Document:

Exhibit 10.40

 

EXECUTION VERSION

 

SECURITY AGREEMENT

 

Dated February 22, 2007

 

From

 

The Grantors referred to herein

 

as Grantors

 

to

 

Deutsche Bank AG New York Branch

 

as Collateral Agent

 

 

	
  T  A  B  L  E  O  F  C  O  N  T  E
  N  T  S

  

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 1. Grant of Security

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 2. Security for Obligations

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 3. Grantors Remain Liable

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 4. Maintaining the Account Collateral

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 5. Representations and Warranties

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 6. Further Assurances

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 7. As to Inventory

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 8. Insurance

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 9. Post-Closing Changes; Collections on Receivables and
  Related Contracts

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 10. Transfers and Other Liens

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 11. Collateral Agent Appointed Attorney in Fact

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 12. Collateral Agent May Perform

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 13. The Collateral Agent’s Duties

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 14. Remedies

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 15. Indemnity and Expenses

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 16. Amendments; Waivers; Additional Grantors; Etc.

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 17. Notices, Etc.

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 18. Continuing Security Interest; Assignments under the
  Credit Agreement

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 19. Release; Termination

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 20. Intercreditor

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 21. Execution in Counterparts

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 22. Governing Law

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 23. Jurisdiction, Etc

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 24. Waiver of Jury Trial

  	
   

  	
  14

  

 

	
  Schedules

  	
   

  	
   

  

 

i

 

	
  Schedule I

  	
  -

  	
  Pledged Deposit
  Accounts

  
	
  Schedule II

  	
  -

  	
  Location, Chief
  Executive Office, Type of Organization, Jurisdiction of Organization and
  Organizational Identification Number

  
	
   

  	
   

  
	
  Schedule III

  	
  -

  	
  Locations of
  Inventory

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of
  Security Agreement Supplement

  

 

ii

 

SECURITY AGREEMENT

 

SECURITY AGREEMENT
dated February 22, 2007 made by BUILDING MATERIALS CORPORATION OF AMERICA,
a Delaware corporation (the “Company”), and the other Persons listed on the signature
pages hereof (the Company and the Persons so listed being, collectively,
the “Grantors”)
to DEUTSCHE BANK AG NEW YORK BRANCH (“DBNY”), as
Collateral Monitoring Agent (as defined in the Credit Agreement referred to
below) and DBNY in such capacity together with any successor collateral
monitoring agent appointed pursuant to Article VII of the Credit Agreement
(the “Collateral Agent”).

 

PRELIMINARY
STATEMENTS.

 

(1) The Company along with certain of its Subsidiaries has entered
into a Revolving Credit Agreement dated as of February 22, 2007 (said
Agreement, as it may hereafter be amended, restated, supplemented or otherwise
modified, refinanced or replaced from time to time, being the “Credit Agreement”)
with the Lender Parties and the Agents (each as defined therein).

 

(2) Each Grantor is the owner of the deposit accounts (the “Pledged Deposit Accounts”)
set forth opposite such Grantor’s name on Schedule I hereto.

 

(3) It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
that the Grantors shall have granted the security interest contemplated by this
Agreement.  Each Grantor will derive
substantial direct and indirect benefit from the transactions contemplated by
the Loan Documents.

 

(4) Terms defined in the Credit Agreement and not otherwise
defined in this Agreement are used in this Agreement as defined in the Credit
Agreement.  Further, unless otherwise
defined in this Agreement or in the Credit Agreement, terms defined in Article 8
or 9 of the UCC (as defined below) are used in this Agreement as such terms are
defined in such Article 8 or 9.  “UCC” means the
Uniform Commercial Code as in effect from time to time in the State of New
York; provided that, if
perfection or the effect of perfection or non perfection or the priority of the
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, “UCC” means the
Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non perfection or priority.

 

NOW, THEREFORE, in
consideration of the premises and in order to induce the Lender Parties to make
Advances and issue Letters of Credit under the Credit Agreement, to induce the
Hedge Banks to enter into Secured Hedge Agreements and to induce the Lender
Parties and Affiliates of the Lender Parties to enter into Cash Management
Services from time to time, each Grantor hereby agrees with the Collateral Agent
for the ratable benefit of the Secured Parties as follows:

 

1

 

Section 1. Grant
of Security.  Each Grantor hereby
grants to the Collateral Agent, for the ratable benefit of the Secured Parties,
a security interest in such Grantor’s right, title and interest in and to the
following, in each case, as to each type of property described below, whether
now owned or hereafter acquired by such Grantor, wherever located, and whether
now or hereafter existing or arising (collectively, the “Collateral”):

 

(a) all
inventory in all of its forms, including, without limitation, (i) all raw
materials, work in process, finished goods and materials used or consumed in
the manufacture, production, preparation or shipping thereof, (ii) goods
in which such Grantor has an interest in mass or a joint or other interest or
right of any kind (including, without limitation, goods in which such Grantor
has an interest or right as consignee) and (iii) goods that are returned
to or repossessed or stopped in transit by such Grantor), and all accessions
thereto and products thereof and documents of title therefor, including,
without limitation, computer programs and supporting information that
constitute inventory within the meaning of the UCC (any and all such property
being the “Inventory”);

 

(b) all
accounts, chattel paper (including, without limitation, tangible chattel paper
and electronic chattel paper), instruments (including, without limitation,
promissory notes), deposit accounts, letter-of-credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection with
the sale or lease of goods or the rendering of services and whether or not
earned by performance, and all rights now or hereafter existing in and to all
supporting obligations and in and to all security agreements, mortgages, Liens,
leases, letters of credit and other contracts securing or otherwise relating to
the foregoing property (any and all of such accounts, chattel paper,
instruments, deposit accounts, letter-of-credit rights, general intangibles and
other obligations, to the extent not referred to in clause (c), below, being
the “Receivables,” and any and all such supporting obligations, security
agreements, mortgages, Liens, leases, letters of credit and other contracts
being the “Related
Contracts”);

 

(c) the
following (collectively, the “Account Collateral”):

 

(i)            the Pledged Deposit Accounts and all
funds and financial assets from time to time credited thereto (including,
without limitation, all Cash Equivalents), and all certificates and
instruments, if any, from time to time representing or evidencing the Pledged
Deposit Accounts;

 

(ii)           all promissory notes, certificates of
deposit, checks and other instruments from time to time delivered to or
otherwise possessed by the Collateral Agent for or on behalf of such Grantor in
substitution for or in addition to any or all of the then existing Account
Collateral;

 

2

 

(iii)          all interest, dividends,
distributions, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the then existing Account Collateral; and

 

(d)       all precious metals, including without
limitation, platinum and rhodium, used in the production of Inventory (any and
all such property being the “Precious Metals”);
and

 

(e)       all proceeds of, collateral for, income,
royalties and other payments now or hereafter due and payable with respect to,
and supporting obligations relating to, any and all of the Collateral
(including, without limitation, proceeds, collateral and supporting obligations
that constitute property of the types described in clauses (a) through (d) of
this Section 1) and, to the extent not otherwise included, all (A) payments
under insurance (whether or not the Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral, and (B) cash
(any and all such property being, the “Proceeds”).

 

Section 2. Security
for Obligations.  This Agreement
secures, in the case of each Grantor, the payment of all Obligations of such
Grantor now or hereafter existing under the Loan Documents, whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, fees, premiums, penalties, indemnifications, contract
causes of action, costs, expenses or otherwise (all such Obligations being the “Secured Obligations”).  Without limiting the generality of the
foregoing, this Agreement secures, as to each Grantor, the payment of all
amounts that constitute part of the Secured Obligations and would be owed by
such Grantor to any Secured Party under the Loan Documents but for the fact
that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving a Loan Party.

 

Section 3. Grantors
Remain Liable.  Anything herein to
the contrary notwithstanding, (a) each Grantor shall remain liable under
the contracts and agreements included in such Grantor’s Collateral to the
extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b) the
exercise by the Collateral Agent of any of the rights hereunder shall not
release any Grantor from any of its duties or obligations under the contracts
and agreements included in the Collateral and (c) no Secured Party shall
have any obligation or liability under the contracts and agreements included in
the Collateral by reason of this Agreement or any other Loan Document, nor
shall any Secured Party be obligated to perform any of the obligations or
duties of any Grantor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.

 

Section 4. Maintaining
the Account Collateral.  So long as
any Advance or any other Obligation (other than contingent obligations) of any
Loan Party under any Loan Document shall remain unpaid or any Letter of Credit
shall be outstanding unless cash collateralized or otherwise supported in a
manner reasonably acceptable to the Collateral Agent or any Lender Party shall
have any Commitment:

 

3

 

(a) Each
Grantor will maintain deposit accounts only with the financial institution
acting as Collateral Agent hereunder or with banks (“Pledged Account Banks”) that have agreed with such Grantor and the Collateral
Agent to comply with instructions originated by the Collateral Agent directing
the disposition of funds in such deposit account without the further consent of
such Grantor, such agreement to be in form and substance satisfactory to the
Collateral Agent (a “Deposit
Account Control Agreement”);
provided, however, this Section 4(a) shall not apply to deposit
accounts (i) in which all funds therein are swept on a daily basis and
only to another deposit account over which there is in effect a Deposit Account
Control Agreement or (ii) operated solely as a payroll account, provided, that no funds or investments in
excess of $10,000,000 shall at any time be on deposit in the payroll accounts
in the aggregate; provided, further however, the Company shall have
forty-five (45) days (unless otherwise agreed by the Administrative Agent) from
the Closing Date to comply with the requirements of this Section 4.

 

(b) Subject
to Section 4(a), each Grantor shall instruct all of its account debtors to
remit all payments to (i) the applicable “P.O. Boxes” or “Lockbox
Addresses” of the applicable Pledged Account Banks with respect to all accounts
of such account debtor, which remittances shall be collected by the applicable
Pledged Account Banks and deposited into the applicable Pledged Deposit Account
or (ii) any other deposits accounts in which all funds therein are swept
on a daily basis and only to another deposit account over which there is in
effect a Deposit Account Control Agreement.

 

(c) During
the continuance of a Dominion Event, upon notice from the Administrative Agent
or the Required Lenders to the Company, upon the terms and subject to the
conditions set forth in the Deposit Account Control Agreement, all amounts held
in all of the Pledged Deposit Accounts by the Grantors shall be wired by the
close of business on each Business Day into an account with the Collateral
Agent (the “Concentration
Account”) and all collected amounts held in the Concentration
Account shall be applied as provided in Section 14.  For purposes hereof a “Dominion Event” shall
mean any period (i) commencing on the date on which either (x) an
Event of Default has occurred and is continuing or (y) the Specified
Liquidity Amount (based on the Borrowing Base Certificate last delivered) is
less than the greater of (x) $60,000,000 and (y) 10% of the aggregate
Revolving Credit Commitments and (ii) ending on the first date thereafter
on which (x) no Event of Default exists and (y) the Specified
Liquidity Amount (based on the Borrowing Base Certificate last delivered) has
been equal to or greater than the greater of (m) $60,000,000 and (n) 10%
of the aggregate Revolving Credit Commitments for 30 consecutive days (the “Liquidity Cure”);
provided, however, that a Liquidity Cure may be used as the basis for the
termination of a Dominion Event no more than two times in any Fiscal Year;
provided further, however, that no Dominion Event shall be deemed to have
occurred for the period from the Closing Date to the date which is 30 days
after the Closing Date.

 

4

 

Section 5. Representations
and Warranties.  Each Grantor
represents and warrants as follows:

 

(a) Such
Grantor’s exact legal name, location, chief executive office, type of
organization, jurisdiction of organization and organizational identification
number is set forth in Schedule II hereto.

 

(b) Such
Grantor is the legal and beneficial owner of the Collateral granted or
purported to be granted by it free and clear of any Lien, claim, option or
right of others, except for the security interest created under this Agreement
or permitted under the Credit Agreement. 
No effective financing statement or other instrument similar in effect
covering all or any part of such Collateral or listing such Grantor or any
trade name of such Grantor as debtor is on file in any recording office, except
such as may have been filed in favor of the Collateral Agent relating to the
Loan Documents or as otherwise permitted under the Credit Agreement.

 

(c) All
of the Inventory of such Grantor are located at the places specified therefor
in Schedule III hereto.

 

(d) None
of the Receivables is evidenced by a promissory note or other instrument that
has not been delivered to the Collateral Agent.

 

(e) Such
Grantor has no deposit accounts, other than the Pledged Deposit Accounts listed
on Schedule I hereto.

 

(f) This
Agreement creates in favor of the Collateral Agent for the benefit of the
Secured Parties a valid security interest in the Collateral granted by such
Grantor, securing the payment of the Secured Obligations; upon the filing of
financing statements, all filings and other actions necessary to perfect the
security interest in the Collateral granted by such Grantor will have been duly
made or taken and are in full force and effect; and such security interest is
first priority.

 

(g) No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or any other third party is
required for (i) the grant by such Grantor of the security interest
granted hereunder or for the execution, delivery or performance of this
Agreement by such Grantor, (ii) the perfection or maintenance of the
security interest created hereunder (including the first priority nature of
such security interest), except for the filing of financing and continuation
statements under the UCC, the actions necessary for the Collateral Agent to
obtain control of Collateral as provided in Sections 9-104, 9-106 and 9-107 of
the UCC and actions necessary to perfect the Collateral Agent’s security
interest with respect to Collateral evidenced by a certificate of title or (iii) the
exercise by the Collateral Agent of its voting or other rights provided for in
this Agreement or the remedies in respect of the Collateral pursuant to this
Agreement.

 

5

 

(h) The Inventory that has been
produced or distributed by such Grantor has been produced in compliance with
all requirements of applicable law, including, without limitation, the Fair
Labor Standards Act.

