U.S. SECURITY AGREEMENT

Exhibit 4.5

Execution Version

 

U.S. SECURITY AGREEMENT

dated as of

August 13, 2009

among

AFFINIA GROUP INTERMEDIATE HOLDINGS INC.,

AFFINIA GROUP INC.,

CERTAIN OTHER SUBSIDIARIES OF

AFFINIA GROUP INTERMEDIATE HOLDINGS INC.

FROM TIME TO TIME PARTY HERETO,

and

BANK OF AMERICA, N.A.,

as Collateral Agent

Reference is made to the Lien Subordination and Intercreditor Agreement dated as of August 13, 2009, among Bank of America, N.A., as Collateral Agent for the Revolving Facility Secured Parties referred to therein; Wilmington Trust FSB, as Trustee and as Noteholder Collateral Agent; Affinia Group Inc.; Affinia Group Intermediate Holdings Inc.; and the subsidiaries of Affinia Group Inc. named therein (the “Intercreditor Agreement”). Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Intercreditor Agreement and, to the extent provided therein, the applicable Senior Secured Obligations Security Documents (as defined in the Intercreditor Agreement). In the event of any conflict or inconsistency between the provisions of this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

 

TABLE OF CONTENTS

 

 

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U.S. SECURITY AGREEMENT

U.S. SECURITY AGREEMENT, dated as of August 13, 2009, among AFFINIA GROUP INTERMEDIATE HOLDINGS INC., a Delaware corporation (“ Holdings ”), AFFINIA GROUP INC., a Delaware corporation (the “ Company ”), each Domestic Subsidiary of Holdings set forth on the signature pages hereto as a Grantor (together with Holdings, the Company and each other Domestic Subsidiary that becomes a party hereto pursuant to Section 19(b) hereof, collectively, the “ Grantors ”), and BANK OF AMERICA, N.A. (in its individual capacity, and any successor corporation thereto by merger, consolidation or otherwise, “ Bank of America ”), as collateral agent (in such capacity, together with any successor collateral agent, the “ Collateral Agent ”) for the benefit of the Secured Parties (as defined below).

PRELIMINARY STATEMENTS

(1) Holdings, the Company, the Domestic and Canadian Subsidiaries of the Company from time to time party thereto, the lenders from time to time party thereto (the “ Lenders ”) and Bank of America, N.A., as administrative agent (in such capacity, together with any successor administrative agent, the “ Administrative Agent ”), have entered into an ABL Credit Agreement, dated as the date hereof (as amended, restated, modified, supplemented, refinanced or replaced from time to time, the “ Credit Agreement ”), providing for the making of Loans to the Borrowers and the issuance of, and participation in, Letters of Credit for the account of the U.S. Borrowers and the Canadian Borrower, all as contemplated therein (the Lenders, each Issuing Lender, the Administrative Agent and the Collateral Agent are herein collectively called the “ Lender Creditors ”).

(2) Holdings and/or one or more of its Subsidiaries may at any time and from time to time enter into one or more Qualified Secured Hedging Agreements with one or more Lenders and/or any affiliate thereof (each such Lender and/or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lender’s or such affiliate’s successors and assigns, if any, collectively, the “ Hedge Creditors ”).

(3) Holdings and/or one or more of its Subsidiaries may at any time and from time to time enter into one or more Qualified Secured Cash Management Agreements with one or more Lenders and/or any affiliate thereof (each such Lender and/or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lender’s or such affiliate’s successors and assigns, if any, collectively, the “ Cash Management Creditors ” and, together with the Lender Creditors and the Hedge Creditors, collectively, the “ Secured Parties ”).

(4) Pursuant to the Credit Agreement, the Grantors are entering into this Agreement in order to grant to the Collateral Agent for the ratable benefit of the Secured Parties a security interest in the Collateral (as hereinafter defined) to secure the Obligations (as hereinafter defined), including (x) in the case of Holdings, its Obligations under the Holdings Guaranty, and (y) in the case of each U.S. Borrower and each U.S. Subsidiary Guarantor, its Obligations under the U.S. Subsidiaries Guaranty.

(5) The Intercreditor Agreement governs the relative rights and priorities of the Secured Parties and the Noteholder Secured Parties in respect of all Collateral.

