Document:

exv10w19

 

Exhibit 10.19

THE TJX COMPANIES, INC.

EXECUTIVE SAVINGS PLAN

Effective as of January 1, 2008

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	ARTICLE	 	PAGE	 	 	 	 
	PURPOSE; BACKGROUND
	 	 	1	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PART A: 409A PLAN

	 
	 	 	 	 	 	 	 	 
	ARTICLE 1. DEFINITIONS
	 	 	2	 	 	 	 	 
	1.1.“Account”
	 	 	2	 	 	 	 	 
	1.2.“Administrator”
	 	 	2	 	 	 	 	 
	1.3.“Basic Deferral Account”
	 	 	2	 	 	 	 	 
	1.4.“Bonus Deferral Account”
	 	 	2	 	 	 	 	 
	1.5.“Beneficiary”
	 	 	2	 	 	 	 	 
	1.6.“Change of Control”
	 	 	2	 	 	 	 	 
	1.7.“Company”
	 	 	2	 	 	 	 	 
	1.8.“Code”
	 	 	2	 	 	 	 	 
	1.9.“Director”
	 	 	2	 	 	 	 	 
	1.10.“Disability”
	 	 	2	 	 	 	 	 
	1.11.“Effective Date”
	 	 	2	 	 	 	 	 
	1.12.“Elective Deferral”
	 	 	3	 	 	 	 	 
	1.13.“Eligible Basic Compensation”
	 	 	3	 	 	 	 	 
	1.14.“Eligible Bonus”
	 	 	3	 	 	 	 	 
	1.15.“Eligible Deferrals”
	 	 	3	 	 	 	 	 
	1.16.“Eligible Individual”
	 	 	3	 	 	 	 	 
	1.17.“Employee”
	 	 	4	 	 	 	 	 
	1.18.“Employer”
	 	 	4	 	 	 	 	 
	1.19.“Employer Credit Account”
	 	 	4	 	 	 	 	 
	1.20.“ERISA”
	 	 	4	 	 	 	 	 
	1.21.“MIP (Corporate)”
	 	 	4	 	 	 	 	 
	1.22.“Participant”
	 	 	4	 	 	 	 	 
	1.23.“Performance Goal”
	 	 	4	 	 	 	 	 
	1.24.“Period of Participation”
	 	 	4	 	 	 	 	 
	1.25.“Plan”
	 	 	4	 	 	 	 	 

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	ARTICLE	 	PAGE	 	 	 	 
	1.26.“Plan Year”
	 	 	4	 	 	 	 	 
	1.27.“Separation from Service”
	 	 	4	 	 	 	 	 
	1.28.“Specified Employee”
	 	 	5	 	 	 	 	 
	1.29.“Unforeseeable Emergency”
	 	 	5	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 2. ELIGIBILITY AND PARTICIPATION
	 	 	6	 	 	 	 	 
	2.1.Eligibility to Participate
	 	 	6	 	 	 	 	 
	2.2.Termination of Eligibility
	 	 	6	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 3. CREDITS
	 	 	7	 	 	 	 	 
	3.1.Timing and Form of Compensation Deferrals
	 	 	7	 	 	 	 	 
	3.2.Limit on Elective Deferrals
	 	 	8	 	 	 	 	 
	3.3.Employer Credits
	 	 	9	 	 	 	 	 
	3.4.Vesting of Employer Credit Accounts
	 	 	12	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 4. ADJUSTMENTS TO ACCOUNTS DEEMED INVESTMENTS
	 	 	14	 	 	 	 	 
	4.1.Deemed Investment Experience
	 	 	14	 	 	 	 	 
	4.2.Distributions and Withdrawals
	 	 	14	 	 	 	 	 
	4.3.Notional Investment of Accounts
	 	 	14	 	 	 	 	 
	4.4.Expenses
	 	 	15	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 5. ENTITLEMENT TO AND TIMING OF DISTRIBUTIONS
	 	 	16	 	 	 	 	 
	5.1.Timing of Distributions as a result of Separation from Service, Death
	 	 	16	 	 	 	 	 
	5.2.Unforeseeable Emergency
	 	 	18	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 6. AMOUNT AND FORM OF DISTRIBUTIONS
	 	 	19	 	 	 	 	 
	6.1.Amount of Distributions
	 	 	19	 	 	 	 	 
	6.2.Form of Payment
	 	 	20	 	 	 	 	 
	6.3.Death Benefits
	 	 	21	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 7. BENEFICIARIES; PARTICIPANT DATA
	 	 	22	 	 	 	 	 
	7.1.Designation of Beneficiaries
	 	 	22	 	 	 	 	 
	7.2.Available Information; Missing Persons
	 	 	22	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 8. ADMINISTRATION
	 	 	23	 	 	 	 	 
	8.1.Administrative Authority
	 	 	23	 	 	 	 	 
	8.2.Litigation
	 	 	23	 	 	 	 	 

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	ARTICLE	 	PAGE	 	 	 	 
	8.3.Claims Procedure
	 	 	23	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 9. AMENDMENT
	 	 	24	 	 	 	 	 
	9.1.Right to Amend
	 	 	24	 	 	 	 	 
	9.2.Amendments to Ensure Proper Characterization of Plan
	 	 	24	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 10. TERMINATION
	 	 	25	 	 	 	 	 
	10.1.Right of the Company to Terminate or Suspend Plan
	 	 	25	 	 	 	 	 
	10.2.Allocation and Distribution
	 	 	25	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 11. MISCELLANEOUS
	 	 	26	 	 	 	 	 
	11.1.Limitation on Liability of Employer
	 	 	26	 	 	 	 	 
	11.2.Construction
	 	 	26	 	 	 	 	 
	11.3.Taxes
	 	 	26	 	 	 	 	 
	11.4.Section 409A Transition Relief
	 	 	27	 	 	 	 	 
	11.5.Spendthrift Provision
	 	 	27	 	 	 	 	 
	EXHIBIT A: DEFINITION OF CHANGE OF CONTROL 
	 	 	29	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PART B: GRANDFATHERED PLAN

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THE TJX COMPANIES, INC.

EXECUTIVE SAVINGS PLAN

PURPOSE; BACKGROUND

     The TJX Companies, Inc. Executive Savings Plan (the “Plan”) is intended to provide a means
whereby eligible employees and directors may defer compensation that would otherwise be received on
a current basis and the Employer may credit certain additional amounts on a deferred basis for the
benefit of participating Employees. The Plan, as it applies to Employees, is intended to be an
unfunded “top-hat” plan under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. The Plan consists
of two parts: The TJX Companies, Inc. 409A Executive Savings Plan (the “409A Plan”) and The TJX
Companies, Inc. Executive Savings Plan as restated effective October 1, 1998 and as in effect on
October 3, 2004 (the “Grandfathered Plan”). The effective date of this restated Plan is January 1,
2008.

     The 409A Plan is intended to comply with the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and guidance issued thereunder and shall be
interpreted and administered in a manner consistent with such requirements. For the avoidance of
doubt, the terms of the 409A Plan shall apply to benefits accrued on or after January 1, 2005 and
benefits accrued but not vested as of December 31, 2004 under the Grandfathered Plan. The terms of
the 409A Plan are set forth as Part A below.

     All benefits accrued and vested as of December 31, 2004 (the “Grandfathered Benefit Amount”)
shall be grandfathered for purposes of Code section 409A and shall be governed by The TJX
Companies, Inc. Executive Savings Plan as it was in effect on October 3, 2004. The Grandfathered
Plan is frozen as of December 31, 2004. No additional benefit shall accrue after December 31, 2004
under the Grandfathered Plan and no individual not a Participant as of December 31, 2004 shall
thereafter become a Participant in the Grandfathered Plan. The Grandfathered Plan has not been
materially modified after October 3, 2004, and a copy of the Grandfathered Plan as it was in effect
immediately prior to the Effective Date is attached as Part B. Part B memorializes the methodology
for calculating, in accordance with applicable provisions of the Grandfathered Plan, the
Grandfathered Benefit Amount credited to each Participant under the Grandfathered Plan.

 

PART A

THE TJX COMPANIES, INC. 409A EXECUTIVE SAVINGS PLAN

Article 1.  Definitions

     1.1. “Account” means any or all, as the context requires, of a Participant’s or Beneficiary’s
Basic Deferral Account, Bonus Deferral Account and/or Employer Credit Account.

     1.2. “Administrator” means the Executive Compensation Committee of the Board of Directors of
the Company. The Executive Compensation Committee may delegate to one or more Employees, including
a committee, such powers and responsibilities hereunder as it deems appropriate, in which case the
term “Administrator” shall include the person or persons to whom such delegation has been made, in
each case during the continuation of and to the extent of such delegation.

     1.3. “Basic Deferral Account” means the unfunded book-entry account maintained by the
Administrator to reflect that portion of a Participant’s balance under the Plan which is
attributable to his or her Compensation Deferrals attributable to deferred Eligible Basic
Compensation.

     1.4. “Bonus Deferral Account” means the unfunded book-entry account maintained by the
Administrator to reflect that portion of a Participant’s balance under the Plan which is
attributable to his or her Elective Deferrals attributable to deferred Eligible Bonuses.

     1.5. “Beneficiary” means a Participant’s beneficiary determined in accordance with the
provisions of Article 7.

     1.6. “Change of Control” means a Change of Control as defined in Exhibit A hereto.

     1.7. “Company” means The TJX Companies, Inc.

     1.8. “Code” means the Internal Revenue Code of 1986 and the regulations thereunder, as amended
from time to time.

     1.9. “Director” means a member of the Board of Directors of the Company.

     1.10. “Disability” means the inability to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that can be expected to result in death
or can be expected to last for a continuous period of not less than twelve (12) months, al within
the meaning of Section 409A.

     1.11. “Effective Date” means January 1, 2008.

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     1.12. “Elective Deferral” is defined in Section 3.1.

     1.13. “Eligible Basic Compensation” means, with respect to any Plan Year: (i) the base salary
payable by the Employer to a Participant during the Plan Year in respect of services performed
during the Plan Year, determined before reduction for deferrals under any qualified or nonqualified
plan (including, without limitation, the Plan); (ii) in the case of Directors, annual retainers
and/or meeting fees payable in the Plan Year in respect of services performed during the Plan Year;
and (iii) to the extent provided by the Administrator, other cash compensation payable in the Plan
Year in respect of services performed during the Plan Year.

     1.14. “Eligible Bonus” means a cash bonus payable on or after January 1, 2009 pursuant to one
or more of the Company’s annual and long-term incentive bonus plans, subject to such exceptions as
the Administrator may determine prior to the deadline for any Elective Deferral that might be
affected by such determination.

     1.15. “Eligible Deferrals”
means (a) in the case of any Participant who is an Employee, who is a Vice President or
higher, Elective Deferrals attributable to Eligible Basic Compensation with respect to a Plan Year
not in excess of ten percent (10%) of the Participant’s Eligible Basic Compensation, and (b) in the
case of any Participant who is an Employee with a title of Assistant Vice President or Buyer III,
and any Participant who is an Employee with a title below Assistant Vice President or Buyer III who
previously held the title of Assistant Vice President or Buyer III and has been selected by the
Administrator (in its sole discretion) for eligibility for Employer Credits under the Plan,
Elective Deferrals with respect to a Plan Year not in excess of five percent (5%) of the
Participant’s Eligible Basic Compensation. Notwithstanding the preceding, in the case of any
Participant who is a Director, any Participant who is an Employee and who is eligible for Category
A Key Employee Benefits or Category B Key Employee Benefits under the Company’s Supplemental
Executive Retirement Plan, as from time to time in effect, and any Participant who is an Employee
with a title below Assistant Vice President or Buyer III who is eligible to participate in the Plan
but not described in subclause (b) above, none of the Elective Deferrals deferred under the Plan
shall constitute Eligible Deferrals. For the avoidance of doubt, no Elective Deferral shall
constitute an Eligible Deferral to the extent it relates to remuneration other than Eligible Basic
Compensation.

     1.16. “Eligible Individual” means, for any Plan Year (or applicable portion thereof)
commencing on or after the Effective Date, an Employee or a Director who is determined by the

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Administrator to be eligible to participate in the Plan consistent with the intended purpose of the
Plan as set forth in the “RECITALS” above.

     1.17. “Employee” means an employee of an Employer.

     1.18. “Employer” means The TJX Companies, Inc. and its subsidiaries.

     1.19. “Employer Credit Account” means the unfunded book-entry account maintained by the
Administrator to reflect that portion, if any, of a Participant’s balance under the Plan which is
attributable to Employer Credits allocable to the Participant.

