reconcile any technical inconsistency(ies), in the Plan and/or
any Award Agreement, (h) accelerate the vesting of any Award, (i) extend
the period during which an Option or SAR may be exercisable, and (j) make
all other decisions and determinations that may be required pursuant to the
Plan and/or any Award Agreement or as the Committee deems necessary or
advisable to administer the Plan.

 

The acts of the Committee shall be either (i) acts
of a majority of the members of the Committee present at any meeting at which a
quorum is present or (ii) acts approved in writing by all of the members
of the Committee without a meeting.  A
majority of the Committee shall constitute a quorum.  The Committee’s determinations under the Plan
need not be uniform and may be made selectively among Participants, whether or
not such Participants are similarly situated. 
Each member of the Committee is entitled to, in good faith, rely or act
upon any report or other information furnished to that member by any Employee
of the Company or any of its Subsidiaries or Affiliates, the Company’s
independent certified public accountants or any executive compensation
consultant or other professional retained by the Company to assist in the
administration of the Plan.

 

The Company shall effect the granting of
Awards under the Plan, in accordance with the determinations made by the Committee,
by execution of written agreements and/or other instruments in such form as is
approved by the Committee.

 

3.3                                 Delegation by the Committee.

 

3.3.1                        The Committee, in its sole discretion and on such terms and
conditions as it may provide, may delegate all or any part of its authority and
powers under the Plan to one or more Members of the Board of the Company and/or
officers of the Company (which officers may further 

 

7

 

delegate such
responsibilities); provided, however, that the Committee (or the officers) may
not delegate its authority or power if prohibited by applicable law.

 

3.3.2                        The Committee may, in its sole discretion, employ such legal
counsel, consultants and agents as it may deem desirable for the administration
of this Plan and may rely upon any opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.  Expenses incurred by the Committee or the Board
in the engagement of any such counsel, consultant or agent shall be paid by the
Company.

 

3.4                                 Indemnification.  Each person who is or shall have been a
member of the Committee, or of the Board and any person designated pursuant to Section 3.3.1,
shall be indemnified and held harmless by the Company against and from (a) any
loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any good faith action taken or good faith failure to
act under the Plan or any Award Agreement, and (b) from any and all
amounts paid by him or her in settlement thereof, with the Company’s approval,
or paid by him or her in satisfaction of any judgment in any such claim,
action, suit, or proceeding against him or her, provided he or she shall give
the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own
behalf.  The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company’s Notice of Articles or
Articles of the Company, by contract, as a matter of law, or otherwise, or
under any power that the Company may have to indemnify them or hold them
harmless.

 

3.5                                 Decisions Binding.  All determinations, decisions and
interpretations of the Committee, the Board, and any delegate of the Committee
pursuant to the provisions of the Plan or any Award Agreement shall be final,
conclusive, and binding on all persons, and shall be given the maximum
deference permitted by law.

 

ARTICLE IV

SHARES SUBJECT TO THE PLAN

 

4.1                                 Number of Shares.  Subject to adjustment as provided in Section 4.3,
the number of Shares available for delivery pursuant to Awards granted under
the Plan shall be 2,380,816 Shares. 
Shares awarded under the Plan may be authorized but unissued Shares,
authorized and issued Shares reacquired and held as treasury Shares or a
combination thereof.  To the extent
permitted by applicable law or exchange rules, Shares issued in assumption of,
or in substitution for, any outstanding awards of any entity acquired in any
form of combination by the Company or any Subsidiary or Affiliate shall not
reduce the Shares available for grants of Awards under this Section 4.1.  The maximum number of Shares with respect to
which Incentive Stock Options may be granted shall be 2,380,816.  No
more than 33% of the Shares reserved for issuance hereunder shall, in the
aggregate, be granted in the form of Restricted Stock.

 

4.2                                 Lapsed Awards.  To the extent that Shares subject to an
outstanding Option (except to the extent Shares are issued or delivered by the
Company in connection with the exercise of a tandem SAR) or other Award are not
issued or delivered by reason of (i) the expiration, 

 

8

 

cancellation,
forfeiture or other termination of such Award, (ii) the withholding of
such Shares in satisfaction of applicable federal, state or local taxes or (iii) of
the settlement of all or a portion of such Award in cash, then such Shares
shall again be available under this Plan.

 

4.3                                 Changes in Capital Structure.  Unless otherwise provided in the Award
Agreement, in the event that any extraordinary dividend or other extraordinary
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, change of
control or exchange of Shares or other securities of the Company, or other
corporate transaction or event (each a “Corporate Event”) affects the
Shares, the Board shall, in such manner as it in good faith deems equitable,
adjust any or all of (i) the number of Shares or other securities of the
Company (or number and kind of other securities or property) with respect to
which Awards may be granted, (ii) the number of Shares or other securities
of the Company (or number and kind of other securities or property) subject to
outstanding Awards, and (iii) the Exercise Price or Base Price with
respect to any Award, or make provision for an immediate cash payment to the
holder of an outstanding Award in consideration for the cancellation of such
Award.

