New Enterprise Stone & Lime Co., Inc. - FORM 8-K - EX-10.4 - EXHIBIT 10.4

Attached files

file	filename
8-K - 8-K - New Enterprise Stone & Lime Co., Inc.	nesl8-kpnc_kkrrefinancing.htm
EX-10.1 - EXHIBIT 10.1 - New Enterprise Stone & Lime Co., Inc.	exhibit101revolvingcredita.htm
EX-10.2 - EXHIBIT 10.2 - New Enterprise Stone & Lime Co., Inc.	exhibit102kkrnesltermloan.htm
EX-10.3 - EXHIBIT 10.3 - New Enterprise Stone & Lime Co., Inc.	exhibit103intercreditorand.htm
EX-99.1 - EXHIBIT 99.1 - New Enterprise Stone & Lime Co., Inc.	exhibit991pressrelease.htm
EX-4.1 - EXHIBIT 4.1 - New Enterprise Stone & Lime Co., Inc.	exhibit41ablnoteintercredi.htm

Execution Version

SECURITY AGREEMENT

Among

NEW ENTERPRISE STONE & LIME CO., INC.,

ASTI TRANSPORTATION SYSTEMS, INC.,

EII TRANSPORT INC.,

GATEWAY TRADE CENTER INC.,

PRECISION SOLAR CONTROLS INC.,

PROTECTION SERVICES INC.,

SCI PRODUCTS INC.,

WORK AREA PROTECTION CORP.

And

PNC BANK, NATIONAL ASSOCIATION,

As Collateral Agent

dated as of

February 12, 2014

THE TERMS OF THIS SECURITY AGREEMENT ARE SUBJECT TO CERTAIN INTERCREDITOR AGREEMENTS, AS MORE FULLY SET FORTH IN SECTION 9.14 HERETO.



3243958.7

Execution Version



3243958.7

TABLE OF CONTENTS


DEFINITIONS AND INTERPRETATION	2

Section 1.01 Definitions.2

Section 1.02 Interpretation.12

Section 1.03 Resolution of Drafting Ambiguities.12

Section 1.04 Schedules.12


GRANT OF SECURITY INTEREST	12

Section 2.01 Grant of Security Interest.12

Section 2.02 Filings.14


PERFECTION AND FURTHER ASSURANCES	15

Section 3.01 Perfection of Certificated Securities Collateral.15

Section 3.02 Perfection of Uncertificated Securities Collateral.15

Section 3.03 Maintenance of Perfected Security Interest.16

Section 3.04 Other Actions for Perfection.16

Section 3.05 Joinder of Additional Grantors.19

Section 3.06 Further Assurances.20


REPRESENTATIONS, WARRANTIES AND COVENANTS	21

Section 4.01 Loan Agreement Representations.21

Section 4.02 Ownership of Property and No Other Liens.21

Section 4.03 Perfected First Priority Security Interest.22

Section 4.04 No Transfer of Collateral.22

Section 4.05 Claims Against Collateral.22

Section 4.06 Other Financing Statements.22

Section 4.07 Changes in Name, Jurisdiction of Organization, Etc.23

Section 4.08 Location of Inventory and Equipment.23

Section 4.09 Pledged Securities and Pledged Debt.24

Section 4.10 Approvals.25

Section 4.11 Collateral Information.25

Section 4.12 Insurance.25

Section 4.13 Compliance With Laws.25

Section 4.14 Intellectual Property.26

Section 4.15 Maintenance of Equipment 26


SECURITIES COLLATERAL	27

Section 5.01 Existing Voting Rights and Distributions.27

Section 5.02 Certain Agreements of Grantors.28


INTELLECTUAL PROPERTY COLLATERAL	28

Section 6.01 Intellectual Property License.28

Section 6.02 Dealing With Intellectual Property.29

Section 6.03 Additional Intellectual Property.30

Section 6.04 Intellectual Property Litigation.31


RECEIVABLES	31

Section 7.01 Dealing With Receivables.31

Section 7.02 Modification of Receivables.32


REMEDIES	32

Section 8.01 Remedies.32

Section 8.02 No Waiver and Cumulative Remedies.35

Section 8.03 Application of Proceeds.36


MISCELLANEOUS	36

Section 9.01 Concerning Collateral Agent.36



3243958.7

Section 9.02 Performance By Collateral Agent.37

Section 9.03 Power of Attorney.38

Section 9.04 Continuing Security Interest and Assignment.38

Section 9.05 Termination and Release.39

Section 9.06 Modification in Writing.39

Section 9.07 Notices.40

Section 9.08 Indemnity and Expenses.40

Section 9.09 Governing Law, Consent to Jurisdiction and Waiver of Jury Trial.41

Section 9.10 Severability of Provisions.41

Section 9.11 Counterparts; Integration; Effectiveness.41

Section 9.12 No Release.42

Section 9.13 Obligations Absolute.42

Section 9.14 Intercreditor Agreements.43

SCHEDULES AND EXHIBITS

Schedule 3.03 – Filing Offices; Etc.

Schedule 3.04(a) – Instruments and Tangible Chattel Paper

Schedule 3.04(b) – Deposit Accounts

Schedule 3.04(c) – Investment Property

Schedule 3.04(d) – Electronic Chattel Paper and Transferable Records

Schedule 3.04(f) – Commercial Tort Claims

Schedule 4.07 – Name; Jurisdiction of Organization; Etc.

Schedule 4.08 – Location of Inventory and Equipment

Schedule 4.09 – Pledged Securities and Pledged Debt

Schedule 4.14 – Intellectual Property

Schedule 9.07 – Notice Addresses

Exhibit A – Form of Joinder Agreement

Exhibit B – Form of Issuer’s Acknowledgement



3243958.7

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of February 12, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”) made by and among NEW ENTERPRISE STONE & LIME CO., INC., a corporation organized under the laws of the State of Delaware (“NESL”), ASTI TRANSPORTATION SYSTEMS, INC., a corporation organized under the laws of the State of Delaware (“ASTI”), EII TRANSPORT INC., a corporation organized under the laws of the Commonwealth of Pennsylvania (“EII”), GATEWAY TRADE CENTER INC., a corporation organized under the laws of the State of New York (“Gateway”), PRECISION SOLAR CONTROLS INC., a corporation organized under the laws of the State of Texas (“Precision”), PROTECTION SERVICES INC., a corporation organized under the laws of the Commonwealth of Pennsylvania (“Protection”), SCI PRODUCTS INC., a corporation organized under the laws of the Commonwealth of Pennsylvania (“SCI”), and WORK AREA PROTECTION CORP., a corporation organized under the laws of the State of Illinois (“Work Area”), as grantors (NESL, ASTI, EII, Gateway, Precision, Protection, SCI and Work Area collectively in such capacities, and any other Person that becomes a party to this Agreement pursuant to a Joinder Agreement, together with their respective successors in such capacities, the “Grantors”, and each, a “Grantor”), in favor of PNC BANK, NATIONAL ASSOCIATION, in its capacity as collateral agent pursuant to the ABL Intercreditor Agreement (as hereinafter defined), as secured party (in such capacity and together with any successors and assigns, the “Collateral Agent”).

RECITALS

The Grantors, PNC Bank, National Association, in its capacity as administrative agent (in such capacity and together with any successors in such capacity, the “Revolver Administrative Agent”), Wells Fargo Bank, National Association, in its capacity as syndication agent (in such capacity and together with any successors in such capacity, the “Revolver Syndication Agent”) and the lending institutions signatory thereto from time to time (the “Revolver Lenders”) have, in connection with this Agreement, entered into that certain Revolving Credit Agreement, dated as of February 12, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Revolver Agreement”).

The Grantors, Cortland Capital Market Services LLC, in its capacity as administrative agent (in such capacity and together with any successors in such capacity, the “Term Loan Administrative Agent” and, together with the Revolver Administrative Agent, the “Administrative Agents”, and, individually, each an “Administrative Agent”), and the lending institutions signatory thereto from time to time (the “Term Loan Lenders” and, together with the Revolver Lenders, collectively, the “Lenders”, and, individually, each a “Lender”) have, in connection with this Agreement, entered into that certain Term Loan Credit Agreement, dated as of February 12, 2014 (as amended, amended and restated,



3243958.7

supplemented or otherwise modified from time to time, the “Term Loan Agreement” and, together with the Revolver Agreement, the “Loan Agreements”, and individually, each a “Loan Agreement”).

The Grantors, the Revolver Administrative Agent, on behalf of itself and the Revolver Lenders, the Revolver Syndication Agent, on behalf of itself and the Revolver Lenders, and the Term Loan Administrative Agent, on behalf of itself and the Term Loan Lenders, have, in connection with the execution and delivery of this Agreement and the respective Loan Agreements, entered into that certain Intercreditor and Collateral Agency Agreement, dated as of February 12, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ABL Intercreditor Agreement”), pursuant to which the Revolver Administrative Agent, on behalf of itself and the Revolver Lenders, the Revolver Syndication Agent, on behalf of itself and the Revolver Lenders, and the Term Loan Administrative Agent, on behalf of itself and the Term Loan Lenders, appointed the Collateral Agent as their collateral agent for purposes of securing their respective Secured Obligations (as hereinafter defined).

The Grantors will receive substantial direct and indirect benefits from the execution, delivery and performance of the obligations under the Loan Agreements and the Other Documents and each is, therefore, willing to enter into this Agreement.

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

It is a condition to the obligations of the Lenders to enter into the Loan Agreements that each Grantor execute and deliver this Agreement.

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

Article I
DEFINITIONS AND INTERPRETATION

Section 1.01 Definitions.

(a) Capitalized terms used herein but not defined shall have the meaning ascribed to such term in the Term Loan Agreement or Revolver Agreement, as the case may be.

(b) Unless otherwise defined herein or in the Loan Agreements, capitalized terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC. However, if a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning specified in Article 9 of the UCC.

“ABL First Lien Collateral” has the meaning ascribed to such term in the Noteholder Intercreditor Agreement.

“ABL Intercreditor Agreement” has the meaning set forth in the recitals hereof.

“Administrative Agents” and “Administrative Agent” have the meanings set forth in the recitals hereof.

“Agreement” has the meaning set forth in the preamble hereof.

“ASTI” has the meaning set forth in the preamble hereof.

“Claims” means any and all property and other taxes, assessments and special assessments, levies, fees and all governmental charges imposed upon or assessed against, and landlords’, carriers’, mechanics’, workmen’s, repairmen’s, laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims arising by operation of law against, all or any portion of the Collateral.

“Collateral” has the meaning set forth in Section 2.01 hereof.

“Collateral Agent” has the meaning set forth in the preamble hereof.

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

“Commodity Account Control Agreement” means an agreement in form and substance reasonably satisfactory to the Collateral Agent establishing the Collateral Agent’s Control with respect to any Commodity Account.

“Contracts” means, collectively, with respect to each Grantor, the Material Contracts, the Intellectual Property Licenses, all sale, service, performance, equipment or property lease contracts, agreements and grants and all other contracts, agreements or grants (in each case, whether written or oral, or third party or intercompany), between such Grantor and any third party, and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof.

“Control” means (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” means, collectively, the Deposit Account Control Agreements, the Securities Account Control Agreements and the Commodity Account Control Agreements.

“Copyrights” means, collectively, with respect to each Grantor, all copyrights (whether statutory or common law, whether established or registered in the United States or any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished) including those listed in Schedule 4.14 hereof, all tangible embodiments of the foregoing and all copyright registrations and applications made by such Grantor, in each case, whether now owned or hereafter created or acquired by or assigned to such Grantor, together with any and all (i) rights and privileges arising under applicable law and international treaties and conventions with respect to such Grantor’s use of such copyrights, (ii) reissues, renewals, continuations and extensions thereof and amendments thereto, (iii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including damages and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present or future infringements thereof.

“Deposit Account Control Agreement” means an agreement in form and substance reasonably satisfactory to the Collateral Agent establishing the Collateral Agent’s Control with respect to any Deposit Account.

“Deposit Accounts” means, collectively, with respect to each Grantor, (i) all “deposit accounts” as such term is defined in the UCC and in any event shall include the L/C Account and all accounts and sub-accounts relating to any of the foregoing accounts and (ii) all cash, funds, checks, notes and instruments from time to time on deposit in any of the accounts or sub-accounts described in clause (i) of this definition. Any of the Deposit Accounts may be referred to herein as a “Deposit Account”.