     1.20. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     1.21. “MIP (Corporate)” means the Management Incentive Plan award program for a fiscal year of
the Company as applied to Employees (other than those subject to Section 162(m) of the Code) whose
performance is measured by corporate-level performance of the Company and its subsidiaries.

     1.22. “Participant” means any Eligible Individual who participates in the Plan.

     1.23. “Performance Goal” means the performance goal applicable under the Company’s Management
Incentive Plan for corporate division associates with respect to a fiscal year of the Company in
which a Plan Year ends, or such other performance goal as determined by the Administrator from time
to time.

     1.24. “Period of Participation” means, with respect to any Participant, the period commencing
with the commencement of participation in the Plan and ending on the earlier of (A) the date on
which the Participant ceases to be employed by the Employer or to serve as a Director, as the case
may be, or (B) the date on which the Participant’s Accounts have been completely distributed,
withdrawn or forfeited. For the avoidance of doubt, “Period of Participation” will commence on the
date that amounts are first credited to the Account of a Participant, and can include periods
before or after the Effective Date.

     1.25. “Plan” means The TJX Companies, Inc. Executive Savings Plan as set forth herein and as
the same may be amended from time to time.

     1.26. “Plan Year” means the calendar year.

     1.27. “Separation from Service” and correlative terms mean a “separation from service” from
the Employer, determined in accordance with Treas. Regs. § 1.409A-1(h). The Administrator may, but
need not, elect in
writing, subject to the applicable limitations under

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Section 409A of the Code, any of the
special elective rules prescribed in Treas. Regs. § 1.409A-1(h) for purposes of determining whether
a “separation from service” has occurred. Any such written election shall be deemed part of the
Plan.

     1.28. “Specified Employee” means an individual determined by the Administrator or its delegate
to be a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code. The Administrator
may, but need not, elect in writing, subject to the applicable limitations under Section 409A of
the Code, any of the special elective rules prescribed in Treas. Regs. § 1.409A-1(i) for purposes
of determining “specified employee” status. Any such written election shall be deemed part of the
Plan.

     1.29. “Unforeseeable Emergency” shall mean an unforeseeable emergency as defined in Section
409A(a)(2)(B)(ii) of the Code, including a severe financial hardship to the Participant resulting
from an illness or accident of the Participant, the Participant ‘s spouse, or a dependent (as
defined in Section 152(a) of the Code) of the Participant, loss of the Participant ‘s property due
to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.

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Article 2.  Eligibility and Participation

     2.1. Eligibility to Participate. Each Employee or Director who is an Eligible
Individual may participate in the Plan.

     2.2. Termination of Eligibility. An individual shall cease to be eligible to
participate in the Plan when he or she is no longer an Eligible Individual (whether by reason of a
Separation from Service or by reason of a change in job classification or otherwise) but shall
again become eligible to participate if he or she again becomes an Eligible Individual. No
termination of eligibility shall affect Elective Deferrals for which the applicable election
deadline has passed.

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Article 3. Credits

     3.1. Timing and Form of Compensation Deferrals.

     (a) In General. A Participant may elect to defer Eligible Basic Compensation
and Eligible Bonuses (any such deferral accomplished in accordance with this Section 3.1, an
“Elective Deferral”) by making a timely election in accordance with this Section 3.1. Each
such election shall become irrevocable not later than the applicable election deadline. The
applicable election deadline for a deferral election is such deadline as the Administrator
shall establish, which deadline shall in no event be later than (except as provided at
Section 3.1(b) below) the following:

     (i) with respect to Eligible Basic Compensation or Eligible Bonuses other than
those described in subsection (ii) below, the last day of the calendar year
preceding the calendar year in which the services relating to the deferred Eligible
Basic Compensation or deferred Eligible Bonuses, as the case may be, are to be
performed; and

     (ii) with respect to an Eligible Bonus, if in the Administrator’s judgment the
Eligible Bonus will qualify under Section 409A as “performance-based compensation”
that has not yet become readily ascertainable, the date that is six (6) months
before the end of the performance period, but only if the Participant has been in
continuous employment with the Employer since the later of the beginning of the
performance period or the date the performance criteria are established.

In order to participate in the Plan for any Plan Year, an Eligible Individual must make an
affirmative election pursuant to this Section 3.1(a) (or Section 3.1(b), if applicable) in
respect of such Plan Year by the applicable election deadline for such Plan Year.

     (b) Special Election for Certain Newly Eligible Individuals. Notwithstanding
Section 3.1(a) above, an individual who first becomes an Eligible Individual after the
beginning of a calendar year by reason of (i) the commencement of employment by the Company,
(ii) the promotion to a position that results in the individual becoming an Eligible
Individual or (iii) an election or appointment to the Board of Directors, may, if permitted
by the Administrator, become a Participant for the remainder of such calendar

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year by executing an irrevocable deferral election (on a form prescribed by the
Administrator) with respect to his or her Eligible Basic Compensation and Eligible Bonuses
in respect of services to be performed during the remainder of the calendar year following
such election, provided that such election is submitted to the Administrator within thirty
(30) days of the date that he or she becomes an Eligible Individual. The amount that a
Participant may defer under this Section 3.1(b) with respect to Eligible Bonuses based on a
specified performance period may not exceed an amount equal to the total amount of the
Eligible Bonuses for the applicable performance period multiplied by the ratio of the number
of days remaining in the performance period after the effective date of the election over
the total number of days in the performance period applicable to the Eligible Bonuses. An
individual who already participates or is eligible to participate in (including, except to
the extent otherwise provided in Section 1.409A-2(a)(7) of the Treasury Regulations, an
individual who has any entitlement, vested or unvested, to payments under) any other
nonqualified deferred compensation plan that would be required to be aggregated with the
Plan for purposes of Section 1.409A-1(c)(2) of the Treasury Regulations shall not be treated
as eligible for the mid-year election rules of this Section 3.1(b) with respect to the Plan,
even if he or she had never previously been eligible to participate in the Plan itself.

     3.2. Limit on Elective Deferrals. With respect to an Employee, no more than twenty
percent (20%) of a Participant’s Eligible Basic Compensation for any pay period may be deferred
pursuant to an election under Section 3.1. A Director who participates in the Plan may elect to
defer up to one hundred percent (100%) of his or her Eligible Basic Compensation. Subject to the
foregoing, a Participant’s deferral election in respect of Eligible Basic Compensation may specify
different deferral percentages for different pay periods. Up to one hundred percent (100%) of a
Participant’s Eligible Bonuses may be deferred pursuant to an election under Section 3.1. The
Administrator shall establish and maintain a Basic Deferral Account and Bonus Deferral Account in
the name of each Participant to which shall be credited amounts equal to the Participant’s Elective
Deferrals attributable to deferred Eligible Basic Compensation and deferred Eligible Bonuses,
respectively, and which shall be further adjusted as provided in Article 4 to reflect any
withdrawals or distributions and any deemed earnings, losses or other charges allocable to such
Account. Elective Deferrals shall be credited to a Participant’s Compensation

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Deferral Account or Bonus Deferral Account as soon as practicable following the date the
related Eligible Basic Compensation or Eligible Bonuses, as the case may be, would have been
payable absent deferral. A Participant shall at all times be 100% vested in his or her Basic
Deferral Account and Bonus Deferral Account, subject to adjustment pursuant to Article 4.

     3.3. Employer Credits. The Administrator shall establish and maintain a separate
Employer Credit Account in the name of each Participant to which shall be credited amounts equal to
the Employer Credits, if any, allocable to the Participant and which shall be further adjusted as
provided in Article 4 to reflect any withdrawals, distributions or forfeitures and any deemed
earnings, losses or other charges allocable to the Employer Credit Account. The Employer Credits
allocable to a Participant shall be determined as follows:

     (a) Non-Performance-Based Employer Credits. For each Plan Year, for each
Participant who is an Assistant Vice President, Buyer III or Vice President, or who is a
Senior Vice President or above under age fifty (50), the Administrator shall credit to the
Participant’s Employer Credit Account an amount equal to ten percent (10%) of the
Participant’s Eligible Deferrals for the Plan Year. Subject to the following sentence, for
each Plan Year, for each Participant who is: (i) a Senior Vice President or above, and (ii)
age fifty (50) or older, the Administrator shall credit to the Participant’s Employer Credit
Account an amount equal to the following percentage of the Participant’s Eligible Deferrals
for the Plan Year, based on the Participant’s title as of the effective time of such credit:

	 	 	 	 	 
	Title	 	Percentage of Eligible Deferrals
	Senior Executive Vice
President, Division President and above 
	 	 	25	%
	
Executive Vice President
	 	 	20	%
	 
	 	 	 	 
	Senior Vice President
	 	 	15	%

The maximum number of Plan Year in respect of which any Participant shall be entitled to the
enhanced matching credits set forth in the immediately preceding sentence shall be fifteen
(15). For each Plan Year after the fifteenth Plan Year for which any Participant has
received such matching credits, the Administrator shall credit to the Participant’s Employer
Credit Account an amount equal to ten percent (10%) of the Participant’s Eligible Deferrals
for the Plan Year. The non-performance-based matching credits

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described in this subsection (a) shall be credited to the Participant’s Employer Credit
Account as of the same dates as the Eligible Deferrals to which such matching credits relate
and based on the age and title (to the extent applicable) of the Participant as of such
date.

     (b) Performance-Based Employer Credits at 90% or Greater of Performance Goals.

     (i) In General. For each Plan Year ending within a fiscal year of the
Company for which corporate performance produces a payout at or above target under
MIP (Corporate) awards as determined by the Administrator, the Administrator shall
credit to the Employer Credit Account of each eligible Participant with a title of
Assistant Vice President or Buyer III or above an amount (in addition to the credit
described at Section 3.3(a) above) equal to the following percentage of the
Participant’s Eligible Deferrals for the Plan Year, in each case based on the age
and title (to the extent applicable) of the Participant as of the date the Eligible
Deferrals to which such matching credits relate were credited pursuant to Section
3.2 above:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of Eligible Deferrals
	 	 	 	 	 	 	(based on MIP (Corporate) Performance
	 	 	 	 	 	 	as a Percentage of Target)
	Title	 	Age	 	90% MIP	 	100% MIP	 	125% MIP
	Senior Executive Vice
President, Division
President and above
	 	50 or older	 	 	25	%	 	 	50	%	 	 	75	%
	 
	 	Under 50	 	 	7.5	%	 	 	15	%	 	 	30	%
	Executive Vice President
	 	50 or older	 	 	15	%	 	 	30	%	 	 	50	%
	 
	 	Under 50	 	 	7.5	%	 	 	15	%	 	 	30	%
	Senior Vice President
	 	50 or older	 	 	12.5	%	 	 	25	%	 	 	40	%
	 
	 	Under 50	 	 	7.5	%	 	 	15	%	 	 	30	%
	Vice President
	 	50 or older	 	 	10	%	 	 	20	%	 	 	35	%
	 
	 	Under 50	 	 	7.5	%	 	 	15	%	 	 	30	%
	Assistant Vice President or Buyer III
	 	50 or older	 	 	7.5	%	 	 	15	%	 	 	20	%
	 

	 	Under 50	 	 	7.5	%	 	 	15	%	 	 	15	%

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The maximum number of Plan Years in respect of which any Participant with a title of
Assistant Vice President or Buyer III or above shall be entitled to an enhanced
matching credit pursuant to the immediately preceding sentence as a result of having
attained age 50 shall be fifteen (15). For each Plan Year after the fifteenth Plan
Year for which any Participant has received such enhanced matching credits, the
Administrator shall credit to the Participant’s Employer Credit Account an amount
equal to the percentage of the Participant’s Eligible Deferrals for the Plan Year
indicated in the table above for a Participant with the same title as such
individual and an age under 50.

     (ii) Pro-ration. If corporate performance produces a MIP (Corporate)
payout between ninety percent (90%) and one hundred percent (100%) of target, the
Employer Credit described in this Section 3.2(b) shall be an amount equal to: (A)
the percentage of the Participant’s Eligible Deferrals specified in the table under
subsection (i) above for achievement of ninety percent (90%) of MIP (Corporate)
target; plus (B) an additional amount equal to the Participant’s Eligible Deferrals,
multiplied by the product of (1) a number equal to the difference between the
percentage specified in such table above for achievement of one hundred percent
(100%) of MIP (Corporate) target over the percentage specified for achievement of
ninety percent (90%) of target, (2) the percentage-point excess of MIP (Corporate)
performance over ninety percent (90%) of target, and (3) ten (10). For example, if
corporate performance is such to produce MIP (Corporate) payouts equal to
ninety-five percent (95%) of target, the performance-based Employer credit described
in this Section 3.3(b) for a Participant under age fifty (50) shall be equal to the
Participant’s Eligible Deferrals multiplied by 11.25% (7.5%, plus 7.5 (15 less 7.5),
multiplied by 5% (95% less 90%), multiplied by 10).