 

4.3.1                        If the Company enters into or is involved in any Corporate Event,
the Board may, prior to such Corporate Event and upon such Corporate Event,
take such action as it deems appropriate, including, but not limited to,
replacing Awards with substitute awards in respect of the Shares, other
securities or other property of the surviving corporation or any affiliate of
the surviving corporation on such terms and conditions, as to the number of
Shares, pricing and otherwise, which shall substantially preserve the value,
rights and benefits of any affected Awards granted hereunder as of the date of
the consummation of the Corporate Event. 
Notwithstanding anything to the contrary in the Plan, if a Change in
Control occurs, with respect to clauses (a), (c) and (d) of such
definition only, the Company shall have the right, but not the obligation, to
cancel each Participant’s Awards immediately prior to such Change in Control
and to pay to each affected Participant in connection with the cancellation of
such Participant’s Awards, an amount equal that the Committee, in its sole
discretion, and in good faith, determines to be the equivalent value of such
Award (e.g., in the case of an Option or SAR, the amount of the spread), it
being understood that the equivalent value of an Option or SAR with an exercise
price greater than or equal to the fair market value of the underlying Shares
shall be $0.

 

4.3.2                        Upon receipt by any affected Participant of any such substitute
awards (or payment) as a result of any such Corporate Event, such Participant’s
affected Awards for which such substitute awards (or payment) were received
shall be thereupon cancelled without the need for obtaining the consent of any
such affected Participant.  Any actions
or determinations of the Committee under this Section 4.3 need not be
uniform as to all outstanding Awards, nor treat all Participants identically.

 

4.4                                 Minimum Purchase Price.  Notwithstanding any provision of this Plan to
the contrary, if authorized but previously unissued Shares are issued under
this Plan, such Shares shall not be issued for a consideration that is less
than as permitted under applicable law.

 

9

 

ARTICLE V

EFFECTIVE DATE

 

The Plan has been adopted on April 20,
2010 (the “Effective Date”), subject, only in the case of the ability to
grant ISOs, to the approval of the shareholders of the Company.

 

ARTICLE VI

GENERAL REQUIREMENTS FOR AWARDS

 

6.1                                 Awards Under the Plan.  Awards under the Plan may be in the form of
Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units and Performance Awards, cash
payments and such other forms as the Committee in its discretion deems
appropriate, including any combination of the above.  No fractional Shares shall be issued under
the Plan nor shall any right be exercised under the Plan with respect to a
fractional Share.

 

6.2                                 General Eligibility.  All Eligible Individuals
are eligible to be granted Awards, subject to the terms and conditions of this
Plan.  Eligibility for the grant of
Awards and actual participation in this Plan shall be determined by the
Committee in its sole discretion.

 

6.3                                 Incentive Stock Options.  Notwithstanding anything
herein to the contrary, only eligible Employees of the Company, its
Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock
Options under this Plan.  Eligibility for
the grant of an Incentive Stock Option and actual participation in this Plan
shall be determined by the Committee in its sole discretion.

 

ARTICLE VII

STOCK OPTIONS

 

7.1                                 Grant of Options.  Subject to the provisions of the Plan,
Options may be granted to Participants at such times, and subject to such terms
and conditions, as determined by the Committee in its sole discretion.  An Award of Options may include Incentive
Stock Options, Non-Qualified Stock Options, or a combination thereof; provided,
however, that an Incentive Stock Option may only be granted to an Employee of
the Company or a Subsidiary and no Incentive Stock Option shall be granted more
than ten (10) years after the earlier of (i) the Effective Date or (ii) the
date this Plan is approved by the Company’s shareholders.

 

7.2                                 Award Agreement.  Each Option shall be evidenced by an Award
Agreement that shall specify the Exercise Price, the expiration date of the
Option, the number of Shares to which the Option pertains, any conditions to
the exercise of all or a portion of the Option, the conditions under which such
Options shall become vested, and such other terms and conditions as the
Committee, in its discretion, shall determine. 
The Award Agreement pertaining to an Option shall designate such Option
as an Incentive Stock Option or a Non-Qualified Stock Option.  Notwithstanding any such designation, to the
extent that the aggregate fair market value (determined as of the Grant Date)
of Shares with respect to which Options designated as Incentive Stock Options
are exercisable for the first time by a Participant during any calendar year
(under this Plan or any other plan of the Company, or any parent or subsidiary
as defined in Section 424 of the 

 

10

 

Code) exceeds $100,000, such Options shall
constitute Non-Qualified Stock Options. 
For purposes of the preceding sentence, Incentive Stock Options shall be
taken into account in the order in which they are granted.

 

7.3                                 Exercise Price.  Subject to the other provisions of this Section,
the Exercise Price with respect to Shares subject to an Option shall be
determined by the Committee in its sole discretion; provided, however, that the
Exercise Price with respect to an Incentive Stock Option granted to a Ten
Percent Holder shall not be less than one hundred and ten percent (110%) of the
fair market value of a Share on the Grant Date. 
If and to the extent that an Option by its terms purports to be granted
at a price lower than that permitted by the Plan, such Option shall be deemed for
all purposes to have been granted at the lowest price that would have in fact
have been permitted by the Plan at the time of grant.