(6) It is a condition precedent to the making of Loans and the issuance of Letters of Credit by the Lenders under the Credit Agreement, the entry into Qualified Secured Hedging Agreements by the Hedge Creditors and the entry into Qualified Secured Cash Management Agreements by the Cash Management Creditors from time to time that the Grantors shall have granted the security interests and made the pledges and assignments contemplated by this Agreement.

(7) Each Grantor will derive substantial direct and indirect benefit from the transactions contemplated by the Credit Documents, the Qualified Secured Hedging Agreements and the Qualified Secured Cash Management Agreements.

(8) Unless otherwise defined in this 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 (including Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Commodity Account, Commodity Contract, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Farm Products, Financial Assets, Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letter of Credit Rights, Securities Accounts, Securities Intermediary, Security, Security Entitlements, Supporting Obligations and Tangible Chattel Paper). Additionally, the following terms shall have the following meanings:

“ Additional Grantor ” shall have the meaning specified in Section 19(b) .

“ Administrative Agent ” shall have the meaning specified in the recitals of this Agreement.

“ After-Acquired Intellectual Property ” shall have the meaning specified in Section 10(g) .

“ Agreement ” shall mean this U.S. Security Agreement, as modified, supplemented, amended, restated (including any amendment and restatement hereof), extended or renewed from time to time.

“ Account Debtor ” shall have the meaning specified in the Credit Agreement.

“ Agreement Collateral ” shall have the meaning specified in Section 1(a)(xvi).

“ Assigned Agreements ” shall have the meaning specified in Section 1(a)(xvi).

“ Business Day ” shall have the meaning specified in the Credit Agreement.

“ Canadian Borrower Obligations ” shall mean all Obligations of the Canadian Borrower and any guarantees thereof (including by the U.S. Credit Parties) pursuant to any Guaranty or pursuant to any other Credit Document.

“ Cash Collateral ” shall have the meaning specified in the Credit Agreement.

“ Cash Equivalents ” shall have the meaning specified in the Credit Agreement.

 

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“ Cash Management Creditors ” shall have the meaning specified in the recitals of this Agreement.

“ Cash Management Obligations ” shall mean all Obligations owing by any Grantor under the Qualified Secured Cash Management Agreements.

“ Class ” shall mean each class of Secured Parties with outstanding Obligations secured hereby at such time, i.e., (x) the Lender Creditors as holders of the Credit Document Obligations, (y) the Hedge Creditors as holders of the Hedge Obligations or (z) the Cash Management Creditors as holders of the Cash Management Obligations.

“ Collateral ” shall have the meaning specified in Section 1(a).

“ Collateral Agent ” shall have the meaning specified in the first paragraph of this Agreement.

“ Commodity Account Control Agreement ” shall mean an agreement in form reasonably satisfactory to the Collateral Agent sufficient to grant the Collateral Agent Control over a specified Commodity Account.

“ Company ” shall have the meaning specified in the first paragraph of this Agreement.

“ Computer Software ” shall mean 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.

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

“ Control Agreements ” shall mean, collectively, the Deposit Account Control Agreements, the Securities Account Control Agreements and the Commodity Account Control Agreements.

“ Copyrights ” shall mean all copyright rights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished all registrations thereof, and all applications in connection therewith, including all registrations and applications in the United States Copyright Office, and the right to obtain all renewals thereof.

“ Credit Agreement ” shall have the meaning specified in the recitals of this Agreement.

“ Credit Documents ” shall have the meaning specified in the Credit Agreement.

 

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“ Credit Document Obligations ” shall mean all Obligations owing by any Grantor under the Credit Documents.

“ Deposit Account Control Agreement ” shall mean a “Cash Management Control Agreement” as defined in the Credit Agreement.

“ Domestic Subsidiary ” shall have the meaning specified in the Credit Agreement.

“ Effective Date ” shall have the meaning specified in the Credit Agreement.

“ Equity Interests ” shall mean “Capital Stock” as defined in the Intercreditor Agreement.

“ Event of Default ” shall have the meaning specified in the Credit Agreement.

“ Excluded Account ” shall have the meaning specified in the Credit Agreement.

