Document:

EX-10.7

 

Exhibit 10.7

GUARANTEE AGREEMENT

     GUARANTEE AGREEMENT (this “Agreement”) dated as of February 28, 2008, among each of
the subsidiaries of SOLUTIA INC., a Delaware corporation (the “U.S. Borrower”), listed on
Schedule I hereto (each such subsidiary individually, a “Guarantor” and
collectively, the “Guarantors”) in favor of CITIBANK, N.A., as collateral agent (in such
capacity, together with its successors and assigns in such capacity, the “Collateral
Agent”) for the Secured Parties (as defined in the Credit Agreement referred to below).

     Reference is made to the Credit Agreement dated as of February 28, 2008 (as amended, restated,
amended and restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the U.S. Borrower; SOLUTIA EUROPE SA/NV, a Belgian limited liability company
(“Solutia Europe”), FLEXSYS SA/NV, a Belgian limited liability company (“Flexsys”;
together with Solutia Europe, the “European Borrowers”, and each a “European
Borrower”; the European Borrowers together with the U.S. Borrower are the “Borrowers”
and each, a “Borrower”), the lending institutions from time to time parties thereto (the
“Lenders”), CITIBANK, N.A., as administrative agent for the Lenders (in such capacity,
together with its successors in such capacity, the “Administrative Agent”), the Collateral
Agent, CITIBANK INTERNATIONAL PLC, as collateral agent for the European Secured Parties (in such
capacity, together with its successors and assigns in such capacity, the “European Collateral
Agent”, and together with the Collateral Agent, the “Collateral Agents”, and each a
“Collateral Agent”), DEUTSCHE BANK AG, NEW YORK BRANCH (“DBNY”), as syndication
agent, GOLDMAN SACHS CREDIT PARTNERS L.P. (“GSCP”), as documentation agent; and CITIGROUP
GLOBAL MARKETS INC., GSCP and DEUTSCHE BANK SECURITIES INC., as joint lead arrangers and joint
bookrunners. Capitalized terms used herein without definition shall have the meanings assigned to
such terms in the Credit Agreement.

     The Lenders have agreed to make Loans to the Borrowers pursuant to, and upon the terms and
subject to the conditions specified in, the Credit Agreement. Each of the Guarantors is a direct
or indirect Restricted Subsidiary of the U.S. Borrower and acknowledges that it will derive
substantial benefit from the making of the Loans by the Lenders. The obligations of the Lenders to
make Loans are conditioned on, among other things, the execution and delivery by the Guarantors of
a Guarantee Agreement in the form hereof. As consideration therefor and in order to induce the
Lenders to make Loans, the Guarantors are willing to execute this Agreement.

     Accordingly, the parties hereto agree as follows:

     SECTION 1. Guarantee. Each Guarantor unconditionally and irrevocably guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety,
to each of the Secured Parties and their respective successors and permitted assigns the full
payment when due (whether at stated maturity or otherwise) of the Obligations (the “Guaranteed
Obligations”). Each Guarantor further agrees that the Guaranteed Obligations may be extended
or renewed, in whole or in part, without notice to or further assent from it, and that it will
remain bound upon its guarantee under this Agreement notwithstanding any extension or renewal of
any Obligation. By execution of this Agreement, each Guarantor agrees to be bound by the terms of
the Credit Agreement as a Subsidiary Guarantor as if it were a party to the Credit Agreement.

 

 

     SECTION 2. Guaranteed Obligations Not Waived. The obligations of the Guarantors under
Section 1 shall constitute a guaranty of payment when due and not of collection and to the
fullest extent permitted by applicable law, are absolute, irrevocable and unconditional, joint and
several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations
of each Borrower under the Credit Agreement or any other agreement or instrument referred to herein
or therein (including interest, fees, expenses and other charges that continue to accrue after the
commencement of any bankruptcy or other similar proceeding, whether or not such interest, fees,
expenses and other charges are allowed or allowable under any state, federal or foreign bankruptcy,
insolvency, reorganization or other law affecting the rights of credits generally by or against any
Borrower, or in any such bankruptcy or other similar proceeding), or any substitution, release or
exchange of any other guarantee of or security for any of the Guaranteed Obligations, and,
irrespective of any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a surety or Guarantor (except for payment in full). Without
limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of
the following shall not alter or impair the liability of the Guarantors hereunder which shall
remain absolute, irrevocable and unconditional under any and all circumstances as described above
to the extent permitted by applicable law:

                    (i) at any time or from time to time, without notice to the Guarantors, the
time for any performance of or compliance with any of the Guaranteed Obligations
shall be extended, or such performance or compliance shall be waived;

                    (ii) any of the acts mentioned in any of the provisions of this Agreement or
the Credit Agreement or any other agreement or instrument referred to herein or
therein shall be done or omitted;

                    (iii) the maturity of any of the Guaranteed Obligations shall be accelerated,
or any of the Guaranteed Obligations shall be amended in any respect, or any right
under the Loan Documents or any other agreement or instrument referred to therein
shall be amended or waived in any respect or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with;

                    (iv) the failure to perfect any security interest in or lien on, or the release
of, any of the security held by or on behalf of the Collateral Agent or any other
Secured Party; or

                    (v) the release of any other Guarantor pursuant to Section 9(b).

          The Guarantors hereby expressly waive, to the extent permitted by applicable law, diligence,
presentment, demand of payment, protest and all notices whatsoever, and any requirement that any
Secured Party exhaust any right, power or remedy or proceed against any Borrower under this
Agreement or the Credit Agreement or any other agreement or instrument referred to herein or
therein, or against any other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations. The Guarantors waive, to the extent permitted by applicable law, any and
all notice of the creation, renewal, extension, waiver, termination or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Agreement
or acceptance of this Agreement, and the Guaranteed Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred in reliance upon this Agreement
and the guarantees contained herein, and all dealings between the Borrowers and the Secured Parties
shall likewise be conclusively presumed to have been had or

2

 

consummated in reliance upon this Agreement. This Agreement shall be construed as a continuing, absolute, irrevocable and
unconditional guarantee of payment without regard to any right of offset with respect to the
Guaranteed Obligations at any time or from time to time held by Secured Parties, and the
obligations and liabilities of the Guarantors hereunder shall not be conditioned or contingent upon
the pursuit by the Secured Parties or any other Person at any time of any right or remedy against
any Borrower or against any other Person which may be or become liable in respect of all or any
part of the Guaranteed Obligations or against any collateral security or guarantee therefor or
right of offset with respect thereto. This Agreement shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon the Guarantors and the successors
and permitted assigns thereof, and shall inure to the benefit of the Secured Parties, and their
respective successors and permitted assigns.

     SECTION 3. Guarantee of Payment. Each Guarantor hereby jointly and severally agrees
that its guarantee constitutes a guarantee of payment when due and not of collection of the
Guaranteed Obligations, and waives, to the extent permitted by applicable law, any right to require
that any resort be had by the Collateral Agent or any other Secured Party to any of the security
held for payment of the Guaranteed Obligations or to any balance of any deposit account or credit
on the books of the Collateral Agent or any other Secured Party in favor of any Borrower or any
other Person.

     SECTION 4. No Discharge or Diminishment of Guarantee. The obligations of each
Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination
for any reason (other than the payment in full in cash of the Guaranteed Obligations (other than
contingent indemnification obligations)), including any claim of waiver, release, surrender,
alteration or compromise of any of the Guaranteed Obligations, and shall not be subject to (to the
extent permitted by applicable law) any defense (other than payment in full in cash of the
Guaranteed Obligations (other than contingent indemnification obligations)) or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of
the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Collateral Agent or any other Secured Party to assert any
claim or demand or to enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations, or by any
other act or omission that may or might in any manner or to any extent vary the risk of any
Guarantor or that would otherwise operate as a discharge of each Guarantor as a matter of law or
equity (other than the payment in full in cash of all the Guaranteed Obligations (other than
contingent indemnification obligations)).

     SECTION 5. Defenses of Borrowers Waived. To the fullest extent permitted by
applicable law, each of the Guarantors waives any defense based on or arising out of any defense of
any Loan Party or the unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any Loan Party, other than the payment
in full in cash of the Guaranteed Obligations (other than contingent indemnification obligations).
Subject to the terms of the Security Documents, the Collateral Agent and the other Secured Parties
may, at their election, foreclose on any security held by one or more of them by one or more
judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure,
compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with any
Loan Party or any other guarantor or exercise any other right or remedy available to them against
any Loan Party or any other guarantor, without affecting or impairing in any way the liability of
any Guarantor hereunder except to the extent the Guaranteed Obligations have been fully paid in
cash (other than contingent indemnification obligations). To the extent permitted by

3

 

applicable law, each of the Guarantors waives any defense arising out of any such election even though such
election operates, pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against any Loan Party or
any other Guarantor or guarantor, as the case may be, or any security.

     SECTION 6. Agreement to Pay; Subordination. In furtherance of the foregoing and not
in limitation of any other right that the Collateral Agent or any other Secured Party has at law or
in equity against any Guarantor by virtue hereof, upon the failure of any Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by acceleration, after
notice of prepayment or otherwise, promptly upon notice from the Collateral Agent each Guarantor
hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent or such
other Secured Party as designated thereby in cash or the amount of such unpaid Guaranteed
Obligations. Upon payment by any Guarantor of any sums to the Collateral Agent or any other
Secured Party as provided above, all rights of such Guarantor against any Loan Party arising as a
result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subordinate and junior in right of payment to the prior payment in full in
cash of all the Guaranteed Obligations (other than contingent indemnification obligations). In
addition, any indebtedness of any Loan Party now or hereafter held by any Guarantor is hereby
subordinated in right of payment to the prior payment in full in cash of the Guaranteed Obligations
(other than contingent indemnification obligations). If any amount shall erroneously be paid to
any Guarantor on account of (i) such subrogation, contribution, reimbursement, indemnity or
similar right or (ii) any such indebtedness of any Loan Party, such amount shall be held for the
benefit of the Secured Parties and shall forthwith be paid to the Collateral Agent to be credited
against the payment of the Guaranteed Obligations, whether matured or unmatured, in accordance with
the terms of the Loan Documents.

     SECTION 7. Information. Each of the Guarantors assumes all responsibility for being
and keeping itself informed of each other Loan Party’s financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks that such Guarantor incurs hereunder, and agrees that none of
the Collateral Agent or the other Secured Parties will have any duty to advise any of the
Guarantors of information known to it or any of them regarding such circumstances or risks.

     SECTION 8. Representations and Warranties. Each of the Guarantors represents and
warrants as to itself that all representations and warranties relating to it contained in the
Credit Agreement are true and correct (or true and correct in all material respects if not
otherwise qualified by materiality or a Material Adverse Effect) as of the date hereof (unless
expressly stated to relate to an earlier date, in which case such representations and warranties
shall be true and correct (or true and correct in all material respects if not otherwise qualified
by materiality or a Material Adverse Effect) as of such earlier date).

     SECTION 9. Termination. (a) The Guarantees made hereunder (i) shall automatically
terminate when all the Guaranteed Obligations (other than contingent indemnification obligations)
have been paid in full in cash and (ii) shall continue to be effective or be reinstated, as the
case may be, if at any time any payment in respect thereof, of any Obligation is rescinded or must
otherwise be restored by any Secured Party or any Guarantor upon the bankruptcy or reorganization
of any Borrower, any Guarantor or otherwise. In connection with any termination referred to above,
the Collateral Agent shall promptly execute and deliver to such Guarantor or Guarantor’s designee,
at such Guarantor’s expense, any documents or instruments which such Guarantor shall reasonably
request from time to time in writing to evidence such termination and release.

4

 

     (b) If the Equity Interests of a Guarantor are sold, transferred or otherwise disposed of to a
Person that is not an Affiliate pursuant to a transaction permitted by Section 6.05 of the Credit
Agreement that results in such Guarantor ceasing to be a Subsidiary, or upon the effectiveness of
any written consent pursuant to Section 9.08 of the Credit Agreement to the release of the guarantee granted by
such Guarantor hereby, such Guarantor shall be automatically released from its obligations under
this Agreement without further action. In connection with such release, the Collateral Agent shall
promptly execute and deliver to such Guarantor, at such Guarantor’s expense, all documents that
such Guarantor shall reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 9(b) shall be without recourse to or warranty by the
Collateral Agent.

     SECTION 10. Successors and Assigns; Several Agreement. (a) This Agreement shall be
binding upon each Guarantor and their respective permitted successors and assigns, and shall inure
to the benefit of such Guarantor, the Collateral Agent and the other Secured Parties and their
respective permitted successors and assigns, except that no Guarantor shall have the right to
assign or transfer its rights or obligations hereunder or any interest herein (and any such
attempted assignment or transfer shall be void) except as permitted by the Credit Agreement.

     (b) This Agreement shall be construed as a separate agreement with respect to each Guarantor
and may be amended, modified, supplemented, waived or released with respect to any Guarantor
without the approval of any other Guarantor and without affecting the obligations of any other
Guarantor hereunder.

     SECTION 11. Waivers; Amendment. (a) No failure or delay of the Collateral Agent or
any other Secured Party in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law or in the other Loan Documents. No waiver of any provisions of this Agreement or
any other Loan Document or consent to any departure by any Guarantor therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Guarantor in any case shall entitle such Guarantor or any other
Guarantor to any other or further notice or demand in similar or other circumstances.

     (a) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into in accordance with Section 9.08 of
the Credit Agreement.

     SECTION 12. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

     SECTION 13. Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the
Credit Agreement.

     SECTION 14. Survival of Agreement; Severability. (a) All covenants, agreements,
representations and warranties made by any Guarantor herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this Agreement or any other
Loan Document shall

5

 

be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans, regardless
of any investigation made by the Secured Parties or on their behalf, and shall continue in
full force and effect until this Agreement shall terminate.

     (b) In the event any one or more of the provisions contained in this Agreement should be held
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.

     SECTION 15. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original but all of which when taken together shall constitute a
single contract (subject to Section 10) and shall become effective as provided in Section 10.
Delivery of an executed signature page to this Agreement by facsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart hereof.

     SECTION 16. Rules of Interpretation; Headings. (a) The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this Agreement.

     (b) Section headings used herein are for the purpose of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into consideration in
interpreting this Agreement.

     SECTION 17. Jurisdiction; Consent to Service of Process. (a) Each party hereto
hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States of America for the
Southern District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that the Collateral Agent
or any other Secured Party may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against any Guarantor or its properties in the courts of any
jurisdiction.

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

6

 

     (c) Each party to this Agreement irrevocably consents to service of process in the manner
provided for in Section 9.15 of the Credit Agreement. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner permitted by law.

     SECTION 18. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS.