 

7.4                                 Expiration Dates.  Each Option shall terminate not later than
the expiration date specified in the Award Agreement pertaining to such Option;
provided, however, that the expiration date with respect to an Option shall not
be later than the tenth (10th) anniversary of its Grant Date and the expiration
date with respect to an Incentive Stock Option granted to a Ten Percent Holder
shall not be later than the fifth (5th) anniversary of its Grant Date.

 

7.5                                 Exercisability of Options.  Subject to Section 7.4, Options granted
under the Plan shall be exercisable at such times, and shall be subject to such
restrictions and conditions, as the Committee shall determine in its sole
discretion.  The exercise of an Option is
contingent upon payment by the optionee of the amount sufficient to pay all
taxes required to be withheld by any governmental agency.  Such payment may be in any form approved by
the Committee.

 

7.6                                 Method of Exercise.  Options shall be exercised in whole or in
part by the Participant’s delivery of a written notice of exercise to the
General Counsel and the Treasurer of the Company (or his or her designee),
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment of the Exercise Price with respect to
each such Share and an amount sufficient to pay all taxes required to be
withheld by any governmental agency.  The
Exercise Price shall be payable to the Company in full in cash or its
equivalent and no Shares resulting from the exercise of an Option shall be
issued until full payment therefore has been made.  The Committee, in its sole discretion, also
may permit exercise (a) by tendering previously acquired Shares or (b) by
any other means which the Committee, in its sole discretion, determines to both
provide legal consideration for the Shares, and to be consistent with the
purposes of the Plan.  As soon as practicable
after receipt of a written notification of exercise and full payment for the
Shares with respect to which the Option is exercised, the Company shall deliver
to the Participant Share certificates (or the equivalent if such Shares are
held in book entry form) for such Shares with respect to which the Option is
exercised.

 

7.7                                 Early Exercise.  The Committee may provide that an Option
include a provision whereby the Participant may elect at any time before the
Participant’s Termination to exercise the Option as to any part or all of the
Shares subject to the Option prior to the full vesting of the Option and such
Shares shall be subject to the provisions of Article VIII and treated as
Restricted Stock.  Any unvested Shares so
purchased may be subject to a repurchase option in favor of the Company or to
any other restriction the Committee determines to be appropriate.

 

11

 

7.8                                 Restrictions on Share Transferability.  Incentive Stock Options
are not transferable, except by will or the laws of descent.  The Committee may impose such additional
restrictions on any Shares acquired pursuant to the exercise of an Option as it
may deem advisable, including, but not limited to, restrictions related to
applicable federal securities laws, the requirements of any national securities
exchange or system upon which Shares are then listed or traded, or any blue sky
or state securities laws.

 

7.9                                 Cashing Out of Option.  Unless otherwise provided in the Award
Agreement, on receipt of written notice of exercise, the Committee may elect to
cash out all or part of the portion of the Shares for which an Option is being
exercised by paying the optionee an amount, in cash or Shares, equal to the
excess of the Fair Market Value of the Shares over the option price times the
number of Shares for which the Option is being exercised on the effective date
of such cash-out.

 

7.10                           Certain Powers.  Notwithstanding anything herein to the
contrary, unless otherwise provided in the Award Agreement, the Committee may,
at its sole and absolute discretion, (i) lower the strike price of an
Option after it is granted, or take any other action with the effect of
lowering the strike price of an Option after it is granted or (ii) permit
Participants to cancel an Option in exchange for another Award.

 

7.11                           Incentive Stock Options.  Should any Option granted under this Plan be
designated an “Incentive Stock Option,” but fail, for any reason, to meet the
requirements of the Code for such a designation, then such Option shall be
deemed to be a Non-Qualified Stock Option and shall be valid as such according
to its terms.

 

ARTICLE VIII

STOCK AWARDS

 

8.1                                 Grant of Stock Awards.  Subject to the provisions of the Plan, Stock
Awards may be granted to such Participants at such times, and subject to such
terms and conditions, as determined by the Committee in its sole
discretion.  Stock Awards may be issued
either alone or in addition to other Awards granted under the Plan.

 

8.2                                 Stock Award Agreement.  Each Stock Award shall be evidenced by an
Award Agreement that shall specify the number of Shares granted, the price, if
any, to be paid for the Shares, the Period of Restriction applicable to a
Restricted Stock Award or RSU Award, the vesting conditions to which the Stock Award
is subject and such other terms and conditions as the Committee, in its sole
discretion, shall determine.

 

8.3                                 Acceptance.  Awards of Restricted Stock must be accepted
within a period of sixty (60) days (or such other period as the Committee may
specify) after the grant date, by executing a Restricted Stock Award Agreement
and by paying whatever price (if any) the Committee has designated
thereunder.  If the Restricted Stock
Award Agreement is not so executed, such Award shall be null and void.

