SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

Exhibit 10.4

EXECUTION COPY

SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

THIS SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”) is entered into as of February 22, 2017, by and among Essendant Co., an Illinois corporation (“Borrower”), Essendant Inc., a Delaware corporation (“Holdings”), the entities listed on the signature pages hereto (Borrower, Holdings and such listed entities, collectively, the “Initial Grantors”) and any additional entities which become parties to this Security Agreement by executing a Security Agreement Supplement hereto in substantially the form of Annex I hereto (such additional entities, together with the Initial Grantors, each a “Grantor”, and collectively, the “Grantors”), and JPMorgan Chase Bank, N.A. (“JPMorgan”), in its capacity as administrative agent (the “Administrative Agent”) for the lenders party to the Credit Agreement referred to below.

PRELIMINARY STATEMENT

The Grantors,  the Administrative Agent,  and the Lenders are entering into a Fifth Amended and Restated Credit Agreement dated as of February 22, 2017 (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) which shall amend and restate in its entirety that certain Fourth Amended and Restated Five-Year Revolving Credit Agreement, dated as of July 8, 2013 (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Existing Credit Agreement”), by and among certain of the Grantors, JPMorgan and the lenders party thereto;

Obligations under the Existing Credit Agreement are secured pursuant to that certain Amended and Restated Security Agreement, dated as of October 15, 2007 (as amended, restated, supplemented, or otherwise modified from time to time prior to the date hereof, the “Existing Security Agreement”) executed by certain of the Grantors;

It is a condition precedent to the obligations of the Lenders to make their extensions of credit under the Credit Agreement that the Grantors shall have amended and restated the Existing Security Agreement in its entirety as hereinafter set forth.

ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of the Secured Parties, hereby agree as follows:

ARTICLE I DEFINITIONS

1.1. Terms Defined in Credit Agreement.   All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.

1.2. Terms Defined in UCC.   Terms defined in the UCC which are not otherwise defined in this Security Agreement are used herein as defined in the UCC.

1.3. Definitions of Certain Terms Used Herein. As used in this Security Agreement, in addition to the terms defined in the first paragraph hereof and in the Preliminary Statement, the following terms shall have the following meanings:

“Accounts” shall have the meaning set forth in Article 9 of the UCC.

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“Article” means a numbered article of this Security Agreement, unless another document is specifically referenced.

“Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.

“Collateral” shall have the meaning set forth in Article II.

“Collateral Access Agreement” means any landlord waiver or other agreement, in form and substance satisfactory to the Administrative Agent in its Permitted Discretion, between the Administrative Agent and any third party (including any bailee, consignee, processor, customs broker, or other similar Person) in possession of any Collateral or any landlord of any real property where any Collateral is located, as such landlord waiver or other agreement may be amended, restated, supplemented or otherwise modified from time to time.

“Collateral Deposit Account” shall have the meaning set forth in Section 7.1(a).

“Collateral Report” means any certificate (including any Revolving Borrowing Base Certificate or FILO Borrowing Base Certificate), report or other document (including, without limitation, the schedules to the Credit Agreement) delivered by any Grantor to the Administrative Agent or any Lender with respect to the Collateral pursuant to any Loan Document.

“Collection Account” shall have the meaning set forth in Section 7.1(b).

“Commercial Tort Claims” means commercial tort claims, as defined in the UCC of any Grantor, including each commercial tort claim specifically described in Exhibit J.

“Control” shall have the meaning set forth in Article 8 or, if applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

“Copyrights” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, and copyright applications; (b) all renewals of any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing; (d) the right to xxx for past, present, and future infringements of any of the foregoing; and (e) all rights corresponding to any of the foregoing throughout the world.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Deposit Account Control Agreement” means an agreement, in form and substance reasonably satisfactory to the Administrative Agent in its Permitted Discretion, among any Loan Party, a banking institution holding such Loan Party’s funds, and the Administrative Agent with respect to collection and control of all deposits and balances held in a Deposit Account maintained by such Loan Party with such banking institution.

“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.

“Documents” shall have the meaning set forth in Article 9 of the UCC.

“Effective Date” means the date of the Credit Agreement.

“Equipment” shall have the meaning set forth in Article 9 of the UCC.

“Event of Default” means an event described in Section 5.1.