“Distributions” means, collectively, with respect to each Grantor, all dividends, cash, options, warrants, rights, instruments, distributions, returns of capital or principal, income, interest, profits and other property, interests (debt or equity) or proceeds, including as a result of a split, revision, reclassification or other like change of the Pledged Securities, from time to time received, receivable or otherwise distributed to such Grantor in respect of or in exchange for any or all of the Pledged Securities or Pledged Debt.

“Domestic Subsidiary” means any Restricted Subsidiary that was formed under the laws of the United States or any state of the United States or the District of Columbia or that guarantees or otherwise provides direct credit support for any Indebtedness of the Grantors.

“EII” has the meaning set forth in the preamble hereof.

“Excluded Assets” means, collectively, the following:

(a) to the extent such property or assets do not constitute ABL First Lien Collateral:

(i) any property or asset only to the extent and for so long as the grant of a security interest in such property or asset is prohibited by any Applicable Law or requires a consent not obtained of any Governmental Body pursuant to Applicable Law (after giving effect to Section 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of any relevant jurisdiction or any other Applicable Law);

(ii) any right, title or interest in any permit, license, contract or agreement held by any Grantor or to which any Grantor is a party or any of its right, title or interest thereunder, in each case only to the extent and for so long as the terms of such permit, license, contract or agreement validly prohibit the creation by a Grantor of a security interest in such permit, license, contract or agreement in favor of the Collateral Agent (after giving effect to Section 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of any relevant jurisdiction or any other applicable law (including Title 11 of the United States Code) or principles of equity);

(iii) Equity Interests of a Person that constitutes a Subsidiary (other than a Restricted Subsidiary or a wholly-owned Subsidiary) the pledge of which would violate a contractual obligation to the owners of the other Equity Interests of such Person that is binding on or relating to such Equity Interests but solely to the extent and for so long as such contractual obligation exists;

(iv) property (and proceeds thereof) of the Grantors that is subject to a Lien securing Purchase Money Indebtedness or Capitalized Lease Obligations, in each case as permitted under the Loan Agreements, to the extent the documents relating to such Lien securing Purchase Money Indebtedness or Capitalized Lease Obligations would not permit such equipment or real property (and proceeds thereof) to be subject to the Liens created under this Agreement or the Other Documents (provided that immediately upon the ineffectiveness, lapse or termination of any such restriction, such equipment or real property shall cease to be an “Excluded Asset”);

(v) Equity Interests of non-guarantor, non-borrower Restricted Subsidiaries and Unrestricted Subsidiaries and any Excluded Equity;

(vi) property or assets owned by any Foreign Subsidiary or any Unrestricted Subsidiary;

(vii) any intent-to-use United States trademark applications for which an amendment to allege use or statement of use has not been filed under 15 U.S.C. § 1051(c) or 15 U.S.C. § 1051(d), respectively, or if filed, has not been deemed in conformance with 15 U.S.C. § 1051(a) or examined and accepted, respectively, by the United States Patent and Trademark Office; provided that upon such filing and acceptance, such intent-to-use applications shall cease to be “Excluded Assets”;

(viii) the Excluded Bank Accounts;

(ix) any vehicles and any other assets, in each case subject to certificates of title;

(x) Rolling Stock;

(xi) Equity Interests issued by a Grantor other than NESL or intercompany notes of NESL or a Grantor other than NESL so long as Rule 3-16 of Regulation S-X under the Securities Act would require the filing with the SEC of separate financial statements for such Grantor (other than NESL) due to the fact that such Equity Interests or intercompany notes secure the Senior Secured Notes;

(xii) property and assets that are released from the scope of Collateral pursuant to the terms of this Agreement, the Loan Agreements or the Other Documents, or, to the extent not inconsistent with the foregoing, the Noteholder Intercreditor Agreement;

(xiii) Excluded Joint Venture Interests;

(xiv) Excluded Key-Man Policies; and

(xv) Restricted Assets.

(b) With respect to property or assets that would constitute ABL First Lien Collateral, the following:

(i) Excluded Bank Accounts;

(ii) property and assets that are released from the scope of Collateral pursuant to the terms of this Agreement, the Loan Agreements or the Other Documents, or, to the extent not inconsistent with the foregoing, the Noteholder Intercreditor Agreement, but only for so long as the circumstances that gave rise to such release remain in effect and applicable with respect to such property or assets; and

(iii) with respect to any General Intangible that may otherwise be included in ABL First Lien Collateral, such General Intangible, but only to the extent and for so long as the grant of a security interest in such General Intangible is prohibited by any applicable Law or requires a consent not obtained of any Governmental Authority pursuant to applicable Law (after giving effect to Section 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of any relevant jurisdiction or any other applicable Law).

provided, however, “Excluded Assets” shall not include any Proceeds, products, substitutions or replacements of any Excluded Assets, unless such Proceeds, products, substitutions or replacements would constitute Excluded Assets. In addition, to the extent that such property constitutes “Excluded Assets” due to the failure of the Grantor to obtain consent as described in clauses (a)(i) or (b)(iii) hereof, such Grantor shall use its commercially reasonable efforts to obtain such consent, and, upon obtaining such consent, such property shall cease to constitute “Excluded Assets”.

“Excluded Bank Accounts” shall mean (a) any Notes Collateral Accounts, (b) such other bank accounts established by NESL and its Subsidiaries used exclusively for payroll, payroll taxes or employee benefits, escrow, insurance, or fiduciary purposes, (c) the Permitted Cash Collateral Accounts, (d) such other accounts as individually do not have average monthly balances in excess of $100,000 and in the aggregate do not have average monthly balances in excess of $500,000 and (e) such other accounts as may be agreed to in writing by the Collateral Agent in its sole discretion.

“Excluded Equity” means, any voting stock of any Foreign Subsidiary in excess of 65% of the total combined voting power of all classes of stock of such Foreign Subsidiary that are entitled to vote (within the meaning of Section 1.956-2(c)(2) of the Treasury Regulations).

“Excluded Joint Venture Interests” shall mean the equity interest owned by a Grantor in a Permitted Joint Venture if and to the extent that such joint venture shall have entered into a credit facility with a Joint Venture Lender to obtain, on a non-recourse basis with respect to such Grantor, financing with respect to the operations of such joint venture, and as a condition to such financing, the Joint Venture Lender (a) requires the owners of the equity interests of such joint venture to pledge (on a non-recourse basis with respect to such Grantor, including one that is such an equity owner) such equity interests to the Joint Venture Lender to secure the joint venture’s obligations to it, and/or (b) prohibits any other Liens on such equity interests.

“Excluded Key-Man Policies” shall mean the cash surrender value on proceeds of any key-man life insurance policies on the lives of the shareholders of NESL party to the Stock Restriction and Management Agreement dated as of March 1, 1990 among NESL and such shareholders, if, and solely to the extent, that such agreement prohibits any other Liens on such policies.

“Extension of Credit” means, as applicable, an Advance (as defined in the Revolver Agreement) or a Term Loan (as defined in the Term Loan Agreement).

“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to this Agreement, that, subject only to the Noteholder Intercreditor Agreement and Liens permitted under the Loan Agreements, such Lien is the most senior lien to which such Collateral is subject.

“Foreign Subsidiary” shall mean, with respect to any Person, any Restricted Subsidiary of such Person that is not a Domestic Subsidiary and any Restricted Subsidiary of such Foreign Subsidiary.

“Gateway” has the meaning set forth in the preamble hereof.

“Grantors” and “Grantor” have the meanings set forth in the preamble hereof.

“Intellectual Property Collateral” means, collectively, the Patents, Trademarks (excluding only United States intent-to-use Trademark applications to the extent that and solely during the period in which the grant of a security interest therein would impair, under applicable federal law, the registrability of such applications or the validity or enforceability of registrations issuing from such applications), Copyrights, Trade Secrets, Intellectual Property Licenses and all other industrial, intangible and intellectual property of any type, including mask works and industrial designs.

“Intellectual Property Licenses” means, collectively, with respect to each Grantor, all license and distribution agreements with, and covenants not to sue, any other party with respect to any Patent, Trademark, Copyright or Trade Secret or any other patent, trademark, copyright or trade secret, whether such Grantor is a licensor or licensee, distributor or distributee under any such license or distribution agreement, including such agreements listed in Schedule 4.14 hereof, together with any and all (i) renewals, extensions, supplements and continuations thereof, (ii) income, fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements or violations thereof, (iii) rights to sue for past, present and future infringements or violations thereof and (iv) other rights to use, exploit or practice any or all of the Patents, Trademarks, Copyrights or Trade Secrets or any other patent, trademark, copyright or trade secret.

“Intellectual Property Security Agreement” means an agreement in form and substance reasonably satisfactory to the Collateral Agent pursuant to which the Grantor grants to the Collateral Agent a security interest and Lien in any Intellectual Property Collateral.

“Joinder Agreement” means an agreement substantially in the form of Exhibit A hereto.

“Joint Venture Lender” means a bank or other financial institution that provides financing to a Permitted Joint Venture (on a non-recourse basis with respect to a Grantor) with respect to the operations of such joint venture and that, in connection with such financing, requires a pledge of equity of the Permitted Joint Venture to secure the Permitted Joint Venture’s obligations to it.

“L/C Account” means any account established and maintained in accordance with the provisions of Section 3.2(b) of the Revolver Agreement and all property from time to time on deposit in such L/C Account.

“Lenders” and “Lender” have the meanings set forth in the recitals hereof.

“Loan Agreements” and “Loan Agreement” have the meanings set forth in the recitals hereof.

“Material Intellectual Property Collateral” means any Intellectual Property Collateral necessary for the use and operation of any material portion of the Collateral or Mortgaged Property or the conduct of the business of any Grantor.

“NESL” has the meaning set forth in the preamble hereof.

“Patents” means, collectively, with respect to each Grantor, all patents issued or assigned to, and all patent applications and registrations made by, such Grantor including those listed in Schedule 4.14 hereof (whether issued, established or registered or recorded in the United States or any other country or any political subdivision thereof) and all tangible embodiments of the foregoing, together with any and all (i) rights and privileges arising under applicable law and international treaties and conventions with respect to such Grantor’s use of any patents, (ii) inventions and improvements described and claimed therein, (iii) reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof and amendments thereto, (iv) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements thereof, (v) rights corresponding thereto throughout the world and (vi) rights to sue for past, present or future infringements thereof.

“Permitted Joint Venture” means joint ventures consistent with past practice where (a) the aggregate amount of all Investments made in any single joint venture shall not exceed $5,000,000 and (b) the outstanding amount of Investments in all joint ventures shall not exceed $10,000,000 in the aggregate at any one time.

“Pledged Debt” means, with respect to each Grantor, all Indebtedness (including intercompany notes) from time to time owed to such Grantor by any obligor, including the Indebtedness described in Schedule 4.09 hereof and issued by the obligors named therein, and all interest, cash, instruments and other property, assets or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Indebtedness and all certificates, instruments or agreements evidencing such Indebtedness, and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof.

“Pledged Securities” means, collectively, with respect to each Grantor, (i) all issued and outstanding Equity Interests of each issuer that are owned by such Grantor and all options, warrants, rights, agreements and additional Equity Interests of whatever class of any such issuer acquired by such Grantor in any manner, together with all claims, rights, privileges, authority and powers of such Grantor relating to such Equity Interests in each such issuer or under any Organizational Document of each such issuer, and the certificates, instruments and agreements representing such Equity Interests and any and all interest of such Grantor in the entries on the books of any financial intermediary pertaining to such Equity Interests, including the Equity Interests listed in Schedule 4.09 hereof, (ii) all additional Equity Interests of any issuer from time to time acquired by or issued to such Grantor and all options, warrants, rights, agreements and additional Equity Interests of whatever class of any such issuer from time to time acquired by such Grantor in any manner, together with all claims, rights, privileges, authority and powers of such Grantor relating to such Equity Interests or under any Organizational Document of any such issuer, and the certificates, instruments and agreements representing such Equity Interests and any and all interest of such Grantor in the entries on the books of any financial intermediary pertaining to such Equity Interests, from time to time acquired by such Grantor in any manner, and (iii) all Equity Interests issued in respect of the Equity Interests referred to in clause (i) or (ii) upon any consolidation or merger of any issuer of such Equity Interests; provided, however, that Pledged Securities shall not include any Excluded Equity.