 

8.4                                 Transferability/Share Certificates.  Subject to Section 14.6, Shares subject
to a Stock Award may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated during a Period of Restriction.  During the Period of Restriction, a Restricted
Stock Award may be 

 

12

 

registered in the holder’s name or a
nominee’s name at the discretion of the Company and may bear a legend as
described in Section 8.5.2.  Unless
the Committee determines otherwise, shares of Restricted Stock shall be held by
the Company as escrow agent during the applicable Period of Restriction,
together with stock powers or other instruments of assignment (including a
power of attorney), each endorsed in blank with a guarantee of signature if
deemed necessary or appropriate by the Company, which would permit transfer to
the Company of all or a portion of the Shares subject to the Restricted Stock
Award in the event such Award is forfeited in whole or part.

 

8.5                                 Other Restrictions.  The Committee, in its sole discretion, may
impose such other restrictions on Shares subject to a Stock Award as it may
deem advisable or appropriate.

 

8.5.1                        General Restrictions.  The Committee may set restrictions based upon
applicable federal or state securities laws, or any other basis determined by
the Committee in its discretion.

 

8.5.2                        Legend on Certificates.  The Committee, in its sole discretion, may
legend the certificates representing Restricted Stock during the Period of
Restriction to give appropriate notice of such restrictions.  For example, the Committee may determine that
some or all certificates representing Shares of Restricted Stock shall bear the
following legend: “The sale or other transfer of the shares of stock
represented by this certificate, whether voluntary, involuntary, or by
operation of law, is subject to certain restrictions on transfer as set forth
in the RDA Holding Co. 2010 Equity Incentive Plan (the “Plan”), and in a
Restricted Stock Award Agreement (as defined by the Plan).  A copy of the Plan and such Restricted Stock
Award Agreement may be obtained from the Chief Human Resources Officer of RDA Holding Co.”

 

8.6                                 Removal of Restrictions.  Shares of Restricted Stock covered by a
Restricted Stock Award made under the Plan shall be released from escrow as
soon as practicable after the termination of the Period of Restriction and,
subject to the Company’s right to require payment of any taxes, a certificate
or certificates evidencing ownership of the requisite number of Shares shall be
delivered to the Participant.

 

8.7                                 Voting Rights.  During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless otherwise provided in
the Award Agreement.

 

8.8                                 Dividends and Other Distributions.  Unless otherwise provided in the Award
Agreement, Participants  shall be
entitled to receive all dividends and other distributions paid with respect to
Stock Awards provided, that any such dividends or other distributions will be
subject to the same vesting requirements as the underlying Stock Awards and
shall be paid at the time the Stock Award becomes vested.  If any dividends or distributions are paid in
Shares, such Shares shall be deposited with the Company and shall be subject to
the same restrictions on transferability and forfeitability as the Stock Awards
with respect to which they were paid.

 

13

 

ARTICLE IX

STOCK APPRECIATION RIGHTS

 

9.1                                 Grant of SARs.  Subject to the provisions of the Plan, SARs
may be granted to such Participants at such times, and subject to such terms
and conditions, as shall be determined by the Committee in its sole discretion.

 

9.2                                 Base Price and Other Terms.  The Committee, subject to the provisions of
the Plan, shall have complete discretion to determine the terms and conditions
of SARs granted under the Plan.  Without
limiting the foregoing, the Base Price with respect to Shares subject to a
tandem SAR shall be the same as the Exercise Price with respect to the Shares
subject to the related Option.

 

9.3                                 SAR Agreement.  Each SAR grant shall be evidenced by an Award
Agreement that shall specify the Base Price (which shall not be less than one
hundred percent (100%) of the fair market value of a Share on the Grant Date),
the term of the SAR, the vesting conditions of the SAR, the conditions of
exercise, and such other terms and conditions as the Committee, in its sole
discretion, shall determine.

 

9.4                                 Expiration Dates.  Each SAR shall terminate no later than the
tenth (10th) anniversary of its Grant Date; provided, however, that the
expiration date with respect to a tandem SAR shall not be later than the
expiration date of the related Option.

 

9.5                                 Exercisability.

 

9.5.1                        Method of Exercise.  Unless otherwise specified in the Award
Agreement pertaining to a SAR, a SAR may be exercised (a) by the
Participant’s delivery of a written notice of exercise to the General Counsel
of the Company (or his or her designee) setting forth the number of whole SARs
which are being exercised, (b) in the case of a tandem SAR, by
surrendering to the Company any Options which are cancelled by reason of the
exercise of such SAR, and (c) by executing such documents as the Company
may reasonably request.

 

9.5.2                        Tandem SARs.  Tandem SARs (i.e., SARs issued in tandem with
Options) shall be exercisable only at such time or times and to the extent that
the Options to which they relate shall be exercisable in accordance with the
provisions of Article VII.  The
related Options which have been surrendered by the exercise of a tandem SAR, in
whole or in part, shall no longer be exercisable to the extent the related
tandem SARs have been exercised.