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“Excluded Accounts” means (i) payroll and other employee wage and benefit accounts, (ii) tax accounts, including sales tax accounts, (iii) xxxxx cash accounts funded in the ordinary course of business,

(iv) escrow, fiduciary or trust accounts, (v) designated disbursement accounts and bank accounts that are not

located in the United States of America and (vi) the Securities Accounts listed on Exhibit B on the Effective Date; provided that, notwithstanding anything to the contrary set forth in foregoing, no Collateral Deposit Account, Liberty Xxxx BAML Receivables Account or Operating Account shall be an Excluded Account.

“Excluded Assets” means (i) any leasehold interest in real property, (ii) any property to the extent that the grant of a security interest therein is prohibited by any applicable law or governmental authority, or requires a consent not obtained of any governmental authority pursuant to any applicable law except to the extent that such applicable law providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law; provided, that, the foregoing exclusion shall in no way be construed to apply if any such prohibition is unenforceable under Sections 9-406, 9-407, 9-408 of 9-409 of the UCC or other applicable law; provided further that, immediately upon the ineffectiveness, lapse or termination of such prohibition or the granting of such consent, such property shall automatically constitute Collateral, (iii) any property to the extent that the grant of a security interest therein is prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such property or, in the case of any investment property, any applicable shareholder or similar agreement, except to the extent that the term in such contract, license, agreement, instrument or other document or shareholder or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law and such prohibition has not been or is not waived or the consent of the other party to such contract, lease, sublease, permit, license, charter or similar agreement has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived; provided, that, the foregoing exclusion shall in no way be construed (x) to apply if any such prohibition is unenforceable under Sections 9-406, 9-407, 9-408 of 9-409 of the UCC or other applicable law or (y) so as to limit, impair or otherwise affect Administrative Agent’s unconditional continuing security interests in and Liens upon any rights or interests of any Grantor in or to monies due or to become due under any such contract, license, agreement, instrument or other similar document; provided, further that such contract, license, agreement, instrument or other similar document will cease to be Excluded Assets and will become subject to the Lien granted hereunder, immediately and automatically, at such time as the granting of a Lien hereunder is no longer prohibited, (iv) the excess over 65% of all of the voting shares of Equity Interests in any first-tier Foreign Subsidiary, (v) any Equity Interests of any Subsidiary of any Foreign Subsidiary, (vi) any shares of Holdings’ capital stock that have been repurchased by Holdings and held in treasury, (vii) any “intent to use” trademark applications for which a statement of use has not been filed and (viii) any property as to which the Administrative Agent determines in its sole discretion that the costs of obtaining, perfecting or maintaining a Lien thereon are excessive in relation to the practical benefit to be afforded thereby.

“Exhibit” refers to a specific exhibit to this Security Agreement, unless another document is specifically referenced. Each reference to an Exhibit means such Exhibit as updated from time to time in accordance with this Security Agreement. At the option of the Borrower, any information to be provided in Exhibit B, C, E or G hereto may be provided by a separate disclosure document making reference to this Security Agreement and the applicable Exhibit, in which case each reference to the applicable Exhibit shall be deemed a reference to such disclosure document.

“Exhibit Effective Date” means (i) the date hereof, and (ii) the effective date of each update to the Exhibits pursuant to Section 4.16.

“Fixtures” shall have the meaning set forth in Article 9 of the UCC.

“General Intangibles” shall have the meaning set forth in Article 9 of the UCC.

“Goods” shall have the meaning set forth in Article 9 of the UCC.

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“Instruments” shall have the meaning set forth in Article 9 of the UCC.

“Inventory” shall have the meaning set forth in Article 9 of the UCC.

“Investment Property” shall have the meaning set forth in Article 9 of the UCC.

“Lenders” means the lenders party to the Credit Agreement and their successors and assigns.

“Letter-of-Credit Rights” shall have the meaning set forth in Article 9 of the UCC.

“Liberty  Xxxx BAML Receivables Accounts” means the Deposit Accounts maintained at Bank of America, N.A. and identified as the “Liberty Xxxx BAML Receivables Accounts” in Exhibit B hereto.

“Licenses” means, with respect to any Person, all of such Person’s right, title, and interest in and to (a) any and all licensing agreements or similar arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future breaches thereof, and (c) all rights to xxx for past, present, and future breaches thereof.

“Xxxxxx Sales Account” means the Deposit Account maintained by Xxxxxx Sales LLC at Bank of America, N.A. and identified as the “Xxxxxx Sales Account” in Exhibit B hereto.