“ Excluded Assets ” shall mean the collective reference to (a) any motor vehicle or other asset covered by a certificate of title or ownership to the extent that a security interest in such asset cannot be perfected by the filing of a financing statement under the UCC, (b) any asset of a Grantor (including Equity Interests and any lease, license, contract, property right or agreement to which a Grantor is a party, and any of its rights or interest thereunder) owned on the Effective Date to the extent that, and for so long as, such grant of a security interest in such asset would violate any applicable law, rule or regulation, or would violate, breach, terminate, constitute a default under or require any consent not obtained under or give rise to any right of acceleration, modification or cancellation under, the organizational documents of any non-Wholly-Owned Subsidiary (as defined in the Credit Agreement) or any contractual obligation (including Liens, leases and licenses permitted under the Credit Agreement) binding on such Grantor or on such asset and in effect on the Effective Date (in each case, only to the extent that such contractual obligations are effective under applicable law), (c) any asset of a Grantor (including Equity Interests and any lease, license, contract, property right or agreement to which a Grantor is a party, and any of its rights or interest thereunder) acquired by a Grantor after the Effective Date, to the extent that, and for so long as, (A) the grant of a security interest in such assets would violate any applicable law, rules or regulation, or would violate, breach, terminate, constitute a default under or require any consent not obtained (following commercially reasonable efforts by the applicable Grantor) under or give rise to any right of acceleration, modification or cancellation under, the organizational documents of any non-Wholly Owned Subsidiary (as defined in the Credit Agreement) or any contractual obligation (including Liens, leases and licenses permitted under the Credit Agreement) binding on such Grantor or on such asset and (B) such law, regulation, organizational document or contractual obligation existed at the time of the acquisition thereof and was not (except in the case of customary restrictions and conditions contained in agreements and other documents (including organization documents) governing any Permitted Joint Venture (as defined in the Credit Agreement)) created or made binding upon such asset in contemplation of or in connection with the acquisition of such asset, (d) any of the outstanding Voting Equity Interests of a Foreign Subsidiary in excess of 65% of the Voting Equity Interests of such Foreign Subsidiary, (e) any and all leasehold interests in Real Property (as defined in the Credit Agreement), (f) any Letter of Credit Rights to the extent a Grantor is required by applicable law to apply the proceeds of a drawing of such Letter of Credit for a

 

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specified purpose, (g) any trademark application filed on an “intent-to-use” basis prior to the filing under Section 1(c) or Section 1(d) of the Lanham Act of a “Statement of Use” or an “Amendment to Allege Use” with respect thereto, to the extent that, and for so long as, the grant of a security interest therein would impair the validity or enforceability of such “intent-to-use” trademark application under applicable federal law, or (h) Commercial Tort Claims with a value of less than $500,000; provided , however, that Excluded Assets will not include any asset of a Grantor which secures any Noteholder Obligation.

“ First Priority ” shall have the meaning specified in the Credit Agreement.

“ Grantors ” shall have the meaning specified in the first paragraph of this Agreement.

“ Hedge Creditors ” shall have the meaning specified in the recitals of this Agreement.

“ Hedge Obligations ” shall mean all Obligations that are owing by any Grantor under the Qualified Secured Hedging Agreements.

“ Holdings ” shall have the meaning specified in the first paragraph of this Agreement.

“ Intellectual Property Collateral ” shall have the meaning specified in Section 1(a)(xvii).

“ Indemnified Party ” shall have the meaning specified in Section 18 .

“ Intellectual Property ” shall mean the property described in Section 1(a)(xvii ).

“ Intellectual Property Security Agreement ” shall have the meaning specified in Section 10(f).

“ Intercreditor Agreement ” shall have the meaning specified on the cover page hereof.

“ IP Agreements ” shall mean all written agreements, permits, consents and orders relating to the license, development, use or disclosure of any Intellectual Property Collateral to which such Grantor, now or hereafter, is a party or with respect to which such Grantor has any rights.

“ IP Security Agreement Supplement ” shall have the meaning specified in Section 10(g).

“ Lender Creditors ” shall have the meaning specified in the recitals of this Agreement.

“ Lenders ” shall have the meaning specified in the recitals of this Agreement.