 

9.5.3                        Discretionary Limitations.  If the Committee provides, in its discretion,
that any such right is exercisable subject to certain limitations (including,
without limitation, that it is exercisable only in installments or within
certain time periods), the Committee may waive such limitations on the
exercisability at any time at or after grant in whole or in part (including,
without limitation, waiver of the installment exercise provisions or
acceleration of the time at which such right may be exercised), based on such
factors, if any, as the Committee shall determine, in its sole discretion.  Unless otherwise set forth in an Award
Agreement or determined by the Committee, in the event that a written
employment agreement between the Company and a Participant provides for a
vesting schedule that is more favorable than the vesting schedule provided in
the form of 

 

14

 

Award agreement,
the vesting schedule in such employment agreement shall govern, provided that
such agreement is in effect on the date of grant and applicable to the specific
Award.

 

9.6                                 Payment.  Except as otherwise provided in the relevant
Award Agreement, upon exercise of a SAR, the Participant shall be entitled to
receive payment from the Company in an amount determined by multiplying: (i) the
amount by which the Fair Market Value of a Share on the date of exercise
exceeds the Base Price specified in the Award Agreement pertaining to such SAR
by (ii) the number of Shares with respect to which the SAR is exercised.

 

9.7                                 Payment Upon Exercise of SAR.  Payment to a Participant upon the exercise of
the SAR shall be made, as determined by the Committee in its sole discretion,
either (a) in cash, (b) in Shares with a Fair Market Value equal to
the amount of the payment or (c) in a combination thereof, as set forth in
the applicable Award Agreement.

 

ARTICLE X

PERFORMANCE AWARDS

 

10.1                           General.  The Committee may grant a Performance Award
to the Participant, payable in any form described in Section 6.1, upon the
attainment of specific Performance Goals. 
If the Performance Award is payable in shares of Restricted Stock, such
shares shall be transferable to the Participant only upon attainment of the
relevant Performance Goal in accordance with Article VIII.  If the Performance Award is payable in cash,
it may be paid upon attainment of the relevant Performance Goals either in cash
or in shares of Restricted Stock (based on the then current Fair Market Value
of such Shares), as determined by the Committee, in its sole and absolute
discretion.  Each Performance Award shall
be evidenced by an Award Agreement in such form that is not inconsistent with
the Plan and that the Committee may from time to time approve.  Performance Awards granted under the Plan
shall be subject to the following terms and conditions and such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable, which additional terms and conditions shall be
reflected in the applicable Award Agreement.

 

10.2                           Performance Goals.  Unless otherwise prohibited by applicable
law, the Committee shall have the authority to grant Awards under this Plan
that are contingent upon the achievement of Performance Goals.  Such Performance Goals are to be specified in
the relevant Award Agreement and may be based on such factors including, but
not limited to: (a) revenue, (b) earnings per Share (basic and
diluted), (c) net income per Share, (d) Share price, (e) pre-tax
profits, (f) net earnings, (g) net income, (h) operating income,
(i) cash flow (including, without limitation, operating cash flow, free
cash flow, discounted cash flow, return on investment and cash flow in excess
of cost of capital), (j) earnings before interest, taxes, depreciation and
amortization, (k) earnings before interest and taxes, (l) sales,
(m) total stockholder return relative to assets, (n) total
stockholder return relative to peers, (o) financial returns (including,
without limitation, return on assets, return on net assets, return on equity
and return on investment), (p) cost reduction targets, (q) customer
satisfaction, (r) customer growth, (s) employee satisfaction,
(t) gross margin, (u) revenue growth, (v) market share,
(w) book value per share, (x) expenses and expense ratio management,
(y) system-wide sales or system-wide sales growth, (z) traffic or
customer counts, (aa) new product sales, (bb) any combination of the
foregoing or (cc) such other criteria as the Committee may determine.  Performance Goals may be in respect of the
performance of the 

 

15

 

Company, any of its Subsidiaries or
Affiliates or any combination thereof on either a consolidated, business unit
or divisional level.  Performance Goals
may be absolute or relative (to prior performance of the Company or to the
performance of one or more other entities or external indices) and may be
expressed in terms of a progression within a specified range.  Multiple Performance Goals may be established
and may have the same or different weighting.

 

10.3                           Additional Criteria.  The foregoing criteria shall have any
reasonable definitions that the Committee may specify, which may include or
exclude any or all of the following items, as the Committee may specify:
extraordinary, unusual or non-recurring items; effects of accounting changes;
effects of currency fluctuations; effects of financing activities (e.g., effect
on earnings per share of issuing convertible debt securities); expenses for
restructuring, productivity initiatives or new business initiatives;
non-operating items; acquisition expenses; and effects of divestitures.  Any such performance criterion or combination
of such criteria may apply to the Participant’s award opportunity in its
entirety or to any designated portion or portions of the award opportunity, as
the Committee may specify.