 

Section 6. Further Assurances.  (a)  Each Grantor agrees that from time
to time, at the expense of such Grantor, such Grantor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be necessary or desirable, or that the Collateral
Agent may request, in order to perfect and protect any pledge or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor.  Without limiting the generality of the
foregoing, each Grantor will promptly with respect to Collateral of such
Grantor at the reasonable request of the Collateral Agent:  (i) mark conspicuously each document
included in Inventory, each chattel paper included in Receivables, and, at the
request of the Collateral Agent, each of its records pertaining to such
Collateral with a legend, in form and substance satisfactory to the Collateral
Agent, indicating that such document, chattel paper, or Collateral is subject
to the security interest granted hereby; (ii) if any such Collateral shall
be evidenced by a promissory note or other instrument, deliver and pledge to
the Collateral Agent hereunder such note or instrument duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Collateral Agent; (iii) file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Collateral
Agent may reasonably request, in order to perfect and preserve the security
interest granted or purported to be granted by such Grantor hereunder; and (iv) deliver
to the Collateral Agent evidence that all other actions that the Collateral
Agent may deem reasonably necessary or desirable in order to perfect and
protect the security interest granted or purported to be granted by such
Grantor under this Agreement has been taken.

 

(b) Each Grantor hereby authorizes the
Collateral Agent to file one or more financing or continuation statements, and
amendments thereto, including, without limitation, one or more financing
statements indicating that such financing statements cover all Inventory,
Receivables, Precious Metals and Proceeds (or words of similar effect) of such
Grantor, regardless of whether any particular asset described in such financing
statements falls within the scope of the UCC or the granting clause of this
Agreement.  A photocopy or other
reproduction of this Agreement shall be sufficient as a financing statement
where permitted by law.  Each Grantor
ratifies its authorization for the Collateral Agent to have filed such
financing statements, continuation statements or amendments filed prior to the
date hereof.

 

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

 

Section 7. As to Inventory. 
(a)  Each Grantor will pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including, without limitation, claims for labor, materials and
supplies) against, its Inventory, except to the extent payment thereof is not
required by Section 5.01(b) of the Credit 

 

6

 

Agreement.  In
producing its Inventory, each Grantor will comply with all requirements of
applicable law, including, without limitation, the Fair Labor Standards Act.

 

(b) Each Grantor hereby grants to the
Collateral Agent, for use upon the occurrence and during the continuance of an Event
of Default, the irrevocable, non-exclusive right and license to use all present
and future trademarks, trade names, copyrights, patents or technical processes
owned or used by such Grantor that relate to the Collateral and any other
Collateral granted by such Grantor as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable the Collateral Agent to realize on, and exercise all rights of the
Collateral Agent and the Secured Parties in relation to, the Collateral in
accordance with this Agreement.  This
right shall inure to the benefit of all successors, assigns and transferees of
the Collateral Agent.  Such right and
license shall be granted free of charge, without requirement that any monetary
payment whatsoever be made to such Grantor.

 

Section 8. Insurance. 
(a)  Each Grantor will, at its own expense, maintain insurance with
respect to its Inventory in such amounts, against such risks, in such form and
with such insurers consistent with industry standards.  Each policy of each Grantor for liability
insurance shall provide for all losses to be paid on behalf of the Collateral
Agent and such Grantor as their interests may appear.  Each such policy shall in addition (i) name
such Grantor and the Collateral Agent as insured parties thereunder (without
any representation or warranty by or obligation upon the Collateral Agent) as
their interests may appear, (ii) contain the agreement by the insurer that
any loss thereunder shall be payable to the Collateral Agent notwithstanding
any action, inaction or breach of representation or warranty by such Grantor, (iii) provide
that there shall be no recourse against the Collateral Agent for payment of
premiums or other amounts with respect thereto and (iv) provide that at
least 10 days’ prior written notice of cancellation or of lapse shall be given
to the Collateral Agent by the insurer.

 

(b) Reimbursement under any liability
insurance maintained by any Grantor pursuant to this Section 8 may be paid
directly to the Person who shall have incurred liability covered by such
insurance.  In case of any loss involving
damage to Inventory when subsection (c) of this Section 8 is not
applicable, the applicable Grantor will make or cause to be made the necessary
repairs to or replacements of such Inventory, and any proceeds of insurance
properly received by or released to such Grantor shall be used by such Grantor,
except as otherwise permitted by the Credit Agreement, to pay or as
reimbursement for the costs of such repairs or replacements.

 

(c) So long as no Event of Default shall
have occurred and be continuing, all insurance payments received by the
Collateral Agent in connection with any loss, damage or destruction of any
Inventory will be released by the Collateral Agent to the applicable Grantor.

 

Section 9. Post-Closing Changes; Collections on Receivables and
Related Contracts.  (a)  No
Grantor will change its name, type of organization, jurisdiction of
organization or organizational identification number from those set forth in Section 5(a) of
this Agreement without first giving at least 15 days’ prior written notice to
the Collateral Agent and taking all action required by the Collateral Agent for
the purpose of perfecting or protecting the security interest granted by this
Agreement.  Each Grantor will hold and
preserve its records 

 

7

 

relating to the Collateral, including, without
limitation, the Related Contracts, and will permit representatives of the Collateral
Agent at any time during normal business hours to inspect and make abstracts
from such records and other documents as the Collateral Agent may reasonably
request.  If any Grantor does not have an
organizational identification number and later obtains one, it will forthwith
notify the Collateral Agent of such organizational identification number.

 

(b) Except as otherwise provided in this
subsection (b), each Grantor will continue to collect, at its own expense, all
amounts due or to become due such Grantor under the Receivables.  In connection with such collections, such
Grantor may take (and, at the Collateral Agent’s direction during the
continuance of an Event of Default, will take) such action as such Grantor or
the Collateral Agent may deem necessary or advisable to enforce collection of
the Receivables; provided, however, that the Collateral Agent shall
have the right at any time, upon the occurrence and during the continuance of
an Event of Default and upon written notice to such Grantor of its intention to
do so, to notify the Obligors under any Receivables of the assignment of such
Receivables to the Collateral Agent and to direct such Obligors to make payment
of all amounts due or to become due to such Grantor thereunder directly to the
Collateral Agent and, upon such notification and at the expense of such
Grantor, to enforce collection of any such Receivables, to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done, and to otherwise exercise all rights
with respect to such Receivables, including, without limitation, those set
forth set forth in Section 9-607 of the UCC.  After receipt by any Grantor of the notice
from the Collateral Agent referred to in the proviso to the preceding sentence,
(i) all amounts and proceeds (including, without limitation, instruments)
received by such Grantor in respect of the Receivables of such Grantor shall be
received in trust for the benefit of the Collateral Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Collateral Agent in the same form as so received (with any necessary
indorsement) to be deposited in the Concentration Account and either (A) released
to such Grantor so long as no Event of Default shall have occurred and be
continuing or (B) if any Event of Default shall have occurred and be
continuing, applied as provided in Section 14(b) and (ii) such
Grantor will not adjust, settle or compromise the amount or payment of any
Receivable, release wholly or partly any Obligor thereof or allow any credit or
discount thereon.  No Grantor will permit
or consent to the subordination of its right to payment under any of the
Receivables to any other indebtedness or obligations of the Obligor thereof.

 

Section 10. Transfers and Other Liens.  Each Grantor agrees that it will not (i) sell,
assign or otherwise dispose of, or grant any option with respect to, any of the
Collateral, other than sales, assignments and other dispositions of Collateral,
and options relating to Collateral, permitted under the terms of the Credit
Agreement, or (ii) create or suffer to exist any Lien upon or with respect
to any of the Collateral of such Grantor except for the pledge, assignment and
security interest created under this Agreement and Liens permitted under the
Credit Agreement.

 

Section 11. Collateral Agent Appointed Attorney in Fact.  Each Grantor hereby irrevocably appoints the
Collateral Agent such Grantor’s attorney in fact, with full authority in the
place and stead of such Grantor and in the name of such Grantor or otherwise,
from time to time, upon the occurrence and during the continuance of an Event
of Default, in the Collateral Agent’s discretion, to take any action and to
execute any instrument that the Collateral Agent

 

8

 

may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:

 

(a) to obtain and adjust insurance
required to be paid to the Collateral Agent pursuant to Section 8,

 

(b) to ask for, demand, collect,
sue for, recover, compromise, receive and give acquittance and receipts for
moneys due and to become due under or in respect of any of the Collateral,

 

(c) to receive, indorse and
collect any drafts or other instruments, documents and chattel paper, in
connection with clause (a) or (b) above, and

 

(d) to file any claims or take any
action or institute any proceedings that the Collateral Agent may reasonably
deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of the Collateral Agent with respect to any of
the Collateral.

 

Section 12. Collateral Agent May Perform.  If any Grantor during the continuance of an
Event of Default fails to perform any agreement contained herein, the
Collateral Agent may, but without any obligation to do so and without notice,
itself perform, or cause performance of, such agreement, and the expenses of
the Collateral Agent incurred in connection therewith shall be payable by such
Grantor under Section 15.

 

Section 13. The Collateral Agent’s Duties.  (a)  The powers conferred on the
Collateral Agent hereunder are solely to protect the Secured Parties’ interest
in the Collateral and shall not impose any duty upon it to exercise any such
powers.  Except for the safe custody of
any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Collateral Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not any Secured Party has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral.  The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.

 

(b) Anything contained herein to the
contrary notwithstanding, the Collateral Agent may from time to time, when the
Collateral Agent deems it to be necessary, appoint one or more subagents (each
a “Subagent”) for the Collateral Agent
hereunder with respect to all or any part of the Collateral.  In the event that the Collateral Agent so
appoints any Subagent with respect to any Collateral, (i) the assignment
and pledge of such Collateral and the security interest granted in such
Collateral by each Grantor hereunder shall be deemed for purposes of this
Security Agreement to have been made to such Subagent, in addition to the
Collateral Agent, for the ratable benefit of the Secured Parties, as security
for the Secured Obligations of such Grantor, (ii) such Subagent shall
automatically be vested, in addition to the Collateral Agent, with all rights,
powers, privileges, interests and remedies of the Collateral Agent hereunder
with respect to such Collateral, and (iii) the term “Collateral Agent,”
when used herein in relation to 

 

9

 

any rights, powers, privileges, interests and remedies of the
Collateral Agent with respect to such Collateral, shall include such Subagent; provided, however,
that no such Subagent shall be authorized to take any action with respect to
any such Collateral unless and except to the extent expressly authorized in
writing by the Collateral Agent.

 

Section 14. Remedies.  If any Event of Default shall have occurred
and be continuing:

 

(a) The Collateral Agent may
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies
of a secured party upon default under the UCC (whether or not the UCC applies
to the affected Collateral) and also may: 
(i) require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Collateral as directed by the Collateral Agent and
make it available to the Collateral Agent at a place and time to be designated
by the Collateral Agent that is reasonably convenient to both parties; (ii) without
notice except as specified below, sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Collateral Agent may deem commercially reasonable; (iii) occupy
any premises owned or leased by any of the Grantors where the Collateral or any
part thereof is assembled or located for a reasonable period in order to
effectuate its rights and remedies hereunder or under law, without obligation
to such Grantor in respect of such occupation; and (iv) exercise any and
all rights and remedies of any of the Grantors under or in connection with the
Collateral, or otherwise in respect of the Collateral, including, without limitation,
(A) any and all rights of such Grantor to demand or otherwise require
payment of any amount under, or performance of any provision of, the
Receivables and the other Collateral, (B) withdraw, or cause or direct the
withdrawal, of all funds with respect to the Account Collateral and (C) exercise
all other rights and remedies with respect to the Receivables and the other
Collateral, including, without limitation, those set forth in Section 9-607
of the UCC.  Each Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten days’ notice
to such Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification.  The Collateral Agent shall
not be obligated to make any sale of Collateral 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.

 

(b) Any cash held by or on behalf
of the Collateral Agent and all cash proceeds received by or on behalf of the
Collateral Agent in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent as collateral for, and/or then or at any
time thereafter applied (after payment of any 

 

10

 

amounts
payable to the Collateral Agent pursuant to Section 15) in whole or in
part by the Collateral Agent for the ratable benefit of the Secured Parties
against, all or any part of the Secured Obligations, by payment thereof to the
Administrative Agent for payment in accordance with Section 2.11(f) of
the Credit Agreement and any surplus of such cash or cash proceeds held by or
on the behalf of the Collateral Agent and remaining after payment in full of
all the Secured Obligations shall be paid over to the applicable Grantor or to
whomsoever may be lawfully entitled to receive such surplus.

 

(c) All payments received by any
Grantor in respect of the Collateral shall be received in trust for the benefit
of the Collateral Agent, shall be segregated from other funds of such Grantor
and shall be forthwith paid over to the Collateral Agent in the same form as so
received (with any necessary indorsement).

 

(d) The Collateral Agent may,
without notice to any Grantor except as required by law and at any time or from
time to time, charge, set off and otherwise apply all or any part of the
Secured Obligations against any funds held with respect to the Account
Collateral or in any other deposit account.

 

(e) The Collateral Agent may send
to each bank, securities intermediary or issuer party to any Deposit Account
Control Agreement, a “Notice of Exclusive Control” as defined in and under such
Agreement.

 

Section 15. Indemnity and Expenses.  (a)  Each Grantor agrees to indemnify,
defend and save and hold harmless each Secured Party and each of their
Affiliates and their respective officers, directors, employees, agents and
advisors (each, an “Indemnified
Party”) from and against, and shall pay on demand, any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party’s gross
negligence or willful misconduct.

 

(b) Each Grantor will upon demand pay to
the Collateral Agent the amount of any and all reasonable expenses, including,
without limitation, the reasonable fees and expenses of its counsel and of any
experts and agents, that the Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon, any of
the Collateral of such Grantor, (iii) the exercise or enforcement of any
of the rights of the Collateral Agent or the other Secured Parties hereunder or
(iv) the failure by such Grantor to perform or observe any of the
provisions hereof.