     SECTION 19. Additional Guarantors. To the extent any Subsidiary shall be required to
become a Guarantor pursuant to Section 5.15 of the Credit Agreement, upon execution and delivery by
the Collateral Agent and such Subsidiary of an instrument in the form of Annex I hereto, such
Subsidiary shall become a Guarantor hereunder with the same force and effect as if originally named
as a Guarantor herein. The execution and delivery of any such instrument shall not require the
consent of any other Guarantor hereunder. The rights and obligations of each Guarantor hereunder
shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party
to this Agreement.

     SECTION 20. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Secured Party and its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other indebtedness at any time
owing by such Secured Party or its Affiliates, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, to or for the credit or the account of any Guarantor against any
of and all the obligations of such Guarantor now or hereafter existing under this Agreement and
other Loan Documents held by such Secured Party, irrespective of whether or not such Secured Party
or its Affiliates shall have made any demand under this Agreement or such other Loan Document upon
any amount becoming due and payable by any Borrower under the Credit Agreement (whether at stated
maturity, by acceleration or otherwise). In connection with exercising its rights pursuant to the
previous sentence, a Secured Party or its Affiliates may at any time use any Guarantor’s credit
balances with the Secured Party or its Affiliates to purchase at the Secured Party’s or its
Affiliates’ applicable spot rate of exchange any other currency or currencies which the Secured
Party or its Affiliates considers necessary to reduce or discharge any amount due by such Guarantor
to the Secured Party or its Affiliates, and may apply that currency or those currencies in or
towards payment of those amounts. The rights of each Secured Party or its Affiliates under this
Section are in addition to other rights and remedies (including other rights of setoff) which such
Secured Party or its Affiliates may have. Each Secured Party agrees promptly to notify such
Guarantor and the Administrative Agent after making any such setoff; provided that the
failure to give such notice shall not affect the validity of such setoff.

[Signature Pages Follow]

7

 

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

BEAMER ROAD MANAGEMENT COMPANY

CPFILMS INC.

FLEXSYS AMERICA CO.

FLEXSYS AMERICA L.P.

      by FLEXSYS AMERICA CO.,

     its general partner

MONCHEM INTERNATIONAL, INC.

SOLUTIA BUSINESS ENTERPRISES INC.

SOLUTIA GREATER CHINA, INC.

SOLUTIA INTER-AMERICA, INC.

SOLUTIA OVERSEAS, INC.

SOLUTIA SYSTEMS, INC.

	 	 	 	 	 
	 	 	 
	 	By:  	                                        /s/James A. Tichenor
 	 
	 	 	Name:  	James A. Tichenor 	 
	 	 	Title:  	Authorized Officer 	 

[GUARANTEE AGREEMENT]

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CITIBANK, N.A.,

as Collateral Agent

 	 
	 	By:  	/s/ David Jaffe
 	 
	 	 	Name:  	David Jaffe 	 
	 	 	Title:  	Director/Vice President 	 

[GUARANTEE AGREEMENT]EX-10.8

 

Exhibit 10.8

 

SECURITY AGREEMENT

by

SOLUTIA INC.

and

THE SUBSIDIARIES PARTY HERETO,

as Grantors,

and

CITIBANK, N.A.,

as Collateral Agent

 

Dated as of February 28, 2008

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I	 	 	 	 
	 
	 	 	 	 	 	 
	DEFINITIONS	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 1.01.
	 	Uniform Commercial Code Defined Terms	 	 	2	 
	SECTION 1.02.
	 	Revolving Credit Agreement Defined Terms	 	 	2	 
	SECTION 1.03.
	 	Definition of Certain Terms Used Herein	 	 	2	 
	SECTION 1.04.
	 	Interpretation	 	 	7	 
	SECTION 1.05.
	 	Resolution of Drafting Ambiguities	 	 	7	 
	SECTION 1.06.
	 	Perfection Certificate	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE II	 	 	 	 
	 
	 	 	 	 	 	 
	SECURITY INTERESTS	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 2.01.
	 	Grant of Security Interest	 	 	7	 
	SECTION 2.02.
	 	No Assumption of Liability	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE III	 	 	 	 
	 
	 	 	 	 	 	 
	REPRESENTATIONS AND WARRANTIES	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 3.01.
	 	Title and Authority	 	 	9	 
	SECTION 3.02.
	 	Filings	 	 	9	 
	SECTION 3.03.
	 	Validity of Security Interests	 	 	9	 
	SECTION 3.04.
	 	Limitations on and Absence of Other Liens	 	 	9	 
	SECTION 3.05.
	 	Other Actions	 	 	10	 
	SECTION 3.06.
	 	Condition and Maintenance of Equipment	 	 	13	 
	SECTION 3.07.
	 	No Conflicts, Consents, etc.	 	 	13	 
	 
	 	 	 	 	 	 
	ARTICLE IV	 	 	 	 
	 
	 	 	 	 	 	 
	COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 4.01.
	 	Change of Name; Location of Collateral; Records; Place of Business	 	 	14	 
	SECTION 4.02.
	 	Protection of Security	 	 	14	 
	SECTION 4.03.
	 	Further Assurances	 	 	14	 
	SECTION 4.04.
	 	Inspection and Verification	 	 	14	 
	SECTION 4.05.
	 	Taxes; Encumbrances	 	 	14	 
	SECTION 4.06.
	 	Assignment of Security Interest	 	 	15	 
	SECTION 4.07.
	 	Continuing Obligations of the Grantors	 	 	15	 
	SECTION 4.08.
	 	Use and Disposition of Collateral	 	 	15	 
	SECTION 4.09.
	 	Insurance	 	 	15	 
	SECTION 4.10.
	 	Certain Covenants and Provisions Regarding Patent, Trademark and Copyright Collateral	 	 	16	 

-i-

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 4.11.
	 	Certain Covenants and Provisions Regarding Receivables	 	 	18	 
	SECTION 4.12.
	 	Inventory and Equipment	 	 	19	 
	 
	 	 	 	 	 	 
	ARTICLE V	 	 	 	 
	 
	 	 	 	 	 	 
	REMEDIES	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 5.01.
	 	Remedies upon Default	 	 	19	 
	SECTION 5.02.
	 	Notice of Sale	 	 	21	 
	SECTION 5.03.
	 	Waiver of Notice and Claims	 	 	21	 
	SECTION 5.04.
	 	Certain Sales of Collateral	 	 	21	 
	SECTION 5.05.
	 	No Waiver; Cumulative Remedies	 	 	22	 
	SECTION 5.06.
	 	Certain Additional Actions Regarding Intellectual Property	 	 	23	 
	SECTION 5.07.
	 	Application of Proceeds	 	 	23	 
	SECTION 5.08.
	 	Collateral Agent’s Calculations	 	 	24	 
	 
	 	 	 	 	 	 
	ARTICLE VI	 	 	 	 
	 
	 	 	 	 	 	 
	The Collateral Agent	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 6.01.
	 	General Authority of the Collateral Agent over the Collateral	 	 	24	 
	SECTION 6.02.
	 	Exercise of Powers	 	 	25	 
	SECTION 6.03.
	 	Remedies Not Exclusive	 	 	25	 
	SECTION 6.04.
	 	Waiver and Estoppel	 	 	25	 
	SECTION 6.05.
	 	Limitation on Collateral Agent’s Duty in Respect of Collateral	 	 	26	 
	SECTION 6.06.
	 	Limitation by Law	 	 	26	 
	SECTION 6.07.
	 	Rights of Secured Parties in Respect of Obligations	 	 	26	 
	SECTION 6.08.
	 	Compensation and Expenses	 	 	26	 
	SECTION 6.09.
	 	Stamp and Other Similar Taxes	 	 	26	 
	SECTION 6.10.
	 	Filing Fees, Excise Taxes, etc.	 	 	27	 
	SECTION 6.11.
	 	Indemnification	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE VII	 	 	 	 
	 
	 	 	 	 	 	 
	MISCELLANEOUS	 	 	 	 
	 
	 	 	 	 	 	 
	SECTION 7.01.
	 	Notices	 	 	27	 
	SECTION 7.02.
	 	Survival of Agreement	 	 	27	 
	SECTION 7.03.
	 	Binding Effect	 	 	27	 
	SECTION 7.04.
	 	GOVERNING LAW	 	 	27	 
	SECTION 7.05.
	 	Waivers; Amendment; Several Agreement	 	 	27	 
	SECTION 7.06.
	 	WAIVER OF JURY TRIAL	 	 	28	 
	SECTION 7.07.
	 	Severability	 	 	28	 
	SECTION 7.08.
	 	Counterparts	 	 	28	 
	SECTION 7.09.
	 	Headings	 	 	28	 
	SECTION 7.10.
	 	Jurisdiction; Consent to Service of Process	 	 	28	 
	SECTION 7.11.
	 	Termination	 	 	29	 
	SECTION 7.12.
	 	Additional Grantors	 	 	29	 
	SECTION 7.13.
	 	Financing Statements	 	 	30	 
	SECTION 7.14.
	 	Collateral Agent Appointed Attorney-in-Fact	 	 	30	 
	SECTION 7.15.
	 	Intercreditor Agreement Governs	 	 	31	 

-ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 7.16.
	 	Delivery of Collateral	 	 	31	 
	SECTION 7.17.
	 	Mortgages	 	 	31	 
	SECTION 7.18.
	 	Conflicts	 	 	31	 
	 
	 	 	 	 	 	 
	SCHEDULES	 	 	 	 
	 
	 	 	 	 	 	 
	Schedule I
	 	Subsidiary Guarantors	 	 	 	 
	Schedule II
	 	Excluded Deposit Account(s)	 	 	 	 
	Schedule III
	 	Excluded Securities Account	 	 	 	 
	 
	 	 	 	 	 	 
	ANNEXES	 	 	 	 
	 
	 	 	 	 	 	 
	Annex I
	 	Form of Joinder Agreement	 	 	 	 
	Annex II
	 	Form of Perfection Certificate	 	 	 	 
	Annex III
	 	Form of Bailee Letter	 	 	 	 
	Annex IV
	 	Form of Landlord Access Agreement	 	 	 	 

-iii

 

This instrument, the rights and obligations evidenced hereby, and the liens created hereunder, are
subordinate in the manner and to the extent set forth in the Intercreditor Agreement (the
“Intercreditor Agreement”), dated as of February 28, 2008, by and among SOLUTIA INC., a Delaware
corporation (the “Company”), each of the Company’s Subsidiaries party thereto from time to time and
CITIBANK, N.A. (“Citi”), in its capacity as administrative agent for the holders of the Term Loan
Obligations, and as collateral agent for the holders of the Term Loan Obligations, Citi, in its
capacity as administrative agent for the holders of the Revolving Credit Obligations, and as
collateral agent for the holders of the Revolving Credit Obligations, as amended from time to time;
and each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the
provisions of the Intercreditor Agreement.

SECURITY AGREEMENT

     SECURITY AGREEMENT (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, this “Agreement”) dated as of February 28, 2008 among SOLUTIA
INC., a Delaware corporation (the “U.S. Borrower”), each Subsidiary of the U.S. Borrower
listed on Schedule I hereto (collectively, together with each Subsidiary that becomes a
party hereto pursuant to Section 7.12 of this Agreement, the “Subsidiary Guarantors” and,
together with the U.S. Borrower, the “Grantors”), and CITIBANK, N.A., as collateral agent
(in such capacity, together with its successors in such capacity, the “Collateral Agent”)
for the Secured Parties (as defined in the Revolving Credit Agreement referred to below).

R E C I T A L S

     A. The U.S. Borrower, SOLUTIA EUROPE SA/NV, a Belgian limited liability company and FLEXSYS
SA/NV, a Belgian limited liability company (the “European Borrowers”), Citibank, N.A., as
administrative agent (in such capacity and together with any successors in such capacity, the
“Administrative Agent”) for the Lenders (as defined herein) and Citibank, N.A., as
collateral agent (in such capacity and together with any successors in such capacity, the
“Collateral Agent’“) for the Lenders, the lending institutions from time to time party
thereto (the “Lenders”) and the other agents party thereto have entered into that certain
Revolving Credit Agreement, dated as of the date hereof (as amended, restated, amended and
restated, supplemented or otherwise modified from time to time, the “Revolving Credit
Agreement”), providing for the making of Loans to the Borrower and the European Borrowers
pursuant to, and upon the terms and subject to the conditions specified in, the Revolving Credit
Agreement.

     B. Each Subsidiary Guarantor has, pursuant to the Guarantee Agreement, dated as of the date
hereof, among other things, unconditionally guaranteed (i) the obligations of the U.S. Borrower and
the European Borrowers under the Revolving Credit Agreement and (ii) the obligations of each other
Subsidiary Guarantor under the Guarantee Agreement.

     C. The U.S. Borrower and each Subsidiary Guarantor will receive substantial benefits from the
execution, delivery and performance of the obligations of the Borrowers under the Revolving Credit
Agreement and are, therefore, willing to enter into this Agreement.

     D. Contemporaneously with the execution and delivery of this Agreement, the U.S. Borrower and
Subsidiary Guarantors have executed and delivered to the Collateral Agent a Pledge Agreement (as
amended, restated, amended and restated, supplemented or otherwise modified from time to time, the
“Pledge Agreement”).

 

 

     E. This Agreement is given by each Grantor in favor of the Collateral Agent for the benefit of
the Secured Parties to secure the payment and performance of all of the Obligations (as hereinafter
defined).

     NOW THEREFORE, in consideration of the foregoing and other benefits accruing each Grantor, the
receipt and sufficiency of which are hereby acknowledged, each Grantor and the Collateral Agent
hereby agree as follows:

ARTICLE I

DEFINITIONS

     SECTION 1.01. Uniform Commercial Code Defined Terms. Unless otherwise defined herein, terms
used herein that are defined in the UCC shall have the meanings assigned to them in the UCC,
including the following which are capitalized herein:

     “Account Debtor”; “Accounts”; “Bank”; “Certificates of
Title”; “Chattel Paper”; “Commercial Tort Claim”; “Commodity
Account”; “Commodity Contract”; “Commodity Intermediary”; “Deposit
Accounts”; “Documents”; “Electronic Chattel Paper”; “Entitlement
Holder”, “Entitlement Order”; “Equipment”; “Fixtures”;
“General Intangibles”; “Goods”; “Instruments” (as defined in
Article 9 rather than Article 3); “Inventory”; “Investment Property”;
“Letter-of-Credit Rights”; “Letters of Credit”; “Money”;
“Proceeds”; “Records”; “Securities Account”; “Securities
Intermediary”; “Security Entitlement”; “Supporting Obligations”; and
“Tangible Chattel Paper”.