 

10.4                           Adjustment to Performance Goals.  At any time prior to payment of an Award, the
Committee may adjust previously established Performance Goals and other terms
and conditions of the Award to reflect major unforeseen events, including,
without limitation, changes in laws, regulations or accounting policies or
procedures, mergers, acquisitions or divestitures or extraordinary, unusual or
non-recurring items.

 

10.5                           Value, Form and Payment of Performance Award.  The Committee will
establish the value or range of value of the Performance Award, the form in
which the Award will be paid, and the date(s) and timing of payment of the
Award.  The Participant will be entitled
to receive the Performance Award only upon the attainment of the Performance
Goals and such other criteria as may be prescribed by the Committee during the
Performance Period.

 

ARTICLE XI

PARTICIPANT TERMINATION

 

11.1                           Unless otherwise provided in the applicable Award Agreement or as
determined by the Company, Options or SARs that are not vested as of the date
of a Participant’s Termination for any reason shall terminate and expire as of
the date of such Termination.  Unless
otherwise provided in the applicable Award Agreement or as determined by the
Company, upon a Participant’s Termination for any reason:  (i) during the relevant Restriction
Period, all Stock Awards still subject to restriction shall be forfeited; and (ii) any
unvested Performance Award shall be forfeited.

 

ARTICLE XII

CHANGE IN CONTROL

 

Unless otherwise provided in an Award Agreement,
in the event of a Change in Control, unless the right to accelerated vesting,
the lapse of restrictions or risks of forfeiture, or accelerated delivery or
receipt of cash provided for herein is waived or deferred by a Participant and
the Company by written notice prior to the Change in Control, all restrictions
and risks of forfeiture on Awards (other than those imposed by law or
regulation) shall lapse, and all deferral or vesting 

 

16

 

periods relating to Awards shall
immediately expire.  In the event of a
Change in Control, the Board can unilaterally implement or negotiate a
procedure with any party to the Change in Control pursuant to which all
Participants’ unexercised Options may be cashed out as part of the purchase
transaction, without requiring exercise, for the difference between the
purchase price and the Exercise Price.

 

ARTICLE XIII

AMENDMENT, TERMINATION AND DURATION

 

13.1                           Amendment, Suspension or Termination.  The Board, in its sole
discretion, may amend, suspend or terminate the Plan, or any part thereof, at
any time and for any reason, subject to any requirement of stockholder approval
required by applicable law, rule or regulation, including, without
limitation, Section 422 of the Code and the rules of the applicable
securities exchange; provided, however, the Board may amend the Plan and any
Award Agreement without shareholder approval as necessary to avoid the
imposition of any taxes under Section 409A of the Code.  Subject to the preceding sentence, the
amendment, suspension or termination of the Plan shall not, without the consent
of the Participant, materially adversely alter or impair any rights or
obligations under any Award theretofore granted to such Participant.  Notwithstanding the foregoing, the Committee
may, but shall not be required to, amend or modify any Award to the extent
necessary to avoid the imposition of taxes under Section 409A of the
Code.  The Company intends to administer
the Plan and all Awards granted thereunder in a manner that complies with Code Section 409A,
however, the Company shall not be responsible for any additional tax imposed
pursuant to Code Section 409A, nor will the Company indemnify or otherwise
reimburse Participant for any liability incurred as a result of Code Section 409A.  No Award may be granted during any period of
suspension or after termination of the Plan.

 

13.2                           Duration of the Plan.  The Plan shall, subject to Section 13.1,
terminate ten (10) years after adoption, unless earlier terminated by the
Board and no further Awards shall be granted under the Plan.  The termination of the Plan shall not affect
any Awards granted prior to the termination of the Plan.

 

ARTICLE XIV

MISCELLANEOUS

 

14.1                           No Effect on Employment or Service.  Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Participant’s
employment or service at any time, for any reason and with or without cause.

 

14.2                           Participation.  No person shall have the right to be selected
to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.  The
Committee’s determination under the Plan (including, without limitation,
determination of the eligible Employees who shall be granted Awards, the form,
amount and timing of such Awards, the terms and provisions of Awards and the
Awards Agreements and the establishment of Performance Goals) need not be
uniform and may be made by it selectively among eligible Employees who receive
or are eligible to receive Awards under the Plan, whether or not such eligible
Employees are similarly situated.

 

17

 

14.3                           Unfunded Status.  The Plan is intended to constitute an “unfunded”
plan for incentive and deferred compensation. 
With respect to any payments not yet made to a Participant by the
Company, nothing set forth herein shall give any Participant any rights that
are greater than those of a general creditor of the Company.  In its sole and absolute discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Shares or payments in lieu of or
with respect to Awards hereunder; provided, however, that the existence of such
trusts or other arrangements is consistent with the unfunded status of the
Plan.

 

14.4                           Successors.  All obligations of the Company under the
Plan, with respect to Awards granted hereunder, shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation or otherwise, of all or
substantially all of the business or assets of the Company.

