SECOND LIEN GUARANTEE AND COLLATERAL AGREEMENT

 

 

TABLE OF CONTENTS

 

		Page
ARTICLE I
Definitions
SECTION 1.01.	Credit Agreement	2
SECTION 1.02.	Other Defined Terms	2
ARTICLE II
Guarantee
SECTION 2.01.	Guarantee	6
SECTION 2.02.	Guarantee of Payment	7
SECTION 2.03.	No Limitations, Etc	7
SECTION 2.04.	Reinstatement	8
SECTION 2.05.	Agreement To Pay; Subrogation	8
SECTION 2.06.	Information	9
ARTICLE III
Pledge of Securities
SECTION 3.01.	Pledge	9
SECTION 3.02.	Delivery of the Pledged Collateral	10
SECTION 3.03.	Representations, Warranties and Covenants	10
SECTION 3.04.	Certification of Limited Liability Company Interests and Limited Partnership Interests	12
SECTION 3.05.	Registration in Nominee Name; Denominations	12
SECTION 3.06.	Voting Rights; Dividends and Interest, Etc.	12
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01.	Security Interest	15
SECTION 4.02.	Representations and Warranties	16
SECTION 4.03.	Covenants	18
SECTION 4.04.	Other Actions	21
SECTION 4.05.	Covenants Regarding Patent, Trademark and Copyright Collateral	24

 

 

ARTICLE V
Remedies
SECTION 5.01.	Remedies Upon Default	26
SECTION 5.02.	Application of Proceeds	27
SECTION 5.03.	Grant of License to Use Intellectual Property	28
SECTION 5.04.	Securities Act, Etc	28
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01.	Indemnity and Subrogation	29
SECTION 6.02.	Contribution and Subrogation	30
SECTION 6.03.	Subordination	30
ARTICLE VII
Miscellaneous
SECTION 7.01.	Notices	30
SECTION 7.02.	Security Interest Absolute	31
SECTION 7.03.	Survival of Agreement	31
SECTION 7.04.	Binding Effect; Several Agreement	31
SECTION 7.05.	Successors and Assigns	32
SECTION 7.06.	Collateral Agent’s Fees and Expenses; Indemnification	32
SECTION 7.07.	Collateral Agent Appointed Attorney-in-Fact	32
SECTION 7.08.	Applicable Law	33
SECTION 7.09.	Waivers; Amendment	33
SECTION 7.10.	WAIVER OF JURY TRIAL	34
SECTION 7.11.	Severability	34
SECTION 7.12.	Counterparts	34
SECTION 7.13.	Headings	35
SECTION 7.14.	Jurisdiction; Consent to Service of Process	35
SECTION 7.15.	Termination or Release	35
SECTION 7.16.	Additional Subsidiaries	36
SECTION 7.17.	Right of Setoff	36

 

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Schedules

 

Schedule I	Subsidiary Guarantors
Schedule II	Equity Interests; Pledged Debt Securities
Schedule III	Intellectual Property
Exhibits
Exhibit A	Form of Supplement
Exhibit B	Form of Perfection Certificate

 

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SECOND LIEN GUARANTEE AND COLLATERAL AGREEMENT dated as of June 15, 2007 (this “ Agreement ”), among STR ACQUISITION, INC., a Delaware corporation, which substantially simultaneously with the execution hereof shall be merged with and into SPECIALIZED TECHNOLOGY RESOURCES, INC., a Delaware corporation (“ STR ”), with STR being the surviving entity (the “ Borrowe r ”), STR HOLDINGS LLC, a Delaware limited liability company ( “ Holdings ” ), the Subsidiaries of the Borrower from time to time party hereto and CREDIT SUISSE (“ Credit Suisse ”), as collateral agent (in such capacity, the “ Collateral Agent ”) .