“Precision” has the meaning set forth in the preamble hereof.

“Prior Credit Agreement” has the meaning set forth in the Senior Secured Notes Indenture.

“Protection” has the meaning set forth in the preamble hereof.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the directors, officers, employees, partners, agents, trustees, administrators, managers, advisors and representatives of it and its Affiliates.

“Requirement of Law” as to any Person, the Organizational Documents of such Person, and any law (including common law), statute, ordinance, treaty, rule, regulation, order, decree, judgment, writ, injunction, settlement agreement, requirement or determination of an arbitrator or a court or other Governmental Body, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Restricted Assets” for so long as the negative covenant with respect to the incurrence of Liens under the Unsecured Notes Indenture is in effect, any property or asset of NESL or any of its Restricted Subsidiaries that was neither collateral securing obligations under the Prior Credit Agreement nor an asset or property that, pursuant to the terms of the Prior Credit Agreement, could have secured the Prior Credit Agreement.

“Revolver Administrative Agent” has the meaning set forth in the first recital hereof.

“Revolver Agreement” has the meaning set forth in the first recital hereof.

“Revolver Lenders” has the meaning set forth in the first recital hereof.

“SCI” has the meaning set forth in the preamble hereof.

“Secured Cash Management Agreement” means any agreement relating to Cash Management Products and Services.

“Secured Hedge Agreement” means any agreement relating to a Lender-Provided Foreign Currency Hedge (as defined in the Revolver Agreement) or Lender-Provided Interest Rate Hedge (as defined in the Revolver Agreement).

“Secured Obligations” means (i) the “Obligations” under and as defined in the Revolver Agreement and (ii) the “Obligations” under and as defined in the Term Loan Agreement.

“Secured Parties” means, collectively, the Administrative Agents, the Collateral Agent, each Issuer, the Lenders and each party to a Secured Hedge Agreement or Secured Cash Management Agreement if at the date of entering into such Secured Hedge Agreement or Secured Cash Management Agreement such person was a Lender or an Affiliate of a Lender.

“Securities Account Control Agreement” means an agreement in form and substance reasonably satisfactory to the Collateral Agent establishing the Collateral Agent’s Control with respect to any Securities Account.

“Securities Collateral” means, collectively, the Pledged Securities, the Pledged Debt and the Distributions.

“Term Loan Administrative Agent” has the meaning set forth in the recitals hereof.

“Term Loan Agreement” has the meaning set forth in the recitals hereof.

“Term Loan Lenders” has the meaning set forth in the recitals hereof.

“Trade Secrets” means, collectively, with respect to each Grantor, all know-how, trade secrets, manufacturing and production processes and techniques, inventions, research and development information, technical, marketing, financial and business data and databases, pricing and cost information, business and marketing plans, customer and supplier lists and information, all other confidential and proprietary information and all tangible embodiments of the foregoing, together with any and all (i) rights and privileges arising under applicable law and international treaties and conventions with respect to such trade secrets, (ii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto including damages and payments for past, present or future misappropriations thereof, (iii) rights corresponding thereto throughout the world and (iv) rights to sue for past, present or future misappropriations thereof.

“Trademarks” means, collectively, with respect to each Grantor, all trademarks (including service marks), slogans, logos, symbols, certification marks, collective marks, trade dress, uniform resource locators (URL’s), domain names, corporate names and trade names, whether statutory or common law, whether registered or unregistered and whether established or registered in the United States or any other country or any political subdivision thereof, including those listed in Schedule 4.14 hereof, that are owned by or assigned to such Grantor, all registrations and applications for the foregoing and all tangible embodiments of the foregoing, together with, in each case, the goodwill symbolized thereby and any and all (i) rights and privileges arising under applicable law and international treaties and conventions with respect to such Grantor’s use of any trademarks, (ii) reissues, continuations, extensions and renewals thereof and amendments thereto, (iii) income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder and with respect thereto, including damages, claims and payments for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the world and (v) rights to sue for past, present and future infringements thereof.

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

“Work Area” has the meaning set forth in the preamble hereof.

Section 1.02 Interpretation. The rules of interpretation specified in the Loan Agreements (including Section 1.4 of each thereof) shall be applicable to this Agreement. All references in this Agreement to Sections are references to Sections of this Agreement unless otherwise specified.

Section 1.03 Resolution of Drafting Ambiguities. Each Grantor acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of this Agreement, that it and its counsel reviewed and participated in the preparation and negotiation of this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party (i.e., the Collateral Agent) shall not be employed in the interpretation of this Agreement.

Section 1.04 Schedules. The Collateral Agent and each Grantor agree that the Schedules hereof and all descriptions of Collateral contained in the Schedules and all amendments and supplements thereto are and shall at all times remain a part of this Agreement.

ARTICLE II
GRANT OF SECURITY INTEREST

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

(a) all Receivables and all Supporting Obligations relating thereto;

(b) all Equipment;

(c) all General Intangibles (including, without limitation, all Intellectual Property Collateral, Payment Intangibles and all Software) and Supporting Obligations related thereto;

(d) all Inventory;

(e) all Securities Collateral, Investment Property and Financial Assets;

(f) all Real Property and Fixtures;

(g) all Leasehold Interests;

(h) all contract rights, rights of payment which have been earned under a contract rights, Chattel Paper (including Electronic Chattel Paper and Tangible Chattel Paper);

(i) all Commercial Tort Claims (whether now existing or hereafter arising), including the Commercial Tort Claims described on Schedule 3.04(f) hereof as supplemented by any written notification given by a Grantor to the Collateral Agent pursuant to Section 3.04(f) hereof;

(j) all Documents (including all Warehouse Receipts and Bills of Lading);

(k) all Deposit Accounts;

(l) all Goods;

(m) all Instruments (including Promissory Notes);

(n) all Letters of Credit (whether or not the respective Letter of Credit is evidenced by a writing) and Letter-of-Credit Rights, cash, certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), security agreements, eminent domain proceeds, condemnation proceeds, tort claim proceeds and all supporting obligations;

(o) all ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software and programs (owned by any Grantor or in which it has an interest to the extent of such interest), tapes, disks and documents, including all of such property relating to the property described in clauses (a) through (n) of this Section 2.01; and

(p) all Proceeds and products of the property described in clauses (a) through (o) of this Section 2.01 and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Grantor from time to time with respect to any of the foregoing, in whatever form.

It is the intention of the parties that if Collateral Agent shall fail to have a perfected Lien in any particular property or assets of any Grantor for any reason whatsoever, but the provisions of this Agreement, the Loan Agreements and/or the Other Documents, together with all financing statements and other public filings relating to Liens filed or recorded by Collateral Agent against the Grantors, would be sufficient to create a perfected Lien in any property or assets that such Grantor may receive upon the sale, lease, license, exchange, transfer or disposition of such particular property or assets, then all such “proceeds” of such particular property or assets shall be included in the Collateral as original collateral that is the subject of a direct and original grant of a security interest as provided for herein and in the Other Documents (and not merely as proceeds (as defined in Article 9 of the UCC) in which a security interest is created or arises solely pursuant to Section 9-315 of the UCC).

Notwithstanding anything to the contrary contained in clauses (a) through (p) above, the security interest created by this Agreement shall not extend to, and the term “Collateral” shall not include, any Excluded Assets, provided, that, if any Excluded Assets would have otherwise constituted Collateral, when such property shall cease to be Excluded Assets, such property shall be deemed at all times from and after the date hereof to constitute Collateral.

The Grantors shall from time to time at the request of the Collateral Agent provide to the Collateral Agent such information regarding the Excluded Assets as the Collateral Agent may reasonably request.

Section 2.02 Filings.

(a) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any relevant jurisdiction any financing statements (including fixture filings) and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including (i) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor, (ii) any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by such Grantor hereunder, without the signature of such Grantor where permitted by law, including the filing of a financing statement describing the Collateral as “all assets now owned or hereafter acquired by the Grantor or in which the Grantor otherwise has rights” and (iii) in the case of a financing statement filed as a fixture filing or covering Collateral constituting minerals or the like to be extracted or timber to be cut, a sufficient description of the real property to which such Collateral relates. Each Grantor agrees to provide all information described in the immediately preceding sentence to the Collateral Agent promptly upon request by the Collateral Agent.

(b) Each Grantor hereby further authorizes the Collateral Agent to file with the United States Patent and Trademark Office and the United States Copyright Office (and any successor office and any similar office in any United States state or other country) this Agreement, any Intellectual Property Security Agreement, and other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by such Grantor hereunder, without the signature of such Grantor where permitted by law, and naming such Grantor as debtor, and the Collateral Agent as secured party.

(c) Each Grantor hereby ratifies its authorization for the Collateral Agent to file in any relevant jurisdiction any initial financing statements or amendments thereto relating to the Collateral if filed prior to the date hereof.

ARTICLE III
PERFECTION AND FURTHER ASSURANCES

Section 3.01 Perfection of Certificated Securities Collateral. Each Grantor represents and warrants that, subject to the Noteholder Intercreditor Agreement, all certificates, agreements or instruments representing or evidencing the Securities Collateral in existence on the date hereof have been delivered to the Collateral Agent in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank and that, assuming continuing possession by the Collateral Agent of any such Securities Collateral, the Collateral Agent has a perfected First Priority security interest therein. Each Grantor hereby agrees that all certificates, agreements or instruments representing or evidencing the Securities Collateral acquired by such Grantor after the date hereof, shall immediately upon receipt thereof by such Grantor be held by or on behalf of and delivered to the Collateral Agent in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Collateral Agent.

The Collateral Agent shall have the right, at any time upon the occurrence and during the continuance of any Event of Default and subject to the Noteholder Intercreditor Agreement, to indorse, assign or otherwise transfer to or to register in the name of the Collateral Agent or any of its nominees or indorse for negotiation any or all of the Securities Collateral, without any indication that such Securities Collateral is subject to the security interest hereunder. In addition, at any time/upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the right to exchange certificates representing or evidencing Securities Collateral for certificates of smaller or larger denominations.

Section 3.02 Perfection of Uncertificated Securities Collateral. Each Grantor represents and warrants that, subject to the Noteholder Intercreditor Agreement, the Collateral Agent has a perfected First Priority security interest in all uncertificated Pledged Securities pledged by it hereunder that are in existence on the date hereof. Each Grantor hereby agrees that, if any of the Pledged Securities are at any time not evidenced by certificates of ownership, such Grantor will cause the issuer thereof (a) to register the Collateral Agent as the registered owner of such securities or agree in an authenticated record with such Grantor and the Collateral Agent that such issuer will comply with instructions with respect to such securities originated by the Collateral Agent without further consent of such Grantor, such authenticated record to be substantially in the form of Exhibit B, (b) upon request by the Collateral Agent, provide to the Collateral Agent an opinion of counsel, in form and substance reasonably satisfactory to the Collateral Agent, confirming such pledge and perfection thereof, and (c) if reasonably requested by the Collateral Agent, request the issuer of such Pledged Securities to cause such Pledged Securities to become certificated and in the event such Pledged Securities become certificated, to deliver such Pledged Securities to the Collateral Agent in accordance with the provisions of Section 3.01 hereof. Each Grantor hereby agrees, with respect to Pledged Securities that are partnership interests or limited liability company interests, that after the occurrence and during the continuance of any Event of Default, upon request by the Collateral Agent, such Grantor will (A) cause the Organizational Documents of each issuer that is a Subsidiary of such Grantor to be amended to provide that such Pledged Securities shall be treated as “securities” for purposes of the UCC and (B) cause such Pledged Securities to become certificated and delivered to the Collateral Agent in accordance with the provisions of Section 3.01 hereof.

Section 3.03 Maintenance of Perfected Security Interest. Each Grantor represents and warrants that on the date hereof all financing statements, agreements (including the Intellectual Property Security Agreements), instruments and other documents necessary to perfect the security interest granted by it to the Collateral Agent in respect of the Collateral have been delivered to the Collateral Agent in completed and, to the extent necessary or appropriate, duly executed form for filing in each governmental, municipal or other office specified in Schedule 3.03 hereof. Each Grantor agrees that at its sole cost and expense, such Grantor will maintain the security interest created by this Agreement in the Collateral as a perfected First Priority security interest.