     SECTION 1.02. Revolving Credit Agreement Defined Terms. Capitalized terms used but not
otherwise defined herein that are defined in the Revolving Credit Agreement shall have the meanings
given to them in the Revolving Credit Agreement.

     SECTION 1.03. Definition of Certain Terms Used Herein. As used herein, the following terms
shall have the following meanings:

     “Accounts Receivable” shall mean all Accounts and all right, title and interest in any
returned goods, together with all rights, titles, securities and guarantees with respect thereto,
including any rights to stoppage in transit, replevin, reclamation and resales, and all related
security interests, liens and pledges, whether voluntary or involuntary, in each case whether now
existing or owned or hereafter arising or acquired.

     “Agreement” shall have the meaning assigned to such term in the Preamble of this
Agreement.

     “Bailee Letter” shall mean an agreement in form substantially similar to Annex
III hereto or in such other form reasonably satisfactory to the Collateral Agent.

     “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”,
as now and hereinafter in effect, or any successor statute.

     “Borrowers” shall mean the U.S. Borrower and the European Borrowers.

     “Books and Records” shall mean all instruments, files, Records, ledger sheets and
documents.

-2

 

     “Charges” shall mean any and all property and other taxes, assessments and special
assessments, levies, fees and all governmental charges imposed upon or assessed against, and all
claims (including, without limitation, landlords’, carriers’, mechanics’, maritime, workmen’s,
repairmen’s, laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims arising
by operation of law) against, all or any portion of the Collateral.

     “Collateral” shall have the meaning assigned to such term in Section 2.01.

     “Collateral Agent” shall have the meaning assigned to such term in the Preamble of
this Agreement.

     “Collateral Agent Fees” shall mean all fees, costs and expenses of the Collateral
Agent of the types described in Sections 6.08, 6.09, 6.10 and 6.11.

     “Collateral Estate” shall have the meaning assigned to such term in Section 6.01(c).

     “Collateral Report” shall mean any certificate, report or other document delivered by
any Grantor to any Agent with respect to the Collateral pursuant to any Loan Document.

     “Collateral Support” shall mean all property (real or personal) assigned, hypothecated
or otherwise securing any Collateral and shall include any security agreement or other agreement
granting a lien or security interest in such real or personal property.

     “Control” shall mean (i) in the case of each Deposit Account, “control,” as such term
is defined in Section 9-104 of the UCC, (ii) in the case of any Security Entitlement, “control,” as
such term is defined in Section 8-106(d) of the UCC, and (iii) in the case of any Commodity
Contract, “control,” as such term is defined in Section 9-106(b) of the UCC.

     “Control Agreement” shall mean an agreement in form and substance reasonably
acceptable to the Collateral Agent for the purpose of effecting Control with respect to any Deposit
Account, Securities Account or Commodity Account.

     “Copyrights” shall mean all U.S. and foreign copyrights (whether registered or
unregistered and whether published or unpublished) and all mask works (as such term is defined in
17 U.S.C. Section 901, et seq.), together with any and all (i) registrations and applications
therefor, including those listed on Schedule 14(b) of the Perfection Certificate, (ii)
rights and privileges arising under applicable law with respect thereto, (iii) renewals and
extensions thereof, (iv) income, fees, royalties, damages, claims and payments now or hereafter due
and/or payable with respect thereto, including damage awards and payments for past, present or
future infringements or other violations thereof, (v) rights corresponding thereto throughout the
world and (vi) rights to sue for past, present or future infringements thereof.

     “Current Asset Collateral” shall have the meaning assigned to such term in the
Intercreditor Agreement.

     “Discharge of Term Loan Obligations” shall have the meaning assigned to such term in
the Intercreditor Agreement.

     “Distribution Date” shall mean each date fixed by the Collateral Agent in its sole
discretion for a distribution to the Secured Parties of funds held by the Collateral Agent for the
benefit of the Secured Parties.

-3

 

     “European Borrower” shall have the meaning assigned to such term in the Recitals of
this Agreement.

     “Excluded Account” shall mean (i) any Deposit Account(s) used solely as a payroll,
trust, tax or other fiduciary account and (ii) any Deposit Account(s) set forth on Schedule
II hereto.

     “Excluded Property” shall mean:

     (a) any permit, lease, license, contract, instrument or other document, or the assets
subject thereto or covered thereby, held by any Grantor that validly prohibits the creation
by such Grantor of a security interest therein or thereon (other than to the extent that any
such prohibition would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or
any other applicable law (including the Bankruptcy Code) or principles of equity);

     (b) any permit, lease, license, contract, instrument or other document, or the assets
subject thereto or covered thereby, held by any Grantor to the extent that any Requirement
of Law applicable thereto prohibits the creation of a security interest therein or thereon
(other than to the extent that any such prohibition would be rendered ineffective pursuant
to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law (including the
Bankruptcy Code) or principles of equity);

     (c) goods owned by any Grantor on the date hereof or hereafter acquired that are
subject to a Lien securing a purchase money obligation (as defined in the UCC) or Capital
Lease Obligation permitted to be incurred pursuant to the provisions of Section 6.01(vi) of
the Revolving Credit Agreement if the contract or other agreement in which such Lien is
granted (or the documentation providing for such purchase money obligation or Capital Lease
Obligation) validly prohibits the creation of any other Lien on such Goods;

     (d) any Collateral consisting of Intellectual Property for which the creation by a
Grantor of a security interest therein is prohibited (i) without the consent of a third
party, (ii) by Requirement of Law, or (iii) any Trademark applications filed in the United
States Patent and Trademark Office on the basis of such Grantor’s “intent-to-use” such
Trademark, unless and until acceptable evidence of use of the Trademark has been filed with
the United States Patent and Trademark Office pursuant to Section 1(c) or 1(d) of the Lanham
Act (at which time such Trademark application will no longer be considered Excluded
Property), in each case, other than to the extent that any such prohibition would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any
successor provision or provisions) of any relevant jurisdiction or any other applicable law
(including the Bankruptcy Code) or principles of equity);

     (e) Securities Collateral (as defined in the Pledge Agreement) and the Equity Interests
and debt securities excluded from the definition of “Securities Collateral” in the Pledge
Agreement;

     (f) any Equity Interests pledged pursuant to any Non-U.S. Pledge Agreement and any
issued and outstanding shares of voting stock of any Subsidiary of a Grantor organized under
the laws of a Non-U.S. Jurisdiction that is expressly excluded from the pledge
contained in any Non- U.S. Pledge Agreement;

-4

 

     (g) motor vehicles and other assets subject to certificates of title;

     (h) any Equity Interests or debt securities owned by such Grantor if and to the extent
that the grant of the security interest shall, after giving effect to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC (or any successor provision or provisions) or any other applicable
law, (A) constitute or result in the abandonment, invalidation or unenforceability of any
right, title or interest of such Grantor therein, (B) constitute or result in a breach or
termination pursuant to the terms of, or a default under, any such Equity Interest or debt
securities, (C) be void or illegal under any applicable governmental law, rule or
regulation, or (D) be prohibited by (i) the organizational documents of the issuer of such
Equity Interests or debt securities or (ii) agreements among the equity holders of the
issuer of such Equity Interests or debt securities, in each case, as in effect on the
Effective Date;

     (i) any Commercial Tort Claim with a value of less than $500,000;

     (j) such Grantor’s leasehold interests; and

     (k) any Excluded Accounts;

provided that the term “Excluded Property” shall not include any Proceeds, substitutions or
replacements of any Excluded Property (unless such Proceeds, substitutions or replacements would
constitute Excluded Property).

     “Grantors” shall have the meaning assigned to such term in the Preamble of this
Agreement.

     “Intellectual Property” shall mean, collectively, with respect to any Grantor, all
intellectual and similar property rights of every kind and nature, whether arising under United
States, multinational or foreign laws or otherwise, including Patents, Copyrights, Intellectual
Property Licenses, Trademarks, Trade Secrets, intangible rights in software and databases not
otherwise included in the foregoing, and all rights corresponding thereto throughout the world
(including the right to sue and to collect proceeds), and all embodiments or fixations thereof and
related documentation, registrations and franchises, and all additions, improvements and accessions
to, and Books and Records describing or used in connection with, any of the foregoing.

     “Intellectual Property Licenses” shall mean, collectively, with respect to each
Grantor, all agreements pursuant to which such Grantor receives or grants any right in, to, or
under Intellectual Property, including license agreements, distribution agreements and covenants
not to sue (regardless of whether such agreements and covenants are contained within an agreement
that also covers other matters, such as development or consulting) with respect to any Patent,
Trademark, Copyright, Trade Secrets or other Intellectual Property, whether such Grantor is a
licensor or licensee, distributor or distributee under any such agreement, including those listed
on Schedules 14(a) and 14(b) of the Perfection Certificate, together with any and
all (i) amendments, renewals, extensions, supplements and continuations thereof, and (ii) income,
fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder and
with respect thereto including damages and payments for past, present or future infringements or
violations thereof.

     “Intercreditor Agreement” shall mean that certain Intercreditor Agreement, dated as of
the date hereof, by and among the Grantors, the Administrative Agent, the Collateral Agent, the
Term Loan
Agents, and certain other Persons which may be or become parties thereto or become bound
thereto from time to time, as the same may be amended, restated, amended and restated, supplemented
or otherwise modified from time to time.

-5

 

     “Landlord Access Agreement” shall mean a landlord access agreement in form
substantially similar to Annex IV hereto or in such other form reasonably satisfactory to
the Collateral Agent.

     “Lenders” shall have the meaning assigned to such term in the Recitals of this
Agreement.

     “Patents” shall mean, collectively, all United States and foreign patents, patent
applications, certificates of inventions, and industrial designs, together with any and all (i)
rights and privileges arising under applicable law with respect to any of the foregoing, (ii)
inventions and improvements described and claimed therein, (iii) reissues, divisions, continuations
extensions and continuations-in-part thereof and amendments thereto, (iv) income, fees, royalties,
damages, claims and payments now or hereafter due and/or payable thereunder and with respect
thereto including damages and payments for past, present or future infringements or other
violations thereof, (v) rights corresponding thereto throughout the world and (vi) rights to sue
for past, present or future infringements or other violations thereof.

     “Perfection Certificate” shall mean a certificate substantially in the form of
Annex II hereto, completed and supplemented with the schedules and attachments contemplated
thereby, and duly executed by the Grantors.

     “Pledge Agreement” shall have the meaning assigned to such term in the Recitals of
this Agreement.

     “Pledged Securities” shall have the meaning assigned to such term in the Pledge
Agreement and shall include Equity Interests pledged pursuant to Non-U.S. Pledge Agreements.

     “Receivables” shall mean all (i) Accounts, (ii) Chattel Paper, (iii) Payment
Intangibles, (iv) General Intangibles, (v) Instruments and (vi) all other rights to payment,
whether or not earned by performance, for goods or other property sold, leased, licensed, assigned
or otherwise disposed of, or services rendered or to be rendered, regardless of how classified
under the UCC together with all of Grantors’ rights, if any, in any goods or other property giving
rise to such right to payment and all Collateral Support and Supporting Obligations related thereto
and all Records relating thereto.

     “Revolving Credit Agreement” shall have the meaning assigned to such term in the
Recitals of this Agreement.

     “Revolving Credit Facility Agents” shall have the meaning assigned to such term in the
Intercreditor Agreement.

     “Revolving Credit Facility Security Documents” shall have the meaning assigned to such
term in the Intercreditor Agreement.

     “Securities Collateral” shall have the meaning assigned to such term in the Pledge
Agreement.

     “Security Interests” shall have the meaning assigned to such term in Section 2.01.

     “Subsidiary Guarantors” shall have the meaning assigned to such term in the Preamble
of this Agreement.

     “Trademarks” shall mean, collectively, all United States, state, and foreign
trademarks, service marks, certification marks, slogans, logos, certification marks, trade dress,
internet domain names, corporate names, trade names, and other source or business identifiers,
whether registered or unregistered (whether statutory or common law and whether established or
registered in the United States or any other

-6

 

country or any political subdivision thereof),
together with any and all (i) registrations and applications for any of the foregoing, including
those listed on Schedule 14(a) of the Perfection Certificate, (ii) goodwill connected with
the use thereof and symbolized thereby, (iii) rights and privileges arising under applicable law
with respect to the use of any of the foregoing, (iv) renewals thereof and amendments thereto,
(v) income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder
and with respect thereto, including damages, claims and payments for past, present or future
infringements, dilutions or other violations thereof, (vi) rights corresponding thereto throughout
the world and (vii) rights to sue for past, present and future infringements, dilutions or other
violations thereof.

     “Trade Secrets” shall mean all trade secrets and all other confidential or proprietary
information and know-how, whether or not such information has been reduced to a writing or other
tangible form, together with all (i) rights and privileges arising under applicable law with
respect to the use of any of the foregoing, (ii) income, fees, royalties, damages and payments now
and hereafter due and/or payable thereunder and with respect thereto, including damages, claims and
payments for past, present or future misappropriation or other violations thereof, (iii) rights
corresponding thereto throughout the world and (iv) rights to sue for past, present and future
misappropriation or other violations thereof.

     “UCC” shall mean the Uniform Commercial Code as in effect on the date hereof in the
State of New York; provided, however, that if by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of the Collateral Agent’s and the Secured
Parties’ security interest in any item or portion of the Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC”
shall mean the Uniform Commercial Code as in effect on the date hereof in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or priority and for
purposes of definitions relating to such provisions.

     “U.S. Borrower” shall have the meaning assigned to such term in the Preamble of this
Agreement.

     SECTION 1.04. Interpretation. The rules of interpretation specified in the Revolving Credit
Agreement (including Section 1.03 thereof) shall be applicable to this Agreement.

     SECTION 1.05. Resolution of Drafting Ambiguities. Each Grantor acknowledges and agrees that
it was represented by counsel in connection with the execution and delivery hereof, that it and its
counsel reviewed and participated in the preparation and negotiation hereof and that any rule of
construction to the effect that ambiguities are to be resolved against the drafting party (i.e.,
the Collateral Agent) shall not be employed in the interpretation hereof.

     SECTION 1.06. Perfection Certificate. The Collateral Agent and each Grantor agree that the
Perfection Certificate and all schedules, amendments and supplements thereto are and shall at all
times remain a part of this Agreement.