 

Section 16. Amendments; Waivers; Additional Grantors; Etc.  (a)  No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance

 

11

 

and for the specific purpose for which given.  No failure on the part of the Collateral
Agent or any other Secured Party to exercise, and no delay in exercising any
right hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.

 

(b) Upon the execution and delivery by
any Person of a security agreement supplement in substantially the form of Exhibit A
hereto (each a “Security Agreement
Supplement”) or such other form as may be reasonably
acceptable to the Administrative Agent, such Person shall be referred to as an “Additional Grantor” and shall be and become a
Grantor hereunder, and each reference in this Agreement and the other Loan
Documents to “Grantor” shall also mean and be a reference to such Additional
Grantor, each reference in this Agreement and the other Loan Documents to the “Collateral”
shall also mean and be a reference to the Collateral granted by such Additional
Grantor and each reference in this Agreement to a Schedule shall also mean and
be a reference to the schedules attached to such Security Agreement Supplement.

 

Section 17. Notices, Etc. 
All notices and other communications provided for hereunder shall be
either (i) in writing (including telecopier communication) and mailed,
telecopied or otherwise delivered or (ii) by electronic mail (if
electronic mail addresses are designated as provided below) confirmed
immediately in writing, in the case of the Company or the Collateral Agent,
addressed to it at its address specified in the Credit Agreement and, in the
case of each Grantor other than the Company, addressed to it at its address set
forth opposite such Grantor’s name on the signature pages hereto or on the
signature page to the Security Agreement Supplement pursuant to which it
became a party hereto; or, as to any party, at such other address as shall be
designated by such party in a written notice to the other parties.  All such notices and other communications
shall, when mailed, telecopied, sent by electronic mail or otherwise, be
effective when deposited in the mails, telecopied, sent by electronic mail and
confirmed in writing, or otherwise delivered (or confirmed by a signed
receipt), respectively, addressed as aforesaid; except that notices and other
communications to the Collateral Agent shall not be effective until received by
the Collateral Agent.  Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or of any Security Agreement Supplement or Schedule
hereto shall be effective as delivery of an original executed counterpart
thereof.

 

Section 18. Continuing Security Interest; Assignments under the
Credit Agreement.  This Agreement
shall create a continuing security interest in the Collateral and shall (a) remain
in full force and effect until the later of (i) the payment in full in
cash of the Secured Obligations under the Credit Agreement (other than
contingent obligations) and the termination of all letters of credit (or cash
collateralization or otherwise supported in a manner satisfactory to the
Collateral Agent), or (ii) the Termination Date, (b) be binding upon
each Grantor, its successors and assigns and (c) inure, together with the
rights and remedies of the Collateral Agent hereunder, to the benefit of the
Secured Parties and their respective successors, transferees and assigns.  Without limiting the generality of the
foregoing clause (c), any Lender Party may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of its Commitment, the
Advances owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person 

 

12

 

shall thereupon become vested with all the benefits in
respect thereof granted to such Lender Party herein or otherwise, in each case
as provided in Section 8.07 of the Credit Agreement.

 

Section 19. Release; Termination.  (a)  Upon any sale, lease, transfer or
other disposition of any item of Collateral of any Grantor in accordance with
the terms of the Loan Documents (other than sales of Inventory in the ordinary
course of business), the security interest in such Collateral shall
automatically terminate and, as promptly as practicable, the Collateral Agent
will, at such Grantor’s expense, execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence the release of
such item of Collateral from the assignment and security interest granted
hereby; provided, however, that (i) at the time of such
request and such release no Default shall have occurred and be continuing, (ii) such
Grantor shall have delivered to the Collateral Agent, at least five Business
Days prior to the date of the proposed release, a written request for release
describing the item of Collateral, together with a form of release for
execution by the Collateral Agent and a certificate of such Grantor to the
effect that the transaction is in compliance with the Loan Documents and as to
such other matters as the Collateral Agent may reasonably request.

 

(b) Upon the latest of (i) the
payment in full in cash of the Secured Obligations under the Credit Agreement
(other than contingent obligations), (ii) the Termination Date and (iii) the
termination, expiration, cash collateralization or provision of other credit support
satisfactory to the Issuing Bank of all Letters of Credit, the pledge and
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantor.  Upon any such termination, the Collateral
Agent will, at the applicable Grantor’s expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence
such termination.

 

Section 20. Intercreditor. 
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIENS AND SECURITY
INTERESTS GRANTED TO THE COLLATERAL AGENT PURSUANT TO THIS AGREEMENT IN ANY
COLLATERAL AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE COLLATERAL AGENT WITH
RESPECT TO ANY COLLATERAL HEREUNDER ARE SUBJECT TO THE LIMITATION AND
PROVISIONS OF THE REVOLVER INTERCREDITOR AGREEMENT, DATED AS OF FEBRUARY 22,
2007 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME, THE “INTERCREDITOR AGREEMENT”,
AMONG THE COMPANY, EACH OTHER LOAN PARTY PARTY THERETO, THE COLLATERAL AGENT,
DEUTSCHE BANK TRUST COMPANY AMERICAS, AS SECOND LIEN COLLATERAL AGENT (AS
DEFINED THEREIN) AND DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, AS THIRD LIEN
COLLATERAL AGENT (AS DEFINED THEREIN), AND CERTAIN OTHER PERSONS THAT MAY BECOME
PARTY THERETO FROM TIME TO TIME AND CONSENTED TO BY BUILDING MATERIALS
CORPORATION OF AMERICA AND THE GRANTORS IDENTIFIED THEREIN.  IN THE EVENT OF ANY CONFLICT BETWEEN THE
TERMS OF THE INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE TERMS OF THE
INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.

 

Section 21. Execution in Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and 

 

13

 

all of which taken together shall constitute one and
the same agreement.  Delivery of an
executed counterpart of a signature page to this Agreement by telecopier
shall be effective as delivery of an original executed counterpart of this
Agreement.

 

Section 22. Governing Law. 
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.

 

Section 23. Jurisdiction, Etc.  (a)  Each of the parties 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 sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement to which it is a party, 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 any such New York State court or, to the fullest 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 any party may otherwise have to bring any action or
proceeding relating to this Agreement in the courts of any jurisdiction.

 

(b) Each of the parties hereto
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection that 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 to which it is a party in any New York State or Federal
court.  Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

 

Section 24. Waiver of Jury Trial.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT.

 

14

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

 

 

	
  Address for Notices: 

  c/o Building Materials Corp of America 

  1361 Alps Road, Wayne, NJ 07470

  	
   

  	
  BUILDING MATERIALS CORPORATION OF AMERICA 

  BMCA ACQUISITION INC. 

  BMCA ACQUISITION SUB INC. 

  BMCA FRESNO LLC 

  BMCA FRESNO II LLC 

  BMCA GAINESVILLE LLC 

  BMCA INSULATION PRODUCTS INC. 

  BMCA QUAKERTOWN INC. 

  BUILDING MATERIALS INVESTMENT CORPORATION 

  BUILDING MATERIALS MANUFACTURING CORPORATION 

  DUCTWORK MANUFACTURING CORPORATION 

  GAF LEATHERBACK CORP. 

  GAF MATERIALS CORPORATION (CANADA) 

  GAF PREMIUM PRODUCTS INC. 

  GAF REAL PROPERTIES, INC. 

  GAFTECH CORPORATION 

  HBP ACQUISITION LLC 

  LL BUILDING PRODUCTS INC. 

  PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. 

  SOUTH PONCA REALTY CORP. 

  WIND GAP REAL PROPERTY ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
  /John M. Maitner/

  
	
   

  	
   

  	
   

  	
  Name: John M. Maitner 

  
	
   

  	
   

  	
   

  	
  Title: Vice President and Treasurer

  

 

 

	
  ACKNOWLEDGED & AGREED

  	
   

  
	
   

  	
   

  
	
  DEUTSCHE BANK AG NEW YORK BRANCH, as Collateral
  Agent

  
	
   

  	
   

  
	
  By 

  	
  /Marguerite Sutton/

  	
   

  
	
   

  	
  Name: Marguerite Sutton

  	
   

  
	
   

  	
  Title: Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By 

  	
  /Enrique Landaeta/

  	
   

  
	
   

  	
  Name: Enrique Landaeta

  	
   

  
	
   

  	
  Title: Vice PresidentExhibit 10.41

 

EXECUTED DOCUMENT

 

AMENDED AND RESTATED SECURITY AGREEMENT

 

Dated March 15, 2007

 

From

 

The Grantors referred to herein

 

as Grantors

 

to

 

Deutsche Bank AG New York Branch

 

as Collateral Agent

 

 

T  A  B  L  E  O  F  C  O  N  T  E  N
T  S

 

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 1. Grant of Security

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 2. Security for Obligations

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 3. Grantors Remain Liable

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 4. Delivery and Control of
  Security Collateral

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 5. Maintaining the Account
  Collateral

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 6. Representations and
  Warranties

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 7. Further Assurances

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 8. As to Equipment and
  Inventory

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 9. Insurance

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 10. Post-Closing Changes;
  Collections on Receivables and Related Contracts

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 11. As to Intellectual
  Property Collateral

  	
   

  	
  17

  
	
   

  	
   

  	
   

  
	
  Section 12. Voting Rights; Dividends;
  Etc.

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
  Section 13. As to Letter-of-Credit
  Rights

  	
   

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 14. Commercial Tort Claims

  	
   

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 15. Transfers and Other Liens;
  Additional Shares

  	
   

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 16. Collateral Agent Appointed
  Attorney in Fact

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 17. Collateral Agent
  May Perform

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 18. The Collateral Agent’s
  Duties

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 19. Remedies

  	
   

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 20. Indemnity and Expenses

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 21. Amendments; Waivers;
  Additional Grantors; Etc.

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 22. Notices, Etc.

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 23. Continuing Security
  Interest

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 24. Release; Termination

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 25. Intercreditor

  	
   

  	
  27

  

 

 

	
  Section 26. Execution in Counterparts

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 27. Governing Law

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 28. Jurisdiction, Etc

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 29. Waiver of Jury Trial

  	
   

  	
  29

  

 

Schedules

 

	
  Schedule I

  	
   

  	
  -

  	
   

  	
  Investment Property

  
	
  Schedule II

  	
   

  	
  -

  	
   

  	
  Pledged Deposit Accounts

  
	
  Schedule III

  	
   

  	
  -

  	
   

  	
  Intellectual Property

  
	
  Schedule IV

  	
   

  	
  -

  	
   

  	
  Commercial Tort Claims

  
	
  Schedule V 

  	
   

  	
  - 

  	
   

  	
  Location, Chief Executive Office, Type of
  Organization, Jurisdiction of Organization and Organizational Identification
  Number 

  
	
  Schedule VI

  	
   

  	
  -

  	
   

  	
  Locations of Equipment and Inventory

  
	
  Schedule VII

  	
   

  	
  -

  	
   

  	
  Letters of Credit

  
	
  Schedule VIII

  	
   

  	
  -

  	
   

  	
  Post-Closing Matters

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  -

  	
   

  	
  Form of Intellectual Property Security
  Agreement

  
	
  Exhibit B

  	
   

  	
  -

  	
   

  	
  Form of Intellectual Property Security
  Agreement Supplement

  
	
  Exhibit C

  	
   

  	
  -

  	
   

  	
  Form of Security Agreement Supplement

  

 

ii

 

AMENDED AND RESTATED SECURITY AGREEMENT

 

AMENDED
AND RESTATED SECURITY AGREEMENT dated March 15, 2007 made by BUILDING
MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the “Company”), and the
other Persons listed on the signature pages hereof (the Company and the
Persons so listed being, collectively, the “Grantors”), to DEUTSCHE BANK AG NEW YORK
BRANCH (“DBNY”),
as collateral agent for the Secured Parties (as hereinafter defined) and in
such capacity, and together with any successor collateral agent appointed
pursuant to Article VII of the Loan Agreement as hereinafter defined, the “Collateral Agent”.

 

PRELIMINARY STATEMENTS.

 

(1) The Company and certain of its Subsidiaries
are parties to a Junior Lien Term Loan Agreement (amending and restating in its
entirety the Bridge Loan Agreement dated as of February 22, 2007, the “Existing Bridge Loan”) dated as of March 15,
2007 (the “Loan Agreement”), with the
lenders party thereto from time to time, and DBNY as collateral agent.  The Loan Agreement amends and restates in its
entirety the Existing Bridge Loan, including reflecting that DBNY has replaced
Deutsche Bank AG Cayman Islands Branch as the Collateral Agent.  The Lenders and the Agents party to the Loan
Agreement shall be the “Secured Parties”
hereunder.

 

(2) The Company and certain of its Subsidiaries
have entered into a Term Loan Agreement dated as of February 22, 2007 (as
amended, restated, supplemented, waived or otherwise modified, refinanced or
replaced from time to time, the “Term Loan Agreement”) with the lenders party
thereto and DBNY, as administrative agent, Deutsche Bank Securities Inc., Bear
Stearns & Co. Inc. and J.P. Morgan Securities Inc., as joint lead arrangers
and joint book managers, Bear Stearns & Co. Inc., as syndication
agent, and J.P. Morgan Securities Inc., as documentation agent for the lenders.

 

(3) The Company is a party to the Revolving
Credit Agreement dated as of February 22, 2007 (as amended, restated,
supplemented, waived, or otherwise modified, refinanced or replaced from time
to time, the “Revolving
Credit Agreement”), among the Company and certain of its
Subsidiaries, the lender parties party thereto from time to time, DBNY, as
collateral monitoring agent and administrative agent, swingline lender and
letter of credit issuer, Bear Stearns & Co. Inc., as syndication
agent, J.P. Morgan Securities Inc., as documentation agent, and Deutsche Bank
Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities
Inc., as joint lead arrangers and joint book managers.