Section 3.04 Other Actions for Perfection. In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Collateral Agent’s security interest in the Collateral, each Grantor represents and warrants (as to itself) as follows and agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Collateral:

(a) Instruments and Tangible Chattel Paper. (i) As of the date hereof, no amounts payable to such Grantor under or in connection with any of the Collateral are evidenced by any Instrument or Tangible Chattel Paper other than Instruments and Tangible Chattel Paper listed on Schedule 3.04(a) hereof and (ii) subject to the Noteholder Intercreditor Agreement, each Instrument and each item of Tangible Chattel Paper listed on Schedule 3.04(a) hereof has been properly indorsed, assigned and delivered to the Collateral Agent, accompanied by instruments of transfer or assignment duly executed in blank. Subject to the Noteholder Intercreditor Agreement, if any amount then payable under or in connection with any of the Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, the Grantor acquiring such Instrument or Tangible Chattel Paper shall promptly (but in any event within five (5) Business Days after receipt thereof by such Grantor) indorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably specify.

(b) Deposit Accounts. (i) As of the date hereof, no Grantor has opened or maintains any Deposit Accounts other than the accounts listed in Schedule 3.04(b) hereof and (ii) the Collateral Agent has a perfected First Priority security interest in each Deposit Account listed in Schedule 3.04(b) hereof (other than the Excluded Bank Accounts) which security interest is perfected by Control. No Grantor shall hereafter establish and maintain any Deposit Account unless such Deposit Account is an Excluded Bank Account or (1) the applicable Grantor shall have given the Collateral Agent ten (10) Business Days’ prior written notice of its intention to establish such new Deposit Account with a depository bank, (2) the depository bank shall be reasonably acceptable to the Collateral Agent and (3) unless the Collateral Agent agrees in writing that it is not required, such depository bank and such Grantor shall have duly executed and delivered to the Collateral Agent a Deposit Account Control Agreement with respect to such Deposit Account. No Grantor shall grant Control of any Deposit Account to any person other than the Collateral Agent. If at any time the balance in any Excluded Bank Account exceeds $75,000 individually, or the balances of all Excluded Bank Accounts exceeds $300,000 in the aggregate, the Loan Parties will use commercially reasonable efforts to promptly reduce such balance or balances in the Excluded Bank Accounts to less than $75,000 in any individual Excluded Bank Account and less than $300,000 in the aggregate for all Excluded Bank Accounts.

(i) As of the date hereof, other than the Notes Collateral Accounts, no Grantor (1) has any Securities Accounts or Commodity Accounts other than those listed in Schedule 3.04(c) hereof and the Collateral Agent has a perfected First Priority security interest in such Securities Accounts and Commodity Accounts which security interest is perfected by Control unless the Collateral Agent agrees in writing that it is not required, (2) holds, owns or has any interest in any certificated securities or uncertificated securities other than those constituting Pledged Securities or Excluded Assets and those maintained in Securities Accounts or Commodity Accounts listed in Schedule 3.04(c) hereof. Unless the Collateral Agent agrees in writing that it is not required, as of the date hereof, each Grantor has duly authorized, executed and delivered a Securities Account Control Agreement or a Commodity Account Control Agreement with respect to each Securities Account or Commodity Account listed in Schedule 3.04(c) hereof, if any, as applicable. No Grantor shall hereafter establish or maintain any Securities Account or Commodity Account with any Securities Intermediary or Commodity Intermediary, other than a Notes Collateral Account, unless (A) the applicable Grantor shall have given the Collateral Agent ten (10) Business Days prior written notice of its intention to establish such new Securities Account or Commodity Account with such Securities Intermediary or Commodity Intermediary, (B) such Securities Intermediary or Commodity Intermediary shall be reasonably acceptable to the Collateral Agent and (C) unless the Collateral Agent agrees in writing that it is not required, such Securities Intermediary or Commodity Intermediary, as the case may be, and such Grantor shall have duly executed and delivered a Control Agreement with respect to such Securities Account or Commodity Account, as the case may be. Subject to the Noteholder Intercreditor Agreement, each Grantor shall accept any cash and Investment Property constituting Collateral in trust for the benefit of the Collateral Agent and within five (5) Business Days of actual receipt thereof, deposit any and all such cash and Investment Property (other than any Investment Property pledged pursuant to clauses (ii)(1), (iii)(1) or (iii)(3) below) received by it into a Deposit Account or Securities Account subject to the Collateral Agent’s Control. The provisions of this Section 3.04(c) shall not apply to any Financial Assets credited to a Securities Account for which the Collateral Agent is the Securities Intermediary. No Grantor shall grant control over any Investment Property to any person other than the Collateral Agent.

(ii) If any Grantor shall at any time hold or acquire any certificated securities constituting Investment Property included in the Collateral, such Grantor shall, subject to the Noteholder Intercreditor Agreement, promptly (1) indorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank, all in form and substance satisfactory to the Collateral Agent or (2) deliver such securities into a Securities Account with respect to which a Securities Account Control Agreement is in effect in favor of the Collateral Agent.

(iii) If any securities now or hereafter acquired by any Grantor constituting Investment Property included in the Collateral are uncertificated and are issued to such Grantor or its nominee directly by the issuer thereof, such Grantor shall promptly notify the Collateral Agent thereof and pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (1) cause the issuer to agree to comply with instructions from the Collateral Agent as to such securities, without further consent of any Grantor or such nominee, (2) cause a Security Entitlement with respect to such uncertificated security to be held in a Securities Account with respect to which the Collateral Agent has Control or (3) arrange for the Collateral Agent to become the registered owner of such securities.

(d) Electronic Chattel Paper and Transferable Records. As of the date hereof, no amount under or in connection with any of the Collateral is evidenced by any Electronic Chattel Paper or any “transferable record” (as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction) other than such Electronic Chattel Paper and transferable records listed on Schedule 3.04(d) hereof.

Subject to the Noteholder Intercreditor Agreement, each Grantor will maintain all (i) 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.

The Collateral Agent agrees with such Grantor that the Collateral Agent will arrange, pursuant to procedures reasonably satisfactory to the Collateral Agent and so long as such procedures will not result in the Collateral Agent’s loss of control, for the Grantor to make alterations to the Electronic Chattel Paper or transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such Electronic Chattel Paper or transferable record.

(e) Letter-of-Credit Rights. If any Grantor is at any time a beneficiary under a Letter of Credit now or hereafter issued in favor of such Grantor, such Grantor shall promptly notify the Collateral Agent thereof and such Grantor shall maintain all letter-of-credit rights assigned to the Collateral Agent so that the Collateral Agent has control of the letter-of-credit rights in the manner specified in Section 9-107 of the UCC.

(f) Commercial Tort Claims. On the date hereof, no Grantor holds any Commercial Tort Claim that is not listed on Schedule 3.04(f). Each Grantor will promptly give notice to the Collateral Agent of any Commercial Tort Claim that is commenced in the future which might reasonably result in awarded damages (less any and all legal and other expenses incurred or reasonably expected to be incurred by such Grantor) in excess of $250,000 and will immediately execute or otherwise authenticate a supplement to this Agreement, and otherwise take all necessary action, to subject such Commercial Tort Claim to the First Priority security interest created under this Agreement.

(g) Landlord’s Access Agreements/Bailee Letters. Each Grantor shall use commercially reasonable efforts to obtain as soon as practicable after the date hereof (i) with respect to each location where such Grantor maintains Collateral, a bailee letter and/or landlord access agreement, as applicable, and (ii) a bailee letter, landlord access agreement and/or landlord’s lien waiver, as applicable, from all such bailees and landlords, as applicable, who from time to time have possession of Collateral in the ordinary course of such Grantor’s business and if requested by the Collateral Agent; except in each case with respect to Rolling Stock, mobile Equipment and Inventory in transit, assets under repair at third party locations, and Collateral at locations of construction jobs in progress, in each case in the Ordinary Course of Business.

Section 3.05 Joinder of Additional Grantors. The Grantors shall cause each Subsidiary of the Grantors which, from time to time, after the date hereof shall be required to pledge any assets to the Collateral Agent for the ratable benefit of the Secured Parties pursuant to the provisions of the Loan Agreements, to execute and deliver to the Collateral Agent a Joinder Agreement within thirty (30) days of the date on which it was acquired or created and, upon such execution and delivery, such Subsidiary shall constitute a “Grantor” for all purposes hereunder with the same force and effect as if originally named as a Grantor herein. Upon the execution and delivery by any Subsidiary of a Joinder Agreement, the supplemental schedules attached to such Joinder Agreement shall be incorporated into and become part of and supplement the Schedules to this Agreement and each reference to such Schedules shall mean and be a reference to such Schedules as supplemented pursuant to each Joinder Agreement and from time to time. The execution and delivery of such Joinder Agreement shall not require the consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.

Section 3.06 Further Assurances.

(a) Further Assurances. Each Grantor shall take such further actions, and execute and/or deliver to the Collateral Agent such additional financing statements, amendments, assignments, agreements, supplements, powers and instruments, as the Collateral Agent may in its reasonable judgment deem necessary, appropriate or desirable in order to perfect, preserve and protect the security interest in the Collateral as provided herein and the rights and interests granted to the Collateral Agent hereunder, and enable the Collateral Agent to exercise and enforce its rights, powers and remedies hereunder with respect to any Collateral, including the filing of any financing statements, continuation statements and other documents under the UCC (or other similar laws) in effect in any jurisdiction with respect to the security interest created hereby, the filing of any Intellectual Property Security Agreement and supplemental Intellectual Property Security Agreements with the United States Patent and Trademark Office and the United States Copyright Office and the execution and delivery of Control Agreements with respect to Securities Accounts, Commodities Accounts and Deposit Accounts (other than Excluded Bank Accounts), all in form reasonably satisfactory to the Collateral Agent and in such offices wherever required by law to perfect, continue and maintain a valid, enforceable, First Priority security interest in the Collateral as provided herein and to preserve the other rights and interests granted to the Collateral Agent hereunder, as against third parties, with respect to the Collateral. Without limiting the generality of the foregoing, but subject to applicable law, each Grantor shall make, execute, indorse, acknowledge, file or refile and/or deliver to the Collateral Agent from time to time upon reasonable request by the Collateral Agent such lists, schedules, descriptions and designations of the Collateral, statements, copies of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, supplements, additional security agreements, conveyances, financing statements, transfer indorsements, powers of attorney, certificates, reports and other assurances or instruments as the Collateral Agent shall reasonably request. If an Event of Default has occurred and is continuing, the Collateral Agent may institute and maintain, in its own name or in the name of any Grantor, such suits and proceedings as the Collateral Agent may deem necessary, expedient or desirable to prevent any impairment of the security interest in or the perfection thereof in the Collateral. All of the foregoing shall be at the sole cost and expense of the Grantors.

(b) Report. On a quarterly basis in connection with delivery of each Compliance Certificate, each Grantor shall furnish the Collateral Agent with a report listing for such quarter:

(i) any Subsidiary formed or acquired by any Grantor;

(ii) any certificated securities, uncertificated securities, other equity interests or Indebtedness not held in a Securities Account acquired by any Grantor;

(iii) any change in name or jurisdiction of organization of any Grantor as permitted by the Loan Agreements and the Other Documents;

(iv) any new location of Inventory or Equipment of any Grantor other than Rolling Stock, mobile Equipment and Inventory in transit, assets under repair at third party locations, and Collateral at locations of construction jobs in progress, in each case in the Ordinary Course of Business;

(v) all Promissory Notes, Instruments or Chattel Paper received by any Grantor;

(vi) any Securities Account, Commodities Account or Deposit Account opened by any Grantor;

(vii) all applications for and registration received by any Grantor in respect of any Intellectual Property;

(viii) any Letter of Credit Rights acquired by any Grantor; and

(ix) any Commercial Tort Claims acquired by any Grantor.

ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS

Each Grantor represents, warrants and covenants as follows:

Section 4.01 Loan Agreement Representations. Each Grantor makes the representations and warranties set forth in Article V of each Loan Agreement as they relate to the Grantors or to the Other Documents to which any Grantor is a party, each of which is hereby incorporated herein by reference in its entirety, and the Collateral Agent and the Secured Parties shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the “Borrowers’”, “Guarantors’” or “Loan Parties’” knowledge shall, for the purposes of this Section 4.01, be deemed to be a reference to the Grantors’ knowledge.