“ Lien ” shall have the meaning specified in the Intercreditor Agreement.

“ Non-Voting Equity Interests ” shall mean all Equity Interests of any Person which are not Voting Equity Interests.

“ Noteholder Collateral Agent ” shall have the meaning specified in the Intercreditor Agreement.

 

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“ Noteholder First Lien Collateral ” shall have the meaning specified in the Intercreditor Agreement.

“ Noteholder Obligations ” shall have the meaning specified in the Intercreditor Agreement.

“ Noteholder Secured Parties ” shall have the meaning specified in the Intercreditor Agreement.

“ Obligations ” shall have the meaning specified in the Credit Agreement.

“ Payment in Full ” shall have the meaning specified in the Intercreditor Agreement.

“ Payment Item ” shall mean each check, draft or other item of payment payable to a Credit Party, including those constituting proceeds of any Collateral.

“ Patents ” shall mean (a) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, (b) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof and (c) all rights to obtain all renewals, reissues, and reexaminations thereof.

“ Perfection Certificate ” shall have the meaning specified in the Credit Agreement.

“ Person ” shall have the meaning specified in the Intercreditor Agreement.

“ Pledged Account Bank ” shall have the meaning specified in Section 5(a).

“ Pledged Debt ” shall have the meaning specified in Section 1(a)(xv)(A).

“ Pledged Deposit Account ” shall have the meaning specified in Section 5(a).

“ Pledged Equity ” shall have the meaning specified in Section 1(a)(xv)(B).

“ Pro Rata Share ” shall mean, when calculating a Secured Party’s portion of any distribution or amount, that amount (expressed as a percentage) equal to a fraction the numerator of which is the then unpaid amount of such Secured Party’s U.S. Borrower Obligations, or Canadian Borrower Obligations, as the case may be, and the denominator of which is the then outstanding amount of all U.S. Borrower Obligations or Canadian Borrower Obligations, as the case may be.

“ Qualified Secured Cash Management Agreement ” shall have the meaning specified in the Credit Agreement.

“ Qualified Secured Hedging Agreements ” shall have the meaning specified in the Credit Agreement.

“ Receivables ” shall have the meaning specified in Section 1(a)(xiv).

 

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“ Revolving Facility First Lien Collateral ” shall have the meaning specified in the Intercreditor Agreement.

“ Related Contracts ” shall have the meaning specified in Section 1(a)(xiv).

“ Release Date ” shall have the meaning specified in Section 21 .

“ Representative ” shall have the meaning specified in Section 17(e).

“ Requisite Secured Parties ” of any Class shall mean each of (x) with respect to the Credit Document Obligations, the Required Lenders (or, to the extent provided in Section 13.12 of the Credit Agreement, each of the Lenders), (y) with respect to the Hedge Obligations, the holders of at least a majority of all Hedge Obligations outstanding from time to time under the Qualified Secured Hedging Agreements or (z) with respect to the Cash Management Obligations, the holders of at least a majority of all Cash Management Obligations outstanding from time to time under the Qualified Secured Cash Management Agreements.

“ Second Priority ” shall have the meaning specified in the Credit Agreement.

“ Secured Debt Documents ” shall mean and include each Credit Document, each Qualified Secured Hedging Agreement and each Qualified Secured Cash Management Agreement.

“ Secured Parties ” shall have the meaning specified in the recitals of this Agreement.

“ Securities Account Control Agreement ” shall mean an agreement in form and substance reasonably satisfactory to the Collateral Agent sufficient to grant the Collateral Agent Control with respect to a specified Securities Account.

“ Security Collateral ” shall have the meaning specified in Section 1(a)(xv) .

“ Senior Secured Notes Obligations Termination Date ” shall mean that date upon which the Noteholder Obligations shall have been Paid In Full.

“ Subagent ” shall have the meaning specified in Section 15(b) .

“ Taxes ” shall have the meaning specified in the Credit Agreement.

“ Trademarks ” shall mean (a) all trademarks, trade names, corporate names, the Grantors’ names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto and (b) the right to obtain all renewals thereof.

 

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“ Trade Secrets ” shall mean all confidential and proprietary information of any Grantor, 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 business data, pricing and cost information, business and marketing plans and customer and supplier lists and information.