 

(4) The Company is party to (i) an indenture
dated as of October 20, 1997 (as amended, restated, supplemented, waived,
or otherwise modified, refinanced or replaced from time to time, the “2007 Notes Indenture”),
among the Company, the Guarantors identified therein and The Bank of New York,
as trustee pursuant to which certain 8% senior notes due 2007 were issued; (ii) an
indenture dated as of December 3, 1998 (as amended, restated,
supplemented, waived or otherwise modified, refinanced or replaced from time to
time, the “2008 Notes
Indenture”), among the Company, the Guarantors identified
therein and The Bank of New York, as trustee pursuant to which certain 8%
senior notes due 2008 were issued; and 

 

1

 

(iii) an indenture dated as of July 26, 2004 (as amended,
restated, supplemented, waived, or otherwise modified, refinanced or replaced
from time to time, the “2014
Notes Indenture”) among the Company, the Guarantors identified
therein and Wilmington Trust Company, as trustee, pursuant to which certain
7.75% senior notes were issued.

 

(5) DBNY, as administrative agent for the lenders
and agents party to the Term Loan Agreement from time to time, The Bank of New
York, as trustee under the 2007 Notes Indenture and the 2008 Notes Indenture,
and Wilmington Trust Company, as trustee under the 2014 Notes Indenture, the
Company and the other Grantors are party to the Collateral Agency Agreement
dated February 22, 2007 (as amended, restated, supplemented, waived or
otherwise modified or replaced from time to time) in which, among other things,
the parties thereto have appointed Deutsche Bank Trust Company Americas to act
as collateral agent (the “Term
Collateral Agent”) for purposes of the Security Agreement (as
defined in such Collateral Agency Agreement, the “Term Security Agreement”) and the
Intercreditor Agreements (as hereinafter defined).

 

(6) Each Grantor is the owner of the shares of stock
or other Equity Interests (the “Initial Pledged Equity”) set forth opposite such Grantor’s
name on and as otherwise described in Part I of Schedule I hereto and
issued by the Persons named therein and of the indebtedness (the “Initial Pledged Debt”)
set forth opposite such Grantor’s name on and as otherwise described in Part II
of Schedule I hereto and issued by the obligors named therein.

 

(7) Each Grantor is the owner of the deposit
accounts (the “Pledged
Deposit Accounts”) set forth opposite such Grantor’s name on
Schedule II hereto.

 

(8)  In connection with the Existing Bridge Loan,
the Grantors entered into a Security Agreement, dated February 22, 2007
(the “Existing Security Agreement”),
and the security interests created thereunder were perfected by the filing of
UCC (as hereinafter defined) financing statements.  It is a condition precedent to the entering
into of the Loan Agreement that the Existing Security Agreement be amended and
restated as provided herein and that the security interests created thereunder
continue under this Agreement.

 

(9) Terms defined in the Loan Agreement and not
otherwise defined in this Agreement are used in this Agreement as defined in
the Loan Agreement.  Further, unless
otherwise defined in this Agreement or in the Loan Agreement, terms defined in Article 8
or 9 of the UCC (as defined below) are used in this Agreement as such terms are
defined in such Article 8 or 9.  “UCC” means the
Uniform Commercial Code as in effect from time to time in the State of New
York; provided that, if
perfection or the effect of perfection or non perfection or the priority of the
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of
perfection or non perfection or priority.

 

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

 

2

 

Section 1. Grant of Security.  Each Grantor hereby grants to the Collateral
Agent, for the ratable benefit of the Secured Parties, and confirms its prior
grant to the Collateral Agent for the ratable benefit of the Secured Parties
of, a security interest in such Grantor’s right, title and interest in and to
the following, in each case, as to each type of property described below,
whether now owned or hereafter acquired by such Grantor, wherever located, and
whether now or hereafter existing or arising (collectively, the “Collateral”):

 

(a) all equipment in all of its
forms, including, without limitation, all machinery, tools, motor vehicles,
furniture and fixtures, and all parts thereof and all accessions thereto,
including, without limitation, computer programs and supporting information
that constitute equipment within the meaning of the UCC (any and all such
property being the “Equipment”);

 

(b) all inventory in all of its
forms, including, without limitation, (i) all raw materials, work in
process, finished goods and materials used or consumed in the manufacture,
production, preparation or shipping thereof, (ii) goods in which such
Grantor has an interest in mass or a joint or other interest or right of any
kind (including, without limitation, goods in which such Grantor has an
interest or right as consignee) and (iii) goods that are returned to or
repossessed or stopped in transit by such Grantor), and all accessions thereto
and products thereof and documents therefor, including, without limitation,
computer programs and supporting information that constitute inventory within
the meaning of the UCC (any and all such property being the “Inventory”);

 

(c) all accounts, chattel paper
(including, without limitation, tangible chattel paper and electronic chattel
paper), instruments (including, without limitation, promissory notes), deposit
accounts, letter-of-credit rights, general intangibles (including, without
limitation, payment intangibles) and other obligations of any kind, whether or
not arising out of or in connection with the sale or lease of goods or the
rendering of services and whether or not earned by performance, and all rights
now or hereafter existing in and to all supporting obligations and in and to
all security agreements, mortgages, Liens, leases, letters of credit and other
contracts securing or otherwise relating to the foregoing property (any and all
of such accounts, chattel paper, instruments, deposit accounts,
letter-of-credit rights, general intangibles and other obligations, to the
extent not referred to in clause (d), (e) or (f) below, being the “Receivables,”
and any and all such supporting obligations, security agreements, mortgages,
Liens, leases, letters of credit and other contracts being the “Related Contracts”);

 

(d) all precious metals, including
without limitation, platinum and rhodium, (any and all such Property being the “Precious Metals”)
used in the production of Inventory;

 

(e) the following (the “Security Collateral”):

 

3

 

(i)            the Initial Pledged Equity and the certificates, if any,
representing the Initial Pledged Equity, and all dividends, distributions,
return of capital, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Initial Pledged Equity and all warrants, rights or options
issued thereon or with respect thereto;

 

(ii)           the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the Initial Pledged Debt;

 

(iii)          all additional shares of stock and other Equity Interests
from time to time acquired by such Grantor in any manner (such shares and other
Equity Interests, together with the Initial Pledged Equity, being the “Pledged Equity”), and the certificates, if any, representing such
additional shares or other Equity Interests, and all dividends, distributions,
return of capital, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares or other Equity Interests and all warrants, rights or
options issued thereon or with respect thereto;

 

(iv)          all additional indebtedness from time to time owed to such
Grantor  (such indebtedness, together
with the Initial Pledged Debt, being the “Pledged Debt”)
and the instruments, if any, evidencing such indebtedness, and all interest,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
indebtedness;

 

(v)           any securities account (the “Securities Account”), any collateral account (the “Collateral Account”), all
security entitlements with respect to all financial assets from time to time
credited to the Securities Account or the Collateral Account, and all financial
assets, and all dividends, distributions, return of capital, interest, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
security entitlements or financial assets and all warrants, rights or options
issued thereon or with respect thereto; and

 

(vi)          all other investment property (including, without
limitation, all (A) securities, whether certificated or uncertificated, (B) security
entitlements, (C) securities accounts, (D) commodity contracts and (E) commodity
accounts) in which such Grantor has now, or acquires from time to time
hereafter, any right, title or interest in any manner, and the certificates or
instruments, if any, representing or evidencing such investment property, and
all dividends, distributions, return of capital, interest, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such investment
property and all warrants, rights or options issued thereon or with respect
thereto;

 

4

 

(f) the following (collectively,
the “Account Collateral”):

 

(i)            the Pledged Deposit Accounts, the Collateral Account and
all funds and financial assets from time to time credited thereto (including,
without limitation, all Cash Equivalents), and all certificates and
instruments, if any, from time to time representing or evidencing the Pledged
Deposit Accounts or the Collateral Account;

 

(ii)           all promissory notes, certificates of deposit, checks and
other instruments from time to time delivered to or otherwise possessed by the
Collateral Agent for or on behalf of such Grantor in substitution for or in
addition to any or all of the then existing Account Collateral; and

 

(iii)          all interest, dividends, distributions, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then existing
Account Collateral; and

 

(g) the following (collectively,
the “Intellectual Property
Collateral”):

 

(i)            all patents, patent applications, utility models and
statutory invention registrations, all inventions claimed or disclosed therein
and all improvements thereto (“Patents”);

 

(ii)           all trademarks, service marks, domain names, trade dress,
logos, designs, slogans, trade names, business names, corporate names and other
source identifiers, whether registered or unregistered (provided that no
security interest shall be granted in United States intent-to-use trademark
applications to the extent that, and solely during the period in which, the
grant of a security interest therein would impair the validity or
enforceability of such intent-to-use trademark applications under applicable
federal law), together, in each case, with the goodwill symbolized thereby (“Trademarks”);

 

(iii)          all copyrights, including, without limitation, copyrights
in Computer Software (as hereinafter defined), internet web sites and the
content thereof, whether registered or unregistered (“Copyrights”);

 

(iv)          all computer software, programs and databases (including,
without limitation, source code, object code and all related applications and
data files), firmware and documentation and materials relating thereto,
together with any and all maintenance rights, service rights, programming
rights, hosting rights, test rights, improvement rights, renewal rights and
indemnification rights and any substitutions, replacements, improvements, error
corrections, updates and new versions of any of the foregoing (“Computer
Software”);

 

(v)           all confidential and proprietary information, including,
without limitation, know-how, trade secrets, manufacturing and production
processes and techniques, inventions, research and development information,
databases and data, including, without limitation, technical data, financial,
marketing and 

 

5

 

business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information (collectively, “Trade
Secrets”), and all
other intellectual, industrial and intangible property of any type, including,
without limitation, industrial designs and mask works;

 

(vi)          all registrations and applications for registration for any
of the foregoing, including, without limitation, those registrations and
applications for registration set forth in Schedule III hereto, together with
all reissues, divisions, continuations, continuations-in-part, extensions,
renewals and reexaminations thereof ((i)-(vi) collectively, “IP Rights”);

 

(vii)         all tangible embodiments of the foregoing, all rights in the
foregoing provided by international treaties or conventions, all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto;

 

(viii)        all agreements, permits, consents, orders and franchises
relating to the license, development, use or disclosure of any of the foregoing
to which such Grantor, now or hereafter, is a party or a beneficiary,
including, without limitation, the agreements set forth in Schedule III hereto
(“IP Agreements”); and

 

(ix)           any and all claims for damages and injunctive relief for
past, present and future infringement, dilution, misappropriation, violation,
misuse or breach with respect to any of the foregoing, with the right, but not
the obligation, to sue for and collect, or otherwise recover, such damages;

 

(h) the commercial tort claims
described in Schedule IV hereto (together with any commercial tort claims as to
which the Grantors have complied with the requirements of Section 15, the “Commercial Tort Claims Collateral”);

 

(i) all books and records
(including, without limitation, customer lists, credit files, printouts and
other computer output materials and records) of such Grantor pertaining to any
of the Collateral; and

 

(j) all proceeds of, collateral
for, income, royalties and other payments now or hereafter due and payable with
respect to, and supporting obligations relating to, any and all of the
Collateral (including, without limitation, proceeds, collateral and supporting
obligations that constitute property of the types described in clauses (a) through
(i) of this Section 1) and, to the extent not otherwise included, all
(A) payments under insurance (whether or not the Collateral Agent is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral, and (B) cash (any and all such property being the “Proceeds”).

 

Notwithstanding anything herein to the contrary, in no
event shall the Collateral include, and no Grantor shall be deemed to have
granted a security interest in, (a) any Intellectual Property Collateral,
if the grant of such security interest shall constitute or result in the
abandonment, 

 

6

 

invalidation or rendering unenforceable any right,
title or interest of such Grantor therein; (b) in any license, contract or
agreement to which such Grantor is a party or any of its rights or interests
thereunder, including, without limitation, with respect to any pledged
partnership interests or any pledged limited liability company interests, to
the extent, but only to the extent, that such a grant would, under the terms of
such license, contract or agreement (including, without limitation, any
partnership agreements or any limited liability company agreements), or
otherwise, is prohibited by or result in a breach or termination of the terms
of, or constitute a default under or termination of any such license, contract
or agreement (other than to the extent that any such term would be rendered
ineffective pursuant to Section 9-406 of the UCC (or any successor
provision) of any relevant jurisdiction or any other applicable law (including
the Bankruptcy Code) or principles of equity) or would otherwise constitute a
violation of law, regulation or policy; provided, however, that immediately upon the ineffectiveness, lapse or
termination of any such provision, the Collateral shall include, and each
Grantor shall be deemed to have granted a security interest in, all such rights
and interests as if such provision had never been in effect; (c) in any of
the outstanding capital stock of a “controlled foreign corporation” as defined
in the Internal Revenue Code of 1986, as amended from time to time (each, a “Controlled Foreign Corporation”), in
excess of 65% of the voting power of all classes of capital stock of such
controlled foreign corporation entitled to vote; (d) the Chester
Equipment; or (e) all equipment and other property to the extent, but only
to the extent, that such a grant would, under the terms of any contract or
agreement to which such Grantor is a party in connection with certain
industrial revenue obligations, be prohibited by or would otherwise result in a
breach or termination of the terms of, or constitute a default under or
termination of any such contract or agreement or would otherwise constitute a
violation of law, regulation or policy; provided, however, that immediately upon the ineffectiveness, lapse or
termination of any such provision precluding the grant of security interest on
such property, the Collateral shall include, and each Grantor shall be deemed
to have granted a security interest in, all such rights and interests as if
such provision had never been in effect.