Section 4.02 Ownership of Property and No Other Liens. Each Grantor has fee simple title to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its Collateral, and none of such property is subject to any Lien, claim, option or right of others, except for the security interest granted to the Collateral Agent for the ratable benefit of the Secured Parties and Liens expressly permitted under the Loan Agreements, the Other Documents and the Noteholder Intercreditor Agreement. No person other than the Collateral Agent has control or possession of all or any part of the Collateral, except as permitted by the Loan Agreements, the Other Documents and the Noteholder Intercreditor Agreement.

None of the Collateral constitutes, or is the proceeds of, “farm products” as defined in section 9-102(a)(34) of the UCC. Except as described in a current Borrowing Base Certificate, none of the account debtors or other persons obligated on any of the Collateral is a Governmental Body covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral.

Section 4.03 Perfected First Priority Security Interest. This Agreement is effective to create in favor of the Collateral Agent for the ratable benefit of the Secured Parties, a legal, valid and enforceable First Priority security interest in the Collateral and the proceeds thereof. In the case of the certificated Pledged Securities, when stock certificates representing such Pledged Securities are delivered to the Collateral Agent (or, subject to the Noteholder Intercreditor Agreement, to the Notes Collateral Agent) and in the case of the other Collateral, when financing statements and other filings specified on Schedule 3.03 hereof in appropriate form are filed in the offices specified on Schedule 3.03 hereof and other actions described in Schedule 3.03 hereof are taken, this Agreement shall constitute, and will at all times constitute a fully perfected First Priority Lien on, and security interest in, all rights, title and interest of the Grantors in such Collateral and the proceeds thereof, as security for the Secured Obligations.

Section 4.04 No Transfer of Collateral. No Grantor shall sell, offer to sell, dispose of, convey, assign or otherwise transfer, or grant any option with respect to, restrict, or grant, create, permit or suffer to exist any Lien on, any of the Collateral pledged by it hereunder or any interest therein except to the extent as expressly permitted by the Loan Agreements.

Section 4.05 Claims against Collateral. Each Grantor shall, at its own cost and expense, defend title to the Collateral and the First Priority security interest and Lien granted to the Collateral Agent with respect thereto against all claims and demands of all persons at any time claiming any interest therein adverse to the Collateral Agent or any other Secured Party other than Liens permitted under the Loan Agreements or Other Documents. Except as expressly permitted by the Loan Agreements or any Other Document, there is no agreement, order, judgment or decree, and no Grantor shall enter into any agreement or take any other action, that could reasonably be expected to restrict the transferability of any of the Collateral or otherwise impair or conflict in any material respect with such Grantors’ obligations or the rights of the Collateral Agent hereunder.

Section 4.06 Other Financing Statements. Such Grantor has not executed, filed, nor authorized any third party to file any financing statement or other instrument similar in effect covering all or any part of the Collateral or listing such Grantor as debtor in any recording office, except such as have been filed in favor of the Collateral Agent pursuant to this Agreement or as otherwise permitted under the Loan Agreements.

No Grantor shall execute, authorize or permit to be filed in any recording office any financing statement or other instrument similar in effect covering all or any part of the Collateral or listing such Grantor as debtor with respect to all or any part of the Collateral, except financing statements and other instruments filed in respect of Liens permitted under the Loan Agreements.

Section 4.07 Changes in Name, Jurisdiction of Organization, Etc. On the date hereof, such Grantor’s type of organization, jurisdiction of organization, legal name, Federal Taxpayer Identification Number, organizational identification number (if any) and chief executive office or principal place of business are indicated next to its name in Schedule 4.07 hereof. Schedule 4.07 also lists all of such Grantor’s jurisdictions and types or organization, legal names and locations of chief executive office or principal place of business at any time during the four months preceding the date hereof, if different from those referred to in the preceding sentence.

Such Grantor shall not, except upon not less than thirty (30) days’ prior written notice (or such lesser notice period that Collateral Agent shall agree to in writing in its sole discretion) to the Collateral Agent and the Administrative Agents, and delivery to the Collateral Agent of all additional financing statements, information and other documents reasonably requested by the Collateral Agent or the Administrative Agents to maintain the validity, perfection and priority of the security interests provided for herein:

(a) change its legal name, identity, type of organization or corporate structure;

(b) change the location of its chief executive office or its principal place of business;

(d) change its jurisdiction of organization (in each case, including by merging with or into any other entity, reorganizing, organizing, dissolving, liquidating, reincorporating or incorporating in any other jurisdiction).

Each Grantor agrees to promptly provide the Collateral Agent with certified Organizational Documents reflecting any of the changes described in this Section 4.07. Each Grantor also agrees to promptly notify the Collateral Agent of any change in the location of any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral is located (including the establishment of any such new office or facility).

Section 4.08 Location of Inventory and Equipment. On the date hereof, the Inventory and the Equipment constituting Collateral (other than mobile Equipment and Inventory in transit, assets under repair at third party locations, and Collateral at locations of construction jobs in progress, in each case in the Ordinary Course of Business) of such Grantor are kept at locations listed in Schedule 4.08 hereof. Schedule 4.08 also lists the locations of such Grantor’s Inventory and Equipment constituting Collateral (other than mobile Equipment and Inventory in transit, assets under repair at third party locations, and Collateral at locations of construction jobs in progress, in each case in the Ordinary Course of Business) for the four months preceding the date hereof, if different from those referred in the preceding sentence.

Such Grantor shall not move any Equipment or Inventory constituting Collateral (other than mobile Equipment and Inventory in transit, assets under repair at third party locations, and Collateral at locations of construction jobs in progress, in each case in the Ordinary Course of Business) other than an immaterial portion thereof, to any location, other than any location that is listed in Schedule 4.08 hereof, except upon not less than ten (10) days’ prior written notice to the Collateral Agent and the Administrative Agents, of its intention so to do, clearly describing such new location and providing such other information and documents to the Collateral Agent reasonably requested by the Collateral Agent or the Administrative Agents to maintain the validity, perfection and priority of the security interests provided for herein.

Such Grantor shall, prior to any change described in the preceding sentence, take all actions reasonably requested by the Collateral Agent to maintain the perfection and priority of the security interest of the Collateral Agent for the ratable benefit of the Secured Parties in the Collateral intended to be granted hereunder, including using commercially reasonable efforts to obtain waivers of landlord’s or warehousemen’s liens with respect to such new location; provided that, in no event shall any Equipment or Inventory of any Grantor that constitutes Collateral be moved to any location outside of the continental United States.

Section 4.09 Pledged Securities and Pledged Debt. Schedule 4.09 sets forth a complete and accurate list of all Pledged Securities and Pledged Debt evidenced by promissory notes or instruments held by such Grantor as of the date hereof. The Pledged Securities pledged by such Grantor hereunder constitute all of the issued and outstanding Equity Interests of each issuer owned by such Grantor except as noted in Schedule 4.09. Such Equity Interests represent all of the outstanding Equity Interests of each such issuer which is a Subsidiary except as noted in such Schedule. All of the Pledged Securities existing on the date hereof have been, and to the extent any Pledged Securities are hereafter issued, such Pledged Securities will be, upon such issuance, duly authorized, validly issued, fully paid and non-assessable. There is no amount or other obligation owing by any Grantor to any issuer of the Pledged Securities in exchange for or in connection with the issuance of the Pledged Securities or any Grantor’s status as a partner or a member of any issuer of the Pledged Securities. No Grantor is in default or violation of any provisions of any agreement to which such Grantor is a party relating to the Pledged Securities, except any such default or violation that could not reasonably be expected to result in a Material Adverse Effect.

All of the Pledged Debt described on Schedule 4.09 has been duly authorized, authenticated or issued, and delivered and is the legal, valid and binding obligation of the issuers thereof, enforceable in accordance with their respective terms (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law)) and is not in default. The Pledged Debt constitutes all of the issued and outstanding intercompany indebtedness owing to such Grantor and if evidenced by promissory notes, such notes have been delivered to the Collateral Agent.

No Securities Collateral pledged by such Grantor is subject to any defense, offset or counterclaim, nor have any of the foregoing been asserted or alleged against such Grantor by any person with respect thereto, except as have been expressly disclosed to Collateral Agent, and there are no certificates, instruments, documents or other writings (other than the Organizational Documents and certificates representing such Pledged Securities or Pledged Debt, if any, that have been delivered to the Collateral Agent) which evidence any Pledged Securities or Pledged Debt of such Grantor.

Each Grantor shall, upon obtaining any Pledged Securities or Pledged Debt of any person, accept the same in trust for the benefit of the Collateral Agent and promptly (but in any event within five (5) Business Days after receipt thereof) deliver to the Collateral Agent an updated Schedule 4.09, and the certificates and other documents required under Section 3.01 and Section 3.02 hereof in respect of the additional Pledged Securities or Pledged Debt which are to be pledged pursuant to this Agreement, and confirming the Lien hereby created on such additional Pledged Securities or Pledged Debt.

Section 4.10 Approvals. In the event that the Collateral Agent desires to exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this Agreement and determines it necessary to obtain any approvals or consents of any Governmental Body or any other person therefor, then, upon the reasonable request of the Collateral Agent, such Grantor agrees to use its commercially reasonable efforts to assist the Collateral Agent in obtaining as soon as practicable any necessary approvals or consents for the exercise of any such remedies, rights and powers.

Section 4.11 Collateral Information. All information set forth herein, including the schedules annexed hereto, and all information contained in any documents, schedules and lists heretofore delivered to the Collateral Agent or any Secured Party, in connection with this Agreement, in each case, relating to the Collateral, is accurate and complete in all material respects.

Section 4.12 Insurance. In the event that the proceeds of any insurance claim are paid to any Grantor after the Collateral Agent has exercised its right to foreclose on all or any part of the Collateral during the existence of an Event of Default, such Net Cash Proceeds shall be held in trust for the benefit of the Collateral Agent and immediately after receipt thereof shall be paid to the Collateral Agent for application in accordance with the ABL Intercreditor Agreement.

Section 4.13 Compliance With Laws. Each Grantor shall pay promptly when due all Claims incurred in connection with the use or operation of the Collateral except to the extent Properly Contested. All Claims imposed or assessed against the Collateral have been paid and discharged except to the extent such Claims are Properly Contested. In the event any Grantor shall fail to make such payment contemplated in the immediately preceding sentence, the Collateral Agent may (following notice to the Grantor, to the extent practicable) do so for the account of such Grantor and the Grantors shall promptly reimburse and indemnify the Collateral Agent for all costs and expenses incurred by the Collateral Agent under this Section 4.13 in accordance with Section 9.08. Each Grantor shall comply with all Requirements of Law applicable to the Collateral the failure to comply with which could reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.

Section 4.14 Intellectual Property. (a) Schedule 4.14 lists all patents and pending applications therefor, registered trademarks and pending applications therefor and registered copyrights and pending applications therefor owned by such Grantor; (b) all Material Intellectual Property Collateral is valid, subsisting, unexpired and enforceable and has not been abandoned; (c) except as described on Schedule 4.14, such Grantor is the exclusive owner of all right, title and interest in and to, or has the right to use, all such Material Intellectual Property Collateral; (d) consummation and performance of this Agreement will not result in the invalidity, unenforceability or impairment of any such Material Intellectual Property Collateral, or in default or termination of any Intellectual Property License necessary for the use and operation of a material portion of the Pledged Collateral or Mortgaged Property; (e) except as described on Schedule 4.14, there are no outstanding holdings, decisions, consents, settlements, decrees, orders, injunctions, rulings or judgments that would limit, cancel or question the validity or enforceability of any such Material Intellectual Property Collateral or such Grantor’s rights therein or use thereof; (f) to such Grantor’s knowledge, except as described on Schedule 4.14, the operation of such Grantor’s business and such Grantor’s use of Material Intellectual Property Collateral in connection therewith, does not infringe or misappropriate the intellectual property rights of any other Person; (g) except as described in Schedule 4.14, no action or proceeding is pending or, to such Grantor’s knowledge, threatened (i) seeking to limit, cancel or question the validity of any Material Intellectual Property Collateral or such Grantor’s ownership interest or rights therein, (ii) which, if adversely determined, could have a Material Adverse Effect on the value of any such Material Intellectual Property Collateral or (iii) alleging that any such Material Intellectual Property Collateral, or such Grantor’s use thereof in the operation of its business, infringes or misappropriates the intellectual property rights of any Person and (h) to such Grantor’s knowledge, there has been no Material Adverse Effect on such Grantor’s rights in its material Trade Secrets as a result of any unauthorized use, disclosure or appropriation by or to any Person, including such Grantor’s current and former employees, contractors and agents.