“Operating Account” means those Deposit Accounts designated as “Operating Accounts” in Exhibit B to this Security Agreement, as updated from time to time by the Grantors pursuant to Section 7.2.

“Patents” means, with respect to any Person, all of such Person’s right, title, and interest in and to: (a) any and all patents and patent applications; (b) all inventions and improvements described and claimed therein;

(c) all reissues, divisions, continuations, renewals, extensions, and continuations-in-part thereof; (d) all income,

royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future infringements thereof; (e) all rights to xxx for past, present, and future infringements thereof; and (f) all rights corresponding to any of the foregoing throughout the world.

“Pledged Collateral” means all Instruments, Securities and other Investment Property of the Grantors (including, without limitation, any Pledged Stock), whether or not physically delivered to the Administrative Agent pursuant to this Security Agreement (other than Excluded Assets).

“Pledged Stock” means, with respect to any Grantor, the shares of common and preferred stock (or other ownership interest) of each issuer identified in Exhibit G under the name of such Grantor and all other shares of capital stock (or other ownership interest) of whatever class of each such issuer, now or hereafter owned by such Grantor, and all certificates evidencing the same, and shall include, without limitation, all of the capital stock of such Grantor’s Domestic Subsidiaries owned by such Grantor and the requisite percentage of the capital stock of all Material Foreign Subsidiaries required to be pledged pursuant to the Credit Agreement, and owned by such Grantor.

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property, Instruments and any other rights or claims to receive money which are General Intangibles or which are otherwise included as Collateral.

“Section” means a numbered section of this Security Agreement, unless another document is specifically referenced.

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“Securities Account” shall have the meaning set forth in Article 8 of the UCC.

“Security” shall have the meaning set forth in Article 8 of the UCC.

“Security Agreement Supplement” means any Security Agreement Supplement to this Security Agreement in substantially the form of Annex I hereto executed by an entity that becomes a Grantor under this Security Agreement after the date hereof.

“Settlement Note” means a promissory note from an Account Debtor to a Grantor evidencing such Account Debtor’s obligation to pay Accounts that are past due when the terms of such note are approved by such Grantor.

“Stock Rights” means all dividends, instruments or other distributions and any other right or property which the Grantors shall receive or shall become entitled to receive for any reason whatsoever with respect to, in substitution for or in exchange for any Equity Interest constituting Collateral, any right to receive an Equity Interest and any right to receive earnings, in which the Grantors now have or hereafter acquire any right, issued by an issuer of such Equity Interest.

“Supporting Obligations” shall have the meaning set forth in Article 9 of the UCC.

“Trademarks” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) all trademarks (including service marks), trade names, trade dress, and trade styles and the registrations and applications for registration thereof and the goodwill of the business symbolized by the foregoing; (b) all licenses of the foregoing, whether as licensee or licensor; (c) all renewals of the foregoing; (d) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and future infringements thereof; (e) all rights to xxx for past, present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing; and (f) all rights corresponding to any of the foregoing throughout the world.

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the attachment, perfection or priority of, or remedies with respect to, Administrative Agent’s or any other Secured Party’s Lien on any Collateral.

terms.

The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined

ARTICLE II

GRANT OF SECURITY INTEREST

Each Grantor hereby pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Secured Parties, a security interest in all of its right, title and interest in, to and under all personal property and other assets, whether now owned by or owing to, or hereafter acquired by or arising in favor of such Grantor (including under any trade name or derivations thereof), and whether owned or consigned by or to, or leased from or to, such Grantor, and regardless of where located, but excluding Excluded Assets (all of which will be collectively referred to as the “Collateral”), including:

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all Copyrights, Patents and Trademarks;

(iv) all Documents;

(i)

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(v) all Equipment;

(vi) all Fixtures;

(vii) all General Intangibles;

(viii) all Goods;

(ix) all Instruments;

(x) all Inventory;

(xi) all Investment Property;

(xii) all cash or cash equivalents;

(xiii) all letters of credit, Letter-of-Credit Rights and Supporting Obligations;

(xiv) all Deposit Accounts with any bank or other financial institution;

(xv) all Commercial Tort Claims; and

(xvi) all accessions to, substitutions for and replacements, proceeds (including Stock Rights), insurance proceeds and products of the foregoing, together with all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto and any General Intangibles at any time evidencing or relating to any of the foregoing;

to secure the prompt and complete payment and performance of the Secured Obligations.