ARTICLE II

SECURITY INTERESTS

     SECTION 2.01. Grant of Security Interest. As collateral security for the payment and
performance in full of all the obligations of each Grantor under the Loan Documents
(“Obligations”), each Grantor hereby pledges and grants to the Collateral Agent, for the
benefit of the Secured Parties, a lien on and security interest in and to all of the right, title
and interest of such Grantor in, to and under the following property, wherever located, and whether
now existing or hereafter arising or acquired from time to time (collectively, the
“Collateral”):

-7

 

	 	(a)	 	Accounts Receivable;
	 
	 	(b)	 	Books and Records;
	 
	 	(c)	 	Money and Deposit Accounts;
	 
	 	(d)	 	Chattel Paper;
	 
	 	(e)	 	Commercial Tort Claims described on Schedule 15 to the Perfection
Certificate (as such schedule may be amended or supplemented from time to time);
	 
	 	(f)	 	Documents;
	 
	 	(g)	 	Equipment;
	 
	 	(h)	 	Fixtures;
	 
	 	(i)	 	General Intangibles (including Intellectual Property);
	 
	 	(j)	 	Goods;
	 
	 	(k)	 	Instruments;
	 
	 	(l)	 	Inventory;
	 
	 	(m)	 	Investment Property;
	 
	 	(n)	 	Supporting Obligations; and
	 
	 	(o)	 	all other personal property of such Grantor, whether tangible
or intangible, and all Proceeds and products of each of the foregoing and all
accessions to, substitutions and replacements for, and rents, profits and
products of, each of the foregoing, any and all Proceeds of any insurance,
indemnity, warranty or guaranty payable to such Grantor from time to time with
respect to any of the foregoing.

          Notwithstanding anything to the contrary contained in clauses (a) through (p) above, (x) the
security interest created by this Agreement shall not extend to, and the term “Collateral” shall
not include, any Excluded Property and (y) from and after the Effective Date, no Grantor shall
permit to become effective in any document creating, governing or providing for any permit, license
or agreement a provision that would prohibit the creation of a Lien on such permit, license or
agreement in favor of the
Collateral Agent unless such prohibition is permitted under Section 6.09 of the Revolving
Credit Agreement.

          The Liens granted hereunder to secure the Obligations are collectively referred to herein as
the “Security Interests”.

     SECTION 2.02. No Assumption of Liability. The Security Interests are granted as security only
and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or
modify, any obligation or liability of any Grantor with respect to or arising out of the
Collateral.

-8

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     The Grantors jointly and severally represent and warrant to the Collateral Agent and the
Secured Parties that:

     SECTION 3.01. Title and Authority. Each Grantor has good and valid rights in and title to the
Collateral with respect to which it has purported to grant a Security Interest hereunder and has
full power and authority to grant to the Collateral Agent the Security Interest in such Collateral
pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other Person other than any consent or
approval which has been obtained.

     SECTION 3.02. Filings. (a)  All information set forth herein as of the date hereof and in
the Perfection Certificate as of the date hereof, including the Schedules annexed hereto and
thereto, has been duly prepared, completed and executed and the information set forth herein and
therein is correct and complete in all material respects. The Collateral described on the
Schedules annexed to the Perfection Certificate constitutes all of the property of such type of
Collateral owned or held by the Grantors to the extent required to be scheduled thereon. Fully
completed and, to the extent necessary or appropriate, duly executed UCC financing statements
(including fixture filings, as applicable) or other appropriate filings, recordings or
registrations containing a description of the Collateral have been delivered to the Collateral
Agent for filing in each governmental, municipal or other office specified in Schedule 7 to
the Perfection Certificate, which are all the filings, recordings and registrations (along with the
concurrent payment of any applicable taxes or filing fees) that are necessary to publish notice of
and protect the validity of and to establish a legal, valid and perfected security interest in
favor of the Collateral Agent (for the benefit of the Secured Parties) in respect of all Collateral
in which a security interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof) and its territories and possessions, and no further
or subsequent filing, refiling, recording, rerecording, registration or reregistration under
Article 9 of the UCC is necessary in any such jurisdiction, except as provided under applicable law
with respect to the filing of continuation statements.

     (b) Each Grantor represents and warrants that a fully executed security agreement in the form
hereof (or short form security agreements in a form reasonably satisfactory to the Collateral
Agent) containing a description of all Collateral consisting of Intellectual Property with respect to
(x) United States issued Patents and Patent applications and United States registered Trademarks
and Trademarks applications, in each case, owned by such Grantor, have been delivered
contemporaneously with the execution of this Agreement to the Collateral Agent for recordation with
the United States Patent and Trademark Office, and (y) United States registered Copyrights and
Copyright applications owned by such Grantor have been delivered contemporaneously with the
execution of this Agreement to the Collateral Agent for registration with the United States
Copyright Office.

     SECTION 3.03. Validity of Security Interests. This Agreement creates legal and valid security
interests in all the Collateral securing the payment and performance of the Obligations;
provided, however, that, for the avoidance of doubt, the foregoing representation
shall not be made with respect to, or construed in accordance with, the laws of any jurisdiction
other than the United States, any State thereof or the District of Columbia. The Security
Interests are and shall be prior to any other Lien on any of the Collateral, other than Permitted
Liens.

     SECTION 3.04. Limitations on and Absence of Other Liens. The Collateral is owned by the
Grantors or the Grantors have rights therein, free and clear of any Lien, except for Permitted
Liens. The Grantors have not filed or consented to the filing of (a) any financing statement or
analogous document

-9

 

under the UCC or any other applicable laws covering any Collateral, (b) any
assignment in which any Grantor assigns any Collateral or any security agreement or similar
instrument covering any Collateral with the United States Patent and Trademark Office and the
United States Copyright Office or (c) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Collateral with any foreign governmental,
municipal or other office, which financing statement or analogous document, assignment, security
agreement or similar instrument is still in effect, except, in each case, for Permitted Liens or
filings as to which a duly authorized termination statement relating to such financing statement or
other instrument has been delivered to the Collateral Agent on the Effective Date.

     SECTION 3.05. Other Actions. In order to further ensure the attachment, perfection and
priority of, and the ability of the Collateral Agent to enforce, preserve and protect, the
Collateral Agent’s security interests in the Collateral, each Grantor hereby represents and
warrants as follows and agrees, in each case at such Grantor’s own expense, to take the following
actions with respect to the following Collateral:

     (a) Instruments and Tangible Chattel Paper. As of the date hereof, (x) each Instrument
representing indebtedness between or among the Grantors or owed to any Grantor by any of the
Borrowers’ other Restricted Subsidiaries and (y) each other Instrument and each other item of
Tangible Chattel Paper specified in Schedule 12 to the Perfection Certificate valued in
excess of $500,000 has been properly endorsed, assigned and delivered to the Collateral Agent, and,
if necessary, accompanied by instruments of transfer or assignment duly executed in blank;
provided, that, to the extent that any such Instrument constitutes an Intercompany Note
and to the extent that any Grantor is required hereunder to deliver any such Intercompany Note to
the Collateral Agent for purposes of possession, such Grantor’s obligations hereunder with respect
to such delivery shall be deemed satisfied by the delivery to the Collateral Agent of the Master
Intercompany Note. If any amount individually or in the aggregate in excess of $500,000 payable
under or in connection with any of the Collateral shall be evidenced by any Instrument or Tangible
Chattel Paper, the Grantor acquiring such Instrument or Tangible Chattel Paper shall notify the
Collateral Agent and, on each date on which financial statements are required to be delivered under
Section 5.01(a) or (b) of the Credit Agreement, endorse, assign and deliver the same to the
Collateral Agent, accompanied
by such instruments of transfer or assignment duly executed in blank as the Collateral Agent
may from time to time reasonably request; provided, that, if any amount
individually or in the aggregate in excess of $1,000,000 payable under or in connection with any of
the Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, the Grantor
acquiring such Instrument or Tangible Chattel Paper shall promptly endorse, assign and deliver the
same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as the Collateral Agent may from time to time reasonably request;
provided, however, that so long as no Event of Default shall have occurred and be
continuing, the Collateral Agent shall return such Instrument or Tangible Chattel Paper to such
Grantor from time to time, to the extent necessary for collection in the ordinary course of such
Grantor’s business.

     (b) Deposit Accounts. Each Grantor hereby represents and warrants that (i) as of the date
hereof, it does not maintain any Deposit Accounts other than the accounts listed in
Schedule 16 of the Perfection Certificate and (ii) with respect to each Deposit Account,
other than any Excluded Accounts and the other accounts set forth in Section 5.20(a) of the
Revolving Credit Agreement, upon execution and delivery of a Control Agreement for such Deposit
Account, the Collateral Agent will have a perfected security interest in such Deposit Account by
Control. From and after 90 days following the Effective Date (plus, in the event any depositary
institution refuses to execute a Control Agreement, then the Grantors shall have an additional 120
days to move such Deposit Account), no Grantor shall hereafter establish and maintain any Deposit
Account, other than an Excluded Account or any other account set forth in Section 5.20(a) of the
Revolving Credit Agreement, unless (1) the applicable Grantor shall have given the Collateral Agent
at least 10 days’ (or such shorter period as may be determined by the Collateral Agent in

-10

 

its sole
discretion) prior written notice of its intention to establish such new Deposit Account with a Bank
and (2) such Bank and such Grantor shall have duly executed and delivered to the Collateral Agent a
Control Agreement with respect to such Deposit Account. No Grantor shall grant Control of any
Deposit Account to any Person other than the Collateral Agent and, subject to the terms of the
Intercreditor Agreement, Revolving Credit Facility Agents. The Grantors shall not permit the
Accounts set forth on Schedule II hereto to have balances in excess of $1.0 million
individually or $10.0 million in the aggregate at any time.

     (c) Investment Property. (i) Each Grantor hereby represents and warrants that (1) as of the
date hereof, it does not maintain any Securities Accounts or Commodity Accounts other than those
listed in Schedule 16 of the Perfection Certificate and, except with respect to the
Securities Account set forth on Schedule III hereto, the Collateral Agent has a perfected
security interest in such Securities Accounts and Commodity Accounts by Control and (2) it does not
hold, own or have any interest in any certificated securities or uncertificated securities other
than those constituting Securities Collateral under the Pledge Agreement, those not required to be
pledged pursuant to the terms of the Pledge Agreement or this Agreement and those maintained in
Securities Accounts or Commodity Accounts listed in Schedule 16 of the Perfection
Certificate. The Grantors shall not permit the Account set forth on Schedule III hereto to
have a balance in excess of $50,000 at any time. If any Grantor shall at any time hold or acquire
any certificated securities constituting Investment Property (other than any Excluded Property)
valued in excess of $500,000 that are not Pledged Securities under the Pledge Agreement, such
Grantor shall, on each date on which financial statements are required to be delivered under
Section 5.01(a) or (b) of the Credit Agreement, endorse, assign and deliver the same to the
Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank,
all in form and substance reasonably satisfactory to the Collateral Agent; provided,
that, if any Grantor shall at any time hold or acquire any certificated securities
constituting Investment Property (other than any Excluded Property) valued in excess of $1,000,000
that are not Pledged Securities under the Pledge Agreement, such Grantor shall promptly endorse,
assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank, all in form and substance reasonably satisfactory to the
Collateral Agent. If any securities now or hereafter acquired by any Grantor constituting
Investment Property (other than any Excluded Property) that are not Pledged Securities are
uncertificated, such Grantor shall
promptly notify the Collateral Agent thereof and use its commercially reasonable efforts to,
within five (5) Business Days and in any event no later than 30 days (except where legally
prohibited therefrom), pursuant to an agreement in form and substance reasonably satisfactory to
the Collateral Agent, cause the issuer to agree to comply with instructions from the Collateral
Agent as to such securities, without further consent of any Grantor. From and after 90 days
following the Effective Date (plus, in the event any depositary institution refuses to execute a
Control Agreement, then the Grantors shall have an additional 120 days to move such Securities
Account or Commodity Account), no Grantor shall hereafter establish and maintain any Securities
Account or Commodity Account with any Securities Intermediary or Commodity Intermediary unless
(1) the applicable Grantor shall have given the Collateral Agent at least 10 days’ (or such shorter
period as may be determined by the Collateral Agent in its sole discretion) prior written notice of
its intention to establish such new Securities Account or Commodity Account with such Securities
Intermediary or Commodity Intermediary and (2) such Securities Intermediary or Commodity
Intermediary, as the case may be, and such Grantor shall have duly executed and delivered to the
Collateral Agent a Control Agreement with respect to such Securities Account or Commodity Account,
as the case may be. Each Grantor shall accept any cash and Investment Property (other than any
Excluded Property) in trust for the benefit of the Collateral Agent and promptly, and in any event
within ten (10) Business Days of actual receipt thereof, deposit such Investment Property and any
new securities, instruments, documents or other Investment Property by reason of ownership of such
Investment Property received by it into a Securities Account or Commodity Account subject to a
Control Agreement in favor of the Collateral Agent. No Grantor shall grant Control over any
Investment Property to any Person other than the Collateral Agent and, subject to the terms of the
Intercreditor Agreement, Revolving Credit Facility Agents.

-11

 

     (ii) Each Grantor shall promptly pay all Charges and fees with respect to the Investment
Property pledged by it under this Agreement; provided that no Grantor shall be required to
pay any such Charge or fee that is being contested in good faith and by proper proceedings
diligently conducted, which proceedings have the effect of preventing the forfeiture or sale of
such Investment Property, if it has maintained adequate reserves with respect thereto in accordance
with and to the extent required by GAAP and such failure to pay could not reasonably be expected to
have a Material Adverse Effect; provided, further, that no Liens shall be permitted
to exist, directly or indirectly, on any Investment Property other than Liens in favor of the
Collateral Agent and Liens permitted by Sections 6.02(v), 6.02(ix) and 6.02(xviii) of the Revolving
Credit Agreement. In the event any Grantor shall fail to make such payment contemplated in the
immediately preceding sentence (except to the extent any Grantor is contesting such Charges and
fees in good faith), the Collateral Agent may upon written notice to such Grantor, do so for the
account of such Grantor and the Grantors shall promptly reimburse and indemnify the Collateral
Agent from all reasonable costs and expenses incurred by the Collateral Agent under this
Section 3.05(c).

     (d) Electronic Chattel Paper and Transferable Records. If any amount individually or in the
aggregate in excess of $500,000 payable under or in connection with any of the Collateral shall be
evidenced by any Electronic Chattel Paper or any “transferable record,” as that term is defined in
Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction,
the Grantor acquiring such Electronic Chattel Paper or transferable record shall, on each date on
which financial statements are required to be delivered under Section 5.01(a) or (b) of the Credit
Agreement, notify the Collateral Agent and take such action as the Collateral Agent may reasonably
request in writing to vest in the Collateral Agent control under UCC Section 9-105 of such
Electronic Chattel Paper or control under Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable record;
provided, that, if any amount individually or in the aggregate in excess of
$1,000,000 payable under or in connection with any of the Collateral shall be evidenced by any
Electronic Chattel Paper or any “transferable record,” as that term is defined in Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the
Uniform Electronic Transactions Act as in effect in
any relevant jurisdiction, the Grantor acquiring such Electronic Chattel Paper or transferable
record shall promptly notify the Collateral Agent and take such action as the Collateral Agent may
reasonably request in writing to vest in the Collateral Agent control under UCC Section 9-105 of
such Electronic Chattel Paper or control under Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable record.