     If corporate performance produces a MIP (Corporate) payout between one hundred
percent (100%) and one hundred twenty-five percent (125%) of target, the Employer
Credit described in this Section 3.2(b) shall be an amount equal to: (A) the
percentage of the Participant’s Eligible Deferrals specified in the table under
subsection (i) above for achievement of one hundred percent (100%) of

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MIP (Corporate) target; plus (B) an additional amount equal to the
Participant’s Eligible Deferrals, multiplied by the product of (1) a number equal to
the difference between the percentage specified in such table above for achievement
of one hundred twenty-five percent (125%) of MIP (Corporate) target over the
percentage specified for achievement of one hundred percent (100%) of target, (2)
the percentage-point excess of MIP (Corporate) performance over one hundred percent
(100%) of target, and (3) four (4). For example, if corporate performance is such
to produce MIP (Corporate) payouts equal to one hundred twenty percent (120%) of
target, the performance-based Employer credit described in this Section 3.3(b) for a
Participant under age fifty (50) with a title of vice president or above shall be
equal to the Participant’s Eligible Deferrals multiplied by 27% (15%, plus 15 (30
less 15) multiplied by 20% (120% less 100%), multiplied by 4).

     (iii) Timing of Performance-Based Employer Credits. The
performance-based Employer Credit described in this Section 3.3(b) shall be credited
as soon as practicable following the close of the fiscal year and only to the
Employer Credit Accounts of those Participants who were employed by the Employer on
the last day of such fiscal year.

     3.4. Vesting of Employer Credit Accounts. A Participant shall become vested in the
balance of his or her Employer Credit Account, subject to adjustment pursuant to Article 4, in
accordance with the following vesting schedule:

	 	 	 	 	 
	Completed Period of Participation	 	Vested Percentage
	Fewer than five years
	 	 	0	%
	Five years or more,
but fewer than ten years
	 	 	50	%
	Ten or more years
	 	 	100	%

     Notwithstanding the foregoing, if a Participant who is 50% but not 100% vested in his or her
Employer Credit Account takes an in-service withdrawal under Section 5.2, the Participant’s vested
interest in his or her Employer Credit Account as of any subsequent date prior to full vesting (the
“determination date”) shall be

1/2(AB+W) - W

-12-

 

     where “AB” is the balance of the Employer Credit Account as of the determination date and “W”
is that portion of the withdrawal (or withdrawals, if more than one) under Section 5.2 that was
attributable to the Employer Credit Account.

     In addition, a Participant will become immediately vested in his or her Employer Credit
Account, subject to adjustment pursuant to Article 4, upon attainment by the Participant of age
fifty-five (55), upon Separation from Service by reason of Disability (as determined by the
Administrator) or death, or upon the earlier occurrence of a Change of Control.

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Article 4.  Adjustments to Accounts Deemed Investments

     4.1. Deemed Investment Experience. Each Account shall be adjusted on such periodic
basis and subject to such rules as the Administrator may prescribe to reflect the investment
performance of the notional investments in which the Account is deemed invested pursuant to Section
4.3, including without limitation any interest, dividends or other distributions deemed to have
been received with respect to such notional investments.

     4.2. Distributions and Withdrawals. As of the date of any distribution or withdrawal
hereunder, the Administrator shall reduce the affected Participant’s Accounts to reflect such
distribution or withdrawal. Any such adjustment shall reduce ratably each affected Account’s share
of each of the notional investments in which the Account is deemed to be invested, except as the
Administrator may otherwise determine.

     4.3. Notional Investment of Accounts. The Administrator shall from time to time
specify one or more mutual funds or other investment alternatives that shall be available as
measures of notional investment return for Accounts under the Plan (each such specified
alternative, a “measuring investment option”). Subject to such rules and limitations as the
Administrator may from time to time prescribe, each Participant shall have the right to have the
balance of his or her Accounts treated for all purposes of the Plan as having been notionally
invested in one or more measuring investment options and to change the notional investment of his
or her Accounts from time to time. The Administrator shall have complete discretion at any time
and from time to time to eliminate or add a measuring investment option. The Administrator may
designate one or more measuring investment options as the default in which a Participant’s Accounts
shall be deemed to be invested to the extent the Participant does not affirmatively, timely and
properly provide other notional investment directions.

     Nothing in this Section 4.3 shall be construed as giving any Participant the right to cause
the Administrator, the Employer or any other person to acquire or dispose of any investment, to set
aside (in trust or otherwise) money or property to meet the Employer’s obligations under the Plan,
or in any other way to fund the Employer’s obligations under the Plan. The sole function of the
notional investment provisions of this Section 4.3 is to provide a computational mechanism for
measuring the Employer’s unfunded contractual deferred compensation obligation to Participants.
Consistent with the foregoing, the Employer may (although it shall

-14-

 

not be obligated to do any of the following): (i) establish and fund a so-called “rabbi”
trust or similar trust or account to hold and invest amounts to help the Employer meet its
obligations under the Plan; and (ii) if it establishes and funds such a trust or account, cause the
trustee or other person holding the assets in such trust or account to invest them in a manner that
is consistent with the notional investment directions of Participants under the Plan.

     Each reference in this Section 4.3 to a Participant shall be deemed to include, where
applicable, a reference to a Beneficiary.

     4.4. Expenses. All expenses associated with the Plan shall be paid by the Employer;
but if a trust or account is established as described at Section 4.3 above, the Employer may
provide that expenses associated with that trust or account shall be paid out of the assets held
therein.

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Article 5. Entitlement to and Timing of Distributions

     5.1. Timing of Distributions as a result of Separation from Service, Death.

     (a) Basic Deferral Account and Bonus Deferral Account. A Participant’s Basic
Deferral Account and Bonus Deferral Account will be distributed, in the form and amount
specified in Article 6, upon the earliest to occur of (i) the date specified by the
Participant pursuant to a distribution election made under this Section 5.1, or (ii) the
Participant’s Separation from Service for any reason. When the Participant makes a deferral
election in respect of Eligible Basic Compensation for a Plan Year beginning on or after
January 1, 2008 or Eligible Bonuses payable on or after January 1, 2009 under Sections 3.1
and 3.2, he or she shall also elect the time at which payment of the amounts credited to the
Basic Deferral Account and Bonus Deferral Account, respectively, established in respect of
such Plan Year shall commence. The earliest time a Participant may elect to have payment
commence in respect of any such amounts credited to the Participant’s Basic Deferral Account
or Bonus Deferral Account shall be January 1st of the second calendar year commencing after
the date such amounts were credited to such Accounts. A Participant may subsequently elect
to change his or her prior election of the date of commencement of payments from his or her
Basic Deferral Account or Bonus Deferral Account, as the case may be, but only if such
change (i) shall not take effect for at least twelve (12) months after the date on which the
subsequent election is made; (ii) is made at least twelve (12) months prior to the date on
which the first payment was scheduled to be made (“prior election payment date”); and (iii)
results in a new payment date that is delayed by at least five (5) years, as measured from
the prior election payment date. Any such change of the time of commencement of payment
shall be made in the manner specified by the Administrator. In the absence of a timely and
proper election as to the time of distribution pursuant to this Section 5.1(a) on a form
acceptable to the Administrator, the Participant shall be deemed to have elected
distribution under this Section 5.1(a) upon Separation from Service. Distribution of the
Participant’s Basic Deferral Account and Bonus Deferral Account shall be made (or commence,
if installments have been properly elected under Section 6.2(b)(ii) below) upon or as soon
as practicable following the date specified, or deemed to have been specified, in this

-16-

 

Section 5.1(a), subject to the last sentence of this Section 5.1 in the case of a
Specified Employee. With respect to amounts credited to a Participant’s Basic Deferral
Account for Plan Years commencing on or after January 1, 2005 and before January 1, 2008,
the Administrator may, in its sole discretion, provide an opportunity to elect distribution
upon a date specified by the Participant, to the extent that such date occurs prior to the
Participant’s Separation from Service, pursuant to an election permitted under applicable
transition relief rules promulgated by the Internal Revenue Service under Section 409A of
the Code. Any such election shall be made, if at all, by the deadline and on the form
prescribed by the Administrator.

     (b) Employer Credit Account. A Participant’s vested Employer Credit Account
will be valued and paid in accordance with the provisions of Article 6 upon the earliest to
occur of (i) the Participant’s death, (ii) the Participant’s Separation from Service by
reason of Disability (as determined by the Administrator), or (iii) the later of (A) the
Participant’s Separation from Service for any reason, and (B) the Participant’s attainment
of age 55; provided, that if the Participant’s Separation from Service is for cause (as
determined by the Administrator), no portion of the Participant’s Employer Credit Account
shall be paid and the entirety of the Employer Credit Account shall instead be immediately
forfeited. Distribution of the Participant’s vested Employer Credit Account shall be made
(or commence, if installments have been properly elected under Section 6.2(b)(ii) below)
upon or as soon as practicable following the date specified in Section 5.1(b), subject to
the last sentence of this Section 5.1 in the case of a Specified Employee.

     Notwithstanding any provision of this Section 5.1 or any other provision of the Plan to the
contrary, in the case of a Participant who is an individual determined by the Administrator or its
delegate to be a Specified Employee, payment of such Participant’s benefit as a result of a
Separation from Service (other than by reason of death) shall not commence until the date
coincident with or next following the date which is six (6) months and one (1) day after the date
of such Separation from Service or, if earlier than the end of such period, the date of death of
such Participant.

     Notwithstanding any provision of this Section 5.1 or any other provision of the Plan to the
contrary, the Company may delay distributions to any Participant under the Plan to the extent

-17-

 

permitted under Treas. Regs. §1.409A-2(b)(7)(i) to the extent that the Company reasonably
anticipates that if the distribution were made at the time specified in Section 5.1(a) above, the
Company’s deduction with respect to such distribution would not be permitted due to the application
of Section 162(m) of the Code, provided that the distribution is made either during the
Participant’s first taxable year in which the Company reasonably anticipates, or should reasonably
anticipate, that if the payment is made during such year, the deduction of such payment will not be
barred by application of Section 162(m) of the Code or during the period beginning with the date of
the Participant’s Separation from Service (or such later date as required under Treas. Regs.
§1.409A-2(b)(7)(i)) and ending on the later of the last day of the taxable year of the Company in
which such date occurs or the 15th day of the third month following such date. For the avoidance
of doubt, the Participant shall have no election with respect to the timing of the payment under
this paragraph.

     5.2. Unforeseeable Emergency. In the event of an Unforeseeable Emergency, the
Participant may apply to the Administrator for the distribution of all or any part of his or her
vested Account. The Administrator shall consider the circumstances of each case and shall have the
right, in its sole discretion, to allow or disallow the application in whole or in part. The
Administrator shall have the right to require such Participant to submit such documentation as it
deems appropriate for the purpose of determining the existence of an Unforeseeable Emergency.
Distributions under this Section 5.2 in connection with the occurrence of an Unforeseeable
Emergency shall be made as soon as practicable after the Administrator’s determination under
Section 5.2.

-18-

 

Article 6. Amount and Form of Distributions

     6.1. Amount of Distributions.

     (a) Basic Deferral Account. The amount distributable to the Participant under
Section 5.1(a) in respect of his or her Basic Deferral Account shall be the balance of the
Participant’s Basic Deferral Account determined as of the date of distribution, unless a
timely installment election has been submitted pursuant to Section 6.2 below in which case
the amount of each installment shall be calculated in accordance with Section 6.2 below.

     (b) Bonus Deferral Account. The amount distributable to the Participant under
Section 5.1(a) in respect of his or her Bonus Deferral Account shall be the balance of the
Participant’s Bonus Deferral Account determined as of the date of distribution, unless a
timely installment election has been submitted pursuant to Section 6.2 below in which case
the amount of each installment shall be calculated in accordance with Section 6.2 below.

     (c) Employer Credit Account. The amount distributable to the Participant under
Section 5.1(b) in respect of his or her Employer Credit Account shall be the balance of the
Participant’s Employer Credit Account determined as of the date of distribution, unless a
timely installment election has been submitted pursuant to Section 6.2 below in which case
the amount of each installment shall be calculated in accordance with Section 6.2 below.