“ UCC ” shall mean the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction.

“ U.S. Borrower Obligations ” shall mean all Obligations of the U.S. Borrowers and any guarantees of such Obligations of the U.S. Borrowers pursuant to any Guaranty or pursuant to any other Credit Document.

“ Voting Equity Interests ” of any Person shall mean all classes of Equity Interests of such Person entitled to vote.

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

Section 1. Grant of Security, etc .

(a) 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 ”):

(i) all Accounts;

(ii) all cash, Cash Equivalents and all Cash Collateral, whether such Cash Collateral is held in a Deposit Account or elsewhere;

(iii) all Chattel Paper (including, without limitation, all Tangible Chattel Paper and all Electronic Chattel Paper);

(iv) all Commercial Tort Claims (including, without limitation, the Commercial Tort Claims set forth on Schedule 14 to the Perfection Certificate);

(v) all Deposit Accounts, Securities Accounts, Commodities Accounts and all assets on deposit therein;

(vi) all Documents;

(vii) all Equipment;

 

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(viii) all Farm Products;

(ix) all Fixtures;

(x) all General Intangibles;

(xi) all Goods;

(xii) all Instruments;

(xiii) all Inventory;

(xiv) all Letter-of-Credit Rights, whether or not the respective letter of credit is evidenced by a writing (together with all Accounts, Chattel Paper, Instruments, Deposit Accounts, General 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, the “ Receivables ”; 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 Receivables, being the “ Related Contracts ”);

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

 

(A)

all indebtedness from time to time owed to such Grantor, including without limitation, all promissory notes or instruments, if any, evidencing such indebtedness, all indebtedness owed to such Grantor pursuant to each Intercompany Note and the instruments set forth on Schedule 8 to the Perfection Certificate (the “ 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 Pledged Debt;

 

(B)

subject to the proviso below in this Section 1(a), all Equity Interests from time to time acquired, owned or held by such Grantor in any manner, including, without limitation, the Equity Interests owned by each Grantor set forth opposite such Grantor’s name on and otherwise described on Schedule 7A to the Perfection Certificate, and the certificates, if any, representing such shares or units or other Equity Interests (collectively, the “ 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 such shares or other Equity Interests and all subscription warrants, rights or options issued thereon or with respect thereto; and

 

(C)

without limiting the foregoing, all Investment Property and all Financial Assets (including, without limitation, all securities, security entitlements and securities accounts), the certificates or

 

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instruments, if any, representing or evidencing such Investment Property or 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 therefor and all subscription warrants, rights or options issued thereon or with respect thereto;

(xvi) all contracts and agreements between any Grantor and one or more additional parties, including, without limitation, any Interest Rate Protection Agreements (as defined in the Credit Agreement), any Other Hedging Agreements (as defined in the Credit Agreement), licensing agreements and any partnership agreements, joint venture agreements, limited liability company agreements, the Related Contracts and the IP Agreements, in each case, as such agreements may be amended, amended and restated, supplemented or otherwise modified from time to time (collectively, the “ Assigned Agreements ”), including, without limitation, (i) all rights of such Grantor to receive moneys due and to become due under or pursuant to the Assigned Agreements, (ii) all rights of such Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii) claims of such Grantor for damages arising out of or for breach of or default under the Assigned Agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder (all such Collateral being the “ Agreement Collateral ”);

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

 

(A)

all Patents, Trademarks, Copyrights and Computer Software;

 

(B)

all Trade Secrets and all other intellectual, industrial and intangible property of any type, including, without limitation, industrial designs and mask works;

 

(C)

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; and

 

(D)

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;

(xviii) 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;

(xix) and all other tangible and intangible personal property of whatever nature whether or not covered by Article 9 of the UCC;

 

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(xx) all accessions to, substitutions for, and all replacements, products, and cash and non-cash proceeds of the foregoing, including proceeds of and unearned premiums with respect to insurance policies, and claims against any Person for loss, damage or destruction of any Collateral;

(xxi) 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 (i) through (xx) of this Section 1 ) and, to the extent not otherwise included, all 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;

provided that, notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute a grant of a security interest in any Excluded Asset.