Section 4.15 Maintenance of Equipment. Each Grantor shall keep its Equipment in good order and repair, ordinary wear and tear excepted and except to the extent that the Grantors in their good faith business judgment shall have determined that such maintenance is not warranted by the benefits thereof to the business of the Grantors, and will not use the same in violation in any material respect of any law, statute, ordinance, code, rule or regulation or any policy of insurance thereon.

ARTICLE V
SECURITIES COLLATERAL

Section 5.01 Existing Voting Rights and Distributions.

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

(i) Each Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Securities Collateral or any part thereof for any purpose not inconsistent with the terms or purposes hereof, the Loan Agreements or any Other Document; provided, however, that no Grantor shall in any event exercise such rights in any manner which could reasonably be expected to have a Material Adverse Effect.

(ii) Each Grantor shall be entitled to receive and retain, and to utilize free and clear of the Lien hereof, any and all Distributions, if and to the extent made in accordance with the provisions of the Loan Agreements; provided, however, that, subject to the Noteholder Intercreditor Agreement, any and all such Distributions consisting of rights or interests in the form of securities shall be immediately delivered to the Collateral Agent to hold as Collateral and shall, if received by any Grantor, be received in trust for the benefit of the Collateral Agent, be segregated from the other property or funds of such Grantor and be promptly (but in any event within five (5) Business Days after receipt thereof) delivered to the Collateral Agent as Collateral in the same form as so received (with any necessary indorsement).

(b) The Collateral Agent shall be deemed without further action to have granted to each Grantor all necessary consents relating to voting rights and shall, if necessary, upon written request of any Grantor and at the sole cost and expense of such Grantor, from time to time execute and deliver (or cause to be executed and delivered) to such Grantor all such instruments as such Grantor may reasonably request in order to permit such Grantor to exercise the voting and other rights which it is entitled to exercise pursuant to Section 5.01(a)(i) hereof and to receive the Distributions which it is authorized to receive and retain pursuant to Section 5.01(a)(ii) hereof.

(i) All rights of each Grantor to exercise the voting and other consensual rights it would otherwise be entitled to exercise pursuant to Section 5.01(a)(i) hereof shall immediately cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole right to exercise such voting and other consensual rights.

(ii) All rights of each Grantor to receive Distributions which it would otherwise be authorized to receive and retain pursuant to Section 5.01(a)(ii) hereof shall immediately cease and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole right to receive and hold such Distributions as Collateral in accordance with this Agreement and the ABL Intercreditor Agreement.

(d) Each Grantor shall, at its sole cost and expense, from time to time execute and deliver to the Collateral Agent appropriate instruments as the Collateral Agent may request in order to permit the Collateral Agent to exercise the voting and other rights which it may be entitled to exercise pursuant to Section 5.01(c)(i) hereof and to receive all Distributions which it may be entitled to receive under Section 5.01(c)(ii) hereof.

(e) All Distributions which are received by any Grantor contrary to the provisions of Section 5.01(a)(ii) or Section 5.01(c) hereof shall be received in trust for the benefit of the Collateral Agent, shall be segregated from other funds of such Grantor and shall promptly (but in any event within five (5) Business Days after receipt thereof by such Grantor) be paid over to the Collateral Agent as Collateral in the same form as so received (with any necessary indorsement).

Section 5.02 Certain Agreements of Grantors.

(h) In the case of each Grantor which is an issuer of Securities Collateral, such Grantor agrees to be bound by the terms of this Agreement relating to the Securities Collateral issued by it and will comply with such terms insofar as such terms are applicable to it.

(i) In the case of each Grantor which is a partner, shareholder or member, as the case may be, in a partnership, limited liability company or other entity, such Grantor hereby (i) consents to the extent required by the applicable Organizational Document to the pledge by each other Grantor, pursuant to the terms hereof, of the Pledged Securities in such partnership, limited liability company or other entity and, upon the occurrence and during the continuance of an Event of Default, to the transfer of such Pledged Securities to the Collateral Agent or its nominee and to the substitution of the Collateral Agent or its nominee as a substituted partner, shareholder or member in such partnership, limited liability company or other entity with all the rights, powers and duties of a general partner, limited partner, shareholder or member, as the case may be and (ii) irrevocably waives any and all provisions of the applicable Organizational Documents that conflict with the terms of this Agreement or prohibit, restrict, condition or otherwise affect the grant hereunder of any Lien on any of the Collateral or any enforcement action which may be taken in respect of any such Lien.

ARTICLE VI
INTELLECTUAL PROPERTY COLLATERAL

Section 6.01 Intellectual Property License. For the purpose of enabling the Collateral Agent, during the continuance of an Event of Default, to exercise rights and remedies under Article VIII hereof at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent, to the extent of such Grantor’s rights and effective only during the continuance of an Event of Default, an irrevocable, non-exclusive license to use and sublicense any of the Intellectual Property Collateral then owned by or licensed to such Grantor. Such license shall include access to all devices, products and media in which any of the Intellectual Property Collateral is embodied, embedded, recorded or stored and to all computer programs used for the compilation or printout thereof. In addition to and not in limitation of the powers granted herein, each Grantor hereby authorizes the Collateral Agent, upon the occurrence and continuance of an Event of Default, to make, constitute and appoint any officer or agent of the Collateral Agent as the Collateral Agent may select, in its sole discretion, as such Grantor’s true and lawful attorney-in-fact, with power to (i) endorse such Grantor’s name on all applications, documents, papers and instruments necessary or desirable for the Collateral Agent in the use of the Intellectual Property or (ii) take any other actions with respect to the Intellectual Property as the Collateral Agent deems to be in the best interest of the Collateral Agent, or (iii) grant or issue any exclusive or non-exclusive irrevocable or revocable, royalty-bearing or royalty-free license under the Intellectual Property to anyone, including the Collateral Agent itself, including but not limited to a license or other right to use such Grantor’s labels, General Intangibles, Intellectual Property, Equipment, real estate, advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale and selling any Inventory or other Collateral, and such Grantor’s rights under all contracts, licenses, approvals, permits, leases and franchise agreements, to the extent assignable, shall inure to the Collateral Agent’s benefit, or (iv) assign, pledge, convey or otherwise transfer title in or dispose of the Intellectual Property to anyone. Each Grantor hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney shall be irrevocable until the Secured Obligations (other than contingent obligations not then due) shall have been paid in full and the Loan Agreements and this Agreement have been terminated. None of the Collateral Agent, the Lenders, the other Secured Parties or their respective affiliates, officers, directors, employees, agents or representatives shall be responsible to any Grantor for any act or failure to act under any power of attorney or otherwise, except in respect of damages attributable solely to their own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction, nor for any punitive, exemplary, indirect or consequential damages.

Section 6.02 Dealing With Intellectual Property. On a continuing basis, each Grantor shall, at its sole cost and expense,

(a) promptly following its becoming aware thereof, notify the Collateral Agent of any adverse determination in any proceeding or the institution of any proceeding in any federal, state or local court or administrative body or in the United States Patent and Trademark Office or the United States Copyright Office regarding such Grantor’s claim of ownership in or right to use any of the Material Intellectual Property Collateral, such Grantor’s right to register such Material Intellectual Property Collateral or its right to keep and maintain such registration in full force and effect,

(b) maintain and protect the Material Intellectual Property Collateral as presently used and operated and as contemplated by the Loan Agreements, except in the Ordinary Course of Business and consistent with Grantors’ commercially reasonable business judgment,

(c) not permit to lapse or become abandoned any Material Intellectual Property Collateral as presently used and operated and as contemplated by the Loan Agreements, and not settle or compromise any pending or future litigation or administrative proceeding with respect to such Material Intellectual Property Collateral, in each case except in the Ordinary Course of Business and consistent with Grantors’ commercially reasonable business judgment,

(d) upon such Grantor obtaining knowledge thereof, promptly notify the Collateral Agent in writing of any event which may be reasonably expected to materially and adversely affect the value or utility of any of the Material Intellectual Property Collateral or the rights and remedies of the Collateral Agent in relation thereto or the ability of such Grantor or the Collateral Agent to dispose of such Material Intellectual Property Collateral, including a levy or threat of levy or any legal process against the Material Intellectual Property Collateral or any portion thereof,

(e) not license the Material Intellectual Property Collateral other than licenses entered into by such Grantor in, or incidental to, the Ordinary Course of Business, or amend or permit the amendment of any of the licenses in a manner that materially and adversely affects the right to receive payments thereunder, or in any manner that could materially impair the value of the Intellectual Property Collateral or the Lien on and security interest in the Intellectual Property Collateral created therein hereby, without the consent of the Collateral Agent,

(f) diligently keep adequate records respecting its Material Intellectual Property Collateral, and

(g) furnish to the Collateral Agent from time to time upon the Collateral Agent’s reasonable request therefor reasonably detailed statements and amended schedules further identifying and describing the Intellectual Property Collateral and such other materials evidencing or reports pertaining to the Intellectual Property Collateral as the Collateral Agent may from time to time reasonably request.

Section 6.03 Additional Intellectual Property. If any Grantor shall at any time after the date hereof (a) obtain any rights to any additional Intellectual Property Collateral or (b) become entitled to the benefit of any additional Intellectual Property Collateral or any registration, renewal or extension thereof, including any reissue, division, continuation, or continuation-in-part of any Intellectual Property Collateral, or any improvement on any Intellectual Property Collateral, the provisions hereof shall automatically apply thereto and any such item enumerated in clause (a) or (b) of this Section 6.03 with respect to such Grantor shall automatically constitute Intellectual Property Collateral as if such would have constituted Intellectual Property Collateral at the time of execution hereof and be subject to the Lien and security interest created by this Agreement without further action by any party. Each Grantor shall promptly with the delivery of its quarterly financial statements (i) provide to the Collateral Agent written notice of any updates to Schedule 4.14, and (ii) upon the Collateral Agent’s reasonable request, confirm the attachment of the Lien and security interest created by this Agreement to any rights described in clauses (a) and (b) of the immediately preceding sentence of this Section 6.03 by execution of an instrument in form reasonably acceptable to the Collateral Agent and the filing of any instruments or statements as shall be reasonably necessary to create, preserve, protect or perfect the Collateral Agent’s security interest in such Intellectual Property Collateral, including by execution and filing of a supplemental Intellectual Property Security Agreement in accordance with Section 3.06 hereof.

Section 6.04 Intellectual Property Litigation. Unless there shall occur and be continuing any Event of Default and Grantors receive written notice from Collateral Agent of its intent to exercise remedies hereunder, each Grantor shall have the right to commence and prosecute in its own name, as the party in interest, for its own benefit and at the sole cost and expense of the Grantors, such applications for protection of the Intellectual Property Collateral and suits, proceedings or other actions to prevent the infringement, misappropriation, counterfeiting, unfair competition, dilution, diminution in value or other damage as are necessary to protect the Intellectual Property Collateral. Upon the occurrence and during the continuance of any Event of Default and upon receipt by Grantors of written notice from Collateral Agent stating its intent to exercise remedies hereunder, the Collateral Agent shall have the right but shall in no way be obligated to file applications for protection of the Intellectual Property Collateral and/or bring suit in the name of any Grantor, the Collateral Agent or the Secured Parties to enforce the Intellectual Property Collateral and any license thereunder. In the event of such suit, each Grantor shall, at the reasonable request of the Collateral Agent, do any and all commercially reasonable acts and execute any and all documents reasonably requested by the Collateral Agent in aid of such enforcement, and the Grantors shall promptly reimburse and indemnify the Collateral Agent for all reasonable costs and expenses incurred by the Collateral Agent in the exercise of its rights under this Section 6.04 in accordance with Section 9.08. In the event that the Collateral Agent shall elect not to bring suit to enforce the Intellectual Property Collateral as permitted by this Section 6.04 and an Event of Default has occurred and is continuing, each Grantor agrees, at the reasonable request of the Collateral Agent, to take all commercially reasonable actions necessary, whether by suit, proceeding or other action, to prevent the infringement, misappropriation, counterfeiting, unfair competition, dilution, diminution in value of or other damage to any of the Intellectual Property Collateral by others and for that purpose agrees to diligently maintain any suit, proceeding or other action against any person so infringing necessary to prevent such infringement.