ARTICLE III REPRESENTATIONS AND WARRANTIES

Each Grantor represents  and warrants, and each Grantor that becomes a party  to this Security Agreement pursuant to the execution of a Security Agreement Supplement represents and warrants (after giving effect to supplements, if any, to each of the Exhibits hereto with respect to such Grantor as attached to such Security Agreement Supplement or as the Exhibits are otherwise updated from time to time in accordance with this Security Agreement), to the Administrative Agent and the Lenders that:

3.1. Title, Authorization, Validity, Enforceability, Perfection and Priority. Such Grantor has good and valid rights in or the power to transfer the Collateral owned by it and title to the Collateral with respect to which it has purported to grant a security interest hereunder,   free and clear of all Liens except for Liens permitted under Section 4.1(e), and has requisite power and authority to grant to the Administrative Agent the security interest in the Collateral pursuant hereto. The execution and delivery by such Grantor of this Security Agreement has been duly authorized by proper corporate or limited liability company proceedings of such Grantor, as applicable, and this Security Agreement constitutes a legal valid and binding obligation of such Grantor and creates a security interest which is enforceable against such Grantor in all Collateral it now owns or hereafter acquires, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, voidable transactions or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. When financing statements have been filed in the appropriate offices against such Grantor in the locations listed on Exhibit H, the Administrative Agent will have a fully perfected first priority security interest in that Collateral owned by such Grantor in which a security interest may be perfected by filing under the UCC, subject only to Liens permitted under Section 4.1(e).

3.2. Type and Jurisdiction of Organization.   The type of entity of such Grantor and its state of organization are set forth on Exhibit A.

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3.3. Principal Location.  As of the Closing Date, such Grantor’s location of its place of business (if it has only one) or its chief executive office (if it has more than one place of business), are disclosed in Exhibit A.

3.4. Collateral Locations. All of such Grantor’s locations where (A) any Collateral that constitutes Eligible Inventory with a market value in excess of $250,000 in the aggregate or (B) any other Collateral with a market value in excess of $1,000,000 in the aggregate, in each case, other than Collateral in transit in the ordinary course of business, is stored or located are listed on Exhibit A. All of said locations are owned by such Grantor except for locations (i) which are leased by the Grantor as lessee and designated in Part VII(b) of Exhibit A and (ii) at which Inventory is held in a public warehouse or is otherwise held by a bailee or on consignment as designated in Part VII(c) of Exhibit A.

3.5. Deposit Accounts and Securities Accounts.   All of  such Grantor’s Deposit Accounts and Securities Accounts are listed on Exhibit B; provided that Grantors shall have up to 30 days after the opening of any Excluded Account after the Closing Date to update Exhibit B.

3.6. Exact Names. Such Grantor’s name in which it has executed this Security Agreement is the exact name as it appears in such Grantor’s organizational documents, as amended, as filed with such Grantor’s jurisdiction of organization.   Except as set forth on Exhibit A, such Grantor has not, during the five years preceding the Exhibit Effective Date, been known by or used any other corporate or fictitious name, or been a party to any merger or consolidation, or been a party to any acquisition.

3.7. Letter-of-Credit Rights and Chattel Paper.  As of the most recent Exhibit Effective Date, Exhibit C lists all Letter-of-Credit Rights and Chattel Paper having a face amount in excess of $1,000,000 owned by any of the Grantors. All action by such Grantor necessary or desirable to protect and perfect the Administrative Agent’s Lien on each item listed on Exhibit C as of the most recent Exhibit Effective Date (including the delivery of all originals and the placement of a legend on all Chattel Paper as required hereunder) has been duly taken. The Administrative Agent will have a fully perfected first priority security interest in the Collateral listed on Exhibit C, subject only to Liens permitted under Section 4.1(e). Such Grantor has not pledged, assigned or delivered any letter of credit or Chattel Paper to any third party other than the Administrative Agent.

3.8. Accounts and Chattel Paper.

(a) The names of the obligors,  amounts owing,  due dates and other information with respect to its Accounts and Chattel Paper are and will be correctly stated, in all material respects, in all records of such Grantor relating thereto and in all invoices and Collateral Reports with respect thereto furnished to the Administrative Agent by such Grantor from time to time.   As of the time when each Account or each item of Chattel Paper arises, such Grantor shall be deemed to have represented and warranted that such Account or Chattel Paper, as the case may be, and all records relating thereto, are genuine and in all material respects what they purport to be.