 

PRELIMINARY STATEMENT

 

Reference is made to (a) the Second Lien Credit Agreement dated as of June 15, 2007 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, Holdings, the lenders from time to time party thereto (the “ Lenders ”) and Credit Suisse, as administrative agent (in such capacity, the “ Administrative Agent ”) and Collateral Agent, (b) the First Lien Credit Agreement dated as of June 15, 2007 (as amended, supplemented or otherwise modified from time to time, the “ First Lien Credit Agreement ”), among the Borrower, Holdings, the Lenders and Credit Suisse, as administrative agent, (c) the First Lien Guarantee and Collateral Agreement dated as of June 15, 2007 (as amended, supplemented or otherwise modified from time to time, the “ First Lien Guarantee and Collateral Agreement ”) among the Borrower, Holdings, the Subsidiaries of the Borrower from time to time party thereto and Credit Suisse, as first lien collateral agent (in such capacity, the “ First Lien Collateral Agent ”), and (d) the Intercreditor Agreement dated as of June 15, 2007 (as amended, supplemented or otherwise modified from time to time, the “ Intercreditor Agreement ”), among Borrower, Holdings, the Subsidiaries of the Borrower from time to time party thereto and Credit Suisse, in its capacities as the Collateral Agent and as the First Lien Collateral.

 

The Lenders have agreed to extend credit to the Borrower pursuant to, and upon the terms and conditions specified in, the Credit Agreement. The obligations of the Lenders to extend credit to the Borrower are conditioned upon, among other things, the execution and delivery of this Agreement by the Borrower and each Guarantor (such term and each other capitalized term used but not defined in this preliminary statement having the meaning given or ascribed to it in Article I). Each Guarantor is an affiliate of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and is willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:

 

 

ARTICLE I

 

Definitions

 

SECTION 1.01. Credit Agreement . (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings set forth in the Credit Agreement. All capitalized terms defined in the New York UCC (as such term is defined herein) and not defined in this Agreement have the meanings specified therein. All references to the Uniform Commercial Code shall mean the New York UCC.

 

(b) The rules of construction specified in Section 1.02 of the Credit Agreement also apply to this Agreement.

 

SECTION 1.02. Other Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

 

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

 

“ Administrative Agent ” shall have the meaning assigned to such term in the preliminary statement.

 

“ Article 9 Collateral ” shall have the meaning assigned to such term in Section 4.01.

 

“ Assignment of Distributions ” shall mean the assignment of distribution substantially in the form of Exhibit C.

 

“ Borrower ” shall have the meaning assigned to such term in the preamble.

 

“ Collateral ” shall mean the Article 9 Collateral and the Pledged Collateral.

 

“ Collateral Agent ” shall have the meaning assigned to such term in the preamble.

 

“ Copyright License ” shall mean any written agreement, now or hereafter in effect, granting any right to any third person under any copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any copyright now or hereafter owned by any third person, and all rights of such Grantor under any such agreement.

 

“ Copyrights ” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or

 

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otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office (or any successor office or any similar office in any other country), including those listed on Schedule III.

 

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

 

“ Excluded Assets ” shall mean (a) any lease, license, contract, property right or agreement to which any Grantor is a party or any of its rights or interests thereunder if and only for so long as the grant of a security interest hereunder shall constitute or result in a breach, termination or default under any such lease, license, contract, property right or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction or any other applicable law or principles of equity); provided, however, that any portion of any such lease, license, contract, property right or agreement shall cease to constitute an Excluded Asset pursuant to this clause at the time and to the extent that the grant of security interest therein does not result in any of the consequences specified above, (b) motor vehicles the perfection of a security interest in which is excluded from the Uniform Commercial Code in the relevant jurisdiction, (c) interests in real property, (d) any Equity Interest in an Excluded Entity and (e) any application to register Trademarks in the U.S. Patent and Trademark Office based upon Grantor’s “intent to use” such Trademark (but only if the grant of security interest to such intent-to-use Trademark violates 15 U.S.C. § 1060(a)) unless and until a “Statement of Use” or “Amendment to Allege Use” is filed in the U.S. Patent and Trademark Office with respect thereto, at which point the Collateral shall include, and the security interest granted hereunder shall attach to, such application.

 

“ Excluded Entity ” shall mean each of (i) STR-Registrar LLC, (ii) CTC Asia Ltd. and (iii) Specialized Technology Resources (India) Pvt Ltd. to the extent that the necessary governmental consents to make a valid and enforceable pledge of 66% of its issued and outstanding stock to the Collateral Agent have not been obtained.

 

“ Federal Securities Laws ” shall have the meaning assigned to such term in Section 5.04.

 

“ First Lien Collateral Agent ” shall have the meaning assigned to such term in the preliminary statement.

 

“ First Lien Credit Agreement ” shall have the meaning assigned to such term in the preliminary statement.