     (d) Distributions upon Unforeseeable Emergency. The amount of a distribution
to the Participant under Section 5.2 shall be determined by the Administrator, provided that
in no event shall the aggregate amount of any distribution under Section 5.2 exceed the
lesser of the vested portion of the Participant’s Account or the amount determined by the
Administrator to be necessary to alleviate the Participant’s Unforeseeable Emergency
(including any taxes estimated by the Administrator to be due with respect to the
distribution) and which is not reasonably available from other resources of the Participant.
A withdrawal under Section 5.2 shall be allocated between the Participant’s Basic Deferral
Account, Bonus Deferral Account and the vested portion

-19-

 

of the Participant’s Employer Credit Account pro rata based on the balance credited to
the vested portion of each such Account immediately prior to the hardship distribution.

     6.2. Form of Payment.

     (a) Cash Payment. All payments under the Plan shall be made in cash.

     (b) Lump sums; installments.

     (i) Except as provided at (ii) immediately below, all distributions under the
Plan shall be made in the form of a lump sum payment.

     (ii) A Participant who Separates from Service (other than by reason of death or
for cause (as determined by the Administrator)) upon or after attaining age 55 may
elect, in accordance with this Section 6.2(b)(ii), to have amounts distributable
under Section 6.1 paid either as a lump sum or in annual installments over a period
of not more than ten years. In the absence of a proper advance election to have
such amounts paid in installments, amounts distributable under Section 6.1 shall be
paid as a lump sum. With respect to amounts deferred for any Plan Year beginning on
or after January 1, 2005 and prior to January 1, 2008, any election by a Participant
to have amounts distributable under Section 6.1 paid in installments (an
“installment election”) must be delivered to the Administrator, in a form acceptable
to the Administrator, not later than the earlier of the date prescribed by the
Administrator or the latest date permissible under transition relief promulgated by
the Internal Revenue Service under Section 409A. With respect to amounts deferred
for any Plan Year beginning on or after January 1, 2008, any election by a
Participant to have amounts distributable under Section 6.1 paid in installments (an
“installment election”) must be delivered to the Administrator, in a form acceptable
to the Administrator, not later than the “applicable election deadline” for such
Plan Year (as defined in Section 3.1).

     (iii) Where an Account is payable in installments, the amount of each
installment shall be determined by dividing the vested portion of the Account (as
adjusted through the date of such installment distribution) by the number of
installments remaining to be paid. The Administrator may require that the balance
of Accounts for which an installment election is made must exceed a dollar minimum
specified by the Administrator. For the avoidance of doubt, any

-20-

 

installments payable hereunder shall be treated as a single payment pursuant to
Treas. Regs. § 1.409A-2(b)(2)(iii).

     (c) Employer’s Obligation. All payments under the Plan not made from a trust
or account described in Section 4.3 above shall be made by the Employer.

     6.3. Death Benefits. Notwithstanding any other provision of the Plan, if a
Participant dies before distribution of his or her Account has occurred or (if payable in
installments) has been completed, the entire value of the Participant’s vested Account shall be
paid, as soon as practicable following the Participant’s death, in a lump sum to the Participant’s
Beneficiary or Beneficiaries.

-21-

 

Article 7.  Beneficiaries; Participant Data

     7.1. Designation of Beneficiaries. Subject to such rules and limitations as the
Administrator may prescribe, each Participant from time to time may designate one or more persons
(including a trust) to receive benefits payable with respect to the Participant under the Plan upon
or after the Participant’s death, and may change such designation at any time. Each designation
will revoke all prior designations by the same Participant, shall be in a form prescribed by the
Administrator, and will be effective only when filed in writing with the Administrator during the
Participant’s lifetime.

     In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is
due to a Beneficiary there is no living Beneficiary validly named by the Participant, the
Administrator shall cause such benefit to be paid to the Participant’s estate. In determining the
existence or identity of anyone entitled to a benefit payment, the Administrator may rely
conclusively upon information supplied by the Participant’s personal representative, executor or
administrator.

     7.2. Available Information; Missing Persons. Any communication, statement or notice
addressed to a Participant or to a Beneficiary at his or her last post office address as shown on
the Administrator’s records shall be binding on the Participant or Beneficiary for all purposes of
the Plan. A benefit shall be deemed forfeited if the Administrator is unable to locate the
Participant or Beneficiary to whom payment is due, after diligent effort, for a period of at least
three (3) years, provided, however, that the Administrator shall have the authority (but not the
obligation) to reinstate such benefit upon the later discovery of a proper payee for such benefit,
but solely to the extent permitted under Section 409A. Mailing of a notice in writing, by
certified or registered mail, to the last known address of the Participant and the Beneficiaries
(if the addresses of such Beneficiaries are known to the Administrator) not less frequently than
once each year for the three-year period shall be considered a diligent effort for this purpose.
The Administrator shall not be obliged to search for any Participant or Beneficiary beyond the
sending of a registered letter to such last known address. If a benefit payable to an un-located
Participant or Beneficiary is subject to escheat pursuant to applicable state law, neither the
Administrator, the Company, nor the Employer shall be liable to any person for any payment made in
accordance with such law.

-22-

 

Article 8.  Administration

     8.1. Administrative Authority. Except as otherwise specifically provided herein, the
Plan shall be administered by the Administrator. The Administrator shall have full discretionary
authority to construe and administer the terms of the Plan and its actions under the Plan shall be
binding on all persons. Without limiting the foregoing, the Administrator shall have full
discretionary authority, consistent with the requirements of Section 409A of the Code, to:

     (a) Resolve and determine all disputes or questions arising under the Plan, and to
remedy any ambiguities, inconsistencies or omissions in the Plan.

     (b) Adopt such rules of procedure and regulations as in its opinion may be necessary
for the proper and efficient administration of the Plan and as are consistent with the Plan.

     (c) Implement the Plan in accordance with its terms and the rules and regulations
adopted as above.

     (d) Make determinations with respect to the eligibility of any person to participate in
the Plan or derive benefits hereunder and make determinations concerning the crediting and
adjustment of Accounts.

     (e) Appoint such persons or firms, or otherwise act to obtain such advice or
assistance, as it deems necessary or desirable in connection with the administration and
operation of the Plan, and the Administrator shall be entitled to rely conclusively upon,
and shall be fully protected in any action or omission taken by it in good faith reliance
upon, the advice or opinion of such firms or persons.

     8.2. Litigation. Except as may be otherwise required by law, in any action or
judicial proceeding affecting the Plan, no Participant or Beneficiary shall be entitled to any
notice or service of process, and any final judgment entered in such action shall be binding on all
persons interested in, or claiming under, the Plan.

     8.3. Claims Procedure. The Administrator shall establish claims procedures under the
Plan consistent with the requirements of Section 503 of ERISA.

-23-

 

Article 9.  Amendment

     9.1. Right to Amend. The Administrator, by written instrument executed by a duly
authorized representative, shall have the right to amend the Plan, at any time and with respect to
any provisions hereof; provided, however, that no such amendment shall materially or adversely
affect the rights of any Participant with respect to Compensation Deferrals and Employer Credits
already made under the Plan as of the date of such amendment, except as permitted under Section
409A.

     9.2. Amendments to Ensure Proper Characterization of Plan. The Plan, as it applies to
Employees, is intended to be an unfunded “top-hat” plan under sections 201(2), 301(a)(3) and
401(a)(1) of ERISA and therefore participation in the Plan by Employees shall be limited to
Employees who (i) qualify for inclusion in a “select group of management or highly compensated
employees” within the meaning of sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA and
(ii) are designated by the Company as being eligible to participate. If the Administrator
determines that a Participant no longer qualifies as being a member of a select group of management
or highly compensated employees, then the compensation deferral elections made by such Participant
in accordance with the provisions of the Plan will continue for the remainder of the Plan Year.
However, no additional amounts shall be deferred and credited to the Account of such individual
under the Plan for any future Plan Year until such time as the individual is again determined to be
eligible to participate in the Plan and makes a new election under the provisions of the Plan;
except that all prior amounts credited to the Account of such individual shall continue to be
adjusted for earnings or losses pursuant to the other provisions of the Plan until fully
distributed.

-24-

 

Article 10.  Termination

     10.1. Right of the Company to Terminate or Suspend Plan. The Company reserves the
right at any time to terminate the Plan or to suspend the operation of the Plan for a fixed or
indeterminate period of time, by action of the Administrator. In the event of a suspension of the
Plan, the Administrator shall continue all aspects of the Plan, other than Compensation Deferrals
and Employer Credits, during the period of the suspension, in which event payments hereunder will
continue to be made during the period of the suspension in accordance with Articles 5 and 6.

     10.2. Allocation and Distribution. This Section 10.2 shall become operative on a
complete termination of the Plan. The provisions of this Section 10.2 shall also become operative
in the event of a partial termination of the Plan, as determined by the Administrator, but only
with respect to that portion of the Plan attributable to the Participants to whom the partial
termination is applicable. Upon the effective date of any such event, notwithstanding any other
provisions of the Plan, no persons who were not theretofore Participants shall be eligible to
become Participants. Each Participant’s Accounts as they then exist will be maintained, credited
and paid pursuant to the provisions of this Plan and the Participant’s elections. Notwithstanding
the foregoing, the Company may provide for the accelerated distribution of all accounts upon
termination of the Plan as a whole or with respect to any Participant or group of Participants, but
only to the extent the Company determines this to be permissible under Section 409A.

-25-

 

Article 11.  Miscellaneous

     11.1. Limitation on Liability of Employer. The Employer’s sole liability under the
Plan shall be to pay benefits under the Plan as expressly set forth herein and subject to the terms
hereof. Subject to the preceding sentence, neither the establishment or administration of the
Plan, nor any modification nor the termination or suspension of the Plan, nor the creation of any
account under the Plan, nor the payment of any benefits under the Plan, nor any other action taken
by the Employer or the Administrator with respect to the Plan shall be construed as giving to any
Participant, any Beneficiary or any other person any legal or equitable right against the
Administrator, the Employer, or any officer or employer thereof. Without limiting the foregoing,
neither the Administrator nor the Employer in any way guarantees any Participant’s or Beneficiary’s
Account from loss or decline for any reason.

     11.2. Construction. If any provision of the Plan is held to be illegal or void, such
illegality or invalidity shall not affect the remaining provisions of the Plan, but the illegal or
void provision shall be fully severable and the Plan shall be construed and enforced as if said
illegal or void provision had never been inserted herein. For all purposes of the Plan, where the
context admits, the singular shall include the plural, and the plural shall include the singular.
Headings of Articles and Sections herein are inserted only for convenience of reference and are not
to be considered in the construction of the Plan. The laws of the Commonwealth of Massachusetts
shall govern, control and determine all questions of law arising with respect to the Plan and the
interpretation and validity of its respective provisions, except where those laws are preempted by
the laws of the United States. Participation under the Plan will not give any Participant the
right to be retained in the service of the Employer, nor shall any loss or claimed loss of present
or future benefits, whether accrued or unaccrued, constitute an element of damages in any claim
brought in connection with a Participant’s Separation from Service.

     No provision of the Plan shall be interpreted so as to give any individual any right in any
assets of the Employer which right is greater than the rights of a general unsecured creditor of
the Employer.

     11.3. Taxes. Notwithstanding any other provision of the Plan, all distributions and
withdrawals hereunder shall be subject to reduction for applicable income tax withholding and other
legally or contractually required withholdings. To the extent amounts credited under the

-26-

 

Plan are includible in “wages” for purposes of Chapter 21 of the Code, or are otherwise
includible in taxable income, prior to distribution or withdrawal the Employer may deduct the
required withholding with respect to such wages or income from compensation currently payable to
the Participant or the Administrator may reduce the Participant’s Accounts hereunder or require the
Participant to make other arrangements satisfactory to the Administrator for the satisfaction of
the Employer’s withholding obligations. If at any time this Plan is found to fail to meet the
requirements of Section 409A, the Administrator may distribute the amount required to be included
in the Participant’s income as a result of such failure. Any amount distributed under the
immediately preceding sentence will be charged against amounts owed to the Participant hereunder
and offset against future payments hereunder. For the avoidance of doubt, the Participant will
have no discretion, and will have no direct or indirect election, as to whether a payment will be
accelerated under this Section 11.3.

     11.4. Section 409A Transition Relief. The Company may, by action of the
Administrator, authorize changes to time and form of payment elections made under the Plan to the
extent consistent with the transition rules, and during the transition relief period, provided
under Section 409A and guidance issued thereunder by the Internal Revenue Service.