     (e) Intellectual Property. (i) Schedules 14(a) and (b) of the Perfection
Certificate set forth a true and complete list of (A) all United States and foreign registrations
of and applications for Patents, Trademarks, and Copyrights owned by such Grantor and (B) to the
best of each Grantor’s knowledge, all know-how and patent Intellectual Property Licenses currently
in effect; (ii) such Grantor is the sole and exclusive record and beneficial owner of the entire
right, title, and interest in and to all U.S. Intellectual Property listed on Schedules
14(a) and (b) of the Perfection Certificate, and such Grantor owns or has the valid
right to use all other Intellectual Property used in or necessary to conduct its business, free and
clear of all Liens, claims, encumbrances, and licenses, except for Permitted Liens; (iii) all
Intellectual Property listed on Schedule 14(a) of the Perfection Certificate is subsisting
and such Grantor has performed all acts and has paid all renewal, maintenance, and other fees and
taxes required to maintain such Intellectual Property in full force and effect except as may be
permitted under Section 4.10(f); (iv) to the best of such Grantor’s knowledge, all Intellectual
Property owned by such Grantor is valid and enforceable, and no holding, decision, or judgment has
been rendered in any action or proceeding before any court or administrative authority challenging
the validity of, such Grantor’s right to register, or such Grantor’s rights to own or use, any
Intellectual Property and no such action or proceeding is pending or, to the best of such

-12

 

Grantor’s
knowledge, threatened; (v) to the best of such Grantor’s knowledge, the conduct of such Grantor’s
business does not infringe upon or otherwise violate any Intellectual Property right of any third
party except as could not reasonably be expected to have a Material Adverse Effect; (vi) to the
best of each Grantor’s knowledge, no third party is infringing upon or otherwise violating any
rights in any Intellectual Property owned or used by such Grantor, or any of its respective
licensees except as could not reasonably be expected to have a Material Adverse Effect; (vii) no
settlement or consents, covenants not to sue, non-assertion assurances, or releases have been
entered into by such Grantor or to which such Grantor is bound adversely affect Grantor’s rights to
own or use any Intellectual Property that is material to the business of such Grantor as currently
conducted; and (viii) such Grantor has not made a previous assignment, sale, transfer or agreement
constituting a present or future assignment, sale, transfer or agreement of any Intellectual
Property that has not been terminated or released.

     (f) Commercial Tort Claims. As of the date hereof, each Grantor hereby represents and
warrants that it holds no Commercial Tort Claims other than those listed in Schedule 15 to
the Perfection Certificate. If any Grantor shall at any time hold or acquire a Commercial Tort
Claim having a value individually or in the aggregate in excess of $500,000, such Grantor shall, on
each date on which financial statements are required to be delivered under Section 5.01(a) or (b)
of the Credit Agreement, notify the Collateral Agent in writing signed by such Grantor of the brief
details thereof and grant to the Collateral Agent in such writing a security interest therein and
in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to the Collateral Agent; provided, that, if any
Grantor shall at any time hold or acquire a Commercial Tort Claim having a value individually or in
the aggregate in excess of $1,000,000, such Grantor shall promptly notify the Collateral Agent in
writing signed by such Grantor of the brief details thereof and grant to the Collateral Agent in
such writing a security interest therein and in the Proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral
Agent.

     (g) Landlord’s Access Agreements/Bailee Letters. Each Grantor shall use its commercially
reasonable efforts to obtain a Bailee Letter or a Landlord Access Agreement, as applicable, from
all such bailees and landlords, as applicable, who from time to time have possession of Collateral
in excess of
$100,000; provided, that, so long as each Grantor has in fact used
commercially reasonable efforts to obtain Bailee Letters and Landlord Access Agreements, as
required above, during the sixty-day period following the Effective Date, the obligation of the
Grantors to continue to use commercially reasonable efforts to obtain Bailee Letters and Landlord
Access Agreements with respect to bailment and leased locations of the Grantors in existence on the
Effective Date shall terminate.

     SECTION 3.06. Condition and Maintenance of Equipment. The Equipment of such Grantor is in
good repair, working order and condition, reasonable wear and tear, casualty and condemnation
excepted. Each Grantor will maintain its Equipment in accordance with Section 5.03 of the
Revolving Credit Agreement.

     SECTION 3.07. No Conflicts, Consents, etc. In the event that the Collateral Agent desires to
exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this
Agreement and determines it necessary to obtain any approvals or consents of any Governmental
Authority or any other Person therefor, then, upon the reasonable written request of the Collateral
Agent, such Grantor agrees to use its commercially reasonable efforts to assist and aid the
Collateral Agent to obtain as soon as practicable any necessary approvals or consents for the
exercise of any such remedies, rights and powers.

-13

 

ARTICLE IV

COVENANTS

     SECTION 4.01. Change of Name; Location of Collateral; Records; Place of Business.

     (a) Each Grantor shall comply with the provisions of Section 5.07 of the Revolving Credit
Agreement.

     (b) Each Grantor agrees to maintain, at its own cost and expense, records which are complete
and accurate in all material respects with respect to the Collateral owned by it and to permit the
Collateral Agent to examine its records in accordance with Section 5.05 of the Revolving Credit
Agreement.

     SECTION 4.02. Protection of Security. Except to the extent otherwise permitted by the
Revolving Credit Agreement, each Grantor shall, at its own cost and expense, defend title to the
Collateral pledged by it hereunder and the security interest therein and Lien thereon granted to
the Collateral Agent and the priority thereof against all claims and demands of all Persons at any
time claiming any interest therein adverse to the Collateral Agent or any other Secured Party other
than Permitted Liens. Except as permitted by the Revolving Credit Agreement and except for
restrictions in agreements entered into in the ordinary course of business with respect to
Intellectual Property, which restrictions would not, individually or in the aggregate, have an
adverse effect on the business of any Grantor or materially impair the value of the Collateral to
the Collateral Agent, there is no agreement, order, judgment or decree, and no Grantor shall enter
into any agreement or take any other action, that would restrict the transferability of any of the
Collateral or otherwise impair or conflict with such Grantor’s obligations or the rights of the
Collateral Agent hereunder.

     SECTION 4.03. Further Assurances. Each Grantor agrees, at its own expense, to promptly
execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents
and take all such further actions as the Collateral Agent may reasonably request for the purpose of
obtaining or to preserve, protect and perfect the Security Interests and the rights and remedies
created hereby and the rights and powers herein granted, including the payment of any fees and
taxes required in connection with the execution and delivery of this Agreement, the granting of the
Security Interests and the filing of any financing or continuation statement required under the UCC
(or other similar laws) in effect in any jurisdiction with respect to the security interest created
hereby and the execution and delivery of Control Agreements required hereunder.

     SECTION 4.04. Inspection and Verification. The Collateral Agent and its representatives as
the Collateral Agent may reasonably designate shall have the right, at the Grantors’ own cost and
expense, to at all reasonable times and reasonable intervals and upon reasonable prior notice
inspect the Collateral, all records related thereto (and to make extracts and copies from such
records) and the premises upon which any of the Collateral is located in each case during business
hours. The Collateral Agent shall have the absolute right to share any information it gains from
such inspection or verification with any Secured Party (subject to Section 9.16 of the Revolving
Credit Agreement).

     SECTION 4.05. Taxes; Encumbrances. Each Grantor shall pay and discharge all of its material
Taxes and all lawful claims in accordance with Section 5.14 of the Revolving Credit Agreement. In
its reasonable discretion, the Collateral Agent may discharge past due taxes, assessments, charges,
fees, Liens, security interests or other encumbrances at any time levied or placed on the
Collateral except to the extent the same constitute Permitted Liens, and may pay for the
maintenance and preservation of the

-14

 

Collateral to the extent any Grantor fails to do so as required
by this Agreement (in each case with reasonable prior written notice to such Grantor), and each
Grantor jointly and severally agrees to reimburse the Collateral Agent within 20 days of written
demand for any payment made or any expense incurred by the Collateral Agent pursuant to the
foregoing authorization; provided, however, that nothing in this Section 4.05 shall
be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the
Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any
Grantor with respect to taxes, assessments, charges, fees, liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Loan Documents.

     SECTION 4.06. Assignment of Security Interest. If at any time any Grantor shall take a
security interest in any Property of an Account Debtor or any other Person to secure payment and
performance of an Account valued in excess of $500,000, such Grantor shall, on each date on which
financial statements are required to be delivered under Section 5.01(a) or (b) of the Credit
Agreement, notify the Collateral Agent and take such actions as may be requested by the Collateral
Agent to make the Collateral Agent’s interest in such Property a matter of public record;
provided, that, if at any time any Grantor shall take a security interest in any
Property of an Account Debtor or any other Person to secure payment and performance of an Account
valued in excess of $1,000,000, such Grantor shall promptly notify the Collateral Agent and take
such actions as may be requested by the Collateral Agent to make the Collateral Agent’s interest in
such Property a matter of public record.

     SECTION 4.07. Continuing Obligations of the Grantors. Each Grantor shall remain liable to observe and perform all the conditions and obligations
to be observed and performed by it under each contract, agreement or instrument relating to the
Collateral, all in accordance with the terms and conditions thereof.

     SECTION 4.08. Use and Disposition of Collateral. No Grantor shall make or permit to be made
an assignment for security, pledge or hypothecation of the Collateral, execute, authorize or permit
to be filed in any public office any financing statement (or similar statement, instrument of
registration or public notice under the law of any jurisdiction) relating to any Collateral or
shall grant any other Lien in respect of the Collateral other than Permitted Liens.

     SECTION 4.09. Insurance. The Grantors, at their own expense, shall maintain or cause to be
maintained insurance covering physical loss or damage to the Inventory and Equipment in accordance
with Section 5.04 of the Revolving Credit Agreement. Except as set forth in Section 5.04 of the
Revolving Credit Agreement, in the event that any Grantor at any time or times shall fail to obtain
or maintain any of the policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any obligation or
liability of the Grantors hereunder or any Event of Default, in its reasonable discretion and upon
prior written notice to the Grantors obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent deems reasonably
advisable. All sums disbursed by the Collateral Agent in connection with this Section 4.09,
including reasonable attorneys’ fees, court costs, out-of-pocket expenses and other charges
relating thereto, shall be payable, upon written demand, by the Grantors to the Collateral Agent
and shall be additional Obligations secured hereby in the same priority as the original
Obligations. So long as no Event of Default has occurred and is continuing, all actions to be
taken with respect to the making, settling and adjusting of claims under insurance policies may be
taken by the Grantors without any requirement of participation or consent from the Collateral
Agent.

-15

 

     SECTION 4.10. Certain Covenants and Provisions Regarding Patent, Trademark and Copyright
Collateral.

     (a) Each Grantor agrees that it will not, nor will it permit any of its licensees to, do any
act, or omit to do any act, whereby any Patent owned by such Grantor which is material to the
conduct of such Grantor’s business may become invalidated, unenforceable, or dedicated to the
public, and agrees that it shall use commercially reasonable efforts to continue to mark any
products covered by a Patent with the relevant patent number as necessary and sufficient to
establish and preserve its rights under applicable patent laws; provided, however,
that nothing in this Section 4.10(a) shall prevent such Grantor from discontinuing the prosecution
or maintenance of such Patent if, in the reasonable business judgment of such Grantor, such Patent
is no longer necessary or desirable in the conduct of its business.

     (b) Each Grantor (either itself or through its licensees or its sublicenses) will, for each
Trademark material to the conduct of such Grantor’s business, use its commercially reasonable
efforts to (i) maintain each such registered Trademark in full force free from any claim of
abandonment or invalidity for nonuse, (ii) maintain the quality of products and services offered
under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration
to the extent necessary and sufficient to establish and preserve its rights under applicable law
and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third
party rights; provided, however, that nothing in this Section 4.10(b) shall prevent
such Grantor from discontinuing the use, prosecution, or maintenance of such Trademark, if such
discontinuance is, in the reasonable business judgment of such Grantor, no
longer necessary or desirable in the conduct of its business; provided,
further, that nothing in this Section 4.10(b) shall require providing notice in connection
with office actions for pending Patent, Trademark or Copyright applications.

     (c) Intentionally omitted.

     (d) Each Grantor shall promptly notify the Collateral Agent upon such Grantor obtaining
knowledge of any Patent, Trademark or Copyright material to the conduct of its business which may
become abandoned, lost, unenforceable, invalidated, or dedicated to the public, 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 or
United States Copyright Office (or any court or similar office of any country) regarding such
Grantor’s ownership of any Patent, Trademark or Copyright, or its right to register the same, or to
keep and maintain the same.

     (e) If any Grantor shall at any time after the date hereof (i) obtain any ownership or other
rights in and/or to any additional Intellectual Property (including trademark applications for
which evidence of the use of such trademarks in interstate commerce has been submitted to and
accepted by the United States Patent and Trademark Office pursuant to 15 U.S.C. Section 1060(a) (or
a successor provision)) or (ii) become entitled to the benefit of any additional Collateral
consisting of Intellectual Property or any renewal or extension thereof, including any reissue,
division, continuation, or continuation-in-part of any Collateral consisting of Intellectual
Property, or any improvement on any Collateral consisting of Intellectual Property, the provisions
of this Agreement shall automatically apply thereto and any such item described in the preceding
clause (i) or (ii) (other than any Excluded Property) shall automatically constitute Collateral as
if such would have constituted Collateral at the time of execution hereof and such Collateral
consisting of Intellectual Property (other than any Excluded Property) shall be subject to the Lien
and security interest created by this Agreement without further action by any party. Each Grantor
shall on a monthly basis with respect to Copyrights and on a quarterly basis with respect to
Patents and Trademarks provide to the Collateral Agent written notice of any of the foregoing
Collateral consisting of Intellectual Property owned by such Grantor which is the subject of a
registration or application in the United States and confirm the attachment of the Lien and
security interest created by this Agreement to

-16

 

any rights described in clauses (i) and (ii) above
by execution and delivery, within ten (10) days of providing such notice or such longer period as
may be determined by the Collateral Agent in its sole discretion of the acquisition by such Grantor
of such Intellectual Property, of an instrument in form and substance reasonably acceptable to the
Collateral Agent and the filing of any instruments or statements as shall be reasonably necessary
or requested by the Collateral Agent to create, record, preserve, protect or perfect the Collateral
Agent’s lien and security interest in such Intellectual Property.