 

“ First Lien Guarantee and Collateral Agreement ” shall have the meaning assigned to such term in the preliminary statement.

 

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“ First Lien Loan Documents ” shall have the meaning assigned to the term “Loan Documents” in the First Lien Credit Agreement.

 

“ First Lien Obligations ” shall have the meaning assigned to such term in the Intercreditor Agreement.

 

“ First Priority Liens ” shall have the meaning assigned to such term in the Intercreditor Agreement.

 

“ General Intangibles ” shall mean all choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature (other than Accounts) now owned or hereafter acquired by any Grantor, including all rights and interests in partnerships, limited partnerships, limited liability companies and other unincorporated entities, corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Hedging Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts.

 

“ Grantors ” shall mean the Borrower and the Guarantors.

 

“ Guarantors ” shall mean Holdings and the Subsidiary Guarantors.

 

“ Holdings ” shall have the meaning assigned to such term in the preamble.

 

“ Intellectual Property ” shall mean all intellectual and similar property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.

 

“ License ” shall mean any Patent License, Trademark License, Copyright License or other license or sublicense agreement relating to Intellectual Property to which any Grantor is a party, including those listed on Schedule III.

 

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

 

“ Obligations ” shall mean (a) the due and punctual payment of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations of the Borrower to any of the Secured Parties under the

 

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Credit Agreement and each of the other Loan Documents, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of the Borrower under or pursuant to the Credit Agreement and each of the other Loan Documents, and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents.

 

“ Patent License ” shall mean any written agreement, now or hereafter in effect, granting to any third person any right to make, use or sell any invention on which a patent, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a patent, now or hereafter owned by any third person, is in existence, and all rights of any Grantor under any such agreement.

 

“ Patents ” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of the United States or the equivalent thereof in any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or the equivalent thereof in any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office (or any successor or any similar offices in any other country), including those listed on Schedule III, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

 

“ Perfection Certificate ” shall mean a certificate substantially in the form of Exhibit B, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by a Responsible Officer of the Borrower.

 

“ Pledged Collateral ” shall have the meaning assigned to such term in Section 3.01.

 

“ Pledged Debt Securities ” shall have the meaning assigned to such term in Section 3.01.

 

“ Pledged Securities ” shall mean any promissory notes, stock certificates or other securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.

 

“ Pledged Stock ” shall have the meaning assigned to such term in Section 3.01.

 

“ Secured Parties ” shall mean (a) the Lenders, (b) the Administrative Agent, (c) the Collateral Agent, (d) the beneficiaries of each indemnification obligation

 

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undertaken by any Loan Party under any Loan Document and (e) the successors and assigns of each of the foregoing.

 

“ Security Interest ” shall have the meaning assigned to such term in Section 4.01.

 

“ Subsidiary Guarantor ” shall mean (a) the Subsidiaries identified on Schedule I hereto as Subsidiary Guarantors and (b) each other Subsidiary that becomes a party to this Agreement as a Subsidiary Guarantor after the Closing Date; provided , however, that in no event shall STR-Registrar LLC become a Subsidiary Guarantor.

 

“ Trademark License ” shall mean any written agreement, now or hereafter in effect, granting to any third person any right to use any trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any trademark now or hereafter owned by any third person, and all rights of any Grantor under any such agreement.

“ Trademarks ” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office (or any successor office) or any similar offices in any State of the United States or any other country or any political subdivision thereof, and all extensions or renewals thereof, including those listed on Schedule III, (b) all goodwill associated therewith or symbolized thereby and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill.

 

“ Unfunded Advances ” shall mean the aggregate amount, if any (i) made available to the Borrower on the assumption that each Lender has made its portion of the applicable Borrowing available to the Administrative Agent as contemplated by Section 2.02(d) of the Credit Agreement and (ii) with respect to which a corresponding amount shall not in fact have been returned to the Administrative Agent by the Borrower or made available to the Administrative Agent by any such Lender.

 

ARTICLE II

 

Guarantee

 

SECTION 2.01. Guarantee. Each Guarantor unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment and performance of the Obligations. Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation for the ratable

 

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benefit of the Secured Parties. Each Guarantor waives presentment to, demand of payment from and protest to the Borrower or any other Loan Party of any Obligation, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.