     11.5. Spendthrift Provision. No amount payable to a Participant or a Beneficiary
under the Plan will, except as otherwise specifically provided by law, be subject in any manner to
anticipation, alienation, attachment, garnishment, sale, transfer, assignment (either at law or in
equity), levy, execution, pledge, encumbrance, charge or any other legal or equitable process, and
any attempt to do so will be void; nor will any benefit be in any manner liable for or subject to
the debts, contracts, liabilities, engagements or torts of the person entitled thereto. Nothing
herein shall be construed as limiting the Employer’s right to cause its obligations hereunder to be
assumed by a successor to all or a portion of its business or assets.

-27-

 

     IN WITNESS WHEREOF, the Employer has caused the Plan to be executed and its seal to be affixed
hereto, effective as of the 1st day of January, 2008.

ATTEST/WITNESS

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	/s/
Judith Casali 	 	 	 	THE TJX COMPANIES, INC	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Print Name:
	 	Judith Casali 	 	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	/s/
Donald G. Campbell 	 	(SEAL)	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Print Name:	 	 
	 
	 	 	 	 	 	 	 	Donald G. Campbell 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Date: 	 	3/13/08 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

-28-

 

EXHIBIT A

Definition of “Change of Control”

“Change of Control” shall mean the occurrence of any one of the following events:

     (a) there occurs a change of control of the Company of a nature that would be required to be
reported in response to Item 1(a) of the Current Report on Form 8-K pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (the “Exchange Act”) or in any other filing under the
Exchange Act; provided, however, that if the Participant or a Participant Related Party is the
Person or a member of a group constituting the Person acquiring control, a transaction shall not be
deemed to be a Change of Control as to a Participant unless the Committee shall otherwise determine
prior to such occurrence; or

     (b) any Person other than the Company, any wholly-owned subsidiary of the Company, or any
employee benefit plan of the Company or such a subsidiary becomes the owner of 20% or more of the
Company’s Common Stock and thereafter individuals who were not directors of the Company prior to
the date such Person became a 20% owner are elected as directors pursuant to an arrangement or
understanding with, or upon the request of or nomination by, such Person and constitute at least
1/4 of the Company’s Board of Directors; provided, however, that unless the Committee shall
otherwise determine prior to the acquisition of such 20% ownership, such acquisition of ownership
shall not constitute a Change of Control as to a Participant if the Participant or a Participant
Related Party is the Person or a member of a group constituting the Person acquiring such
ownership; or

     (c) there occurs any solicitation or series of solicitations of proxies by or on behalf of
any Person other than the Company’s Board of Directors and thereafter individuals who were not
directors of the Company prior to the commencement of such solicitation or series of solicitations
are elected as directors pursuant to an arrangement or understanding with, or upon the request of
or nomination by, such Person and constitute at least 1/4 of the Company’s Board of Directors; or

     (d) the Company executes an agreement of acquisition, merger or consolidation which
contemplates that (i) after the effective date provided for in such agreement, all or substantially
all of the business and/or assets of the Company shall be owned, leased or otherwise controlled by
another Person and (ii) individuals who are directors of the Company when such agreement is
executed shall not constitute a majority of the board of directors of the survivor or successor
entity immediately after the effective date provided for in such agreement; provided, however, that
unless otherwise determined by the Committee, no transaction shall constitute a Change of Control
as to a Participant if, immediately after such transaction, the Participant or any Participant
Related Party shall own equity securities of any surviving corporation (“Surviving Entity”) having
a fair value as a percentage of the fair value of the equity securities of such Surviving Entity
greater than 125% of the fair value of the equity securities of the Company owned by the
Participant and any Participant Related Party immediately prior to such transaction, expressed as a
percentage of the fair value of all equity securities of the Company

-29-

 

immediately prior to such transaction (for purposes of this paragraph ownership of equity
securities shall be determined in the same manner as ownership of Common Stock); and provided,
further, that, for purposes of this paragraph (d), if such agreement requires as a condition
precedent approval by the Company’s shareholders of the agreement or transaction, a Change of
Control shall not be deemed to have taken place unless and until such approval is secured (but upon
any such approval, a Change of Control shall be deemed to have occurred on the date of execution of
such agreement).

In addition, for purposes of this Exhibit A the following terms have the meanings set forth below:

     “Common Stock” shall mean the then outstanding Common Stock of the Company plus, for purposes
of determining the stock ownership of any Person, the number of unissued shares of Common Stock
which such Person has the right to acquire (whether such right is exercisable immediately or only
after the passage of time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock shall not include
shares of Preferred Stock or convertible debt or options or warrants to acquire shares of Common
Stock (including any shares of Common Stock issued or issuable upon the conversion or exercise
thereof) to the extent that the Board of Directors of the Company shall expressly so determine in
any future transaction or transactions.

     A Person shall be deemed to be the “owner” of any Common Stock:

     (i) of which such Person would be the “beneficial owner,” as such term is defined in
Rule 13d-3 promulgated by the Securities and Exchange Commission (the “Commission”) under
the Exchange Act, as in effect on March 1, 1989; or

     (ii) of which such Person would be the “beneficial owner” for purposes of Section 16 of
the Exchange Act and the rules of the Commission promulgated thereunder, as in effect on
March 1, 1989; or

     (iii) which such Person or any of its affiliates or associates (as such terms are
defined in Rule 12b-2 promulgated by the Commission under the Exchange Act, as in effect on
March 1, 1989) has the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or options or otherwise.

     “Person” shall have the meaning used in Section 13(d) of the Exchange Act, as in effect on
March 1, 1989.

A “Participant Related Party” shall mean, with respect to a Participant, any affiliate or associate
of the Participant other than the Company or a Subsidiary of the Company. The terms “affiliate”
and “associate” shall have the meanings ascribed thereto in Rule 12b-2 under the Exchange Act (the
term “registrant” in the definition of “associate” meaning, in this case, the Company).

     “Subsidiary” shall mean any corporation or other entity (other than the Company) in an
unbroken chain beginning with the Company if each of the entities (other than the last entity in

-30-

 

the unbroken chain) owns stock or other interests possessing 50% or more of the total combined
voting power of all classes of stock or other interests in one of the other corporations or other
entities in the chain.

     “Committee” shall mean the Executive Compensation Committee of the Board of Directors of the
Company.

     “Company” shall mean The TJX Companies, Inc.

     Initially capitalized terms not defined above shall have the meanings assigned to those terms
in Article I of the Plan.

-31-exv10w2

 

Exhibit 10.2

SECURITY AGREEMENT

          This SECURITY AGREEMENT, dated as of February 26, 2008 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, this “Security Agreement”), made by
each of the undersigned companies, as debtor and debtor in possession (each, a “Grantor”
and collectively, the “Grantors”) and DEUTSCHE BANK TRUST COMPANY AMERICAS, in its capacity
as collateral agent (the “Collateral Agent”) for its benefit and the benefit of (i) the
Lenders and the Administrative Agent under the Credit Agreement hereinafter referred to
(collectively, the “Bank Creditors”) and (ii) the Lenders and/or Affiliates thereof that
are holders of the Approved Secured Derivative Transaction Liabilities (as defined in the Credit
Agreement hereinafter referred to) as of the date hereof (even if the respective Lender
subsequently ceases to be a Lender under the Credit Agreement for any reason) so long as any such
Lender or Affiliate continues to hold any Approved Secured Derivative Transaction Liability
(collectively the “Other Creditors”, and together with the Bank Creditors, the “Secured
Parties” or the “Secured Party”).

W I T N E S S E T H:

          WHEREAS, on February 22, 2008, Wellman, Inc., a Delaware corporation (“Wellman”), and
the other Grantors filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy
Code with the United States Bankruptcy Court for the Southern District of New York (together with
such other court having jurisdiction over the Chapter 11 Cases (as hereinafter defined), the
“Bankruptcy Court”), which cases are jointly administered under Case No. 08-10595 (each, a
“Chapter 11 Case” and collectively, the “Chapter 11 Cases”);

          WHEREAS, Wellman and the other Grantors continue to operate their respective businesses as
debtors and debtors in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code;

          WHEREAS, pursuant to that certain Credit Agreement dated as of February 26, 2008 among Wellman
and the other Borrowers party thereto (each, including Wellman, a “Borrower”, and
collectively, the “Borrowers”), as debtors and debtors in possession, the financial
institutions party thereto (the “Lenders”) and Deutsche Bank Trust Company Americas, as
Administrative Agent and Collateral Agent for the Lenders thereunder (the “Administrative
Agent”) (including all annexes, exhibits and schedules thereto, as from time to time amended,
restated, supplemented or otherwise modified, the “Credit Agreement”), the Lenders have
agreed to make the Loans and to incur Letter of Credit Obligations on behalf of Borrowers;

          WHEREAS, Warehouse Associates, Inc. USA, a South Carolina corporation, MRF, Inc., a Delaware
corporation, Josdav Inc., a Delaware corporation, and MED Resins, Inc., a Delaware corporation,
have entered into that certain Subsidiary Guarantee Agreement dated as of February 26, 2008 in
order to guarantee the Secured Obligations hereinafter referred to; and

          WHEREAS, in order to induce the Agent to enter into the Credit Agreement and the Credit
Documents and to induce the Agent and the Lenders to make the Loans and to incur Letter of Credit
Obligations as provided for in the Credit Agreement, the Grantors have agreed to grant a
continuing Lien on the Collateral (as hereinafter defined) to secure the Secured Obligations;

 

 

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

          1. DEFINED TERMS.

          (a) All capitalized terms used but not otherwise defined herein have the meanings given to
them in the Credit Agreement. All other terms contained in this Security Agreement, unless the
context indicates otherwise, have the meanings provided for by the Code to the extent the same are
used or defined therein.

          (b) “Capital Security” shall mean (a) any share of capital stock of or other unit of
ownership interest in any Person and (b) any security convertible into, or any option, warrant or
other right to acquire, any share of capital stock of or other unit of ownership interest in such
Person.

          (c) “Domestic Subsidiary” means any Subsidiary other than a Foreign Subsidiary.

          (d) “Foreign Subsidiary” means any Subsidiary that is organized under the laws of a
jurisdiction other than the United States of America or any state thereof, the District of
Columbia, the United States Virgin Islands or Puerto Rico.

          (e) “Secured Obligations” shall mean (i) the full and prompt payment when due (whether
at the stated maturity, by acceleration or otherwise) of all obligations (including, without
limitation, all “Obligations” as such term is defined in the Credit Agreement) and liabilities of
Borrowers and each Subsidiary Guarantor now existing or hereafter incurred under, arising out of,
or in connection with the Credit Agreement or any other Credit Document to which any Borrower or
any Subsidiary Guarantor is a party and the due performance and compliance by each Borrower and
each Subsidiary Guarantor with all of the terms, conditions and agreements contained in each such
Credit Document (all such obligations and liabilities being herein collectively called the
“Credit Agreement Obligations”); (ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of the Approved Secured Derivative Transaction
Liabilities and compliance by each Borrower with all of the terms, conditions and agreements
contained in the documents pursuant to which the Approved Secured Derivative Transaction
Liabilities were created or evidenced (collectively, the “Approved Secured Derivative
Transaction Agreements”); provided that at no time shall the aggregate Liabilities of the
Borrowers in respect of this clause (ii) which are secured by the Security Documents be greater
than $15,000,000 (all such obligations and liabilities described in this clause (ii) being herein
collectively called the “Other Obligations”); (iii) any and all sums reasonably advanced by
the Administrative Agent or Collateral Agent in order to preserve the Collateral or preserve its
security interest in the Collateral; (iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of any Borrower or any Subsidiary
Guarantor referred to in clauses (i) and (ii), after an Event of Default shall have occurred and be
continuing, the reasonable expenses of taking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral, or of any exercise by the Collateral Agent
of its rights hereunder, together with reasonable attorneys’ fees and court costs; and (v) all
amounts paid by Collateral Agent as to which Collateral Agent has the right to

2

 

reimbursement under Section 5(d) of this Security Agreement. It is acknowledged and
agreed that the “Secured Obligations” shall include extensions of credit of the types described
above, whether outstanding on the date of this Security Agreement or extended from time to time
after the date of this Security Agreement.

          (f) “Significant Copyrights” means, at any time, those copyrights owned or exclusively
licensed by a Grantor which are material to the business of the relevant Grantor or the value of
the Collateral at such time.

          (g) “Significant Patents” means, at any time, those patents owned or exclusively
licensed by a Grantor which are material to the business of the relevant Grantor or the value of
the Collateral at such time.

          (h) “Significant Trademarks” means, at any time, those trademarks owned or exclusively
licensed by a Grantor which are material to the business of the relevant Grantor or the value of
the Collateral at such time.