 

Section 2. Security for Obligations.  This Agreement secures, in the case of each
Grantor, the payment of all Obligations of such Grantor now or hereafter
existing under the Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
fees, premiums, penalties, indemnifications, contract causes of action, costs,
expenses or otherwise (all such Obligations being the “Secured Obligations”).  Without limiting the generality of the
foregoing, this Agreement secures, as to each Grantor, the payment of all
amounts that constitute part of the Secured Obligations and would be owed by
such Grantor to any Secured Party under the Loan Documents but for the fact
that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving a Loan Party.

 

Section 3. Grantors Remain Liable.  Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts
and agreements included in such Grantor’s Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral and (c) no Secured Party shall have any
obligation or liability under the contracts and agreements included in the Collateral
by reason of this Agreement or any other Loan Document, nor shall

 

7

 

any Secured Party be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.

 

Section 4. Delivery and Control of Security Collateral.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor
Agreement:

 

(a) all certificates or instruments
representing or evidencing Security Collateral shall be delivered to and held
by or on behalf of the Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Collateral Agent.  The Collateral Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing
Security Collateral for certificates or instruments of smaller or larger
denominations.

 

(b) with respect to any Security
Collateral that constitutes an uncertificated security, if requested by the
Collateral Agent, the relevant Grantor will cause the issuer thereof either (i) to
register the Collateral Agent as the registered owner of such security or (ii) to
agree with such Grantor and the Collateral Agent that such issuer will comply
with instructions with respect to such security originated by the Collateral
Agent without further consent of such Grantor, such agreement to be in form and
substance reasonably satisfactory to the Collateral Agent (such agreement being
an “Uncertificated Security Control Agreement”).

 

(c) with respect to the Securities
Account, the Collateral Account and any Security Collateral that constitutes a
security entitlement as to which the financial institution acting as Collateral
Agent hereunder is not the securities intermediary, if reasonably requested by
the Collateral Agent, the relevant Grantor will cause the securities
intermediary with respect to such Account or security entitlement either (i) to
identify in its records the Collateral Agent as the entitlement holder thereof
or (ii) to agree with such Grantor and the Collateral Agent that such
securities intermediary will comply with entitlement orders originated by the
Collateral Agent without further consent of such Grantor, such agreement to be
in form and substance reasonably satisfactory to the Collateral Agent (a “Securities Account Control Agreement” or “Securities/Deposit Account Control Agreement,”
respectively).

 

(d) during the continuance of an Event
of Default, the Collateral Agent shall have the right, at any time and without
notice to any Grantor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Security Collateral,
subject only to the revocable rights specified in Section 12(a).  In addition, during the continuance of an
Event of Default, the Collateral Agent shall have the right at any time to
convert Security Collateral consisting of financial assets credited to the
Securities Account or the Collateral Account to Security Collateral consisting
of financial assets held directly by the Collateral Agent, and to convert Security
Collateral consisting of financial assets held directly by the Collateral Agent
to Security Collateral consisting of financial assets credited to the
Securities Account or the Collateral Account.

 

(e) upon the reasonable request of the
Collateral Agent following the occurrence and during the continuance of an
Event of Default, each Grantor will notify each issuer of

 

8

 

Security Collateral granted by it hereunder that such Security
Collateral is subject to the security interest granted hereunder.

 

Section 5. Maintaining the Account Collateral.  Subject to (i) the rights of the
Collateral Monitoring Agent under the Revolving Credit Agreement, the Security
Agreement (as defined in the Revolving Credit Agreement, the “Revolver Security Agreement”) and
the Revolver Intercreditor Agreement (as hereinafter defined) and (ii) the
rights of the Term Collateral Agent under the Term Security Agreement and the
General Intercreditor Agreement (as hereinafter defined), so long as any Loan
or any other Obligation (other than contingent obligations) of any Grantor
under any Loan Document shall remain unpaid:

 

(a) Each Grantor will maintain
deposit accounts only with the financial institution acting as Collateral Agent
hereunder or with a bank (a “Pledged
Account Bank”) that has
agreed with such Grantor and the Collateral Agent to comply with instructions
originated by the Collateral Agent directing the disposition of funds in such
deposit account without the further consent of such Grantor, such agreement to
be in form and substance satisfactory to the Collateral Agent (a “Deposit Account Control Agreement”); provided, however, this Section 5(a) shall not apply to deposit
accounts (i) in which all funds therein are swept on a daily basis and
only to another deposit account over which there is in effect a Deposit Account
Control Agreement or (ii) operated solely as a payroll account, provided, that no funds or investments in
excess of $10,000,000 shall at any time be on deposit in the payroll accounts
in the aggregate; provided, further, however,
the Company shall have forty-five days (unless otherwise agreed by the
Administrative Agent) from the Closing Date (as defined in the Existing Bridge
Loan) to comply with this requirements of this Section 5.

 

(b) Subject to Section 5(a),
each Grantor shall instruct all of its account debtors to remit all payments to
(i) the applicable “P.O. Boxes” or “Lockbox Addresses” of the
applicable Pledged Account Banks with respect to all accounts of such account
debtor, which remittances shall be collected by the applicable Pledged Account
Banks and deposited into the applicable Pledged Deposit Account or (ii) any
other deposit account in which all funds therein are swept on a daily basis and
only to another deposit account over which there is in effect a Deposit Account
Control Agreement.

 

(c) During the continuance of an
Event of Default, upon notice from the Collateral Agent, upon the terms and
subject to the conditions set forth in the Deposit Account Control Agreement,
all amounts held in all of the Pledged Deposit Accounts by the Grantors shall
be wired by the close of business on each Business Day into an account with the
Collateral Agent (the “Concentration
Account”) and all collected amounts held in the Concentration
Account shall be applied as provided in Section 19.

 

Section 6. Representations and Warranties.  Each Grantor represents and warrants as
follows:

 

9

 

(a) Such Grantor’s exact legal
name, location, chief executive office, type of organization, jurisdiction of
organization and organizational identification number is set forth in Schedule
V hereto.  Such Grantor has no trade
names other than as listed on Schedule III hereto.

 

(b) Such Grantor is the legal and
beneficial owner of the Collateral granted or purported to be granted by it
free and clear of any Lien, claim, option or right of others, except for the
security interest created under this Agreement or permitted under the Loan Agreement.  No effective financing statement or other
instrument similar in effect covering all or any part of such Collateral or
listing such Grantor or any trade name of such Grantor as debtor is on file in
any recording office, except such as may have been filed in favor of the
Collateral Agent relating to the Loan Documents or as otherwise permitted under
the Loan Agreement.

 

(c) All of the Equipment and
Inventory of such Grantor are located at the places specified therefor in
Schedule VI hereto.

 

(d) None of the Receivables is
evidenced by a promissory note or other instrument that has not been delivered
to the Term Collateral Agent or the Collateral Monitoring Agent under the
Revolving Security Agreement.

 

(e) If such Grantor is an issuer
of Security Collateral, such Grantor confirms that it has received notice of
the security interest granted hereunder.

 

(f) The Pledged Equity pledged by
such Grantor and issued by a Grantor hereunder has been duly authorized and
validly issued and is fully paid and non assessable.  To the best knowledge of such Grantor, the
Pledged Equity pledged by such Grantor issued by a non-Grantor has been duly
authorized and validly issued and is fully paid or non-assessable.  The Pledged Debt pledged by such Grantor
hereunder and issued by a Grantor has been duly authorized, authenticated or
issued and delivered, is the legal, valid and binding obligation of the issuer
thereof, is evidenced by one or more promissory notes (which promissory notes
have been delivered to the Collateral Agent) and such issuer is not in default
under the terms of such Pledged Debt.  To
the best knowledge of such Grantor, the Pledged Debt pledged by such Grantor
issued by a non-Grantor has been duly authorized, authenticated or issued and
delivered, is the legal, valid and binding obligation of the issuers thereof,
is evidenced by one or more promissory notes (which promissory notes have been
delivered to the Collateral Agent) and such issuer is not in default under the
terms of such Pledged Debt.

 

(g) The Initial Pledged Equity
pledged by such Grantor constitutes the percentage of the issued and
outstanding Equity Interests of the issuers thereof indicated on Schedule I
hereto.  The Initial Pledged Debt
constitutes all of the outstanding indebtedness owed to such Grantor by the
issuers thereof and is outstanding in the principal amount indicated on
Schedule I hereto.

 

10

 

(h) Such Grantor has no investment
property, other than the investment property listed on Schedule I hereto and
additional investment property as to which such Grantor has complied with the
requirements of Section 4.

 

(i) Such Grantor has no deposit
accounts, other than the Pledged Deposit Accounts listed on Schedule II hereto
and additional Pledged Deposit Accounts as to which such Grantor has complied
with the applicable requirements of Section 5.

 

(j) Such Grantor is not a
beneficiary or assignee under any letter of credit, other than the letters of
credit described in Schedule VII hereto and additional letters of credit as to
which such Grantor has complied with the requirements of Section 13.

 

(k) This Agreement creates in
favor of the Collateral Agent for the benefit of the Secured Parties a valid
security interest in the Collateral granted by such Grantor, securing the
payment of the Secured Obligations; except for the filing of financing
statements under the UCC or the other filings referred to in paragraph (l) below,
all filings and other actions necessary to perfect the security interest in the
Collateral granted by such Grantor have been duly made or taken and are in full
force and effect; and such security interest is second priority with the exception
of the security interest in the Revolver Collateral (as defined under the
General Intercreditor Agreement (as hereinafter defined)), which is third
priority.

 

(l) No authorization or approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body or any other third party is required for (i) the grant
by such Grantor of the security interest granted hereunder or for the
execution, delivery or performance of this Agreement by such Grantor, (ii) the
perfection or maintenance of the security interest created hereunder (including
the first priority nature of such security interest), except for the filing of
financing and continuation statements under the UCC, which financing statements
have been duly filed and are in full force and effect, actions necessary to
obtain control of Collateral as provided in Sections 9-104, 9-106 and 9-107 of
the UCC but excluding actions necessary to perfect the Collateral Agent’s
security interest with respect to Collateral evidenced by a certificate of
title, and the recordation of the Intellectual Property Security Agreements
referred to in Section 11(f) with the U.S. Patent and Trademark
Office and the U.S. Copyright Office, which Agreements will be duly recorded
and following the filing thereof shall be in full force and effect, and the
actions described in Section 4 with respect to the Security Collateral,
which actions will be taken and after the completion thereof shall be in full
force and effect, or (iii) the exercise by the Collateral Agent of its
voting or other rights provided for in this Agreement or the remedies in
respect of the Collateral pursuant to this Agreement, except as may be required
in connection with the disposition of any portion of the Security Collateral by
laws affecting the offering and sale of securities generally.

 

11

 

(m) The Inventory that has been
produced or distributed by such Grantor has been produced in compliance with
all requirements of applicable law, including, without limitation, the Fair
Labor Standards Act.

 

(n) As to itself and its
Intellectual Property Collateral:

 

(i)            The operation of such Grantor’s business as currently
conducted or as now contemplated to be conducted and the use of the Intellectual
Property Collateral in connection therewith do not, to such Grantor’s
knowledge, conflict with, infringe, misappropriate, dilute, misuse or otherwise
violate the intellectual property rights of any third party.

 

(ii)           Such Grantor is the exclusive owner of all right, title
and interest in and to the Intellectual Property Collateral, except as set
forth on Schedule III(a) hereto, and is entitled to use all Intellectual
Property Collateral subject only to the terms of the IP Agreements.

 

(iii)          The Intellectual Property Collateral set forth on Schedule
III hereto includes all of the patents, patent applications, domain names,
trademark registrations and applications, and copyright registrations and
applications owned by such Grantor and all IP Agreements to which such Grantor
is a party or beneficiary as of the date hereof.

 

(iv)          The Intellectual Property Collateral material to the
business of the Grantors is subsisting and has not been adjudged invalid or
unenforceable in whole or part, and to the best of such Grantor’s knowledge, is
valid and enforceable.  Such Grantor is
not aware of any uses of any item of Intellectual Property Collateral that
could be expected to lead to such item becoming invalid or unenforceable.

 

(v)           As to each item of Intellectual Property Collateral
material to the business of the Grantors, such Grantor has made or performed
all filings, recordings and other acts and has paid all required fees and taxes
to maintain and protect its interest in each such item of Intellectual Property
Collateral in full force and effect throughout the world, including, without
limitation, recordations of any of its interests in the Patents and Trademarks
with the U.S. Patent and Trademark Office and in corresponding national and
international patent offices, and recordation of any of its interests in the
Copyrights with the U.S. Copyright Office and in corresponding national and
international copyright offices.  Such
Grantor has used proper statutory notice in connection with its use of each
patent, trademark and copyright in the Intellectual Property Collateral
material to the business of the Grantors.

 

(vi)          No claim, action, suit, investigation, litigation or
proceeding has been asserted or is pending or, to such Grantor’s knowledge,
threatened against such Grantor (A) based upon or challenging or seeking
to deny or restrict the Grantor’s rights in or use of any of the Intellectual
Property Collateral material to

 

12

 

the business of the Grantors, (B) to
such Grantor’s knowledge, alleging that the Grantor’s rights in or use of the
Intellectual Property Collateral or that any services provided by, processes
used by, or products manufactured or sold by, such Grantor infringe,
misappropriate, dilute, misuse or otherwise violate any patent, trademark,
copyright or any other proprietary right of any third party, or (C) alleging
that the Intellectual Property Collateral is being licensed or sublicensed in
violation or contravention of the terms of any license or other agreement.  To such Grantor’s knowledge, no Person is
engaging in any activity that infringes, misappropriates, dilutes, misuses or
otherwise violates the Intellectual Property Collateral or the Grantor’s rights
in or use thereof.  Except as set forth
on Schedule III hereto, such Grantor has not granted any license, release,
covenant not to sue, non-assertion assurance, or other right to any Person with
respect to any part of the Intellectual Property Collateral.  The consummation of the transactions
contemplated by the Transaction Documents will not result in the termination or
impairment of any of the Intellectual Property Collateral.