 

SECTION 2.02.  Guarantee of Payment. Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any security held for the payment of the Obligations or to any balance of any Deposit Account or credit on the books of the Collateral Agent or any other Secured Party in favor of the Borrower or any other person.

 

SECTION 2.03. Nature of Guarantee. (a) If and to the extent required in order for the Obligations to be enforceable under applicable federal, state and other laws relating to the insolvency of debtors, the maximum liability of such Guarantor hereunder shall be limited to the greatest amount which can lawfully be guaranteed by such Guarantor under such laws, after giving effect to any rights of contribution, reimbursement and subrogation arising under Article VI. Each Guarantor acknowledges and agrees that, to the extent not prohibited by applicable law, (i) such Guarantor (as opposed to its creditors, representatives of creditors or bankruptcy trustee, including such Guarantor in its capacity as debtor in possession exercising any powers of a bankruptcy trustee) has no personal right under such laws to reduce, or request any judicial relief that has the effect of reducing, the amount of its liability under this Agreement, (ii) such Guarantor (as opposed to its creditors, representatives of creditors or bankruptcy trustee, including such Guarantor in its capacity as debtor in possession exercising any powers of a bankruptcy trustee) has no personal right to enforce the limitation set forth in this Section 2.03(a) or to reduce, or request judicial relief reducing, the amount of its liability under this Agreement, and (iii) the limitation set forth in this Section 2.03(a) may be enforced only to the extent required under such laws in order for the obligations of such Guarantor under this Agreement to be enforceable under such laws and only by or for the benefit of a creditor, representative of creditors or bankruptcy trustee of such Guarantor or other person entitled, under such laws, to enforce the provisions thereof.

 

(b) Except for termination of a Guarantor’s obligations hereunder as expressly provided in Section 7.15, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by (i) the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce any right or remedy under the provisions of any Loan Document or otherwise, (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any other Guarantor under this Agreement, (iii) the release of, or any impairment of or failure to perfect any Lien on or security interest in, any security held by the Collateral Agent or any other Secured Party for the Obligations or any of them,

 

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(iv) any default, failure or delay, wilful or otherwise, in the performance of the Obligations, or (v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations). Subject to the terms of this Agreement, each Guarantor expressly authorizes the Collateral Agent to take and hold security for the payment and performance of the Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in its sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Obligations, all without affecting the obligations of any Guarantor hereunder.

 

(c) To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any defense of the Borrower or any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower or any other Loan Party, other than the indefeasible payment in full in cash of all the Obligations. The Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with the Borrower or any other Loan Party or exercise any other right or remedy available to them against the Borrower or any other Loan Party, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Obligations have been fully and indefeasibly paid in full in cash. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against the Borrower or any other Loan Party, as the case may be, or any security.

 

SECTION 2.04. Reinstatement. Each Guarantor agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the Collateral Agent or any other Secured Party upon the bankruptcy or reorganization of the Borrower, any other Loan Party or otherwise.

 

SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, if the Borrower or any other Loan Party shall fail to pay any Obligation when and as the same shall become due (after taking into account any applicable grace period), whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent for distribution to the applicable Secured Parties in cash the amount of such unpaid Obligation. Upon payment by any Guarantor of any sums to the Collateral Agent as provided above, all rights of such Guarantor against the Borrower or any other Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement,

 

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indemnity or otherwise shall in all respects be subject to Article VI, provided that each Guarantor reserves any and all other rights of reimbursement, contribution or subrogation at any time available to it against any other Guarantor.

 

SECTION 2.06. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s and each other Loan Party’s financial condition and assets and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that neither the Collateral Agent nor any other Secured Party will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.

 

ARTICLE III

 

Pledge of Securities

 