(b) The security interest of the Collateral Agent under this Agreement extends to all Collateral which any Grantor may acquire, or with respect to which any Grantor may obtain rights, at any time during the term of this Agreement.

(c) Notwithstanding anything to the contrary contained in this Section 1 or elsewhere in this Agreement, each Grantor and the Collateral Agent (on behalf of the Secured Parties) acknowledges and agrees that:

(i) the security interest granted pursuant to this Agreement (including pursuant to this Section 1 ) to the Collateral Agent for the benefit of the Secured Parties (i) in the Revolving Facility First Lien Collateral, shall be a First Priority Lien (as defined in the Credit Agreement) and (ii) in the Noteholder First Lien Collateral, shall be a Second Priority Lien (as defined in the Credit Agreement) subordinated and subject to the security interest granted to the Noteholder Collateral Agent for the benefit of the Noteholder Secured Parties in the Noteholder First Lien Collateral on the terms and conditions set forth in the Noteholder Documents (as defined in the Intercreditor Agreement); and

(ii) the Noteholder Secured Parties’ security interests in the Collateral constitute security interests separate and apart (and of a different class and claim) from the Secured Parties’ security interests in the Collateral.

Section 2. Security for Obligations . This Agreement secures the payment of all Obligations of each Grantor now or hereafter existing.

Section 3. Grantors Remain Liable . Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder, all in accordance with the terms of any such contracts or agreements, (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

 

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Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or any other Secured Debt 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. Delivery and Control of Security Collateral . (a) (i) All certificates representing or evidencing the Pledged Equity and (ii) all instruments representing or evidencing the Pledged Debt (excluding, unless an Event of Default has occurred and is continuing, Pledged Debt in an aggregate principal amount not in excess of $1,000,000) , shall be delivered to and held by or on behalf of the Collateral Agent pursuant hereto (unless the Noteholder Collateral Agent is granted a prior security interest in such certificates or instruments and the same are required to be delivered to the Noteholder Collateral Agent pursuant to the Intercreditor Agreement) 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. During the continuation of an Event of Default, and after the Senior Secured Notes Obligations Termination Date with respect to all Noteholder First Lien Collateral, the Collateral Agent shall have the right, at any time in its discretion and without notice to any Grantor, to (i) 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 11(a) , (ii) exchange certificates or instruments representing or evidencing Security Collateral for certificates or instruments of smaller or larger denominations, and (iii) convert Security Collateral consisting of financial assets credited to any Securities 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 any Securities Account.

(b) Each Grantor acknowledges and agrees that (i) to the extent each interest in any limited liability company or limited partnership controlled now or in the future by such Grantor and pledged hereunder is a “ security ” within the meaning of Article 8 of the UCC and is governed by Article 8 of the UCC, such interest shall be certificated and (ii) each such interest shall at all times hereafter continue to be such a security and represented by such certificate. Each Grantor further acknowledges and agrees that with respect to any interest in any limited liability company or limited partnership controlled now or in the future by such Grantor and pledged hereunder that is not a “ security ” within the meaning of Article 8 of the UCC, such Grantor shall at no time elect to treat any such interest as a “ security ” within the meaning of Article 8 of the UCC, nor shall such interest be represented by a certificate, unless such Grantor provides prior written notification to the Collateral Agent of such election and such interest is thereafter represented by a certificate that is promptly delivered to the Collateral Agent pursuant to the terms hereof (unless the Noteholder Collateral Agent is granted a prior security interest in such certificated interest and the same are required to be delivered to the Noteholder Collateral Agent pursuant to the Intercreditor Agreement).

(c) With respect to any Security Collateral that constitutes an uncertificated security that has an individual par value equal to or exceeding $1,000,000 in which any Grantor has any right, title or interest, such Grantor will promptly notify the Collateral Agent thereof. During the continuation of an Event of Default, with respect to any Security Collateral in which any Grantor has any right, title or interest, such Grantor will notify each such issuer of Security Collateral that such Security Collateral is subject to the security interest granted hereunder.