 

(vii)         With respect to each IP Agreement, to such Grantor’s
knowledge: (A) such IP Agreement is valid and binding and in full force
and effect and represents the entire agreement between the respective parties
thereto with respect to the subject matter thereof; (B) such IP Agreement
will not cease to be valid and binding and in full force and effect on terms
identical to those currently in effect as a result of the rights and interest
granted herein, nor will the grant of such rights and interest constitute a
breach or default under such IP Agreement or otherwise give any party thereto a
right to terminate such IP Agreement; (C) such Grantor has not received
any notice of termination or cancellation under such IP Agreement; (D) such
Grantor has not received any notice of a breach or default under such IP
Agreement, which breach or default has not been cured; (E) such Grantor
has not granted to any other third party any rights, adverse or otherwise,
under such IP Agreement; and (F) neither such Grantor nor any other party
to such IP Agreement is in breach or default thereof in any material respect,
and no event has occurred that, with notice or lapse of time or both, would
constitute such a breach or default or permit termination, modification or
acceleration under such IP Agreement.

 

(viii)        To the best of such Grantor’s knowledge, (A) none of the
Trade Secrets of such Grantor has been used, divulged, disclosed or
appropriated to the detriment of such Grantor for the benefit of any other
Person other than such Grantor; (B) no employee, independent contractor or
agent of such Grantor has misappropriated any trade secrets of any other Person
in the course of the performance of his or her duties as an employee,
independent contractor or agent of such Grantor; and (C) no employee,
independent contractor or agent of such Grantor is in default or material
breach of any term of any employment agreement, non-disclosure agreement,
assignment of inventions agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of such
Grantor’s Intellectual Property Collateral.

 

13

 

(ix)           No Grantor or Intellectual Property Collateral is subject
to any outstanding consent, settlement, decree, order, injunction, judgment or
ruling restricting the use of any Intellectual Property Collateral that is
material to the business of the Grantors or that would impair the validity or
enforceability of such material Intellectual Property Collateral.

 

(x)            Such Grantor owns, or possesses the valid right to use,
all Intellectual Property Collateral used in or otherwise necessary to carry on
such Grantor’s business as currently conducted or as now contemplated to be
conducted, all of which rights shall survive unchanged the consummation of the
transactions contemplated by this Agreement. 
There are no other IP Rights that are material to or necessary for the
operation of the Grantors’ business or for the continued operation of the
Grantors’ business immediately after the date hereof in substantially the same
manner as operated prior to the date hereof.

 

(o)           Such Grantor has no commercial tort claims as of the date
hereof other than those listed in Schedule IV hereto and additional commercial
tort claims as to which such Grantor has complied with the requirements of Section 14.

 

Section 7. Further Assurances.  (a)  Each Grantor agrees that from time
to time, at the expense of such Grantor, such Grantor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to perfect and protect any
pledge or security interest granted or purported to be granted by such Grantor
hereunder or to enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral of such Grantor.  Without limiting the generality of the
foregoing, each Grantor will promptly with respect to Collateral of such
Grantor, at the reasonable request of the Collateral Agent:  (i) mark conspicuously each document
included in Inventory, each chattel paper included in Receivables, each Related
Contract, and, at the reasonable request of the Collateral Agent, each of its
records pertaining to such Collateral with a legend, in form and substance reasonably
satisfactory to the Collateral Agent, indicating that such document, chattel
paper, Related Contract, or Collateral is subject to the security interest
granted hereby; (ii) if any such Collateral shall be evidenced by a
promissory note or other instrument, deliver and pledge to the Collateral Agent
hereunder such note or instrument duly indorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Collateral Agent; (iii) file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Collateral Agent may
reasonably request, in order to perfect and preserve the security interest
granted or purported to be granted by such Grantor hereunder; and (iv) deliver
to the Collateral Agent evidence that all other actions that the Collateral
Agent may deem reasonably necessary or desirable in order to perfect and
protect the security interest granted or purported to be granted by such
Grantor under this Agreement have been taken.

 

(b) Each Grantor hereby authorizes the
Collateral Agent or its agent, sub-agent or designee to file one or more
financing or continuation statements, and amendments thereto, including,
without limitation, one or more financing statements indicating that such
financing

 

14

 

statements cover all assets or all personal property (or words of
similar effect) of such Grantor, regardless of whether any particular asset
described in such financing statements falls within the scope of the UCC or the
granting clause of this Agreement.  A
photocopy or other reproduction of this Agreement shall be sufficient as a
financing statement where permitted by law. 
Each Grantor ratifies its authorization for the Collateral Agent or its
agent, sub-agent or designee to have filed such financing statements,
continuation statements or amendments filed prior to the date hereof.

 

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

 

Section 8. As to Equipment and Inventory.  (a)  Each Grantor will cause its
Equipment to be maintained and preserved in the same condition, repair and
working order as when new, ordinary wear and tear excepted, and will forthwith,
or in the case of any loss or damage to any of such Equipment as soon as
practicable after the occurrence thereof, make or cause to be made all repairs,
replacements and other improvements in connection therewith that are necessary
or desirable to such end.

 

(b) Each Grantor will pay promptly when
due all property and other taxes, assessments and governmental charges or
levies imposed upon, and all claims (including, without limitation, claims for
labor, materials and supplies) against, its Equipment and Inventory, except to
the extent payment thereof is not required by Section 5.01(b) of the
Loan Agreement.  In producing its
Inventory, each Grantor will comply with the requirements of the Fair Labor
Standards Act.

 

(c) The Collateral Agent acknowledges
that each Grantor has granted to the Revolver Collateral Agent (as defined in
the General Intercreditor Agreement), for use upon the occurrence and during
the continuance of an Event of Default (as defined in the Revolving Credit
Agreement), the irrevocable, non-exclusive right and license to use all present
and future trademarks, trade names, copyrights, patents or technical processes
owned or used by such Grantor that relate to the Revolver Collateral (as
defined in the General Intercreditor Agreement) and any other Collateral granted
by such Grantor as security for the Secured Obligations (as defined in the
Revolver Security Agreement), together with any goodwill associated therewith,
all to the extent necessary to enable the Revolver Collateral Agent to realize
on, and exercise all rights of the Revolver Collateral Agent and the Lender
Parties under the Revolving Credit Agreement in relation to, the Revolver
Collateral.  This right shall inure to
the benefit of all successors, assigns and transferees of the Revolver
Collateral Agent.  Such right and license
shall be granted free of charge, without requirement that any monetary payment
whatsoever be made to such Grantor.

 

Section 9. Insurance. 
(a)  Each Grantor will, at its own expense, maintain insurance with
respect to its Equipment and Inventory in such amounts, against such risks, in
such form and with such insurers consistent with industry standards.  Subject to the rights of the Term Collateral
Agent under the Term Security Agreement and the General Intercreditor
Agreement, each policy of each Grantor for liability insurance shall provide
for all losses to be

 

15

 

paid on behalf of the Collateral Agent and such
Grantor as their interests may appear. 
Each such policy shall in addition, subject to the rights of the Term
Collateral Agent under the Term Security Agreement and the General
Intercreditor Agreement (i) name such Grantor and the Collateral Agent as
insured parties thereunder (without any representation or warranty by or obligation
upon the Collateral Agent) as their interests may appear, (ii) contain the
agreement by the insurer that any loss thereunder shall be payable to the
Collateral Agent notwithstanding any action, inaction or breach of
representation or warranty by such Grantor, (iii) provide that there shall
be no recourse against the Collateral Agent for payment of premiums or other
amounts with respect thereto and (iv) provide that at least 10 days’ prior
written notice of cancellation or of lapse shall be given to the Collateral
Agent by the insurer.  Further, each
Grantor will, at the request of the Collateral Agent, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of this Section 9 and cause the insurers to acknowledge
notice of such assignment.

 

(b) Reimbursement under any liability
insurance maintained by any Grantor pursuant to this Section 9 may be paid
directly to the Person who shall have incurred liability covered by such
insurance.  In case of any loss involving
damage to Equipment or Inventory when subsection (c) of this Section 9
is not applicable, the applicable Grantor will make or cause to be made the
necessary repairs to or replacements of such Equipment or Inventory, and any
proceeds of insurance properly received by or released to such Grantor shall be
used by such Grantor, except as otherwise permitted by the Loan Agreement, to
pay or as reimbursement for the costs of such repairs or replacements.

 

(c) So long as no Event of Default shall
have occurred and be continuing, all insurance payments received by the
Collateral Agent in connection with any loss, damage or destruction of any
Inventory or Equipment will be released by the Collateral Agent to the
applicable Grantor.

 

Section 10. Post-Closing Changes; Collections on Receivables
and Related Contracts.  (a)  No
Grantor will change its name, type of organization, jurisdiction of
organization or organizational identification number from those set forth in Section 6(a) of
this Agreement without first giving at least 15 days’ prior written notice to
the Collateral Agent and taking all action required by the Collateral Agent for
the purpose of perfecting or protecting the security interest granted by this
Agreement.  Each Grantor will hold and preserve
its records relating to the Collateral, including, without limitation, Related
Contracts, and will permit representatives of the Collateral Agent at any time
during normal business hours to inspect and make abstracts from such records
and other documents.  If any Grantor does
not have an organizational identification number and later obtains one, it will
forthwith notify the Collateral Agent of such organizational identification
number.

 

(b) Except as otherwise provided in this
subsection (b), each Grantor will continue to collect, at its own expense, all
amounts due or to become due such Grantor under the Receivables and Related
Contracts.  In connection with such
collections, subject in the case of Receivables and Related Contracts to the
rights of the Collateral Monitoring Agent under the Revolver Security
Agreement, and the rights of the Term Collateral Agent under the Term Security
Agreement and the General Intercreditor Agreement, such Grantor may take (and,
at the Collateral Agent’s direction during the continuance of an Event of
Default, will take) such action

 

16

 

as such Grantor or the Collateral Agent may deem necessary or advisable
to enforce collection of Receivables and Related Contracts; provided, however,
that the Collateral Agent shall have the right at any time, subject to the
rights of the Collateral Monitoring Agent under the Revolver Security Agreement
and the Revolver Intercreditor Agreement and the Term Collateral Agent under
the Term Security Agreement and the General Intercreditor Agreement, upon the
occurrence and during the continuance of an Event of Default and upon written
notice to such Grantor of its intention to do so, to notify the Obligors under
any Receivables and Related Contracts of the assignment of such Receivables and
Related Contracts to the Collateral Agent and to direct such Obligors to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Collateral Agent and, upon such notification and at the expense of such
Grantor, to enforce collection of any such Receivables and Related Contracts,
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as such Grantor might have done, and to otherwise
exercise all rights with respect to such Receivables and Related Contracts,
including, without limitation, those set forth set forth in Section 9-607
of the UCC.  After receipt by any Grantor
of the notice from the Collateral Agent referred to in the proviso to the
preceding sentence, (i) all amounts and proceeds (including, without
limitation, instruments) received by such Grantor in respect of the Receivables
and Related Contracts of such Grantor shall be received in trust for the
benefit of the Collateral Agent hereunder, shall be segregated from other funds
of such Grantor and shall be forthwith paid over to the Collateral Agent in the
same form as so received (with any necessary indorsement) to be deposited in
the Collateral Account and either (A) released to such Grantor so long as
no Event of Default shall have occurred and be continuing or (B) if any
Event of Default shall have occurred and be continuing, applied as provided in Section 20(b) and
(ii) such Grantor will not adjust, settle or compromise the amount or
payment of any Receivable or amount due on any or Related Contract, release
wholly or partly any Obligor thereof or allow any credit or discount
thereon.  No Grantor will permit or
consent to the subordination of its right to payment under any of the
Receivables and Related Contracts to any other indebtedness or obligations of
the Obligor thereof.

 

Section 11. As to Intellectual Property Collateral.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor
Agreement:

 

(a) with respect to each item of its
Intellectual Property Collateral material to the business of the Grantors, each
Grantor agrees to take, at its expense, all reasonable steps, and shall not
knowingly omit to do any act, including, without limitation, in the U.S. Patent
and Trademark Office, the U.S. Copyright Office and any other governmental
authority, to (i) maintain the validity and enforceability of such
Intellectual Property Collateral and maintain such Intellectual Property
Collateral in full force and effect, and (ii) pursue the registration and
maintenance of each patent, trademark, or copyright registration or
application, now or hereafter included in such Intellectual Property Collateral
of such Grantor, including, without limitation, the payment of required fees
and taxes, the filing of responses to office actions issued by the U.S. Patent
and Trademark Office, the U.S. Copyright Office or other governmental
authorities, the filing of applications for renewal or extension, the filing of
affidavits under Sections 8 and 15 of the U.S. Trademark Act, the filing of
divisional, continuation, continuation-in-part, reissue and renewal
applications or extensions, the payment of maintenance fees and the participation
in interference, reexamination, opposition, cancellation, infringement and
misappropriation

 

17

 

proceedings.  No Grantor shall,
without the written consent of the Collateral Agent, discontinue use of or
otherwise abandon any Intellectual Property Collateral material to the business
of the Grantors, or abandon any right to file an application for patent,
trademark, or copyright, unless such Grantor shall have previously determined
that such use or the pursuit or maintenance of such Intellectual Property
Collateral is no longer desirable in the conduct of such Grantor’s business and
that the loss thereof would not be reasonably likely to have a Material Adverse
Effect.