SECTION 3.01. Pledge. As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest in, all of such Grantor’s right, title and interest, in, to and under (a)(i) the Equity Interests owned by such Grantor on the date hereof (including all such Equity Interests listed on Schedule II), (ii) any other Equity Interests obtained in the future by such Grantor and (iii) the certificates representing all such Equity Interests (all the foregoing collectively referred to herein as the “ Pledged Stock ” ); provided , however , that the Pledged Stock shall not include (x) more than 66% of the issued and outstanding voting Equity Interests of any Foreign Subsidiary or (y) an Excluded Asset, (b)(i) the debt securities held by such Grantor on the date hereof (including all such debt securities listed opposite the name of such Grantor on Schedule II), (ii) any debt securities in the future issued to such Grantor and (iii) the promissory notes and any other instruments evidencing such debt securities (all the foregoing collectively referred to herein as the “ Pledged Debt Securities ” ), (c) all other property that may be delivered to and held by the Collateral Agent pursuant to the terms of this Section 3.01, (d) subject to Section 3.06, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the securities referred to in clauses (a) and (b) above, (e) subject to Section 3.06, all rights and privileges of such Grantor with respect to the securities and other property referred to in clauses (a), (b), (c) and (d) above, and (f) all Proceeds of any of the foregoing (the items referred to in clauses (a) through (f) above being collectively referred to as the “ Pledged Collateral ” ); provided, however, that notwithstanding any other provision in this agreement, this Section 3.01 shall not, at any time, constitute a grant of security interest in an Excluded Asset.

 

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the

 

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Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties forever; subject, however, to the terms, covenants and conditions hereinafter set forth.

 

SECTION 3.02. Delivery of the Pledged Collateral. (a) Each Grantor agrees promptly to deliver or cause to be delivered to the Collateral Agent (or, prior to the Discharge of First Lien Obligations, to the First Lien Collateral Agent, acting as a gratuitous bailee of the Collateral Agent) any and all certificates, instruments or other documents representing or evidencing Pledged Securities.

 

(b) Each Grantor agrees promptly to deliver or cause to be delivered to the Collateral Agent (or, prior to the Discharge of First Lien Obligations, to the First Lien Collateral Agent, acting as a gratuitous bailee of the Collateral Agent) any and all Pledged Debt Securities.

 

(c) Upon delivery to the Collateral Agent (or, prior to the Discharge of First Lien Obligations, to the First Lien Collateral Agent, acting as a gratuitous bailee of the Collateral Agent), (i) any certificate, instrument or document representing or evidencing Pledged Securities shall be accompanied by undated stock powers duly executed in blank or other undated instruments of transfer satisfactory to the Collateral Agent and duly executed in blank and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing the applicable securities, which schedule shall be attached hereto as Schedule II and made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of the pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.

 

(d) In accordance with the terms of the Intercreditor Agreement, all Pledged Collateral delivered to the First Lien Collateral Agent shall be held by the First Lien Collateral Agent, until the transfer of possession of such Pledged Collateral to the Collateral Agent following the Discharge of First Lien Obligations, as gratuitous bailee for the Secured Parties solely for the purpose of perfecting the security interest therein granted under this Agreement.

 

SECTION 3.03. Representations, Warranties and Covenants. The Grantors jointly and severally represent, warrant and covenant to and with the Collateral Agent, for the benefit of the Secured Parties, that:

 

(a) Schedule II correctly sets forth in all material respects the percentage of the issued and outstanding shares of each class of the Equity Interests of the issuer thereof represented by such Pledged Stock and includes all Equity Interests, debt securities and promissory notes required to be pledged hereunder;

 

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such Pledged Securities as security for the payment and performance of the Obligations; and

 

(h) the pledge effected hereby is effective to vest in the Collateral Agent, for the ratable benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged Collateral as set forth herein and all action by any Grantor necessary or desirable to protect and perfect the Lien on the Pledged Collateral has been duly taken.

 

SECTION 3.04. Certification of Limited Liability Company Interests and Limited Partnership Interests . No interest of any Grantor in any limited liability company or limited partnership which is a Subsidiary and pledged hereunder is represented by a certificate. The Grantors shall not, without the consent of the Administrative Agent, agree to any amendment of the certificate of formation or limited liability company agreement (or other comparable constituent document) governing Pledged Stock which has the effect of turning previously uncertificated capital stock or membership interests into certificated capital stock or membership interests or which elects to treat any membership interest that is part of the Pledged Stock as a “security” under Section 8-103 of the New York UCC.

 

SECTION 3.05. Registration in Nominee Name ; Denominations. The Collateral Agent, on behalf of the Secured Parties, at any time after the Discharge of First Lien Obligations, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as Pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Collateral Agent. Each Grantor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities in its capacity as the registered owner thereof. The Collateral Agent shall at any time after the Discharge of First Lien Obligations and during the occurrence and continuation of an Event of Default have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.