 

14.5                           Beneficiary Designations.  Subject to the restrictions in Section 14.6
below, a Participant under the Plan may name a beneficiary or beneficiaries to
whom any vested but unpaid Award shall be paid in the event of the Participant’s
death.  For purposes of this Section, a
beneficiary may include a designated trust having as its primary beneficiary a
family member of a Participant.  Each
such designation shall revoke all prior designations by the Participant and
shall be effective only if given in a form and manner acceptable to the
Committee.  In the absence of any such
designation, any vested benefits remaining unpaid at the Participant’s death
shall be paid to the Participant’s estate and, subject to the terms of the Plan
and of the applicable Award Agreement, any unexercised vested Award may be
exercised by the administrator or executor of the Participant’s estate.

 

14.6                           Nontransferability of Awards.  No Award granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, by the laws of descent and distribution; provided, however, that
except as provided by in the relevant Award Agreement or as determined by the
Committee, a Participant may transfer, without consideration, an Award other
than an Incentive Stock Option to one or more members of his or her Immediate
Family, to a trust established for the exclusive benefit of one or more members
of his or her Immediate Family, to a partnership in which all the partners are
members of his or her Immediate Family, or to a limited liability company in
which all the members are members of his or her Immediate Family; provided,
further, that any such Immediate Family, and any such trust, partnership and
limited liability company, shall agree to be and shall be bound by the terms of
the Plan, and by the terms and provisions of the applicable Award Agreement and
any other agreements covering the transferred Awards.  All rights with respect to an Award granted
to a Participant shall be available during his or her lifetime only to the
Participant and may be exercised only by the Participant or the Participant’s
legal representative.

 

14.7                           No Rights as Shareholder.  Except to the limited extent provided in
Sections 8.7 and 8.8, no Participant (nor any beneficiary) shall have any of
the rights or privileges of a shareholder of the Company with respect to any
Shares issuable pursuant to an Award (or exercise thereof), unless and until
certificates representing such Shares, if any, or in the event the Shares are
non-certificate, such other method of recording beneficial ownership, shall
have been issued, recorded on the records of the Company or its transfer agents
or registrars, and delivered to the Participant (or beneficiary).

 

18

 

14.8                           Withholding.

 

14.8.1                  General.  As a
condition to the settlement of any Award hereunder, a Participant shall be
required to pay in cash, or to make other arrangements satisfactory to the
Company (including, without limitation, authorizing withholding from payroll,
reducing the number of Shares otherwise deliverable or delivering Share already
owned), an amount sufficient to satisfy any federal, state, local and foreign taxes of any
kind (including, but not limited to, the Participant’s FICA and SDI
obligations) which the Company, in its sole discretion, deems necessary to
comply with the Code and/or any other applicable law, rule or regulation
with respect to the Award.  Unless the
tax withholding obligations of the Company are satisfied, the Company shall
have no obligation to issue a certificate or book-entry transfer for such
Shares.

 

14.8.2                  Withholding Arrangements.  The Committee or the Company, in its sole
discretion and pursuant to such procedures as it may specify from time to time,
may permit or require a Participant to satisfy all or part of the tax
withholding obligations in connection with an Award by (a) paying cash, (b) having
the Company withhold otherwise deliverable Shares, (c) delivering to the Company already-owned Shares
having a fair market value equal to the tax obligation, or (d) any
combination of the foregoing.

 

14.9                           No Corporate Action Restriction.  The existence of the Plan, any Award
Agreement and/or the Awards granted hereunder shall not limit, affect or
restrict in any way the right or power of the Board or the shareholders of the
Company to make or authorize (a) any adjustment, recapitalization,
reorganization or other change in the Company’s or any Subsidiary’s or
Affiliate’s capital structure or business, (b) any merger, consolidation
or change in the ownership of the Company or any Subsidiary or Affiliate, (c) any
issue of bonds, debentures, capital, preferred or prior preference stocks ahead
of or affecting the Company’s or any Subsidiary’s or Affiliate’s capital stock
or the rights thereof, (d) any dissolution or liquidation of the Company
or any Subsidiary or Affiliate, (e) any sale or transfer of all or any
part of the Company’s or any Subsidiary’s or Affiliate’s assets or business, or
(f) any other corporate act or proceeding by the Company or any Subsidiary
or Affiliate.  No Participant, beneficiary
or any other person shall have any claim against any Member of the Board or the
Committee, the Company or any Subsidiary or Affiliate, or any employees,
officers, shareholders or agents of the Company or any Subsidiary or Affiliate,
as a result of any such action.