          (i) “Termination Date” means the date on which (a) the Loans have been repaid in full
in cash, (b) all other Obligations under the Credit Agreement and the other Credit Documents have
been completely discharged (other than contingent and indemnification obligations which expressly
survive the termination of the Credit Documents and for which no claim is currently pending),
(c) all Letter of Credit Obligations have been cancelled, backstopped by standby letters of credit
acceptable to Agent or cash collateralized in a manner reasonably satisfactory to the Collateral
Agent, (d) no Borrower shall have any further right to borrow any monies under the Credit
Agreement, (e) all Approved Secured Derivative Transaction Agreements have been terminated and the
amount of Other Obligations, not to exceed the maximum amount secured hereby, has been distributed
to the Other Creditors pursuant to Section 9.5 of the Credit Agreement and (f) the Grantors have
otherwise satisfied the requirements of Section 10.10 of the Credit Agreement to obtain a release
of the Collateral.

          (j) “Uniform Commercial Code jurisdiction” means any jurisdiction that has adopted all
or substantially all of Article 9 as contained in the 2000 Official Text of the Uniform Commercial
Code, as recommended by the National Conference of Commissioners on Uniform State Laws and the
American Law Institute, together with any subsequent amendments or modifications to the Official
Text.

          2. GRANT OF LIEN.

          (a) Subject to the Permitted Senior Liens and the Carve-Out Reserve, each Grantor hereby
grants, assigns, conveys, mortgages, pledges, hypothecates and transfers to Collateral Agent a Lien
upon all of its right, title and interest in, to and under all personal property, fixtures and
other assets, whether now owned by or owing to, or hereafter acquired by or arising in favor of
such Grantor (including under any trade names, styles or derivations thereof), and whether owned or
consigned by or to, or leased from or to, such Grantor, and regardless of where located (all of
which being hereinafter collectively referred to as the “Collateral”) in order to secure
the prompt and complete payment, performance and observance of all of the Secured Obligations,
including, without limitation:

3

 

     (i) all Accounts;

     (ii) all Chattel Paper;

     (iii) all Documents;

     (iv) all General Intangibles (including payment intangibles and Software);

     (v) all Goods (including Inventory, Equipment and Fixtures);

     (vi) all Instruments;

     (vii) all Investment Property (other than Capital Securities of Subsidiaries);

     (viii) all Deposit Accounts, of any Grantor, including all Blocked Accounts,
Concentration Accounts, depository accounts, Disbursement Accounts, and all other
bank accounts and all deposits therein;

     (ix) all money, cash or cash equivalents of any Grantor;

     (x) all Supporting Obligations and Letter-of-Credit Rights of any Grantor;

     (xi) the Commercial Tort Claims described on Schedule V hereto; and

     (xii) to the extent not otherwise included, all Proceeds, tort claims,
insurance claims and other rights to payments not otherwise included in the
foregoing and products of the foregoing and all accessions to, substitutions and
replacements for, and rents and profits of, each of the foregoing, including,
without limitation, the Proceeds of the claims and causes of action arising under
Sections 544, 545, 547, 548, 549 and 550 of the Bankruptcy Code, but not the claims
and causes of action.

Notwithstanding the foregoing, no Lien shall be deemed to be granted in any trademark application
filed on an intent-to-use basis until such time as a statement of use has been filed and accepted
by the United States Patent and Trademark Office.

          (b) In addition, to secure the prompt and complete payment, performance and observance of the
Secured Obligations and in order to induce Collateral Agent as aforesaid, each Grantor hereby
grants to Collateral Agent, upon the occurrence and during the continuance of an Event of Default
and the giving of Required Notice by the Collateral Agent, a right of set-off against the property
of such Grantor held by Collateral Agent, consisting of property described above in Section
2(a) now or hereafter in the possession or custody of or in transit to Collateral Agent, for
any purpose, including safekeeping, collection or pledge, for the account of such Grantor, or as to
which such Grantor may have any right or power.

4

 

          (c) The security interests granted herein and the other obligations of the Grantors hereunder
shall have the priority and status set forth in the Financing Orders.

          3. COLLATERAL AGENT’S RIGHTS; LIMITATIONS ON COLLATERAL AGENT’S OBLIGATIONS.

          (a) It is expressly agreed by Grantors that, anything herein to the contrary notwithstanding,
each Grantor shall remain liable under each of its Contracts and each of its Licenses to observe
and perform all the conditions and obligations to be observed and performed by it thereunder.
Collateral Agent shall not have any obligation or liability under any Contract or License by reason
of or arising out of this Security Agreement or the granting herein of a Lien thereon or the
receipt by Collateral Agent of any payment relating to any Contract or License pursuant hereto.
Collateral Agent shall not be required or obligated in any manner to perform or fulfill any of the
obligations of any Grantor under or pursuant to any Contract or License, or to make any payment, or
to make any inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or License, or to present or file
any claims, or to take any action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be entitled at any time or times.

          (b) Collateral Agent may at any time upon the occurrence and during the continuance of an
Event of Default and after giving Required Notice, notify Account Debtors and other Persons
obligated on the Collateral that Collateral Agent has a security interest therein, and that
payments shall be made directly to Collateral Agent. Furthermore, if Agent determines that Account
Debtors’ contra-accounts or set-off rights may cause Availability to be less than zero, Agent may
notify Account Debtors that Collateral Agent has a security interest therein, and that payments
shall be made directly to Collateral Agent. Upon the request of Collateral Agent during any such
time, each Grantor shall so notify Account Debtors and other Persons obligated on Collateral. Once
any such notice has been given to any Account Debtor or other Person obligated on the Collateral,
the affected Grantor shall not give any contrary instructions to such Account Debtor or other
Person without Collateral Agent’s prior written consent (which consent shall be given if such Event
of Default is no longer continuing and no other Event of Default then exists).

          (c) Collateral Agent may at any time in Collateral Agent’s own name, in the name of a nominee
of Collateral Agent or in the name of any Grantor communicate (by mail, telephone, facsimile or
otherwise) with Account Debtors, parties to Contracts and obligors in respect of Instruments to
verify with such Persons, to Collateral Agent’s reasonable satisfaction, the existence, amount
terms of, and any other matter relating to, Accounts, Instruments, Chattel Paper and/or payment
intangibles. If a Default or Event of Default shall have occurred and be continuing, each Grantor,
at its own expense, shall, or at the request of the Collateral Agent shall cause the independent
certified public accountants then engaged by such Grantor to, prepare and deliver to Collateral
Agent at any time and from time to time promptly upon Collateral Agent’s request, the following
reports with respect to each Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all
Accounts; (iii) trial balances; and (iv) a test verification of such Accounts. Each Grantor, at
its own expense, shall deliver to Collateral Agent the results of each physical verification, if
any, which such Grantor may in its discretion have made, or caused any other Person to have made on
its behalf, of all or any portion of its Inventory.

5

 

          4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and warrants that:

          (a) Subject to the entry of the Financing Orders, each Grantor has rights in and the power to
grant a Lien on each item of the Collateral upon which it purports to grant a Lien hereunder free
and clear of any and all Liens other than Permitted Liens.

          (b) No effective security agreement, financing statement, equivalent security or Lien
instrument or continuation statement covering all or any part of the Collateral is on file or of
record in any public office, except such as may have been filed (i) in favor of Collateral Agent
pursuant to this Security Agreement or the other Credit Documents, and (ii) in connection with any
other Permitted Liens.

          (c) Subject to the entry, the Financing Orders are effective to create a valid and continuing
Lien on, and a perfected Lien in favor of Collateral Agent in, the Collateral. Subject to the
entry of the Financing Orders, such Lien is prior to all other Liens, except for the Permitted
Senior Liens and the Carve-Out Reserve, and is enforceable as such as against any and all creditors
of and purchasers from any Grantor (other than purchasers and lessees of Inventory in the ordinary
course of business and non-exclusive licensees of General Intangibles in the ordinary course of
business). All action by any Grantor necessary to protect and perfect such Lien on each item of
the Collateral (including the delivery of all originals of each item set forth on Schedule
II to Collateral Agent) has been duly taken except as permitted pursuant to Section
5(b) with respect to Chattel Paper.

          (d) Schedule II hereto lists all Instruments, Letter of Credit Rights and Chattel
Paper of each Grantor.

          (e) Each Grantor’s name as it appears in official filings in the state of its incorporation or
other organization, the type of entity of each Grantor (including corporation, partnership, limited
partnership or limited liability company), organizational identification number issued by each
Grantor’s state of incorporation or organization or a statement that no such number has been
issued, each Grantor’s state of organization or incorporation, the location of each Grantor’s chief
executive office, principal place of business, offices, all warehouses and premises where
Collateral is stored or located, and the locations of its books and records concerning the
Collateral are set forth on Schedule III hereto. Each Grantor has only one state of
incorporation or organization.

          (f) With respect to the Accounts, except as specifically disclosed in the most recent
Borrowing Base Certificate delivered to Collateral Agent (i) they represent bona fide sales of
Inventory or rendering of services to Account Debtors in the ordinary course of each Grantor’s
business and are not evidenced by a judgment, Instrument or Chattel Paper; (ii) except to the
extent permitted pursuant to the definition of Eligible Accounts Receivable, there are no setoffs,
claims or disputes existing or asserted with respect thereto and no Grantor has made any agreement
with any Account Debtor for any extension of time for the payment thereof, any compromise or
settlement for less than the full amount thereof, any release of any Account Debtor from liability
therefor, or any deduction therefrom except a discount or allowance allowed by such Grantor in the
ordinary course of its business for prompt payment and disclosed to Collateral Agent; (iii) to each
Grantor’s knowledge, except to the extent permitted pursuant to

6

 

the definition of Eligible Accounts Receivable, there are no facts, events or occurrences
which in any way impair the validity or enforceability thereof or could reasonably be expected to
reduce the amount payable thereunder as shown on any Grantor’s books and records and any invoices,
statements and Borrowing Base Certificates delivered to Collateral Agent with respect thereto; (iv)
no Grantor has received any notice of proceedings or actions which are threatened or pending
against any Account Debtor which might result in any material adverse change in such Account
Debtor’s financial condition; and (v) no Grantor has knowledge that any Account Debtor is unable
generally to pay its debts as they become due. Further with respect to the Accounts (x) the
amounts shown on all invoices, statements and Borrowing Base Certificates which may be delivered to
the Collateral Agent with respect thereto are actually and absolutely owing to such Grantor as
indicated thereon and are not in any way contingent; (y) no payments have been or shall be made
thereon except payments immediately delivered to the applicable Blocked Accounts or the Collateral
Agent as required pursuant to the terms of Section 2.5(b) of the Credit Agreement; and (z) to each
Grantor’s knowledge, all Account Debtors have the capacity to contract.

          (g) With respect to any Inventory scheduled or listed on the most recent Borrowing Base
Certificate delivered to Collateral Agent pursuant to the terms of this Security Agreement or the
Credit Agreement, (i) such Inventory is located at one of the applicable Grantor’s locations set
forth on Schedule III hereto, as applicable, (ii) no Inventory is now, or shall at any time
or times hereafter be stored at any other location without Collateral Agent’s prior consent, and if
Collateral Agent gives such consent, the applicable Grantor will concurrently therewith obtain, to
the extent required by the Credit Agreement, bailee, landlord and mortgagee agreements, (iii) the
applicable Grantor has good, indefeasible and merchantable title to such Inventory and such
Inventory is not subject to any Lien or security interest or document whatsoever except for the
Lien granted to Collateral Agent and except for Permitted Liens, (iv) except as specifically
disclosed in the most recent Borrowing Base Certificate delivered to Collateral Agent, such
Inventory is Eligible Inventory of good and merchantable quality, free from any defects and (v)
such Inventory is not subject to any licensing, patent, royalty, trademark, trade name or copyright
agreements with any third parties which would require any consent of any third party upon sale or
disposition of that Inventory or the payment of any monies to any third party upon such sale or
other disposition.

          (h) No Grantor has any interest in, or title to, any material license (except for commercially
available licensed software), issuance, registration, or application for issuance or registration
of any patent, trademark or copyright except as set forth in Schedule IV hereto.

          5. COVENANTS. Each Grantor covenants and agrees with Collateral Agent that from and
after the date of this Security Agreement and until the Termination Date:

          (a) Further Assurances; Pledge of Instruments; Chattel Paper.

     (i) At any time and from time to time, upon the request of Collateral Agent and at the
sole expense of Grantors, each Grantor shall promptly and duly execute and deliver any and
all such further instruments and documents and take such further actions as Collateral Agent
may reasonably deem desirable to obtain the full benefits of this Security Agreement and of
the rights and powers herein granted, including (A) using its commercially reasonable
efforts to secure all consents and approvals necessary or

7

 

appropriate for the assignment to or for the benefit of Collateral Agent of any License
or Contract held by such Grantor and material to its business and to enforce the security
interests granted hereunder and (B) filing any financing or continuation statements under
the Code with respect to the Liens granted hereunder or under any other Credit Document as
to those jurisdictions that are not Uniform Commercial Code jurisdictions.