ARTICLE VII
RECEIVABLES

Section 7.01 Dealing With Receivables. Each Grantor shall keep and maintain at its own cost and expense complete records of each Receivable, including records of all payments received, all credits granted thereon, all merchandise returned and all other documentation relating thereto. Each Grantor shall, at such Grantor’s sole cost and expense, upon the Collateral Agent’s demand made at any time after the occurrence and during the continuance of any Event of Default, deliver copies of all tangible evidence of Receivables, including copies of all documents evidencing Receivables and any books and records relating thereto to the Collateral Agent or to its representatives. Each Grantor shall legend, at the request of the Collateral Agent made at any time after the occurrence and during the continuance of an Event of Default, and in form and manner reasonably satisfactory to the Collateral Agent, the Receivables and the other books, records and documents of such Grantor evidencing or pertaining to the Receivables with an appropriate reference to the fact that the Receivables have been assigned to the Collateral Agent for the ratable benefit of the Secured Parties and that the Collateral Agent has a security interest therein. Such Grantor will deliver to the Collateral Agent a copy of each material demand, notice or document received by it that questions or calls into doubt the validity or enforceability of more than five percent (5%) of the aggregate amount of the then outstanding Receivables.

Section 7.02 Modification of Receivables. Other than in the Ordinary Course of Business consistent with prudent business practice, such Grantor will not (i) grant any extension of the time of payment of any Receivable, (ii) compromise or settle any Receivable for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any Receivable, (iv) allow any credit or discount whatsoever on any Receivable or (v) amend, supplement or modify any Receivable in any manner that could adversely affect the value thereof.

Section 7.03 Collection. The Grantors shall use commercially reasonable efforts to collect from the account debtor of each of the Receivables as and when due (and shall use continued commercially reasonable efforts to collect on Receivables that are delinquent) in the Ordinary Course of Business, any and all amounts owing under or on account of such Receivable, and apply promptly upon receipt thereof all such amounts as are so collected to the outstanding balance of such Receivable, except that the Grantors may, with respect to a Receivable, allow in the Ordinary Course of Business (i) a refund or credit due as a result of returned or damaged or defective merchandise and (ii) such extensions of time to pay amounts due in respect of Receivables and such other modifications of payment terms or settlements in respect of Receivables as shall be commercially reasonable in the circumstances, all in accordance with the Ordinary Course of Business. The costs and expenses (including attorneys’ fees and disbursements) of collection, in any case, whether incurred by the Grantors, the Collateral Agent or any Secured Party, shall be paid by the Grantors.

ARTICLE VIII
REMEDIES

Section 8.01 Remedies. (a) If any Event of Default shall have occurred and be continuing, the Collateral Agent may from time to time, subject to the Intercreditor Agreements, exercise in respect of the Collateral, in addition to the other rights and remedies provided for herein or in any Other Document or otherwise available to it, the following remedies:

(x) without any other notice to or demand upon any Grantor, all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to the affected Collateral);

(xi) require each Grantor to, at its expense and upon request of the Collateral Agent, immediately assemble the Collateral or any part thereof, as directed by the Collateral Agent and make it available to the Collateral Agent at a place and time to be designated by the Collateral Agent;

(xii) without notice except as specified below, sell, resell, assign and deliver or grant a license to use or otherwise dispose of the Collateral or any part thereof, in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable;

(xiii) occupy any premises owned or leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation;

(xiv) exercise any and all rights and remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect of the Collateral, including without limitation, (A) any and all rights of such Grantor to demand or otherwise require payment of any amount under, or performance of any provision of, the Contracts, the Receivables, the Material Contracts, the Secured Hedge Agreements, the Secured Cash Management Agreements and the other Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds with respect to the Deposit Accounts, (C) exercise all other rights and remedies with respect to the Receivables, the Material Contracts, the Secured Hedge Agreements, the Secured Cash Management Agreements and the other Collateral, including without limitation, those set forth in Section 9-607 of the UCC and (D) exercise any and all voting, consensual and other rights with respect to any Collateral;

(xv) (1) use of any Trademarks for the sale of goods, completion of work-in-process or rendering of services in connection with enforcing any other security interest granted to the Collateral Agent by Grantors or any affiliate of Grantors or for such other reason as the Collateral Agent may determine and (2) grant such license or licenses relating to the Collateral for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall in its sole and absolute discretion deem appropriate; and

(xvi) withdraw all moneys, instruments, securities and other property in any bank, financial securities, deposit or other account of the Grantors constituting Collateral for application to the Secured Obligations as provided in Article VIII hereof.

(c) Each Grantor agrees that, unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, to the extent notice of sale shall be required by law, at least ten (10) days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. At any sale of the Collateral, if permitted by applicable law, the Collateral Agent may be the purchaser, licensee, assignee or recipient of the Collateral or any part thereof and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price of the Collateral or any part thereof payable at such sale. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Collateral Agent arising out of the exercise by it of any rights hereunder. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefore, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

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

(e) Collateral Agent may, without notice to any Grantor except as required by law and at any time or from time to time, charge, set off and otherwise apply all or part of the Secured Obligations against any funds deposited with it or held by it.

(f) Upon the written demand of the Collateral Agent, each Grantor shall execute and deliver to the Collateral Agent an assignment or assignments of any or all of the Intellectual Property Collateral and such other documents and take such other actions as are necessary or appropriate to carry out the intent and purposes hereof. Within five (5) Business Days of written notice thereafter from the Collateral Agent, each Grantor shall make available to the Collateral Agent, to the extent within such Grantor’s power and authority, such personnel in such Grantor’s employ on the date of the Event of Default as the Collateral Agent may reasonably designate to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold by such Grantor under the Intellectual Property Collateral, and such persons shall be available to perform their prior functions on the Collateral Agent’s behalf.

(g) If the Collateral Agent shall determine to exercise its right to sell all or any of the Securities Collateral of any Grantor pursuant to this Section 8.01, each Grantor agrees that, upon request of the Collateral Agent, such Grantor will, at its own expense:

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

(ii) cause any registration, qualification under or compliance with any Federal or state securities law or laws to be effected with respect to all or any part of the Securities Collateral as soon as practicable and at the sole cost and expense of the Grantors. Each Grantor will cause such registration to be effected (and be kept effective) and will use its commercially reasonable efforts to cause such qualification and compliance to be effected (and be kept effective) as may be so requested and as would permit or facilitate the sale and distribution of such Securities Collateral including registration under the Securities Act (or any similar statute then in effect), appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with all other requirements of any Governmental Body; and

(iii) do or cause to be done all such other acts and things as may be necessary to make such sale of such Securities Collateral or any part thereof valid and binding and in compliance with applicable law.

(h) The Collateral Agent is authorized, in connection with any sale of the Securities Collateral pursuant to this Section 8.01, to deliver or otherwise disclose to any prospective purchaser of the Securities Collateral that has entered into a confidentiality agreement in form and substance reasonably satisfactory to Grantors and Collateral Agent: (i) any registration statement or prospectus, and all supplements and amendments thereto, prepared pursuant to Section 8.01(f); (ii) any information and projections provided to it pursuant to Section 8.01(f), and (iii) any other information in its possession relating to such Securities Collateral.

(i) Each Grantor acknowledges the impossibility of ascertaining the amount of damages that would be suffered by the Collateral Agent and the Secured Parties by reason of the failure of such Grantor to perform any of the covenants contained in Section 8.01(f); and consequently, agrees that, if such Grantor shall fail to perform any of such covenants, it will pay, as liquidated damages and not as a penalty, an amount equal to the value of the Securities Collateral on the date the Collateral Agent demands compliance with Section 8.01(f) above.

Section 8.02 Waiver and Cumulative Remedies. The Collateral Agent shall not by any act (except by a written instrument pursuant to Section 9.06), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure on the part of the Collateral Agent to exercise, no course of dealing with respect to, and no delay on the part of the Collateral Agent in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power, privilege or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power, privilege or remedy; nor shall the Collateral Agent be required to look first to, enforce or exhaust any other security, collateral or guaranties. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law.

Section 8.03 Application of Proceeds. Upon the exercise by the Collateral Agent of its remedies hereunder, any proceeds received by the Collateral Agent in respect of any realization upon any Collateral shall be applied, together with any other sums then held by the Collateral Agent pursuant to this Agreement, in accordance with the Loan Agreements and the Intercreditor Agreements. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Secured Obligations and the fees and other charges of any attorneys employed by the Collateral Agent to collect such deficiency.

Section 8.04 Reinstatement; Deficiency. This Agreement and the Liens on the Collateral shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Grantors in respect of the Secured Obligations is rescinded or must be otherwise restored by any holder of any of the Secured Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. Each of the Grantors agrees that it will indemnify the Collateral Agent and the other Secured Parties, and its employees, directors, officers and agents on demand for all reasonable costs and expenses (including reasonable fees, costs and expenses of counsel) incurred by the Collateral Agent and the Secured Parties or their respective employees, directors, officers and agents in connection with such reinstatement, rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law. If the proceeds of, or other realization upon, the Collateral by virtue of the exercise of remedies under this Article VIII are insufficient to cover the costs and expenses of such exercise and the payment in full of the Secured Obligations, the Grantors shall remain liable for any deficiency.

ARTICLE IX
MISCELLANEOUS

Section 9.01 Concerning Collateral Agent.

(a) Appointment. The Collateral Agent has been appointed as collateral agent in the ABL Intercreditor Agreement and shall act in accordance with the terms of the ABL Intercreditor Agreement. The Collateral Agent may exercise or refrain from exercising any rights (including making demands and giving notices) and take or refrain from taking any action (including the release or substitution of the Collateral), in accordance with this Agreement and the ABL Intercreditor Agreement. The Collateral Agent may employ agents and attorneys-in-fact in connection herewith and shall not be liable for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith, but shall be liable for the gross negligence or willful misconduct of such agents and attorneys-in-fact. The Collateral Agent may resign and a successor Collateral Agent may be appointed in the manner provided in the Loan Agreements or the ABL Intercreditor Agreement. On the acceptance of appointment as the successor Collateral Agent, that successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent under this Agreement, and the retiring Collateral Agent shall thereupon be discharged from its duties and obligations under this Agreement. After any retiring Collateral Agent’s resignation, the provisions hereof shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was the Collateral Agent.

(b) Duty of Care. The Collateral Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal with it in the same manner as the Collateral Agent deals with its own property consisting of similar instruments or interests. Neither the Collateral Agent nor any of the Secured Parties shall have responsibility for (i) ascertaining or taking action whatsoever with regard to any Collateral (including matters relating to the Pledged Securities, whether or not the Collateral Agent or any other Secured Party has or is deemed to have knowledge of such matters) or (ii) taking any necessary steps to preserve rights against any person with respect to any Collateral.

(c) Reliance. The Collateral Agent shall be entitled to rely upon any written notice, statement, certificate, order or other document or any telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person, and, with respect to all matters pertaining to this Agreement and its duties hereunder.

(d) Conflict. If any item of Collateral also constitutes collateral granted to the Collateral Agent under any other deed of trust, mortgage, security agreement, pledge or instrument of any type, in the event of any conflict between the provisions hereof and the provisions of such other document in respect of such collateral, the provisions of this Agreement shall control unless the other deed of trust, mortgage, security agreement, pledge or instrument expressly states otherwise.