 

14.10                     Conditions and Restrictions on Shares.  Each Participant to whom
an Award is made under the Plan shall (i) enter into an Award Agreement
with the Company that shall contain such provisions consistent with the
provisions of the Plan, as may be approved by the Committee and (ii) to
the extent the Award is made at a time prior to the date Shares are listed for
trading on an established securities exchange, enter into a “Stockholder’s
Agreement” or other similar agreement that is substantially similar in all
material respect to any stockholder’s agreement entered into by any other
employee of the Company or its Subsidiaries in connection with the Award of any
equity-based compensation and if deemed necessary or appropriate by the
Company, the Participant shall provide other instruments of assignment
(including a power of attorney), each endorsed in blank with a guarantee of
signature, which would permit the Company to cause Participant to become
subject to any such agreement.  If the
Participant does not satisfy clauses (i) and (ii) above within the
time period specified by the Company the Award granted to such Participant
shall be null and void and the Participant shall have no further rights
thereunder.  Each 

 

19

 

Award made hereunder shall be subject to
the requirement that if at any time the Company determines that the listing,
registration or qualification of the Shares subject to such Award upon any
securities exchange or under any law, or the consent or approval of any
governmental body, or the taking of any other action is necessary or desirable
as a condition of, or in connection with, the exercise or settlement of such
Award or the delivery of Shares thereunder, such Award shall not be exercised
or settled and such Shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company.  The Company may require that certificates
evidencing Shares delivered pursuant to any Award made hereunder bear a legend
indicating that the sale, transfer or other disposition thereof by the holder
is prohibited except in compliance with the Securities Act of 1933, as amended,
and the rules and regulations thereunder. 
Finally, no Shares shall be issued and delivered under the Plan, unless
the issuance and delivery of those Shares shall comply with all relevant
regulations and any registration, approval or action thereunder.

 

14.11                     Gender and Number.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.

 

14.12                     Severability.  In the event any provision of the Plan or of
any Award Agreement shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of the Plan or
the Award Agreement, and the Plan and/or the Award Agreement shall be construed
and enforced as if the illegal or invalid provision had not been included.

 

14.13                     Requirements of Law.  The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

 

14.14                     Governing Law.  The Plan and all determinations made and
actions taken pursuant hereto to the extent not otherwise governed by the Code
or the securities laws of the United States, shall be governed by the law of
the State of New York and
construed accordingly.

 

14.15                     Jurisdiction; Waiver of Jury Trial.  Any suit, action or proceeding with respect
to this Plan or any Award Agreement, or any judgment entered by any court of
competent jurisdiction in respect of any thereof, shall be brought in any Court
in the State of New York, and the Company and each Participant shall submit to
the exclusive jurisdiction of such courts for the purpose of any such suit,
action, proceeding or judgment.  The
Company and each Participant shall irrevocably waive any objections which he,
she or it may have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Plan or any Award Agreement brought in any
Court in the State of New York, and shall further irrevocably waive any claim
that any such suit, action or proceeding brought in any such court has been
brought in any inconvenient forum.  The
Company and each Participant shall waive any right he, she or it may have to
trial by jury in respect of any litigation based on, arising out of, under or
in connection with this Plan or any Award Agreement or any course of conduct,
course of dealing, verbal or written statement or action of any party to any Award
Agreement or relating to this Plan in any way.

 

14.16                     Captions.  Captions are provided herein for convenience
only, and shall not serve as a basis for interpretation or construction of the
Plan.

 

20

 

14.17                     Payments to Minors.
Any benefit payable to or for the benefit of a minor, an incompetent person or
other person incapable of receipt thereof shall be deemed paid when paid to
such person’s guardian or to the party providing or reasonably appearing to
provide for the care of such person, and such payment shall fully discharge the
Committee, the Board, the Company, its Affiliates and their employees, agents
and representatives with respect thereto.

 

14.18                     Section 409A of the Code.  The Plan is intended to comply with the
applicable requirements of Section 409A of the Code and shall be limited,
construed and interpreted in accordance with such intent.  To the extent that any Award is subject to Section 409A
of the Code, it shall be paid in a manner that will comply with Section 409A
of the Code, including proposed, temporary or final regulations or any other
guidance issued by the Secretary of the Treasury and the Internal Revenue
Service with respect thereto. 
Notwithstanding anything herein to the contrary, any provision in the
Plan that is inconsistent with Section 409A of the Code shall be deemed to
be amended to comply with Section 409A of the Code and to the extent such
provision cannot be amended to comply therewith, such provision shall be null
and void.  The Company shall have no
liability to a Participant, or any other party, if an Award that is intended to
be exempt from, or compliant with, Code Section 409A is not so exempt or
compliant or for any action taken by the Committee or the Company and, in the
event that any amount or benefit under the Plan becomes subject to penalties
under Section 409A, responsibility for payment of such penalties shall
rest solely with the affected Participant(s) and not with the Company.

 

14.19                     Other Benefits. 
No Award granted or paid out under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of
the Company or its Affiliates nor affect any benefits under any other benefit
plan now or subsequently in effect under which the availability or amount of
benefits is related to the level of compensation.

 

14.20                     Costs.  The Company shall bear all expenses
associated with administering this Plan, including expenses of issuing Shares
pursuant to any Awards hereunder.

 

14.21                     Award Agreement.  Notwithstanding any other provision of the
Plan, to the extent the provisions of any Award Agreement are inconsistent with
terms of the Plan and such inconsistency is a result of compliance with laws of
the jurisdiction in which the Participant is resident or is related to taxation
of such Award in such jurisdiction, the relevant provisions of the particular
Award Agreement shall govern.

 

21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}]]