     (ii) Unless Collateral Agent shall otherwise consent in writing (which consent may be
revoked), each Grantor shall deliver to Collateral Agent all Collateral consisting of
negotiable Documents, certificated securities, Chattel Paper and Instruments (in each case,
accompanied by stock powers, allonges or other instruments of transfer executed in blank)
promptly after such Credit Party receives the same.

     (iii) Upon request by Collateral Agent, to the extent commercially reasonable, each
Grantor shall obtain waivers or subordinations of Liens from landlords and mortgagees, and
obtain signed acknowledgements of Collateral Agent’s Liens from bailees having possession of
any Grantor’s Goods that they hold for the benefit of Collateral Agent.

     (iv) Upon request by Collateral Agent, Grantor shall obtain authenticated Control
Agreements from each issuer of uncertificated securities, securities intermediary, or
commodities intermediary issuing or holding any financial assets or commodities to or for
any Grantor.

     (v) Each Grantor shall obtain such blocked account, lockbox or similar agreements with
each bank or financial institution holding a Deposit Account for such Grantor to the extent
required by Section 2.5(b) of the Credit Agreement.

     (vi) Upon request by Collateral Agent, each Grantor that is or becomes the beneficiary
of a letter of credit having a stated amount of over $250,000 shall promptly, and in any
event within two (2) Business Days after becoming a beneficiary, notify Collateral Agent
thereof, and shall thereafter enter into a tri-party agreement with Collateral Agent and the
issuer and/or confirmation bank with respect to Letter-of-Credit Rights assigning such
Letter-of-Credit Rights to Collateral Agent and directing all payments thereunder to the
Collection Account, all in form and substance reasonably satisfactory to Collateral Agent.

     (vii) Upon request by Collateral Agent, each Grantor shall take all steps necessary to
grant the Collateral Agent control of all electronic chattel paper in accordance with the
Code and all “transferable records” as defined in each of the Uniform Electronic
Transactions Act and the Electronic Signatures in Global and National Commerce Act; provided
that prior to a request by the Collateral Agent after the occurrence and during the
continuance of an Event of Default, such steps need only be taken to the extent such
Collateral has a value in excess of $250,000 in the aggregate.

     (viii) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and
from time to time to file in any filing office in any Uniform Commercial Code jurisdiction
any initial financing statements and amendments thereto that (a) indicate the Collateral (i)
as all assets of such Grantor or words of similar effect,

8

 

regardless of whether any particular asset comprised in the Collateral falls within the
scope of Article 9 of the Code or such jurisdiction, or (ii) as being of an equal or lesser
scope or with greater detail, and (b) contain any other information required by part 5 of
Article 9 of the Code for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether such Grantor is an organization, the type of
organization and any organization identification number issued to such Grantor, and (ii) in
the case of a financing statement filed as a fixture filing or indicating Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real property to
which the Collateral relates. Each Grantor agrees to furnish any such information to the
Collateral Agent promptly upon request. Each Grantor also ratifies its authorization for
the Collateral Agent to have filed in any Uniform Commercial Code jurisdiction any initial
financing statements or amendments thereto if filed prior to the date hereof.

          (ix) Each Grantor shall promptly, and in any event within fifteen (15) Business Days
after the same is acquired by it, notify Collateral Agent of any commercial tort claim (as
defined in the Code) acquired by it and unless otherwise consented by Collateral Agent, such
Grantor shall thereafter enter into a supplement to this Security Agreement, granting to
Collateral Agent a Lien in such commercial tort claim.

          (b) Maintenance of Records. Grantors shall keep and maintain, at their own cost and
expense, satisfactory and complete records of the Collateral, including a record of any and all
payments received and any and all credits granted with respect to the Collateral and all other
dealings with the Collateral. If requested by Collateral Agent, Grantors shall mark their books
and records pertaining to the Collateral to evidence this Security Agreement and the Liens granted
hereby. If any Grantor retains possession of any Chattel Paper or Instruments with Collateral
Agent’s consent, such Chattel Paper and Instruments shall be marked with the following legend:
“This writing and the obligations evidenced or secured hereby are subject to the security interest
of Deutsche Bank Trust Company Americas, as Collateral Agent.”; provided that with respect to
Chattel Paper and Instruments in the possession of any Grantor on the date hereof, such Grantor
shall cause such Chattel Paper and Instruments to be so marked within thirty (30) after the date
hereof.

          (c) Covenants Regarding Patent, Trademark and Copyright Collateral.

          (i) Such Grantor shall notify Collateral Agent immediately if it knows or has reason to
know that any application or registration relating to any Significant Patent, Significant
Trademark or Significant Copyright (now or hereafter existing) may become abandoned or
dedicated, or of any materially adverse determination or development (including 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)
regarding such Grantor’s ownership of any Significant Patent, Significant Trademark or
Significant Copyright, its right to register the same, or to keep and maintain the same.

          (ii) Upon any Grantor, either itself or through any agent, employee, licensee or
designee, filing an application for the registration of any Significant Patent, Significant
Trademark or Significant Copyright with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency,

9

 

such Grantor will give the Collateral Agent written notice within fifteen (15) days
thereof, and, upon request of Collateral Agent, Grantor shall execute and deliver any and
all Patent Security Agreements, Copyright Security Agreements or Trademark Security
Agreements as Collateral Agent may request to evidence Collateral Agent’s Lien on such
Significant Patent, Significant Trademark or Significant Copyright, and the General
Intangibles of such Grantor relating thereto or represented thereby.

          (iii) Such Grantor shall take all actions necessary or reasonably requested by
Collateral Agent to maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of, each of the Significant Patents,
Significant Trademarks and Significant Copyrights (now or hereafter existing), including
the filing of applications for renewal, affidavits of use, affidavits of noncontestability
and opposition and interference and cancellation proceedings.

          (iv) In the event that any of the Significant Patent, Significant Trademark or
Significant Copyright is infringed upon, or misappropriated or diluted by a third party,
upon becoming aware thereof such Grantor shall promptly notify the Collateral Agent and take
such other actions as Collateral Agent shall reasonably deem appropriate under the
circumstances to protect such Significant Patent, Significant Trademark or Significant
Copyright.

          (d) Indemnification. In any suit, proceeding or action brought by Collateral Agent
relating to any Collateral for any sum owing with respect thereto or to enforce any rights or
claims with respect thereto, each Grantor will save, indemnify and keep Collateral Agent harmless
from and against all expense (including reasonable attorneys’ fees and expenses), loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the Account Debtor or other Person obligated on the Collateral, arising out of a
breach by any Grantor of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to, or in favor of, such obligor or its successors from
such Grantor, except to the extent such expense, loss, or damage is attributable to the gross
negligence, bad faith or willful misconduct of Collateral Agent as finally judicially determined.
All such obligations of Grantors shall be and remain enforceable against and only against Grantors
and shall not be enforceable against Collateral Agent.

          (e) Compliance with Terms of Accounts, etc. In all material respects, each Grantor
will perform and comply with its obligations in respect of the Collateral and all other agreements
to which it is a party or by which it is bound relating to the Collateral.

          (f) Limitation on Liens on Collateral. No Grantor will create, permit or suffer to
exist, and each Grantor will defend the Collateral against, and take such other action as is
necessary to remove, any Lien on the Collateral except for Permitted Liens, and will defend the
right, title and interest of Collateral Agent in and to any of such Grantor’s rights under the
Collateral against the claims and demands of all Persons whomsoever.

          (g) Limitations on Disposition. No Grantor will sell, license, lease, transfer or
otherwise dispose of any of the Collateral, or attempt or contract to do so except as permitted by
the Credit Agreement.

10

 

          (h) Further Identification of Collateral. Grantors will, if so requested by
Collateral Agent, furnish to Collateral Agent, as often as Collateral Agent reasonably requests,
statements and schedules further identifying and describing the Collateral and such other reports
in connection with the Collateral as Collateral Agent may reasonably request, all in such detail as
Collateral Agent may specify.

          (i) Notices. Grantors will advise Collateral Agent promptly, in reasonable detail,
(i) of any Lien (other than Permitted Liens), or claim made or asserted against any of the
Collateral, and (ii) of the occurrence of any other event which would have a material adverse
effect on the aggregate value of the Collateral or on the Liens created hereunder or under any
other Credit Document.

          (j) Good Standing Certificates. Upon request of Collateral Agent (not to exceed once
per calendar year excluding such requests as are made after the occurrence and during the
continuance of an Event of Default), each Grantor shall provide to Collateral Agent a certificate
of good standing from its state of incorporation or organization.

          (k) No Reincorporation. Without limiting the prohibitions on mergers involving the
Grantors contained in the Credit Agreement, no Grantor shall reincorporate or reorganize itself
under the laws of any jurisdiction other than the jurisdiction in which it is incorporated or
organized as of the date hereof without prior written notice to Collateral Agent.

          (l) Terminations; Amendments Not Authorized. Each Grantor acknowledges that it is not
authorized to file any financing statement or amendment or termination statement with respect to
any financing statement without the prior written consent of Collateral Agent and agrees that it
will not do so without the prior written consent of Collateral Agent, subject to such Grantor’s
rights under Section 9-509(d)(2) of the Code.

          6. COLLATERAL AGENT’S APPOINTMENT AS ATTORNEY-IN-FACT.

          On the effective date of this Security Agreement, each Grantor shall execute and deliver to
Collateral Agent a power of attorney (the “Power of Attorney”) substantially in the form
attached hereto as Exhibit A. The power of attorney granted pursuant to the Power of
Attorney is a power coupled with an interest and shall be irrevocable until the Termination Date.
The powers conferred on Collateral Agent under the Power of Attorney are solely to protect
Collateral Agent’s interests in the Collateral and shall not impose any duty upon Collateral Agent
to exercise any such powers. Collateral Agent agrees that (a) except for the powers granted in
clause (h) of the Power of Attorney, it shall not exercise any power or authority granted under the
Power of Attorney unless an Event of Default has occurred and is continuing and Required Notice has
been given, and (b) Collateral Agent shall account for any moneys received by Collateral Agent in
respect of any foreclosure on or disposition of Collateral pursuant to the Power of Attorney
provided that Collateral Agent shall have no duty as to any Collateral, and Collateral Agent shall
be accountable only for amounts that it actually receives as a result of the exercise of such
powers. NONE OF COLLATERAL AGENT OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER
OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES TO THE

11

 

EXTENT ATTRIBUTABLE TO THEIR OWN GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT AS FINALLY
JUDICIALLY DETERMINED, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

          7. REMEDIES; RIGHTS UPON DEFAULT.

          (a) In addition to all other rights and remedies granted to it under this Security Agreement,
the Credit Agreement, the other Credit Documents and under any other instrument or agreement
securing, evidencing or relating to any of the Secured Obligations, if any Event of Default shall
have occurred and be continuing and Required Notice has been given, Collateral Agent may exercise
all rights and remedies of a secured party under the Code. Without limiting the generality of the
foregoing, each Grantor expressly agrees that in any such event Collateral Agent, without demand of
performance or other demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale and except for notices required under the Credit
Documents, if any) to or upon such Grantor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code
and other applicable law), may (A) forthwith enter upon the premises of such Grantor where any
Collateral is located through self-help, without judicial process, without first obtaining a final
judgment or giving such Grantor or any other Person notice and opportunity for a hearing on
Collateral Agent’s claim or action, (B) collect, receive, assemble, process, appropriate and
realize upon the Collateral, or any part thereof, and (C) forthwith sell, lease, license, assign,
give an option or options to purchase, or sell or otherwise dispose of and deliver said Collateral
(or contract to do so), or any part thereof, in one or more parcels at a public or private sale or
sales, at any exchange at such prices as it may deem acceptable, for cash or on credit or for
future delivery without assumption of any credit risk. Collateral Agent shall 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 said Collateral so sold, free of any right or equity of
redemption, which equity of redemption each Grantor hereby releases. Such sales may be adjourned
and continued from time to time with or without notice. Collateral Agent shall have the right to
conduct such sales on any Grantor’s premises or elsewhere and shall have the right to use any
Grantor’s premises without charge for such time or times as Collateral Agent deems necessary or
advisable.