 

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(d) Except for checks payable to a Grantor constituting an Instrument and deposited in accordance with the terms of the Credit Agreement and as otherwise set forth herein, if any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, certificated security or Chattel Paper (other than Electronic Chattel Paper), such Instrument, certificated security or Chattel Paper shall be promptly delivered to the Collateral Agent (unless the Noteholder Collateral Agent is granted a prior security interest in such Collateral and the same are required to be delivered to the Noteholder Collateral Agent for the benefit of the Secured Parties pursuant to the Intercreditor Agreement), duly endorsed in a manner reasonably satisfactory to the Collateral Agent, to be held as Collateral pursuant to this Agreement, provided that, unless an Event of Default has occurred and is continuing, the Grantors shall not be required to deliver the same pursuant to this clause (d) to the extent that the aggregate value of the Collateral referred to in this clause (d) not so delivered does not exceed $1,000,000 .

Section 5. Deposit Accounts, Maintaining Electronic Chattel Paper, Transferable Records and Letter-of-Credit Rights and Giving Notice of Commercial Tort Claims .

(a) To further secure the prompt payment and performance of all Obligations, each Grantor hereby grants to Collateral Agent, for the benefit of Secured Parties, a continuing security interest in and Lien upon all amounts credited to any Deposit Account of such Grantor, including any sums in any blocked or lockbox accounts or in any accounts into which such sums are swept. Except as otherwise provided in Section 5.03 of the Credit Agreement, each Grantor will maintain Deposit Accounts only with a bank (which may include the Collateral Agent) (a “ Pledged Account Bank ”) that has entered into a Deposit Account Control Agreement (each such Deposit Account, a “ Pledged Deposit Account ”); provided , however, that no Excluded Account shall be required to be subject to a Deposit Account Control Agreement. Each Grantor shall be the sole account holder of each Pledged Deposit Account and shall not allow any other Person (other than any Person having a Lien on such Pledged Deposit Account that is permitted pursuant to Section 10.01(d) or (q)  of the Credit Agreement) to have Control over a Pledged Deposit Account or any property deposited therein. Such Pledged Deposit Accounts shall be maintained pursuant to lockbox or other arrangements reasonably acceptable to Collateral Agent. Collateral Agent may, during any Dominion Period, require immediate transfer of all funds in such Pledged Deposit Account to the U.S. Dominion Account maintained with Bank of America. Collateral Agent and Lenders assume no responsibility to Grantors for any lockbox arrangement, U.S. Collection Accounts, the Core U.S. Concentration Account or the U.S. Dominion Account, including any claim of accord and satisfaction or release with respect to any payment items accepted by any bank. The Collateral Agent hereby agrees that it will not deliver a notice indicating that the Collateral Agent will take Control over a Deposit Account or a Securities Account under any Control Agreement unless an Event of Default has occurred and is continuing or a Dominion Period has commenced and is continuing.

(b) Grantors shall request in writing and otherwise take all necessary steps to ensure that all payments on Accounts or otherwise relating to Collateral are made directly to a Pledged Deposit Account (or a lockbox relating to a Pledged Deposit Account). If any Grantor or Subsidiary receives cash or payment items with respect to any Collateral, it shall hold same in trust for Collateral Agent and promptly (not later than the next Business Day) deposit same into a Pledged Deposit Account.

 

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(c) The Collateral Agent may, at any time and without notice to, or consent from, any Grantor, transfer, or direct the transfer of, funds from the Pledged Deposit Accounts to satisfy such Grantor’s obligations under the Credit Documents if an Event of Default shall have occurred and be continuing or a Dominion Period has commenced and is continuing.

(d) Upon any termination by a Grantor of any Pledged Deposit Account, such Grantor will immediately (i) transfer all funds and property held in such terminated Pledged Deposit Account to another Pledged Deposit Account and (ii) notify all Account Debtors and any other obligors that were making payments to such Pledged Deposit Account to make all future payments to another Pledged Deposit Account, in each case so that the Collateral Agent shall have a continuously perfected security interest in such Account Collateral, funds and property.

(e) Any Cash Collateral may be invested, at Collateral Agent’s discretion, in Cash Equivalents, but Collateral Agent shall have no duty to do so, regardless of any agreement or course of dealing with any Grantor, and shall have no responsibility for any investment or loss. Collateral Agent may apply Cash Collateral to the payment of any Obligations, in such order as Collateral Agent may elect, as they become due and payable. Each Deposit Account in which Cash Collateral is held and all Cash Collateral shall be under the sole dominion and Control of Collateral Agent. No Grantor or other Person claiming through or on behalf of any Grantor shall have any right to any Cash Collateral, until Payment in Full of all Obligations.