 

(b) each Grantor agrees promptly to notify
the Collateral Agent if such Grantor becomes aware (i) that any item of
the Intellectual Property Collateral material to the business of the Grantors
may have become abandoned, placed in the public domain, invalid or
unenforceable, or of any adverse determination or development regarding such
Grantor’s ownership or use of any such Intellectual Property Collateral or its
right to register the same or to keep and maintain and enforce the same, or (ii) of
any adverse determination or the institution of any proceeding (including,
without limitation, the institution of any proceeding in the U.S. Patent and
Trademark Office or any court) regarding any item of the Intellectual Property
Collateral material to the business of the Grantors.

 

(c) in the event that any Grantor
becomes aware that any item of the Intellectual Property Collateral material to
the business of the Grantors is being infringed or misappropriated by a third
party, such Grantor shall promptly notify the Collateral Agent and shall take
all reasonable actions, at its expense, to protect or enforce such Intellectual
Property Collateral, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation.

 

(d) each Grantor shall use proper
statutory notice in connection with its use of each item of its Intellectual
Property Collateral.

 

(e) each Grantor shall take all steps
which it or the Collateral Agent deems reasonable and appropriate under the
circumstances to preserve and protect each item of its Intellectual Property
Collateral material to the business of the Grantors, including, without
limitation, maintaining the quality of any and all products or services used or
provided in connection with any of the material Trademarks, consistent with the
quality of the products and services as of the date hereof, and taking all
steps necessary to ensure that all licensed users of any of the material
Trademarks use such consistent standards of quality.

 

(f) with respect to its Intellectual
Property Collateral, each Grantor agrees to execute or otherwise authenticate
an agreement, in substantially the form set forth in Exhibit A hereto or
otherwise in form and substance satisfactory to the Collateral Agent (an “Intellectual Property Security Agreement”), for
recording the security interest granted hereunder to the Term Collateral Agent
in such Intellectual Property Collateral with the U.S. Patent and Trademark
Office, the U.S. Copyright Office and any other governmental authorities necessary
to perfect the security interest hereunder in such Intellectual Property
Collateral.

 

(g) each Grantor agrees that should it
obtain an ownership interest in or license to any item of the type set forth in
Section 1(g) that is not on the date hereof a part of the
Intellectual Property Collateral (“After-Acquired
Intellectual Property”) (i) the provisions of

 

18

 

this Agreement shall automatically apply thereto, and (ii) any
such After-Acquired Intellectual Property and, in the case of trademarks, the
goodwill symbolized thereby, shall automatically become part of the
Intellectual Property Collateral subject to the terms and conditions of this
Agreement with respect thereto.  At the
end of each fiscal quarter of the Company, each Grantor shall give prompt
written notice to the Collateral Agent identifying the After-Acquired
Intellectual Property acquired during such fiscal quarter, and such Grantor
shall execute and deliver to the Collateral Agent with such written notice, or
otherwise authenticate, an agreement substantially in the form of Exhibit B
hereto or otherwise in form and substance satisfactory to the Collateral Agent
(an “IP Security Agreement Supplement”) covering
such After-Acquired Intellectual Property, which IP Security Agreement
Supplement shall be recorded with the U.S. Patent and Trademark Office, the
U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such After-Acquired Intellectual
Property.

 

(h) on or prior to a date that is 60
days after the Closing Date (as defined in the Existing Bridge Loan), or such
later date as the Administrative Agent may determine, which determination shall
not be unreasonably withheld after any request for extension by the Company,
the Administrative Agent shall receive a certificate from a Responsible Officer
of the Company confirming that all actions set forth on Schedule VIII have been
completed; provided, that, with respect to any
actions to be taken that have not been completed by such date, the
Administrative Agent may determine in its sole reasonable judgment to waive
such actions if it reasonably determines that the cost of completing such
action is excessive in relation to the benefits afforded to the Secured Parties
thereby.  In addition, such Grantor shall
take all commercially reasonable actions to complete the actions set forth on
Schedule VIII as soon as reasonably practical after the Closing Date (as
defined in the Existing Bridge Loan).

 

Section 12. Voting Rights; Dividends; Etc.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor
Agreement:

 

(a) so long as no Event of Default shall
have occurred and be continuing:

 

(i)            each Grantor shall
be entitled to exercise any and all voting and other consensual rights
pertaining to the Security Collateral of such Grantor or any part thereof for
any purpose.

 

(ii)           each Grantor shall
be entitled to receive and retain any and all dividends, interest and other
distributions paid in respect of the Security Collateral of such Grantor if and
to the extent that the payment thereof is not otherwise prohibited by the terms
of the Loan Documents; provided, however, that any and all instruments
received, receivable or otherwise distributed in respect of, or in exchange
for, any Security Collateral, shall be, and shall be forthwith delivered to the
Collateral Agent to hold as, Security Collateral and shall, if received by such
Grantor, be received in trust for the benefit of the Collateral Agent, be
segregated from the other property or funds of such Grantor and be forthwith
delivered to the Collateral Agent as Security Collateral in the same form as so
received (with any necessary indorsement).

 

(iii)          the Collateral
Agent will execute and deliver (or cause to be executed and delivered) to each
Grantor all such proxies and other instruments as such Grantor may

 

19

 

reasonably
request for the purpose of enabling such Grantor to exercise the voting and
other rights that it is entitled to exercise pursuant to paragraph (i) above
and to receive the dividends or interest payments that it is authorized to
receive and retain pursuant to paragraph (ii) above.

 

(b) Upon the occurrence and during the
continuance of an Event of Default:

 

(i)            All rights of each
Grantor (x) to exercise or refrain from exercising the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to Section 12(a)(i) shall,
upon notice to such Grantor by the Collateral Agent, cease and (y) to
receive the dividends, interest and other distributions that it would otherwise
be authorized to receive and retain pursuant to Section 12(a)(ii) shall
automatically cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights and to receive
and hold as Security Collateral such dividends, interest and other
distributions.

 

(ii)           All dividends,
interest and other distributions that are received by any Grantor contrary to
the provisions of paragraph (i) of this Section 12(b) shall be
received in trust for the benefit of the Collateral Agent, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the Term
Collateral Agent as Security Collateral in the same form as so received (with
any necessary indorsement).

 

Section 13. As to Letter-of-Credit Rights.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor
Agreement:

 

(a) each Grantor, by granting a security
interest in its Receivables consisting of letter-of-credit rights to the
Collateral Agent, intends to (and hereby does) assign to the Collateral Agent
its rights (including its contingent rights) to the proceeds of all Related
Contracts consisting of letters of credit of which it is or hereafter becomes a
beneficiary or assignee.

 

(b) upon the occurrence of an Event of
Default, each Grantor will, promptly upon request by the Collateral Agent, (i) notify
(and such Grantor hereby authorizes the Collateral Agent to notify) the issuer
and each nominated person with respect to each of the Related Contracts
consisting of letters of credit that the proceeds thereof have been assigned to
the Collateral Agent hereunder and any payments due or to become due in respect
thereof are to be made directly to the Collateral Agent or its designee and (ii) arrange
for the Collateral Agent to become the transferee beneficiary of letter of
credit.

 

Section 14. Commercial Tort Claims.  Each Grantor will promptly give notice to the
Collateral Agent of any commercial tort claim in excess of $500,000 that may
arise after the date hereof and will immediately execute or otherwise
authenticate a supplement to this Agreement, and otherwise take all necessary
action, to subject such commercial tort claim to the second priority security
interest created under this Agreement.

 

Section 15. Transfers and Other Liens; Additional Shares.  (a)  Each Grantor agrees that it will
not (i) sell, assign or otherwise dispose of, or grant any option with
respect to,

 

20

 

any of the Collateral, other than sales, assignments
and other dispositions of Collateral, and options relating to Collateral,
permitted under the terms of the Loan Agreement, or (ii) create or suffer
to exist any Lien upon or with respect to any of the Collateral of such Grantor
except for the pledge, assignment and security interest created under this
Agreement and Liens permitted under the Loan Agreement.

 

(b) Each Grantor agrees that it will (i) cause
each issuer of the Pledged Equity pledged by such Grantor not to issue any
Equity Interests or other securities in respect of or in substitution for the
Pledged Equity issued by such issuer, except to such Grantor; provided that in respect of any issuer not directly or
indirectly under the control of a Grantor, such Grantor will use its
commercially reasonable efforts to cause such issuer to adhere to the
requirements of clause (i) above and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional Equity Interests or other securities.

 

Section 16. Collateral Agent Appointed Attorney in Fact.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor
Agreement, each Grantor hereby irrevocably appoints the Collateral Agent such
Grantor’s attorney in fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time, upon
the occurrence and during the continuance of an Event of Default, to take any
action and to execute any instrument that the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:

 

(a) to obtain and adjust insurance
required to be paid to the Collateral Agent pursuant to Section 9,

 

(b) to ask for, demand, collect,
sue for, recover, compromise, receive and give acquittance and receipts for
moneys due and to become due under or in respect of any of the Collateral,

 

(c) to receive, indorse and
collect any drafts or other instruments, documents and chattel paper, in
connection with clause (a) or (b) above, and

 

(d) to file any claims or take any
action or institute any proceedings that the Collateral Agent may reasonably
deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of the Collateral Agent with respect to any of
the Collateral.

 

Section 17. Collateral Agent May Perform.  Subject to the rights of the Term Collateral
Agent under the Term Security Agreement and the General Intercreditor
Agreement, if any Grantor fails during the continuance of an Event of Default
to perform any agreement contained herein, the Collateral Agent may, but
without any obligation to do so and without notice, itself perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by such Grantor under Section 20.

 

Section 18. The Collateral Agent’s Duties.  (a)  The powers conferred on the
Collateral Agent hereunder are solely to protect the Secured Parties’ interest
in the Collateral and

 

21

 

shall not impose any duty upon it to exercise any such
powers.  Except for the safe custody of
any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Collateral Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not any Secured Party has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral.  The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.

 

(b) Anything contained herein to the
contrary notwithstanding, the Collateral Agent may from time to time, when the
Collateral Agent deems it to be necessary, appoint one or more subagents (each
a “Subagent”) for the Collateral Agent
hereunder with respect to all or any part of the Collateral.  In the event that the Collateral Agent so
appoints any Subagent with respect to any Collateral, (i) the assignment
and pledge of such Collateral and the security interest granted in such
Collateral by each Grantor hereunder shall be deemed for purposes of this
Security Agreement to have been made to such Subagent, in addition to the
Collateral Agent, for the ratable benefit of the Secured Parties, as security
for the Secured Obligations of such Grantor, (ii) such Subagent shall
automatically be vested, in addition to the Collateral Agent, with all rights,
powers, privileges, interests and remedies of the Collateral Agent hereunder
with respect to such Collateral, and (iii) the term “Collateral Agent,”
when used herein in relation to any rights, powers, privileges, interests and
remedies of the Collateral Agent with respect to such Collateral, shall include
such Subagent; provided, however, that no such Subagent shall be
authorized to take any action with respect to any such Collateral unless and
except to the extent expressly authorized in writing by the Collateral Agent.

 

Section 19. Remedies. 
Subject to the rights of the Term Collateral Agent under the Term
Security Agreement and the General Intercreditor Agreement, if any Event of
Default shall have occurred and be continuing:

 

(a) The Collateral Agent may
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies
of a secured party upon default under the UCC (whether or not the UCC applies
to the affected Collateral) and also may: 
(i) require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Collateral as directed by the Collateral Agent and
make it available to the Collateral Agent at a place and time to be designated
by the Collateral Agent that is reasonably convenient to both parties; (ii) without
notice except as specified below, sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Collateral Agent may deem commercially reasonable; (iii) occupy
any premises owned or leased by any of the Grantors where the Collateral or any
part thereof is assembled or located for a reasonable period in order to
effectuate its rights and remedies hereunder or under law, without obligation
to such Grantor in respect of such occupation; and (iv) exercise any and
all rights and remedies of

 

22

 

any
of the Grantors under or in connection with the Collateral, or otherwise in
respect of the Collateral, including, without limitation, (A) any and all
rights of such Grantor to demand or otherwise require payment of any amount
under, or performance of any provision of the Receivables, the Related
Contracts and the other Collateral, (B) withdraw, or cause or direct the
withdrawal, of all funds with respect to the Account Collateral and (C) exercise
all other rights and remedies with respect to the Receivables, the Related
Contracts and the other Collateral, including, without limitation, those set
forth in Section 9-607 of the UCC. 
Each Grantor agrees that, to the extent notice of sale shall be required
by law, at least ten days’ notice to such Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification.  The
Collateral Agent shall not be obligated to make any sale of Collateral
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.

 

(b) Any cash held by or on behalf
of the Collateral Agent and all cash proceeds received by or on behalf of the
Collateral Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
the Collateral Agent, be held by the Collateral Agent as collateral for, and/or
then or at any time thereafter applied (after payment of any amounts payable to
the Collateral Agent pursuant to Section 20) in whole or in part by the
Collateral Agent for the ratable benefit of the Secured Parties against, all or
any part of the Secured Obligations, by payment thereof to the Administrative Agent
for payment in accordance with Section 2.09(f) of the Loan Agreement
and any surplus of such cash or cash proceeds held by or on the behalf of the
Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whomsoever may
be lawfully entitled to receive such surplus.

 

(c) All payments received by any
Grantor under in respect of the Collateral shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary indorsement).

 

(d) The Collateral Agent may,
without notice to any Grantor except as required by law and at any time or from
time to time, charge, set off and otherwise apply all or any part of the
Secured Obligations against any funds held with respect to the Account
Collateral or in any other deposit account.

 

(e) The Collateral Agent may send
to each bank, securities intermediary or issuer party to any Deposit Account
Control Agreement, Securities/Deposit Account Control Agreement, Securities
Account Control Agreement or Uncertificated Security Control Agreement a notice
of exclusive control.