     (f) Each Grantor will take all necessary steps in any proceeding before the United States
Patent and Trademark Office or United States Copyright Office, or any office or agency in any
political subdivision of the United States or in any other country or any political subdivision
thereof, to maintain and pursue each material application relating to the Patents, Trademarks
and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued
Patent and each registration of the Trademarks or Copyrights owned by such Grantor that is material
to the conduct of any Grantor’s business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with commercially reasonable business judgment, to initiate opposition, interference and
cancellation proceedings against third parties; provided, however, that nothing in
this Section 4.10(f) shall prevent such Grantor from failing to maintain or pursue any such
Trademark or Patent if, in the reasonable business judgment of such Grantor, the likely costs of
such maintenance or pursuit are likely to outweigh the likely benefits of such maintenance or
pursuit and such failure could not reasonably be expected to have a Material Adverse Effect.

     (g) In the event that any Grantor has reason to believe that any Collateral consisting of a
material Patent, Trademark or Copyright has been or is about to be infringed, misappropriated or
diluted by a third party, such Grantor promptly shall notify the Collateral Agent and, if within
such Grantor’s good faith business judgment, the likely benefits outweigh the likely costs, shall
promptly sue for infringement, misappropriation or dilution and to recover any and all damages for
such infringement, misappropriation or dilution, and shall take such actions as are deemed by such
Grantor in its reasonable business judgment to be reasonably appropriate under the circumstances to
protect such Collateral.

     (h) For the purpose of enabling the Collateral Agent, during the continuance of an Event of
Default, to exercise rights and remedies under Article V hereof at such time as the
Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other
purpose, each Grantor hereby grants to the Collateral Agent an irrevocable, non-exclusive license
and, to the extent permitted under Intellectual Property Licenses granting such Grantor rights in
Intellectual Property, sublicense (in each case, exercisable without payment of royalties or other
compensation to such Grantor) to use, license or sublicense any of the Intellectual Property
included in the Collateral, wherever the same may be located. Such license shall include access to
all media in which any of the licensed items may be recorded or stored and to all computer programs
used for the compilation or printout hereof, to the extent permitted under license agreements
governing use of such computer programs. With respect to Trademarks owned by such Grantor, the
license granted hereunder shall be subject to sufficient rights of quality control and inspection
in favor of such Grantor to avoid the risk of invalidation of such Trademarks.

     (i) Unless there shall occur and be continuing any Event of Default, each Grantor shall have
the right to commence and prosecute in its own name, as the party in interest, for its own benefit
and at the sole cost and expense of the Grantors, such applications for protection of the
Intellectual Property and suits, proceedings or other actions to prevent the infringement,
misappropriation, counterfeiting, unfair competition, dilution, diminution in value or other damage
as are necessary to protect the Intellectual Property. Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent shall have the right but shall in no way
be obligated to file applications for protection of the Intellectual Property and/or bring suit in
the name of any Grantor, the Collateral Agent or the Secured Parties to enforce the Intellectual
Property and any license thereunder. In the event of such suit, each Grantor shall, at

-17

 

the
reasonable request of the Collateral Agent, do any and all lawful acts and execute any and all
documents requested by the Collateral Agent in aid of such enforcement and the Grantors shall
promptly reimburse and indemnify the Collateral Agent for all costs and expenses incurred by the
Collateral Agent in the exercise of its rights under this Section 4.10(i) in accordance with
Section 9.05 of the Revolving Credit Agreement. In the event that the Collateral Agent shall elect
not to bring suit to enforce the Intellectual Property, each Grantor agrees, at the reasonable
request of the Collateral Agent, to take all commercially reasonable actions necessary, whether by
suit, proceeding or other action, to prevent the infringement, counterfeiting, unfair competition,
dilution, diminution in value of or other damage to any of the Intellectual Property by any Person.

     SECTION 4.11. Certain Covenants and Provisions Regarding Receivables.

     (a) Each Grantor shall keep and maintain at its own cost and expense complete records of each
Receivable, in a manner consistent with prudent business practice, including records of all
payments received, all credits granted thereon, all merchandise returned and all other
documentation relating thereto. Each Grantor shall, at such Grantor’s sole cost and expense, upon
the Collateral Agent’s demand made at any time after the occurrence and during the continuance of
any Event of Default, deliver copies of evidence of Receivables, including copies of all documents
evidencing Receivables and any Books and Records relating thereto to the Collateral Agent or to its
representatives (original copies of which evidence and Books and Records may be retained by such
Grantor). Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent may transfer a full and complete
copy of any Grantor’s books, records, credit information, reports, memoranda and all other writings
relating to the Receivables to and for the use by any Person that has acquired or is contemplating
acquisition of an interest in the Receivables or the Collateral Agent’s security interest therein
without the consent of any Grantor; provided, that, the Collateral Agent may
transfer such a copy to a Person engaged principally in the business of manufacture or sale of high
performance chemical based products that is a competitor of the Borrower or any of its Subsidiaries
only upon the occurrence and during the continuance of any Event of Default under Section 7.01(a)
or 7.01(i) of the Revolving Credit Agreement.

     (b) No Grantor shall rescind or cancel any obligations evidenced by any Receivable or modify
any term thereof or make any adjustment, discount, credit, rebate or reduction with respect thereto
except in the ordinary course of business consistent with prudent business practice, or extend or
renew any such obligations except in the ordinary course of business consistent with prudent
business practice or compromise or settle any dispute, claim, suit or legal proceeding relating
thereto or sell any Receivable or interest therein without the prior written consent of the
Collateral Agent except for (i) Asset Sales permitted by Section 6.05(x) and 6.05(xi) of the
Revolving Credit Agreement and (ii) in the ordinary course of business consistent with prudent
business practice. Each Grantor shall timely fulfill all obligations on its part to be fulfilled
under or in connection with the Receivables except in the ordinary course of business consistent
with prudent business practice.

     (c) Each Grantor shall cause to be collected from the Account Debtor of each of the
Receivables, as and when due in the ordinary course of business (including Receivables that are
delinquent, such Receivables to be collected in accordance with generally accepted commercial
collection procedures), any and all amounts owing under or on account of such Receivable, and apply
promptly upon receipt thereof all such amounts as are so collected to the outstanding balance of
such Receivable, except that any Grantor may, with respect to a Receivable, allow in the ordinary
course of business (i) a refund or credit due as a result of returned or damaged or defective
merchandise and (ii) such extensions of time to pay amounts due in respect of Receivables and such
other modifications of payment terms or settlements in respect of Receivables as shall be
commercially reasonable in the circumstances, all in accordance with such Grantor’s ordinary course
of business consistent with its collection practices as in effect from time to time.

-18

 

The costs and
expenses (including reasonable attorneys’ fees) of collection, in any case, whether incurred by any
Grantor, the Collateral Agent or any Secured Party, shall be paid by the Grantors.

     SECTION 4.12. Inventory and Equipment.

     (a) Except as permitted by the Revolving Credit Agreement, the Grantors shall not move any
Equipment or Inventory (other than Equipment or Inventory in transit from a supplier or vendor to a
permitted location, between permitted locations, in transit to a customer, out for repair or
refurbishment, or in the possession of an employee for bona fide business purposes, or having
Dollar Equivalent fair market value not in excess of $500,000 (in the aggregate for all Grantors)
located at locations not identified on the relevant Schedules to the Perfection Certificate) to any
location, other than any location that is listed in the relevant Schedules to the Perfection
Certificate, unless (i) it shall have given the Collateral Agent at least 30 days’ (or such shorter
period as may be determined by the Collateral Agent in its sole discretion) prior written notice of
its intention so to do, clearly describing such new location and providing such other information
in connection therewith as the Collateral Agent may reasonably request and (ii) to the extent
applicable with respect to such new location, such Grantor shall have complied with Section
3.05(g); provided, that if a casualty occurs at a location at which a Grantor maintains
Equipment or Inventory, such Grantor shall not be required to give the Collateral Agent prior
notice as required by clause (i) above prior to moving the Collateral maintained at such location,
but shall be required to provide notice to
the Collateral Agent promptly after moving such Collateral, clearly describing the new
location and providing such other information in connection therewith as the Collateral Agent may
reasonably request.

     (b) With respect to Inventory: (i) no Inventory (other than Inventory in transit from a
supplier or vendor to a permitted location, between permitted locations, in transit to a customer,
or in the possession of an employee for bona fide business purposes, or having Dollar Equivalent
fair market value not in excess of $500,000 (in the aggregate for all Grantors)) is now, or shall
at any time or times hereafter be stored at any other location not set forth in the Perfection
Certificate except as permitted by Section 4.12(a), (ii) the Grantors have good and valid title to
such Inventory and such Inventory is not subject to any Lien or security interest or document
whatsoever except for Permitted Liens, (iii) such Inventory is not subject to any Intellectual
Property Licenses with any third parties that would, upon sale or other disposition of such
Inventory by the Collateral Agent in accordance with the terms hereof, infringe or otherwise
violate the Intellectual Property of such third-party licensor, violate any contracts with such
third-party licensor, or cause the Collateral Agent to incur any liability with respect to payment
of royalties other than royalties incurred pursuant to sale of such Inventory under the current
Intellectual Property Licenses related thereto and (iv) the completion of manufacture, sale or
other disposition of such Inventory by the Collateral Agent upon the occurrence and during the
continuance of any Event of Default shall not require the consent of any person and shall not
constitute a breach or default under any contract or agreement to which any Grantor is a party or
to which such Inventory is subject.

ARTICLE V

REMEDIES

     SECTION 5.01. Remedies upon Default. Upon the occurrence and during the continuance of any
Event of Default, the Collateral Agent may from time to time (alternatively, successively or
concurrently on any one or more occasions) exercise in respect of the Collateral, in addition to
the other rights and remedies provided for herein or otherwise available to it, the following
remedies:

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

-19

 

any of the Collateral is located, remove such Collateral, remain present at such
premises to receive copies of all communications and remittances relating to the Collateral and use
in connection with such removal and possession any and all services, supplies, aids and other
facilities of any Grantor;

     (b) Demand, sue for, collect or receive any money or property at any time payable or
receivable in respect of the Collateral including, upon any Event of Default under Section 7.01(a)
or 7.01(i) of the Revolving Credit Agreement, instructing the obligor or obligors on any agreement,
instrument or other obligation constituting part of the Collateral to make any payment required by
the terms of such agreement, instrument or other obligation directly to the Collateral Agent, and
in connection with any of the foregoing, compromise, settle, extend the time for payment and make
other modifications with respect thereto; provided, however, that in the event that
any such payments are made directly to any Grantor, prior to receipt by any such obligor of such
instruction, such Grantor shall segregate all amounts received pursuant thereto in trust for the
benefit of the Collateral Agent and shall promptly (but in no event later than one Business Day
after receipt thereof) pay such amounts to the Collateral Agent;

     (c) Sell, assign, grant a license to use or otherwise liquidate, or direct any Grantor to
sell, assign, grant a license to use or otherwise liquidate and dispose of, any and all investments
made in whole
or in part with the Collateral or any part thereof, and take possession of the proceeds of any
such sale, assignment, license, liquidation or disposition;

     (d) Take possession of the Collateral or any part thereof, by directing any Grantor in writing
to assemble all or part of the Collateral as directed by the Collateral Agent at a place reasonably
designated by the Collateral Agent. Each Grantor’s obligation to deliver the Collateral as
contemplated in this Section 5.01(d) is of the essence hereof. Upon application to a court of
equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific
performance by any Grantor of such obligation;

     (e) Withdraw all moneys, instruments, securities and other property in any bank, financial
securities, deposit or other account of any Grantor constituting Collateral for application to the
Obligations as provided in Section 5.07 hereof;

     (f) Retain and apply the distributions to the Obligations as provided in Section 5.07 hereof;

     (g) Exercise any and all rights as beneficial and legal owner of the Collateral, including
perfecting assignment of and exercising any and all voting, consensual and other rights and powers
with respect to any Collateral;

     (h) In the Collateral Agent’s own name, in the name of a nominee of the Collateral Agent, or
in the name of any Grantor communicate (by mail, telephone, facsimile or otherwise) with the
Account Debtors and other obligors in respect of Receivables of such Grantor and parties to
contracts with such Grantor, to verify with such Persons, to the Collateral Agent’s satisfaction,
the existence, amount, terms of, and any other matter relating to, Accounts, Chattel Paper, Payment
Intangibles, General Intangibles, Instruments and other Receivables that are Collateral; and

     (i) Exercise all the rights and remedies of a secured party on default under the UCC, and the
Collateral Agent may also in its sole discretion, without notice except as specified in Section
5.02 hereof, sell, assign or grant a license to use the Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange, broker’s board or at any of the Collateral
Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as the Collateral Agent may deem commercially reasonable. The
Collateral Agent or any other Secured Party or any of their respective Affiliates may be the
purchaser, licensee, assignee or recipient of the Collateral or any

-20

 

part thereof at any such public sale, and, to the extent permitted by applicable law, at any
such private sale, and shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed
at such sale, to use and apply any of the Obligations owed to such Person as a credit on account of
the purchase price of the Collateral or any part thereof payable by such Person at such sale. Each
purchaser, assignee, licensee or recipient at any such sale shall acquire the property sold,
assigned or licensed absolutely free from any claim or right on the part of any Grantor, and each
Grantor hereby waives, to the fullest extent permitted by law, all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. The Collateral Agent shall not be obligated to make any
sale of the Collateral or any part thereof regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Each Grantor hereby waives, to the fullest extent permitted by
law, any claims against the Collateral Agent arising by reason of the fact that the price at which
the Collateral or any part thereof may have been sold, assigned or licensed at such a private sale
was less than the price which might have been obtained at a public sale, even if the Collateral
Agent accepts the first offer received and does not offer such Collateral to more than one offeree.

     SECTION 5.02. Notice of Sale. Each Grantor acknowledges and agrees that, to the extent notice
of sale or other disposition of the Collateral or any part thereof shall be required by law, 10
days’ prior notice to such Grantor of the time and place of any public sale or of the time after
which any private sale or other intended disposition is to take place shall be commercially
reasonable notification of such matters. No notification need be given to any Grantor if it has
signed, after the occurrence of an Event of Default, a statement renouncing or modifying any right
to notification of sale or other intended disposition.