 

SECTION 3.06. Voting Rights; Dividends and Interest, Etc . (a) Unless and until an Event of Default shall have occurred and be continuing and the Collateral Agent shall have given the Grantors reasonable advance notice of its intent to exercise its rights under this Agreement (which notice shall be deemed to have been given immediately upon the occurrence of an Event of Default under paragraph (g) or (h) of Article VII of the Credit Agreement):

 

(i)                                Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents; provided, however, that such rights and powers shall not be exercised in any manner that could materially and adversely affect the rights inuring to a holder of any Pledged Securities or the rights and remedies of any of the

 

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Collateral Agent or the other Secured Parties under this Agreement or the Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same.

 

(ii)                             The Collateral Agent shall execute and deliver to each Grantor, or cause to be executed and delivered to each Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to paragraph (i) above.

 

(iii)                          Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable law; provided, however, that any noncash dividends, interest, principal or other distributions that would constitute Pledged Stock or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the ratable benefit of the Secured Parties and shall be forthwith delivered to the Collateral Agent (or, prior to the Discharge of First Lien Obligations, to the First Lien Collateral Agent, acting as a gratuitous bailee of the Collateral Agent) in the same form as so received (with any necessary endorsement or instrument of assignment). This paragraph (iii) shall not apply to dividends between or among the Borrower, the Guarantors and any Subsidiaries only of property subject to a perfected security interest under this Agreement; provided that the Borrower notifies the Collateral Agent in writing, specifically referring to this Section 3.06 at the time of such dividend and takes any actions the Collateral Agent specifies to ensure the continuance of its perfected security interest in such property under this Agreement.

 

(b) Upon the occurrence and during the continuance of an Event of Default and in any case subject to the terms of the Intercreditor Agreement, after the Collateral Agent shall have notified (or shall be deemed to have notified pursuant to Section 3.06(a)) the Grantors of the suspension of their rights under paragraph (a)(iii) of this Section 3.06, then all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of this Section 3.06

 

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shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 3.06 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of such Grantor and, subject to the rights of the First Lien Collateral Agent and the obligations of the Grantors under the First Lien Loan Documents and the Intercreditor Agreement, shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsement or instrument of assignment). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 5.02. After all Events of Default have been cured or waived and each applicable Grantor has delivered to the Administrative Agent certificates to that effect, the Collateral Agent shall, promptly after all such Events of Default have been cured or waived, repay to each applicable Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.06 and that remain in such account.

 

(c)        Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified (or shall be deemed to have notified pursuant to Section 3.06(a)) the Grantors of the suspension of their rights under paragraph (a)(i) of this Section 3.06, then all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.06, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 3.06, shall cease, and all such rights shall thereupon become, subject to the rights of the First Lien Collateral Agent and the obligations of the Grantors under the First Lien Loan Documents and the Intercreditor Agreement, vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, subject to the terms of the Intercreditor Agreement, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights.

 

(d)       Any notice given by the Collateral Agent to the Grantors exercising its rights under paragraph (a) of this Section 3.06 (i) may be given by telephone if promptly confirmed in writing, (ii) may be given to one or more of the Grantors at the same or different times and (iii) may suspend the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.

 

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ARTICLE IV

 

Security Interests in Personal Property

 

SECTION 4.01. Security Interest. (a) As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest (the “ Security Interest ” ) , in all right, title or interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “ Article 9 Collateral ” ):

 

(i)                                 all Accounts;

 

(ii)                              all Chattel Paper;

 

(iii)                           all cash and Deposit Accounts;

 

(iv)                          all Documents;

 

(v)                             all Equipment;

 

(vi)                          all General Intangibles;

 

(vii)                       all Instruments;

 

(viii)                    all Inventory;

 

(ix)                            all Investment Property;

 

(x)                               all Letter-of-Credit Rights;

 

(xi)                            all Commercial Tort Claims;

 

(xii)                         all books and records pertaining to the Article 9 Collateral; and

 

(xiii)                      to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any person with respect to any of the foregoing.

 

Notwithstanding any provision in this Agreement, this Section 4.01(a) shall not, at any time, constitute a grant of security interest in an Excluded Asset.

 

(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) with respect to the Article 9 Collateral or any part thereof and amendments thereto that (i)   indicate the Article 9 Collateral as “all assets” of

 

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such Grantor or words of similar effect, and (i) contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor and (B) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Article 9 Collateral relates. Each Grantor agr