          If any Event of Default shall have occurred and be continuing and Required Notice has been
given, each Grantor further agrees, at Collateral Agent’s request, to assemble the Collateral and
make it available to Collateral Agent at a place or places designated by Collateral Agent which are
reasonably convenient to Collateral Agent and such Grantor, whether at such Grantor’s premises or
elsewhere. Until Collateral Agent is able to effect a sale, lease, or other disposition of
Collateral, Collateral Agent shall have the right to hold or use Collateral, or any part thereof,
to the extent that it deems appropriate for the purpose of preserving Collateral or its value or
for any other purpose deemed appropriate by Collateral Agent. Collateral Agent shall have no
obligation to any Grantor to maintain or preserve the rights of such Grantor as against third
parties with respect to Collateral while Collateral is in the possession of Collateral Agent.
Collateral Agent may, if it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of Collateral Agent’s remedies without prior notice or
hearing as to such appointment. Collateral Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale to the Secured Obligations as
provided in Section 9 of this Security Agreement, and only after so paying over such net

12

 

proceeds, and after the payment by Collateral Agent of any other amount required by any
provision of law, need Collateral Agent account for the surplus, if any, to any Grantor. To the
maximum extent permitted by applicable law, each Grantor waives all claims, damages, and demands
against Collateral Agent arising out of the repossession, retention or sale of the Collateral
except such as arise solely out of the gross negligence or willful misconduct of Collateral Agent
as finally determined by a court of competent jurisdiction. Each Grantor agrees that ten (10) days
prior notice by Collateral Agent of the time and place of any public sale or of the time after
which a private sale may take place is reasonable notification of such matters. Grantors shall
remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Secured Obligations, including any attorneys’ fees and other expenses
incurred by Collateral Agent to collect such deficiency.

          (b) Except as otherwise specifically provided herein, each Grantor hereby waives presentment,
demand, protest or any notice (other than any notice required under the Credit Documents, if any)
(to the maximum extent permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.

          (c) Collateral Agent shall not be required to make any demand upon, or pursue or exhaust any
of its rights or remedies against, any Grantor, any other obligor, guarantor, pledgor or any other
Person with respect to the payment of the Secured Obligations or to pursue or exhaust any of its
rights or remedies with respect to any Collateral therefor or any direct or indirect guarantee
thereof. Collateral Agent shall not be required to marshal the Collateral or any guarantee of the
Secured Obligations or to resort to the Collateral or any such guarantee in any particular order,
and all of its rights hereunder or under any other Credit Document shall be cumulative. To the
extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the
benefit and advantage of, and covenants not to assert against the Collateral Agent until after the
Termination Date, any valuation, stay, appraisement, extension, redemption or similar laws and any
and all rights or defenses it may have as a surety now or hereafter existing which, but for this
provision, might be applicable to the sale of any Collateral made under the judgment, order or
decree of any court, or privately under the power of sale conferred by this Security Agreement, or
otherwise.

          8. GRANT OF LICENSE TO USE PATENT, TRADEMARK AND COPYRIGHT COLLATERAL. For the
purpose of enabling Collateral Agent to exercise rights and remedies under Section 7 hereof
(including, without limiting the terms of Section 7 hereof, in order to take possession of,
hold, preserve, process, assemble, prepare for sale, market for sale, sell or otherwise dispose of
Collateral) at such time as Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby grants to Collateral Agent, effective only at such time an Event of
Default shall have occurred and be continuing and Required Notice has been given, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor)
to use, license or sublicense any patent, trademark, trade secret or copyright now owned or
hereafter acquired by such Grantor, and wherever the same may be located, and including in such
license access to all media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof.

          9. APPLICATION OF PROCEEDS. All moneys collected by the Collateral Agent (or, to the
extent the Pledge Agreement requires proceeds of Collateral under such

13

 

agreement to be applied in accordance with the provisions of this Security Agreement, the
Collateral Agent under such other agreement) upon any sale or other disposition of the Collateral,
together with all other moneys received by the Collateral Agent hereunder, shall be applied as set
forth in Section 9.5 of the Credit Agreement.

          10. LIMITATION ON COLLATERAL AGENT’S DUTY IN RESPECT OF COLLATERAL. Collateral Agent
shall use reasonable care with respect to the Collateral in its possession or under its control.
Collateral Agent shall not have any other duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of Collateral Agent, or any income thereon or
as to the preservation of rights against prior parties or any other rights pertaining thereto.

          11. NOTICES. Except as otherwise provided herein, whenever it is provided herein that
any notice, demand, request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with respect to this Security
Agreement, each such notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be given in the manner, and deemed received, as provided for in the
Credit Agreement.

          12. SEVERABILITY. Whenever possible, each provision of this Security Agreement shall
be interpreted in a manner as to be effective and valid under applicable law, but if any provision
of this Security Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Security Agreement. This Security
Agreement is to be read, construed and applied together with the Credit Agreement and the other
Credit Documents which, taken together, set forth the complete understanding and agreement of
Collateral Agent and Grantors with respect to the matters referred to herein and therein.

          13. NO WAIVER; CUMULATIVE REMEDIES; AMENDMENT. Collateral Agent shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder. A
waiver by Collateral Agent of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Collateral Agent would otherwise have had on any
future occasion. No failure to exercise nor any delay in exercising on the part of Collateral
Agent, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law. None of the terms or provisions of this
Security Agreement may be waived, altered, modified or amended except by an instrument in writing,
duly executed by the Grantors and Collateral Agent (with the written consent of the Majority
Lenders, or to the extent required by Section 11.10 of the Credit Agreement, all the Lenders);
provided, however, that any change, waiver, modification or variance affecting the
rights and benefits of the Other Creditors shall require the written consent of the holders of at
least 51% in amount of all of the Approved Secured Derivative Transaction Liabilities.

14

 

          14. LIMITATION BY LAW. All rights, remedies and powers provided in this Security
Agreement may be exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Security Agreement are intended to be
subject to the giving by the Collateral Agent of Required Notice and to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent necessary so that they
shall not render this Security Agreement invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any applicable law.

          15. RELEASE OF COLLATERAL; TERMINATION OF THIS SECURITY AGREEMENT. (a) After the
Termination Date, this Security Agreement shall automatically terminate and the Collateral Agent,
at the request and expense of the Grantors, will execute and deliver to each Grantor a proper
instrument or instruments (including Uniform Commercial Code termination statements on form UCC-3)
acknowledging the satisfaction and termination of this Security Agreement, and will duly assign,
transfer and deliver to each Grantor (without recourse and without any representation or warranty)
such of the Collateral of such Grantor as has not theretofore been sold or otherwise applied or
released pursuant to this Security Agreement.

          (b) In the event that any part of the Collateral is sold or otherwise disposed of in
connection with a sale or other disposition permitted by Section 8.5 of the Credit Agreement or is
otherwise released at the direction of the Majority Lenders (or all the Lenders if required by
Section 11.10 of the Credit Agreement), such Collateral will be sold free and clear of the Liens
created by this Security Agreement and the Collateral Agent, at the request and expense of the
Grantors, will duly assign, transfer and deliver to the relevant Grantor (without recourse and
without any representation or warranty) such of the Collateral as is then being (or has been) so
sold or released and has not theretofore been released pursuant to this Security Agreement,
provided that the Liens created by this Security Agreement will attach to the proceeds of any such
sale with a priority consistent with the Financing Orders. The Collateral Agent shall also be
entitled to and is hereby authorized and directed to duly assign, transfer and deliver such of the
Collateral as provided in Section 10.10(b) or (c) of the Credit Agreement.

          (c) At any time that a Grantor desires that the Collateral Agent take any action to
acknowledge or give effect to any release of Collateral pursuant to the foregoing Section
15(a) or (b), as the case may be, it shall deliver to the Collateral Agent a
certificate signed by an Authorized Officer stating that the release of the respective Collateral
is permitted pursuant to Section 15(a) or (b), as the case may be.

          (d) The Collateral Agent shall have no liability whatsoever to any Secured Creditor as a
result of any release of Collateral by it in accordance with this Section 15.

          16. SUCCESSORS AND ASSIGNS. This Security Agreement and all obligations of Grantors
hereunder shall be binding upon the successors and assigns of each Grantor (including any
debtor-in-possession on behalf of such Grantor) and shall, together with the rights and remedies of
Collateral Agent hereunder, inure to the benefit of Collateral Agent, all future holders of any
instrument evidencing any of the Secured Obligations and their respective successors and assigns.
No sales of participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Secured Obligations or any portion thereof or
interest therein shall in any manner affect the Lien granted

15

 

to Collateral Agent hereunder. No Grantor may assign, sell, hypothecate or otherwise transfer
any interest in or obligation under this Security Agreement.

          17. COUNTERPARTS. This Security Agreement may be authenticated in any number of
separate counterparts, each of which shall collectively and separately constitute one and the same
agreement. This Security Agreement may be authenticated by manual signature, facsimile or, if
approved in writing by Collateral Agent, electronic means, all of which shall be equally valid.

          18. CONSENT TO JURISDICTION; MUTUAL WAIVER OR JURY TRIAL. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST ANY PARTY HERETO ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR
ANY OF THE SECURED OBLIGATIONS, MAY BE BROUGHT IN THE BANKRUPTCY COURT, AND IF THE BANKRUPTCY COURT
DOES NOT HAVE (OR ABSTAINS FROM) JURISDICTION, OR THE CHAPTER 11 CASES HAVE BEEN DISMISSED, ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS SECURITY AGREEMENT, EACH PARTY HERETO, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY (1) ACCEPTS GENERALLY AND UNCONDITIONALLY THE JURISDICTION AND
VENUE OF SUCH COURTS; (2) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (3) AGREES THAT SERVICE OF
ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO IT AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 11.5 OF THE
CREDIT AGREEMENT; (4) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (3) ABOVE IS SUFFICIENT TO CONFER
PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (5) AGREES THE PARTIES
HERETO RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST ANY PARTY HERETO IN THE COURTS OF ANY OTHER JURISDICTION. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS SECURITY
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY
IN ANY COURT OR JURISDICTION, INCLUDING WITHOUT LIMITATION THOSE REFERRED TO ABOVE, IN RESPECT TO
ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT AND THE OTHER CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

          19. GOVERNING LAW. THE RIGHTS AND DUTIES OF THE GRANTORS AND THE COLLATERAL AGENT
UNDER THIS SECURITY AGREEMENT AND THE OTHER CREDIT DOCUMENTS SHALL, PURSUANT TO NEW YORK

16

 

GENERAL OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK, EXCEPT AS GOVERNED BY THE BANKRUPTCY CODE.

          20. SECTION TITLES. The Section titles contained in this Security Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.

          21. NO STRICT CONSTRUCTION. The parties hereto have participated jointly in the
negotiation and drafting of this Security Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Security Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Security Agreement.

          22. ADVICE OF COUNSEL. Each of the parties represents to each other party hereto that
it has discussed this Security Agreement and, specifically, the provisions of Section 18
and Section 19, with its counsel.

          23. EFFECT OF FINANCING ORDERS. Notwithstanding anything to the contrary in this
Security Agreement or any other Credit Document, this Security Agreement (including, without
limitation, each Grantor’s representations, warranties and covenants contained herein) shall be
subject to the terms and provisions of the Financing Orders. In the event of any conflict or
inconsistency between the terms and provisions of the Financing Orders and this Security Agreement,
the terms and provisions of the Financing Orders shall control.

[signature page follows]

17

 

     IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set forth above.

	 	 	 	 	 	 	 
	 	 	WELLMAN, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Name:
	 	 
 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 
	 	 	 	 	 	 
	 	 	PRINCE, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 
	 	 	 	 	 	 
	 	 	WELLMAN OF MISSISSIPPI, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 
	 	 	 	 	 	 
	 	 	FIBER INDUSTRIES, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 
	 	 	 	 	 	 
	 	 	CARPET RECYCLING OF GEORGIA, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 

 

 

	 	 	 	 	 	 	 
	 	 	ALG, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 
	 	 	 	 	 	 
	 	 	WAREHOUSE ASSOCIATES, INC. USA
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 
	 	 	 	 	 	 
	 	 	MRF, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 
	 	 	 	 	 	 
	 	 	JOSDAV INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 
	 	 	 	 	 	 
	 	 	MED RESINS, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 

[Signature Page to Security Agreement]

 

 

	 	 	 	 	 	 	 
	 	 	PTA RESOURCES, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Keith R. Phillips	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 
	 	 
 	 	 
	 
	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS, as

Collateral Agent
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Marguerite Sutton	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Marguerite Sutton	 	 
	 

	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David J. Bell	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	David J. Bell	 	 
	 

	 	Title:
	 	Managing Director	 	 

[Signature Page to Security Agreement]

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