     SECTION 5.03. Waiver of Notice and Claims. Each Grantor hereby waives, to the fullest extent
permitted by applicable law, notice or judicial hearing in connection with the Collateral Agent’s
taking possession or the Collateral Agent’s disposition of the Collateral or any part thereof,
including any and all prior notice and hearing for any prejudgment remedy or remedies and any such
right which such Grantor would otherwise have under law, and each Grantor hereby further waives, to
the fullest extent permitted by applicable law: (i) except to the extent arising out of gross
negligence, bad faith or willful misconduct on the part of the Collateral Agent, all damages
occasioned by such taking of possession, (ii) all other requirements as to the time, place and
terms of sale or other requirements with respect to the enforcement of the Collateral Agent’s
rights hereunder and (iii) all rights of redemption, appraisal, valuation, stay, extension or
moratorium now or hereafter in force under any applicable law. To the fullest extent permitted by
applicable law, the Collateral Agent shall not be liable for any incorrect or improper payment made
pursuant to this Article V in the absence of gross negligence or willful misconduct on the
part of the Collateral Agent. Any sale of, or the grant of options to purchase, or any other
realization upon, any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the applicable Grantor therein and thereto, and shall be a
perpetual bar both at
law and in equity against such Grantor and against any and all Persons claiming or attempting
to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through or
under such Grantor.

     SECTION 5.04. Certain Sales of Collateral.

     (a) Each Grantor recognizes that, by reason of certain prohibitions contained in law, rules,
regulations or orders of any Governmental Authority, the Collateral Agent may be compelled, with
respect to any sale of all or any part of the Collateral, to limit purchasers to those who meet the
requirements of such Governmental Authority. Each Grantor acknowledges that any such sales may be
at prices and on terms less favorable to the Collateral Agent than those obtainable through a
public sale without

-21

 

such restrictions, and, notwithstanding such circumstances, agrees that any
such restricted sale shall be deemed to have been made in a commercially reasonable manner and
that, except as may be required by applicable law, the Collateral Agent shall have no obligation to
engage in public sales.

     (b) Each Grantor recognizes that, by reason of certain prohibitions contained in the
Securities Act of 1933, and applicable state securities laws, the Collateral Agent may be
compelled, with respect to any sale of all or any part of the Investment Property, to limit
purchasers to Persons who will agree, among other things, to acquire such Investment Property for
their own account, for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges that any such private sales may be at prices and on terms less favorable to
the Collateral Agent than those obtainable through a public sale without such restrictions
(including a public offering made pursuant to a registration statement under the Securities Act of
1933), and, notwithstanding such circumstances, agrees that any such private sale shall be deemed
to have been made in a commercially reasonable manner and that the Collateral Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any Investment Property
for the period of time necessary to permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act of 1933 or under applicable state securities
laws, even if such issuer would agree to do so.

     (c) If the Collateral Agent determines to exercise its right to sell any or all of the
Securities Collateral or Investment Property, upon written request, the applicable Grantor shall
from time to time furnish to the Collateral Agent all such information as the Collateral Agent may
request in order to determine the number of securities included in the Securities Collateral or
Investment Property which may be sold by the Collateral Agent as exempt transactions under the
Securities Act and the rules of the Securities and Exchange Commission thereunder, as the same are
from time to time in effect.

     (d) Each Grantor further agrees that a breach of any of the covenants contained in this
Section 5.04 will cause irreparable injury to the Collateral Agent and the other Secured Parties,
that the Collateral Agent and the other Secured Parties have no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in this Section 5.04
shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees
not to assert any defenses against an action for specific performance of such covenants except for
a defense that no Event of Default has occurred and is continuing.

     SECTION 5.05. No Waiver; Cumulative Remedies.

     (a) No failure on the part of the Collateral Agent to exercise, no course of dealing with
respect to, and no delay on the part of the Collateral Agent in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power, privilege or remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right, power, privilege or remedy; nor shall the Collateral Agent be
required to look first to, enforce
or exhaust any other security, collateral or guaranties. All rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies provided by law or
otherwise available.

     (b) In the event that the Collateral Agent shall have instituted any proceeding to enforce any
right, power, privilege or remedy under this Agreement or any other Loan Document by foreclosure,
sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Collateral Agent, then and in every such
case, the Grantors, the Collateral Agent and each other Secured Party shall be restored to their
respective former positions and rights hereunder with respect to the Collateral, and all rights,
remedies, privileges and powers of the Collateral Agent and the other Secured Parties shall
continue as if no such proceeding had been instituted.

-22

 

     SECTION 5.06. Certain Additional Actions Regarding Intellectual Property. If any Event of
Default shall have occurred and be continuing, upon the written demand of the Collateral Agent,
each Grantor shall execute and deliver to the Collateral Agent an assignment or assignments (in a
form satisfactory to the Collateral Agent) of such Grantor’s rights in the Intellectual Property,
and, with respect to those items of the Intellectual Property Collateral consisting of issued
Patents, registered Trademarks and/or registered Copyrights (or applications therefor) owned by
such Grantor, such assignment shall be in recordable form satisfactory to the Collateral Agent, and
such other documents as are necessary or appropriate to carry out the intent and purposes hereof.

     SECTION 5.07. Application of Proceeds. Subject to the terms of the Intercreditor Agreement,
all Proceeds received by the Collateral Agent in respect of any sale of, collection from or other
realization upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent
of its remedies shall, to the extent available for distribution (it being understood that the
Collateral Agent may liquidate investments prior to maturity in order to make a distribution
pursuant to this Section 5.07), be distributed (subject to the provisions of Section 5.08) by the
Collateral Agent on each Distribution Date in the following order of priority:

          First: to the Collateral Agent for any unpaid Collateral Agent Fees;

          Second: without duplication of amounts applied pursuant to clause
First above, to any other Secured Party which has theretofore advanced or paid any
Collateral Agent Fees constituting administrative expenses allowable under Section 503(b) of
the Bankruptcy Code, an amount equal to the amount thereof so advanced or paid by such
Secured Party and for which such Secured Party has not been reimbursed prior to such
Distribution Date, and, if such moneys shall be insufficient to pay such amounts in full,
then ratably (without priority of any one over any other) to such Secured Parties in
proportion to the amounts of such Collateral Agent Fees advanced by the respective Secured
Parties and remaining unpaid on such Distribution Date;

          Third: without duplication of the amounts applied pursuant to clause
First and Second above, to any Secured Party which has theretofore advanced
or paid any Collateral Agent Fees other than such administrative expenses, an amount equal
to the amount thereof so advanced or paid by such Secured Party and for which such Secured
Party has not been reimbursed prior to such Distribution Date, and, if such moneys shall be
insufficient to pay such amounts in full, then ratably (without priority of any one over any
other) to such Secured Parties in proportion to the amounts of such Collateral Agent Fees
advanced by the respective Secured Parties and remaining unpaid on such Distribution Date;

          Fourth: without duplication of the amounts applied pursuant to clauses
First, Second and Third above, subject to the provisions of Section
2.13 of the Revolving Credit Agreement, to the Secured Parties, in an amount equal to all
Obligations, whether or not then due and payable, and,
if such moneys shall be insufficient to pay such amounts in full, then ratably (without
priority of any one over any other) to such Secured Parties in proportion to the unpaid
amounts thereof on such Distribution Date; and

          Fifth, without duplication of the amounts applied pursuant to clauses
First, Second, Third and Fourth above, any surplus then
remaining shall be paid to the Grantors or their successors or assigns or to whomever may be
lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

     In the event that any such proceeds are insufficient to pay in full the items described in
clauses First through Fourth of this Section 5.07, the Grantors shall remain liable
for any deficiency.

-23

 

The term “unpaid” as used in this Section 5.07 refers:

     (a) in the absence of a bankruptcy proceeding with respect to the relevant Grantor(s), to all
amounts of the relevant Obligations (other than unasserted contingent indemnification obligations
not due and payable) outstanding as of a Distribution Date, and

     (b) during the pendency of a bankruptcy proceeding with respect to the relevant Grantor(s), to
all amounts allowed by the bankruptcy court in respect of the relevant Obligations as a basis for
distribution (including estimated amounts, if any, allowed in respect of contingent claims), to the
extent that prior distributions have not been made in respect thereof.

     SECTION 5.08. Collateral Agent’s Calculations. In making the determinations and allocations
required by Section 5.07, the Collateral Agent may conclusively rely upon information supplied by
the Administrative Agent as to the amounts of unpaid principal and interest and other amounts
outstanding with respect to any Obligations, and the Collateral Agent shall have no liability to
any of the Secured Parties for actions taken in reliance on such information; provided that
nothing in this sentence shall prevent any Grantor from contesting any amounts claimed by any
Secured Party in any information so supplied. In addition, for purposes of making the allocations
required by Section 5.07 with respect to any amount that is denominated in any currency other than
Dollars, the Collateral Agent shall, on the applicable Distribution Date, convert such amount into
an amount of Dollars based upon the relevant Spot Selling Rate. All distributions made by the
Collateral Agent pursuant to Section 5.07 shall be (subject to any decree of any court of competent
jurisdiction) final (absent manifest error), and the Collateral Agent shall have no duty to inquire
as to the application by the Administrative Agent of any amounts distributed to it for distribution
to any Lenders.

ARTICLE VI

The Collateral Agent

     SECTION 6.01. General Authority of the Collateral Agent over the Collateral(a) .

     (a) Until the termination of this Agreement pursuant to Section 7.11, subject to the
provisions herein, each Grantor hereby appoints the Collateral Agent as its true and lawful
attorney-in-fact for the purpose, during the continuance of an Event of Default, of taking any
action and executing any and all documents and instruments that the Collateral Agent may deem
necessary to carry out the terms of this Agreement and accomplish the purposes hereof and, without
limiting the generality of the foregoing, each Grantor hereby acknowledges that the Collateral
Agent shall have all powers and remedies set forth in the Security Documents. The foregoing grant
of authority is a power of attorney coupled with an interest and such appointment shall be
irrevocable for the term hereof.

-24

 

     (b) By acceptance of the benefits of this Agreement and the Security Documents: each Secured
Party shall be deemed irrevocably (1) to consent to the appointment of the Collateral Agent as its
agent hereunder and under the other Security Documents, (2) to confirm that the Collateral Agent
shall have the authority to act as the exclusive agent of such Secured Party for enforcement of any
provisions of this Agreement and the other Security Documents against any Grantor or the exercise
of remedies hereunder or thereunder, (3) to agree that such Secured Party shall not take any action
to enforce any provisions of this Agreement or any other Security Document against any Grantor or
to exercise any remedy hereunder or thereunder and (4) to agree to be bound by the terms of this
Agreement and the other Security Documents.

     (c) The Collateral Agent hereby agrees that it holds and will hold all of its right, title and
interest in, to and under the Security Documents and the Collateral granted to the Collateral Agent
thereunder whether now existing or hereafter arising (all such right, title and interest being
hereinafter referred to as the “Collateral Estate”) under and subject to the conditions set
forth in this Agreement; and the Collateral Agent further agrees that it will hold such Collateral
Estate for the benefit of the Secured Parties, for the enforcement of the payment of all
Obligations (subject to the limitations and priorities set forth herein and in the respective
Security Documents) and as security for the performance of and compliance with the covenants and
conditions of this Agreement and each of the Security Documents.

     SECTION 6.02. Exercise of Powers. All of the powers, remedies and rights of the Collateral
Agent as set forth in this Agreement may be exercised by the Collateral Agent in respect of any
Security Document as though set forth in full therein and all of the powers, remedies and rights of
the Collateral Agent as set forth in any Security Document may be exercised from time to time as
herein and therein provided.

     SECTION 6.03. Remedies Not Exclusive.

     (a) No remedy conferred upon or reserved to the Collateral Agent herein or in the other
Security Documents is intended to be exclusive of any other remedy or remedies, but every such
remedy shall be cumulative and shall be in addition to every other remedy conferred herein or in
any other Security Document or now or hereafter existing at law or in equity or by statute.

     (b) No delay or omission by the Collateral Agent to exercise any right, remedy or power
hereunder or under any Security Document shall impair any such right, remedy or power or shall be
construed to be a waiver thereof, and every right, power and remedy given by this Agreement or any
Security Document to the Collateral Agent may be exercised from time to time and as often as may be
deemed expedient by the Collateral Agent.

     (c) If the Collateral Agent shall have proceeded to enforce any right, remedy or power under
this Agreement or any Security Document and the proceeding for the enforcement thereof shall have
been discontinued or abandoned for any reason or shall have been determined adversely to the
Collateral Agent, then the Grantors, the Collateral Agent and the other Secured Parties shall,
subject to any determination in such proceeding, severally and respectively be restored to their
former positions and rights hereunder or thereunder with respect to the Collateral Estate and in
all other respects, and thereafter all rights, remedies and powers of the Collateral Agent shall
continue as though no such proceeding had been taken.

     SECTION 6.04. Waiver and Estoppel.

     (a) Each Grantor, to the extent it may lawfully do so, on behalf of itself and all who may
claim through or under it, including without limitation any and all subsequent creditors, vendees,
assignees and licensors, waives and releases all rights to demand or to have any marshaling of
the Collateral

-25

 

upon any sale, whether made under any power of sale granted herein or in any
Security Document or pursuant to judicial proceedings or upon any foreclosure or any enforcement of
this Agreement or any Security Document and consents and agrees that all the Collateral may at any
such sale be offered and sold as an entirety.

     (b) Each Grantor waives, to the extent permitted by applicable law, presentment, demand,
protest and any notice of any kind (except notices explicitly required hereunder or under any
Security Document) in connection with this Agreement and the Security Documents and any action
taken by the Collateral Agent with respect to the Collateral.

     SECTION 6.05. Limitation on Collateral Agent’s Duty in Respect of Collateral. Except as
required by applicable law, beyond its express duties specified in the Security Documents, the
Collateral Agent shall not have any duty to the Grantors or to the Secured Parties as to any
Collateral in its possession or control or in the possession or control of any of its agents or
nominees, or any income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto.

     SECTION 6.06. Limitation by Law. All rights, remedies and powers provided in this Agreement
or any Security Document may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions hereof are intended to be subject
to all applicable mandatory provisions of law which may be controlling and to be limited to the
extent necessary so that they will not render this Agreement invalid, unenforceable in whole or in
part or not entitled to be recorded, registered or filed under the provisions of any applicable
law.

     SECTION 6.07. Rights of Secured Parties in Respect of Obligations. Notwithstanding any other
provision of this Agreement or any Security Document, the right of each Secured Party to receive
payment of the Obligations held by such Secured Party when due (whether at the stated maturity
thereof, by acceleration or otherwise), as expressed in the instruments evidencing or agreements
governing such Obligations, or to institute suit for the enforcement of such payment on or after
such due date, shall not be impaired or affected without the consent of such Secured Party given in
the manner prescribed by the instruments evidencing or agreements governing such Obligations.