(f) Upon the occurrence of and during the continuation of an Event of Default, each Grantor will maintain (i) all Electronic Chattel Paper so that the Collateral Agent has control of the Electronic Chattel Paper in the manner specified in Section 9-105 of the UCC and (ii) all transferable records so that the Collateral Agent has control of the transferable records in the manner specified in Section 16 of the Uniform Electronic Transactions Act, as in effect in the jurisdiction governing such transferable record.

(g) 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 (except to the extent that the applicable Grantor is required by applicable law to apply such proceeds to a specified purpose). If any Grantor is at any time a beneficiary under a letter of credit that is not a Supporting Obligation with respect to any Collateral and that is now or hereafter issued in favor of such Grantor, and (i) the face amount of such letter of credit is in excess of $2,000,000 individually or (ii) the face amount of such letter of credit, together with the face amount of all other letters of credit issued in favor of any Grantor in which the Collateral Agent does not have a perfected security interest exceeds $5,000,000 in the aggregate, such Grantor shall promptly notify the Collateral Agent thereof and such Grantor shall use commercially reasonable efforts to either (A) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing under such letter of credit or (B) arrange for the Collateral Agent to become the transferee beneficiary of such letter of credit, with the Collateral Agent agreeing, in each case, that the proceeds of any drawing under such letter of credit are to be applied as provided in the Credit Agreement.

 

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(h) Upon the occurrence of an Event of Default, each Grantor shall (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.

(i) Each Grantor will give prompt notice in writing (which notice shall reference this Section 5(i) ) to the Collateral Agent of any Commercial Tort Claim individually valued in excess of $500,000 that may arise in the future and will promptly execute or otherwise authenticate a supplement to this Agreement, and otherwise take all necessary action, to subject such Commercial Tort Claim to the first priority security interest created under this Agreement.

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

(a) All Pledged Equity consisting of certificated securities and all Pledged Debt has been delivered to the Collateral Agent (unless the Noteholder Collateral Agent is granted a prior security interest therein and the same is required to be delivered to the Noteholder Collateral Agent pursuant to the Intercreditor Agreement), in accordance herewith. If such Grantor is an issuer of Security Collateral, such Grantor confirms that it has received notice of the security interest granted hereunder.

(b) Such Grantor is the legal and beneficial owner of the Collateral granted or purported to be granted by such Grantor free and clear of any Lien, claim, option or right of others, except for the security interest created under this Agreement, subject to Liens permitted under Section 10.01 of the Credit Agreement. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral or listing such Grantor as debtor is on file in any recording office, except such as may have been filed in favor of the Collateral Agent, the Noteholder Collateral Agent or as otherwise permitted under the Credit Agreement.

(c) All of the Equipment and Inventory of such Grantor are located at the places specified therefor in Section 2 to the Perfection Certificate or at another location as to which such Grantor has complied with the requirements of Sections 8 and 9(b) . Such Grantor has obtained and maintains insurance with respect to its Equipment and Inventory in compliance with Section 8(k) .

(d) The Pledged Equity issued by such Grantor hereunder has been duly authorized and validly issued and is fully paid and non assessable. The Pledged Debt issued by such Grantor has been duly authorized, authenticated or issued and delivered and is the legal, valid and binding obligation of the issuers thereof and such Pledged Debt is evidenced by one or more promissory notes (which promissory notes have been delivered to the Collateral Agent

 

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unless required to be delivered to the Noteholder Collateral Agent pursuant to the terms of the Intercreditor Agreement, in which case, such promissory notes have been delivered to the Noteholder Collateral Agent) and the issuers thereof are not in default in any material respect under such Pledged Debt.

(e) As of the Effective Date, the Pledged Equity pledged by such Grantor constitutes the percentage of the issued and outstanding Equity Interests of the issuers thereof indicated on Schedule 7 to the Perfection Certificate. As of the Effective Date, no Grantor has any Investment Property or Financial Assets other than the Investment Prope