 

23

 

(f) In the event of any sale or
other disposition of any of the Intellectual Property Collateral of any
Grantor, the goodwill symbolized by any Trademarks subject to such sale or
other disposition shall be included therein, and such Grantor shall supply to
the Collateral Agent or its designee such Grantor’s know-how and expertise, and
documents and things relating to any Intellectual Property Collateral subject
to such sale or other disposition, and such Grantor’s customer lists and other
records and documents relating to such Intellectual Property Collateral and to
the manufacture, distribution, advertising and sale of products and services of
such Grantor.

 

(g) If the Collateral Agent shall
determine to exercise its right to sell all or any of the Security Collateral
of any Grantor pursuant to this Section 19, each Grantor agrees that, upon
request of the Collateral Agent, such Grantor will, at its own expense:

 

(i)            execute and deliver, and cause each issuer of such
Security Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts and things, as may be necessary or, in the
reasonable opinion of the Collateral Agent, advisable to register such Security
Collateral under the provisions of the Securities Act of 1933 (as amended from
time to time, the “Securities
Act”), to use commercially
reasonable efforts to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished and to make all amendments and supplements
thereto and to the related prospectus that, in the opinion of the Collateral
Agent, are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;

 

(ii)           use its commercially reasonable efforts to qualify the
Security Collateral under the state securities or “Blue Sky” laws and to obtain
all necessary governmental approvals for the sale of such Security Collateral,
as requested by the Collateral Agent;

 

(iii)          use commercially reasonable efforts to cause each such
issuer of such Security Collateral to make available to its security holders,
as soon as practicable, an earnings statement that will satisfy the provisions
of Section 11(a) of the Securities Act;

 

(iv)          provide the Collateral Agent with such other information
and projections as may be necessary or, in the opinion of the Collateral Agent,
advisable to enable the Collateral Agent to effect the sale of such Security
Collateral; and

 

(v)           do or use commercially reasonable efforts to cause to be
done all such other acts and things as may be necessary to make such sale of
such Security

 

24

 

Collateral or any part thereof valid
and binding and in compliance with applicable law.

 

(h) The Collateral Agent is
authorized, in connection with any sale of the Security Collateral pursuant to
this Section 20, to deliver or otherwise disclose to any prospective
purchaser of the Security Collateral:  (i) any
registration statement or prospectus, and all supplements and amendments
thereto, prepared pursuant to subsection (f)(i) above; (ii) any
information and projections provided to it pursuant to subsection (f)(iv) above;
and (iii) any other information in its possession relating to such
Security Collateral.

 

Section 20. Indemnity and Expenses.  (a)  Each Grantor agrees to indemnify, defend
and save and hold harmless each Secured Party and each of their Affiliates and
their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”)
from and against, and shall pay on demand, any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except to the extent such claim, damage, loss, liability or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence or
willful misconduct.

 

(b) Each Grantor will upon demand pay to
the Collateral Agent the amount of any and all reasonable expenses, including,
without limitation, the reasonable fees and expenses of its counsel and of any
experts and agents, that the Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon, any of
the Collateral of such Grantor, (iii) the exercise or enforcement of any
of the rights of the Collateral Agent or the other Secured Parties hereunder or
(iv) the failure by such Grantor to perform or observe any of the
provisions hereof.

 

(c) The obligations of the Grantors
under this Section 20 shall survive the termination of the other
provisions of this Agreement and the resignation or removal of the Collateral
Agent.

 

Section 21. Amendments; Waivers; Additional Grantors; Etc.  (a)  No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.  No failure on the part of the
Collateral Agent or any other Secured Party to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.

 

(b) Upon the execution and delivery by
any Person of a security agreement supplement in substantially the form of Exhibit D
hereto (each a “Security Agreement
Supplement”) or such other form as may be reasonably
acceptable to the Administrative Agent, such Person shall be referred to as an “Additional Grantor” and shall be and become a
Grantor

 

25

 

hereunder, and each reference in this Agreement and the other Loan
Documents to “Grantor” shall also mean and be a reference to such Additional
Grantor, each reference in this Agreement and the other Loan Documents to the “Collateral”
shall also mean and be a reference to the Collateral granted by such Additional
Grantor and each reference in this Agreement to a Schedule shall also mean and
be a reference to the schedules attached to such Security Agreement Supplement.

 

Section 22. Notices, Etc. 
All notices and other communications provided for hereunder shall be
either (i) in writing (including telecopier communication) and mailed,
telecopied or otherwise delivered or (ii) by electronic mail (if
electronic mail addresses are designated as provided below) confirmed
immediately in writing, in the case of the Company or the Collateral Agent,
addressed to it at its address specified in the Loan Agreement and, in the case
of each Grantor other than the Company, addressed to it at its address set
forth opposite such Grantor’s name on the signature pages hereto or on the
signature page to the Security Agreement Supplement pursuant to which it
became a party hereto; or, as to any party, at such other address as shall be
designated by such party in a written notice to the other parties.  All such notices and other communications
shall, when mailed, telecopied, sent by electronic mail or otherwise, be
effective when deposited in the mails, telecopied, sent by electronic mail and
confirmed in writing, or otherwise delivered (or confirmed by a signed
receipt), respectively, addressed as aforesaid; except that notices and other
communications to the Collateral Agent shall not be effective until received by
the Collateral Agent.  Delivery by
telecopier or other electronic communication of an executed counterpart of any
amendment or waiver of any provision of this Agreement or of any Security
Agreement Supplement or Schedule hereto shall be effective as delivery of an
original executed counterpart thereof.

 

Section 23. Continuing Security Interest.  This Agreement shall create a continuing
security interest in the Collateral and shall (a) remain in full force and
effect until the latest payment in full in cash of the Secured Obligations
(other than contingent obligations), (b) be binding upon each Grantor, its
successors and assigns and (c) inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Secured
Parties and their respective successors, transferees and assigns.

 

Section 24. Release; Termination.  (a)  Upon any sale, lease, transfer or
other disposition of any item of Collateral of any Grantor in accordance with
the terms of the Loan Documents (other than sales of Inventory in the ordinary
course of business), the security interest in such Collateral shall
automatically terminate and as promptly as practicable, the Collateral Agent
will, at such Grantor’s expense, execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence the release of such
item of Collateral from the assignment and security interest granted hereby; provided, however,
that (i) at the time of such request and such release no Event of Default
shall have occurred and be continuing, (ii) such Grantor shall have
delivered to the Collateral Agent, at least five Business Days prior to the
date of the proposed release, a written request for release describing the item
of Collateral, together with a form of release for execution by the Collateral
Agent and a certificate of such Grantor to the effect that the transaction is
in compliance with the Loan Documents and as to such other matters as the
Collateral Agent may reasonably request.

 

26

 

(b) In the case of Collateral other than
the Revolver Collateral (as defined in the General Intercreditor Agreement),
the security interest in such Collateral shall terminate on the date on which
the Collateral Agent shall have received written notice as provided for in the
Loan Agreement that the Obligations under the Term Loan Agreement (other than
contingent obligations) shall have become unsecured or shall have been paid in
full with the proceeds of unsecured indebtedness, the unfunded commitments, if
any, of the lenders under the Term Loan Agreement shall have been terminated
and the Liens securing such Obligations shall have been released, and as
promptly as practicable thereafter, the Collateral Agent will, at the Grantors’
expense, execute and deliver to the Grantors such documents as the Grantors
shall reasonably request to evidence the release of such Collateral from the
assignment and security interest granted hereby; provided, however, that the
security interest in such Collateral shall not terminate and the Collateral
Agent shall not release its security interest in such Collateral if at the time
thereof any Event of Default is then continuing.

 

(c) In the case of the Revolver
Collateral, the security interest in such Collateral shall terminate on the
date on which the Collateral Agent shall have received written notice as
provided for in the Loan Agreement that (i) the Obligations under the Term
Loan Agreement (other than contingent obligations) shall have become unsecured
or shall have been paid in full with the proceeds of unsecured indebtedness,
the unfunded commitments, if any, of the lenders under the Revolving Credit
Agreement shall have been terminated and the Liens securing such Obligations
shall have been released, and (ii) the Obligations under and as defined in
the Revolving Credit Agreement (other than contingent obligations) shall have
become unsecured or shall have been paid in full with the proceeds of unsecured
indebtedness, the unfunded commitments, if any, of the lenders under the
Revolving Credit Agreement shall have been terminated and the liens securing
such Obligations shall have been released, and as promptly as practicable
thereafter, the Collateral Agent will, at the Grantors’ expense, execute and
deliver to the Grantors such documents as the Grantors shall reasonably request
to evidence the release of such Collateral from the assignment and security
interest granted hereby; provided, however, that the security interest in such
Collateral shall not terminate and the Collateral Agent shall not release its
security interest in such Collateral if at the time thereof any Event of
Default is then continuing.

 

(d) Upon the payment in full in cash of
the Secured Obligations (other than contingent obligations), the pledge and
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantor and the Collateral Agent
will, at the applicable Grantor’s expense, execute and deliver to such Grantor
such documents as such Grantor shall reasonably request to evidence such
termination.

 

(e) The Collateral Agent shall release
the Collateral as otherwise provided for under the Intercreditor Agreements.

 

Section 25. Intercreditor. 
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIENS AND SECURITY
INTERESTS GRANTED TO THE COLLATERAL AGENT PURSUANT TO THIS AGREEMENT IN ANY
COLLATERAL AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE COLLATERAL AGENT WITH
RESPECT TO ANY COLLATERAL HEREUNDER ARE SUBJECT TO THE LIMITATIONS AND
PROVISIONS OF (i) THE REVOLVER INTERCREDITOR

 

27

 

AGREEMENT, DATED AS OF FEBRUARY 22, 2007 (AS AMENDED,
RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “REVOLVER INTERCREDITOR AGREEMENT”),
AMONG DBNY, AS FIRST LIEN COLLATERAL AGENT (AS DEFINED THEREIN), DEUTSCHE BANK
TRUST COMPANY AMERICAS, AS SECOND LIEN COLLATERAL AGENT (AS DEFINED THEREIN),
AND DBNY (AS SUCCESSOR TO DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH), AS THIRD
LIEN COLLATERAL AGENT (AS DEFINED THEREIN) AND CERTAIN OTHER PERSONS THAT MAY BECOME
PARTY THERETO FROM TIME TO TIME AND CONSENTED TO BY BUILDING MATERIALS
CORPORATION OF AMERICA AND THE GRANTORS IDENTIFIED THEREIN AND (ii) THE
GENERAL INTERCREDITOR AGREEMENT, DATED AS OF FEBRUARY 22, 2007 (AS AMENDED,
RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “GENERAL INTERCREDITOR AGREEMENT” AND
TOGETHER WITH THE REVOLVER INTERCREDITOR AGREEMENT, THE “INTERCREDITOR
AGREEMENTS”), AMONG DEUTSCHE BANK TRUST COMPANY AMERICAS, AS
FIRST LIEN COLLATERAL AGENT AND DBNY (AS SUCCESSOR TO DEUTSCHE BANK AG CAYMAN
ISLANDS BRANCH), AS JUNIOR LIEN COLLATERAL AGENT AND CERTAIN OTHER PERSONS THAT
MAY BECOME PARTY THERETO FROM TIME TO TIME AND CONSENTED TO BY BUILDING
MATERIALS CORPORATION OF AMERICA AND THE GRANTORS IDENTIFIED THEREIN.  IN THE EVENT OF ANY CONFLICT BETWEEN THE
TERMS OF THE INTERCREDITOR AGREEMENTS AND THIS AGREEMENT, THE TERMS OF THE
INTERCREDITOR AGREEMENTS SHALL GOVERN AND CONTROL.

 

Section 26. Execution in Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.  Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of an original executed counterpart of this Agreement.

 

Section 27. Governing Law. 
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.

 

Section 28. Jurisdiction, Etc.  (a)  Each of the parties 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 sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement to which it is a party, 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 any such New York State court or, to the fullest 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 any party may otherwise have to bring any action or
proceeding relating to this Agreement in the courts of any jurisdiction.

 

(b)           Each of the parties hereto
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection that it may now or hereafter have

 

28

 

to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement to which it is a party
in any New York State or Federal court. 
Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

 

Section 29. Waiver of Jury Trial.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT.

 

29

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

 

	
  Address for Notices:

  c/o Building Materials Corp of America

  1361 Alps Road, Wayne, NJ 07470

  	
   

  	
  BUILDING MATERIALS CORPORATION OF AMERICA

  BMCA ACQUISITION INC.

  BMCA ACQUISITION SUB INC.

  BMCA FRESNO LLC

  BMCA FRESNO II LLC

  BMCA GAINESVILLE LLC

  BMCA INSULATION PRODUCTS INC.

  BMCA QUAKERTOWN INC.

  BUILDING MATERIALS INVESTMENT CORPORATION

  BUILDING MATERIALS MANUFACTURING CORPORATION

  DUCTWORK MANUFACTURING CORPORATION

  GAF LEATHERBACK CORP.

  GAF MATERIALS CORPORATION (CANADA)

  GAF PREMIUM PRODUCTS INC.

  GAF REAL PROPERTIES, INC.

  GAFTECH CORPORATION

  HBP ACQUISITION LLC 

  LL BUILDING PRODUCTS INC.

  PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC.

  SOUTH PONCA REALTY CORP.

  WIND GAP REAL PROPERTY ACQUISITION CORP.

  

 

 

	
   

  	
  By

  	
  /John M. Maitner/

  	 

	
   

  	
   

  	
  Name: John M. Maitner

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  
					

 

 

ACCEPTED & ACKNOWLEDGED

 

DEUTSCHE BANK AG NEW YORK BRANCH, as Collateral Agent

 

	
  By 

  	
  /Marguerite Sutton/

  	
   

  
	
   

  	
  Name: Marguerite Sutton

  	
   

  
	
   

  	
  Title: Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  By 

  	
  /Evelyn Thierry/

  	
   

  
	
   

  	
  Name: Evelyn Thierry

  	
   

  
	
   

  	
  Title: Vice President

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