     SECTION 6.08. Compensation and Expenses. Without limitation of its obligations under the
other Loan Documents, each Grantor agrees to pay to the Collateral Agent, from time to time upon
written demand, all of the reasonable out-of-pocket costs and expenses of the Collateral Agent
(including, without limitation, the reasonable fees and disbursements of its counsel) (i) arising
in connection with the administration of the Collateral, the preparation, execution, delivery,
modification and termination of this Agreement and each Security Document or the enforcement of any
of the provisions hereof or thereof or (ii) incurred or required to be advanced in connection with
the sale or other disposition of Collateral pursuant to any Security Document and the preservation,
protection or defense of the Collateral Agent’s rights under this Agreement and the Security
Documents and in and to the Collateral and the Collateral Estate, in each case, to the extent the
Borrowers would be required to do so pursuant to Section 9.05 of the Revolving Credit Agreement.
Such fees, costs and expenses are intended to constitute expenses of administration under any
bankruptcy law relating to creditors’ rights generally.

     SECTION 6.09. Stamp and Other Similar Taxes. Each Grantor agrees to indemnify and hold
harmless the Collateral Agent, the Administrative Agent and each other Secured Party from any
present or future claim for liability for any stamp or any other similar tax, and any penalties or
interest with respect thereto, which may be assessed, levied or collected by any jurisdiction in
connection with this Agreement, any Security Document, the Collateral Estate or any Collateral.
The obligations of each
Grantor under this Section 6.09 shall survive the termination of the other provisions of this
Agreement and the resignation or removal of the Collateral Agent hereunder.

-26

 

     SECTION 6.10. Filing Fees, Excise Taxes, etc. Each Grantor agrees to pay or to reimburse the
Collateral Agent for any and all payments made by the Collateral Agent in respect of all search,
filing, recording and registration fees, taxes, excise taxes and other similar imposts which may be
payable or determined to be payable in respect of the execution and delivery of this Agreement and
each Security Document. The obligations of each Grantor under this Section 6.10 shall survive the
termination of the other provisions of this Agreement and the resignation or removal of the
Collateral Agent hereunder.

     SECTION 6.11. Indemnification. Without limitation of its indemnification obligations under
the other Loan Documents, each Grantor agrees to pay, and to save the Collateral Agent and the
other Secured Parties harmless from, any and all losses, claims, damages, liabilities and
out-of-pocket expenses (including reasonable counsel fees, charges and disbursements) arising out
of, in any way connected with, or as a result of the execution, delivery, enforcement, performance
and administration of this Agreement to the extent the Borrower would be required to do so pursuant
to Section 9.05 of the Revolving Credit Agreement.

ARTICLE VII

MISCELLANEOUS

     SECTION 7.01. Notices. All communications and notices hereunder shall (except as otherwise
expressly permitted herein) be in writing and given as provided in Section 9.01 of the Revolving
Credit Agreement. All communications and notices hereunder to any Subsidiary Guarantor shall be
given to it c/o the U.S. Borrower at the U.S. Borrower’s address as provided in Section 9.01 of the
Revolving Credit Agreement, with a copy to each of the Borrowers.

     SECTION 7.02. Survival of Agreement. All covenants, agreements, representations and
warranties made by any Grantor herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Collateral Agent and the other Secured Parties and shall
survive the making by the Lenders of the Loans, regardless of any investigation made by the Secured
Parties or on their behalf, and shall continue in full force and effect until this Agreement shall
terminate.

     SECTION 7.03. Binding Effect. This Agreement shall be binding upon each Grantor and the
Collateral Agent and their respective successors and permitted assigns, and shall inure to the
benefit of each Grantor, the Collateral Agent and the other Secured Parties and their respective
permitted successors and assigns, except that no Grantor shall have the right to assign or transfer
its rights or obligations hereunder or any interest herein or in the Collateral (and any such
assignment or transfer shall be void) except as expressly permitted by this Agreement or the
Revolving Credit Agreement.

     SECTION 7.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

     SECTION 7.05. Waivers; Amendment; Several Agreement.

     (a) No failure or delay of the Collateral Agent in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any
other or further
exercise thereof or the exercise of any other right or power. The rights and remedies of the
Collateral Agent hereunder and of the other Secured Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provisions of

-27

 

this Agreement or any other Loan Document or consent to any departure
by any Grantor therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on any Grantor in any case
shall entitle such Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.

     (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into in accordance with Section 9.08 of
the Revolving Credit Agreement.

     (c) This Agreement shall be construed as a separate agreement with respect to each Grantor and
may be amended, modified, supplemented, waived or released with respect to any Grantor without the
approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.

     SECTION 7.06. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS.

     SECTION 7.07. Severability. In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions. It is understood
and agreed among the parties that this Agreement shall create separate security interests in the
Collateral securing the Obligations as provided in Section 2.01, and that any determination by any
court with jurisdiction that the security interest securing any Obligation or class of Obligations
is invalid for any reason shall not in and of itself invalidate the Security Interests securing any
other Obligations hereunder.

     SECTION 7.08. Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall constitute an original, but all of which, when taken together, shall constitute a
single contract and shall become effective as provided in Section 7.03. Delivery of an executed
signature page to this Agreement by facsimile or other electronic transmission (e.g., “PDF” or
“tif” via e-mail) shall be effective as delivery of a manually executed counterpart hereof.

     SECTION 7.09. Headings. Article and Section headings used herein are for the purpose of
reference only, are not part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.

     SECTION 7.10. Jurisdiction; Consent to Service of Process.

     (a) Each party to this Agreement hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America for the Southern District of New York, and any appellate court from
any
thereof, in any action or proceeding arising out of or relating to this Agreement or the other
Loan Documents, or for recognition or enforcement of any judgment, and each Grantor hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding
may be heard and

-28

 

determined in such New York State court or, to the extent permitted by law, in
such Federal court. Each party to this Agreement agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right
that the Collateral Agent or any other Secured Party may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against any Grantor or its
properties in the courts of any jurisdiction.

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

     (c) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.15 of the Revolving Credit Agreement. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any other manner permitted
by law.

     SECTION 7.11. Termination.

     (a) This Agreement and the Security Interests (i) shall automatically terminate when (a) all
the Obligations (other than unasserted contingent indemnification obligations not due and payable)
have been paid in full and (b) the Lenders have no further commitment to lend under the Revolving
Credit Agreement (at which time the Collateral Agent shall execute and deliver to the Grantors, at
the Grantors’ expense, all UCC termination statements and other documents which the Grantors shall
reasonably request to evidence such termination) and (ii) shall continue to be effective or shall
be reinstated, as the case may be, if at any time any payment in respect of any Obligation is
rescinded or must otherwise be restored by any Secured Party upon any bankruptcy or reorganization
of any Grantor or otherwise. Any execution and delivery of termination statements or documents
pursuant to this Section 7.11(a) shall be without recourse to or warranty by the Collateral Agent.
A Subsidiary Guarantor shall automatically be released from its obligations hereunder and the
Security Interests in the Collateral of such Subsidiary Guarantor shall be automatically released
in the event that the Equity Interests of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of pursuant to a transaction permitted under the Revolving Credit Agreement to a
Person that is not an Affiliate of Borrowers such that such Person is no longer a Restricted
Subsidiary of Borrowers.

     (b) Upon any sale or other transfer by any Grantor of any Collateral to a Person that is not a
Loan Party that is permitted under the Revolving Credit Agreement or, upon the effectiveness of any
written consent to the release of the security interests granted hereby in any Collateral pursuant
to Section 9.08 of the Revolving Credit Agreement, security interests in such Collateral shall be
automatically released. In connection with such release, the Collateral Agent shall execute and
deliver to any Grantor, at such Grantor’s expense, all UCC termination statements and other
documents that such Grantor shall reasonably request to evidence such release. Any execution and
delivery of UCC termination statements and similar documents pursuant to this Section 7.11(b) shall
be without recourse to or warranty by the Collateral Agent.

     SECTION 7.12. Additional Grantors. To the extent any Subsidiary shall be required to become a
Grantor pursuant to any Loan Document, upon execution and delivery by the Collateral Agent
and such Subsidiary of an instrument in the form of Annex I hereto, such Subsidiary
shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor
herein. Each such Subsidiary shall at such time deliver to the Collateral Agent a completed
Perfection Certificate. The execution

-29

 

and delivery of any such instrument shall not require the
consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor as a party to this
Agreement.

     SECTION 7.13. Financing Statements. Each Grantor hereby irrevocably authorizes the Collateral
Agent at any time and from time to time to file in any relevant jurisdiction (a) any filing with
the United States Patent and Trademark Office or United States Copyright Office (or any successor
office or any similar office in any other country), (b) any initial financing statements (including
fixture filings) and amendments thereto that contain the information required by Article 9 of the
Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement
or amendment relating to the Collateral, including (i) whether such Grantor is an organization, the
type of organization and any organizational identification number issued to such Grantor, (ii) any
financing or continuation statements or other documents without the signature of such Grantor where
permitted by law, and such financing statements may contain an indication or description of
Collateral that describes such property (x) in the same manner as described in this Agreement or
(z) in any other manner as the Collateral Agent may determine, in its sole discretion, is necessary
or prudent to ensure the perfection of the security interest in the Collateral granted to the
Collateral Agent in connection herewith, including, without limitation, describing such property as
“all personal property of the debtor now owned or hereafter acquired” (or using words of similar
import) and (iii) in the case of a financing statement filed as a fixture filing or covering
Collateral constituting minerals or the like to be extracted or timber to be cut, a sufficient
description of the real property to which such Collateral relates, and (c) any other documents for
the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interests
granted by each Grantor without the signature of any Grantor. Each Grantor agrees to provide all
information described in the immediately preceding sentence to the Collateral Agent promptly upon
written request. Each Grantor hereby ratifies its authorization for the Collateral Agent to file
in any relevant jurisdiction any financing statements relating to the Collateral if filed prior to
the date hereof.

     SECTION 7.14. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the
Collateral Agent the attorney-in-fact of such Grantor for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument that the Collateral
Agent may deem necessary to accomplish the purposes hereof, which appointment is irrevocable and
coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent
shall have the right, upon the occurrence and during the continuance of an Event of Default, with
full power of substitution either in the Collateral Agent’s name or in the name of such Grantor,
(a) to receive, endorse, assign or deliver any and all notes, acceptances, checks, drafts, money
orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand,
collect, receive payment of, give receipt for and give discharges and releases of all or any of the
Collateral; (c) to ask for, demand, sue for, collect, receive and give acquittance for any and all
moneys due or to become due under and by virtue of any Collateral; (d) to sign the name of any
Grantor on any invoice or bill of lading relating to any of the Collateral; (e) to send
verifications of Accounts to any Account Debtor; (f) to commence and prosecute any and all suits,
actions or proceedings at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in respect of any
Collateral; (g) to settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (h) with at least 2 days’ prior notice to the Grantor to
notify, or to require any Grantor to notify Account Debtors to make payment directly to the
Collateral Agent; and (i) to use, sell, assign, transfer, pledge, make any agreement with respect
to or otherwise deal with all or any of the Collateral, and to do all other acts and things
necessary to carry out the purposes of this Agreement, as fully and completely as though the
Collateral Agent were the absolute owner of the Collateral for all purposes; provided that
nothing
herein contained shall be construed as requiring or obligating the Collateral Agent to make
any commitment or to make any inquiry as to the nature or sufficiency of any payment received by
the Collateral Agent, or to present or file any claim or notice, or to take any action with respect
to the Collateral or any part thereof

-30

 

or the moneys due or to become due in respect thereof or any
property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable
only for amounts actually received as a result of the exercise of the powers granted to them
herein, and neither they nor their officers, directors, employees or agents shall be responsible to
any Grantor for any act or failure to act hereunder, except for their own gross negligence, willful
misconduct or bad faith.

     SECTION 7.15. INTERCREDITOR AGREEMENT GOVERNS. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, THE LIEN AND SECURITY INTEREST GRANTED TO THE COLLATERAL AGENT, FOR THE BENEFIT OF THE
SECURED PARTIES, PURSUANT TO THIS AGREEMENT AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE
COLLATERAL AGENT AND THE OTHER SECURED PARTIES HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE
INTERCREDITOR AGREEMENT. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF
THE INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL
GOVERN AND CONTROL.

     SECTION 7.16. Delivery of Collateral. Prior to the Discharge of Term Loan Obligations, to the
extent any Grantor is required hereunder to deliver Fixed Asset Collateral to the Collateral Agent
for purposes of possession and control and is unable to do so as a result of having previously
delivered such Collateral to any of the Term Loan Agents in accordance with the terms of the Term
Loan Security Documents, such Grantor’s obligations hereunder with respect to such delivery shall
be deemed satisfied by the delivery to such Term Loan Agents, acting as a gratuitous bailee and/or
sub-agent of the Collateral Agent in accordance with the terms of the Intercreditor Agreement.

     SECTION 7.17. Mortgages. In the case of a conflict between this Agreement and the Mortgages
with respect to Collateral that is real property (including Fixtures), the Mortgages shall govern.
In all other conflicts between this Agreement and the Mortgages, this Agreement shall govern.

     SECTION 7.18. Conflicts. In the case of any conflict between this Agreement and the Revolving
Credit Agreement, the provisions of the Revolving Credit Agreement shall govern.

[Signature Pages Follow]

-31

 

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

	 	 	 	 	 
	 	SOLUTIA INC.

 	 
	 	By:  	/s/James A Tichenor
 	 
	 	 	Name:  	James A Tichenor 	 
	 	 	Title:  	Authorized Officer 	 

 

 

	 	 	 	 	 

	 	 	 
	 

	 	BEAMER ROAD MANAGEMENT COMPANY
	 

	 	CPFILMS INC.
	 

	 	FLEXSYS AMERICA CO.
	 

	 	FLEXSYS AMERICA L.P.
	 

	 	     by FLEXSYS AMERICA CO.,
	 

	 	     its general partner
	 

	 	MONCHEM INTERNATIONAL, INC.
	 

	 	SOLUTIA BUSINESS ENTERPRISES INC.
	 

	 	SOLUTIA GREATER CHINA, INC.
	 

	 	SOLUTIA INTER-AMERICA, INC.
	 

	 	SOLUTIA OVERSEAS, INC.
	 

	 	SOLUTIA SYSTEMS, INC.

	 	 	 	 	 
	 	 	 
	 	By:  	                /s/James A. Tichenor
 	 
	 	 	Name:  	James A. Tichenor 	 
	 	 	Title:  	Authorized Officer 	 

-2

 

	 	 	 	 	 

	 	 	 	 	 
	 	CITIBANK, N.A.,

as Collateral Agent

 	 
	 	By:  	                /s/David Jaffe
 	 
	 	 	Name:  	David Jaffe 	 
	 	 	Title:  	Director/Vice President 	 

-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]