Section 9.02 Performance by Collateral Agent. If any Grantor shall fail to perform any covenants contained in this Agreement after giving effect to all applicable grace periods (including covenants to pay insurance, taxes and claims arising by operation of law in respect of the Collateral and to pay or perform any Grantor obligations under any Collateral) or if any representation or warranty on the part of any Grantor contained herein shall be breached, the Collateral Agent may (but shall not be obligated to) during the existence of an Event of Default or following notice to such Grantor of such failure to perform and such Grantor’s failure to remedy such failure within a commercially reasonable time period, do the same or cause it to be done or remedy any such breach, and may make payments for such purpose; provided, however, that the Collateral Agent shall in no event be bound to inquire into the validity of any tax, Lien, imposition or other obligation which such Grantor fails to pay or perform as and when required hereby and which such Grantor does not contest in accordance with the provisions of the Loan Agreement. Any and all amounts so paid by the Collateral Agent shall be reimbursed by the Grantors in accordance with the provisions of Section 9.08. Neither the provisions of this Section 9.02 nor any action taken by the Collateral Agent pursuant to the provisions of this Section 9.02 shall prevent any such failure to observe any covenant contained in this Agreement nor any breach of representation or warranty from constituting an Event of Default.

Section 9.03 Appointed Attorney-in-Fact; Power of Attorney. Each Grantor hereby appoints the Collateral Agent its attorney-in-fact, with full power and authority in the place and stead of such Grantor and in the name of such Grantor, or otherwise, from time to time during the existence of an Event of Default in the Collateral Agent’s discretion to take any action and to execute any instrument consistent with the terms of the Loan Agreements and the Other Documents which the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof (but the Collateral Agent shall not be obligated to and shall have no liability to such Grantor or any third party for failure to so do or take action). The foregoing grant of authority is a power of attorney coupled with an interest and such appointment shall be irrevocable for the term hereof. Each Grantor hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof. NONE OF THE ADMINISTRATIVE AGENTS, THE COLLATERAL AGENT, THE LENDERS, THE OTHER SECURED PARTIES OR THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO THE GRANTORS FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

Section 9.04 Continuing Security Interest and Assignment. This Agreement shall create a continuing security interest in the Collateral and shall (a) be binding upon the Grantors, their respective successors and assigns and (b) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and the other Secured Parties and each of their respective permitted successors, transferees and assigns and their respective officers, directors, employees, affiliates, agents, advisors and controlling persons; provided that, no Grantor shall assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the Collateral Agent and any attempted assignment or transfer without such consent shall be null and void. Without limiting the generality of the foregoing clause (b), any Secured Party may assign or otherwise transfer any indebtedness held by it secured by this Agreement to any other person, and such other person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party, herein or otherwise, subject however, to the provisions of the Loan Agreements and, in the case of a Secured Party that is a party to a Secured Hedge Agreement or Secured Cash Management Agreement, such Secured Hedge Agreement or Secured Cash Management Agreement.

Section 9.05 Termination and Release.

(a) At such time as the Loans and the other Secured Obligations shall have been paid in full in cash (other than contingent indemnification obligations in which no claim has been made or is reasonably foreseeable) and the Commitments have been terminated, and all Letters of Credit have been terminated or cash collateralized in accordance with the provisions of the Revolver Agreement, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Collateral Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or any further action by any party, and all rights to the Collateral shall revert to the Grantors. At the request and sole expense of any Grantor following any such termination, the Collateral Agent shall deliver to such Grantor any Collateral held by the Collateral Agent hereunder, and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

(b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Loan Agreements, then the Lien created pursuant to this Agreement in such Collateral shall be released, and the Collateral Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases and other documents reasonably necessary or advisable for the release of the Liens created hereby on such Collateral; provided that the Grantors shall provide to the Collateral Agent evidence of such transaction’s compliance with the Loan Agreements and the Other Documents as the Collateral Agent shall reasonably request. At the request and sole expense of the Grantors, a Grantor shall be released from its obligations hereunder in the event that all the Equity Interests of such Grantor are sold, transferred or otherwise disposed of in a transaction permitted by the Loan Agreements; provided that the Grantors shall have delivered to the Collateral Agent, at least ten (10) Business Days (or such shorter period reasonably acceptable to the Collateral Agent) prior to the date of the proposed release, a written request for release identifying the relevant Grantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Grantors stating that such transaction is in compliance with the Loan Agreements and the Other Documents.

Section 9.06 Modification in Writing. None of the terms or provisions of this Agreement may be amended, modified, supplemented, terminated or waived, and no consent to any departure by any Grantor therefrom shall be effective, except by a written instrument signed by the Collateral Agent in accordance with the terms of the Loan Agreements and the ABL Intercreditor Agreement. Any amendment, modification or supplement of any provision hereof, any waiver of any provision hereof and any consent to any departure by any Grantor from the terms of any provision hereof in each case shall be effective only in the specific instance and for the specific purpose for which made or given. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, terminated or waived with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.

Section 9.07 Notices. Unless otherwise provided herein, any notice or other communication required or permitted to be given under this Agreement shall be in writing and shall be given in the manner and become effective as set forth in the Loan Agreements, and, as to any Grantor, addressed to it at the address of the Grantor set forth in Schedule 9.07 hereof and as to the Collateral Agent, addressed to it at the address set forth in Schedule 9.07 hereof, or in each case at such other address as shall be designated by such party in a written notice to the other party.

Section 9.08 Indemnity and Expenses.

(a) Each Grantor hereby agrees to indemnify and hold harmless the Collateral Agent (and any sub-agent thereof), each other Secured Party and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) from any losses, damages, liabilities, claims and related expenses (including the fees and expenses of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees, expenses and time charges for attorneys who are employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any Person (including any Grantor) other than such Indemnitee and its Related Parties arising out of, in connection with or resulting from this Agreement (including, without limitation, enforcement of this Agreement) or any failure of any Secured Obligations to be the legal, valid, and binding obligations of any Grantor enforceable against such Grantor in accordance with their terms, whether brought by a third party or by such Grantor, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (i) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (ii) result from a claim brought by any Grantor against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any Other Document, if such Grantor has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

(b) To the fullest extent permitted by applicable law, each Grantor hereby agrees not to assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any Other Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Extension of Credit or the use of proceeds thereof. No Indemnitee shall be liable for any damages arising from the use of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement, the Loan Agreements or the Other Documents or the transactions contemplated hereby or thereby by unintended recipients. Grantors assume all responsibility and liability arising from the use of the Trademarks and Grantors hereby indemnify and hold Collateral Agent harmless from and against any claim, suit, loss, damage, or expense (including attorneys’ fees and legal expenses) arising out of any alleged defect in any service or product manufactured, promoted, or sold by Grantors (or any affiliate thereof) in connection with any Trademark or out of the manufacture, promotion, labeling, sale, distribution or advertisement of any such product or service by Grantors (or any affiliate thereof).

(c) Each Grantor agrees to pay or reimburse the Collateral Agent for all its costs and expenses incurred in collecting against such Grantor its Secured Obligations or otherwise enforcing or preserving any rights under this Agreement, the Loan Agreements and the Other Documents to which such Grantor is a party, including the fees and other charges of counsel (including the allocated fees and expenses of internal counsel) to the Collateral Agent.

(d) All amounts due under this Section shall be payable promptly after demand therefor, shall constitute Secured Obligations and shall bear interest until paid at a rate per annum equal to the highest rate per annum at which interest would then be payable on any past due Extension of Credit under the Loan Agreements.

(e) Without prejudice to the survival of any other agreement of any Grantor under this Agreement, the Loan Agreements or any Other Documents, the agreements and obligations of each Grantor contained in this Section shall survive termination of the Loan Agreements and the Other Documents and payment in full of the Secured Obligations and all other amounts payable under this Agreement.

Section 9.09 Governing Law, Consent to Jurisdiction and Waiver of Jury Trial. This Agreement, the Loan Agreements and the Other Documents and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement, the Loan Agreements or any Other Document (except, as to any Other Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the State of New York. The other provisions of Sections 12.3 and 16.1 of the Loan Agreements are incorporated herein, mutatis mutandis, as if a part hereof.

Section 9.10 Severability of Provisions. Any provision hereof which is invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without invalidating the remaining provisions hereof or affecting the validity, legality or enforceability of such provision in any other jurisdiction.

Section 9.11 Counterparts; Integration; Effectiveness. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. This Agreement, the Loan Agreements and the Other Documents, and any separate letter agreements with respect to fees payable to the Collateral Agent, constitute the entire contract among the parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto. This Agreement shall become effective when it shall have been executed by the Collateral Agent and when the Collateral Agent shall have received counterparts hereof signed by each of the other parties hereto. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 9.12 No Release. Nothing set forth in this Agreement, the Loan Agreements or any Other Document, nor the exercise by the Collateral Agent of any of the rights or remedies hereunder, shall relieve any Grantor from the performance of any term, covenant, condition or agreement on such Grantor’s part to be performed or observed in respect of any of the Collateral or from any liability to any person in respect of any of the Collateral or shall impose any obligation on the Collateral Agent or any other Secured Party to perform or observe any such term, covenant, condition or agreement on such Grantor’s part to be so performed or observed or shall impose any liability on the Collateral Agent or any other Secured Party for any act or omission on the part of such Grantor relating thereto or for any breach of any representation or warranty on the part of such Grantor contained in this Agreement, the Loan Agreements or the Other Documents, or in respect of the Collateral or made in connection herewith or therewith. Anything herein to the contrary notwithstanding, neither the Collateral Agent nor any other Secured Party shall have any obligation or liability under any contracts, agreements and other documents included in the Collateral by reason of this Agreement, nor shall the Collateral Agent or any other 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 such contract, agreement or other document included in the Collateral. The obligations of each Grantor contained in this Section 9.12 shall survive the termination hereof and the discharge of such Grantor’s other obligations under this Agreement, the Loan Agreements and the Other Documents.

Section 9.13 Obligations Absolute. All obligations of each Grantor hereunder shall be absolute and unconditional irrespective of:

(a) any illegality or lack of validity or enforceability of any Secured Obligation or any Loan Document or any related agreement or instrument;

(b) any change in the time, place or manner of payment of, or in any other term of, the Secured Obligations or any other obligation of any Grantor under any Loan Document, or any rescission, waiver, amendment or other modification of any Loan Document or any other agreement, including any increase in the Secured Obligations resulting from any extension of additional credit or otherwise;

(c) any taking, exchange, substitution, release, impairment or non-perfection of any Collateral, or any taking, release, impairment, amendment, waiver or other modification of any guaranty, for the Secured Obligations;

(d) any manner of sale, disposition or application of proceeds of any Collateral or any other collateral or other assets to all or part of the Secured Obligations;

(e) any default, failure or delay, willful or otherwise, in the performance of the Secured Obligations;

(f) any change, restructuring or termination of the corporate structure, ownership or existence of any Grantor or any of its Subsidiaries or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Grantor or its assets or any resulting release or discharge of any Secured Obligations;

(g) any failure of any Secured Party to disclose to any Grantor any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Grantor now or hereafter known to such Secured Party; each Grantor waiving any duty of the Secured Parties to disclose such information;

(h) the failure of any other Person to execute or deliver this Agreement, any Joinder Agreement or any other agreement or the release or reduction of liability of any Grantor or other grantor or surety with respect to the Secured Obligations;

(i) the failure of any Secured Party to assert any claim or demand or to exercise or enforce any right or remedy under the provisions of any Loan Agreement or Other Document or otherwise;

(j) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to, or be asserted by, the Grantor against any Secured Party; or

(k) any other circumstance (including, without limitation, any statute of limitations) or manner of administering the Loans or any existence of or reliance on any representation by any Secured Party that might vary the risk of any Grantor or otherwise operate as a defense available to, or a legal or equitable discharge of, any Grantor or any other guarantor or surety.

Section 9.14 Intercreditor Agreements. Notwithstanding anything herein to the contrary, the Liens and security interests granted to the Collateral Agent pursuant to this Agreement, the Loan Agreements and the Other Documents and the exercise of any right or remedy by the Collateral Agent or any Administrative Agent hereunder and thereunder are subject to the provisions of the Intercreditor Agreements. In the event of any conflict between the terms of any Intercreditor Agreement and this Agreement with respect to Lien priority or rights and remedies in connection with in connection with (a) the Collateral (as defined in the Noteholder Intercreditor Agreement), the terms of the Noteholder Intercreditor Agreement shall govern, and (b) the Collateral (as defined in the ABL Intercreditor Agreement), the terms of the ABL Intercreditor Agreement shall govern.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

NEW ENTERPRISE STONE & LIME CO., INC.