(b) With respect any of its Accounts scheduled or listed in the most recent Collateral Report as constituting Eligible Accounts, as of the date of such Collateral Report, (i) such Accounts are Eligible Accounts; (ii) to such Grantor’s knowledge, there are no facts, events or occurrences which in any way impair the validity or enforceability thereof or could reasonably be expected to materially reduce the amount payable thereunder as shown on such Grantor’s books and records and any invoices, statements and Collateral Reports with respect thereto; and (iii) such Grantor has not received any notice of proceedings or actions which are threatened or pending against any Account Debtor which might result in any adverse change in such Account Debtor’s financial condition.

(c) In addition, with respect to all of its Accounts, (i) no payments have been or shall be made thereon except payments promptly delivered to a Collateral Deposit Account or Liberty Xxxx BAML Receivables Account as required pursuant to Section 7.1; and (ii) to such Grantor’s knowledge, all Account

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Debtors have the capacity to contract.

3.9. Inventory. With respect to any of its Inventory scheduled or listed on the most recent Collateral Report as constituting Eligible Inventory, as of the date of such Collateral Report, (a) such Inventory is Eligible Inventory, (b) such Inventory (other than Inventory in transit in the ordinary course of business) is located or stored at one of the locations set forth on Exhibit A (as updated from time to time pursuant to Section 4.16 or the most recent Collateral Report) or otherwise as permitted pursuant to Section 4.1(g), (c) such Inventory has been produced in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder and (d) the completion of manufacture, sale or other disposition of such Inventory by the Administrative Agent following an Event of Default shall not require the consent of any Person and shall not constitute a breach or default under any contract or agreement to which such Grantor is a party or to which such property is subject.

3.10. Intellectual Property. Such Grantor does not have  any  interest in,  or title  to, any Patent, Trademark or registered Copyright except as set forth in Exhibit D or any application for any of the foregoing; provided that except where the failure to own or hold license rights thereto would not reasonably be expected to have a Material Adverse Effect. This Security Agreement is effective to create a valid and continuing Lien on and, upon filing of appropriate financing statements in the offices listed on Exhibit H and timely filing of this Security Agreement with the United States Copyright Office and the United States Patent and Trademark Office, fully perfected first priority security interests in favor of the Administrative Agent (subject only to Liens permitted under Section 4.1(e)) on such Grantor’s Patents, Trademarks and Copyrights, such perfected security interests are enforceable as such as against any and all creditors of and purchasers from such Grantor; and all action necessary or desirable to protect and perfect the Administrative Agent’s Lien on such Grantor’s Patents, Trademarks or Copyrights shall have been duly taken. The use of such Patent, Trademark or Copyright as set forth in Exhibit D, by each Grantor does not infringe upon the rights of any other Person, and each Grantor’s rights thereto are not subject to any licensing agreement or similar arrangement, in each case except where such infringement or licensing agreement or similar arrangement would not reasonably be expected to have a Material Adverse Effect.

3.11. Filing Requirements. As of the most recent Exhibit Effective Date, none of its Equipment is covered by any certificate of title, except for the vehicles and other Equipment described in Part I of Exhibit E. As of the most recent Exhibit Effective Date, none of the Collateral owned by it is of a type for which security interests or liens may be perfected by filing under any federal statute except for (a) the vehicles and other Equipment described in Part II of Exhibit E and (b) Patents, Trademarks and Copyrights held by such Grantor and described in Exhibit D.

3.12. No Financing Statements, Security Agreements.   No valid financing statement or security agreement describing all or any portion of the Collateral which has not lapsed or been terminated (by a filing authorized by the secured party in respect thereof) naming such Grantor as debtor has been filed or is of record in any jurisdiction except for financing statements or security agreements (a) naming the Administrative Agent on behalf of the Secured Parties as the secured party and (b) in respect to Liens permitted under Section 4.1(e).

3.13. Pledged Collateral.

(a) As of the most recent Exhibit Effective Date, Exhibit G sets forth a complete and accurate list of all Pledged Stock, and to the extent (x) the same do not constitute Permitted Investments or Settlement Notes and have a value in excess of $5,000,000 individually or $10,000,000 in the aggregate and (y) the same constitute Settlement Notes and have an outstanding principal amount in excess of $1,000,000 individually or $10,000,000 in the aggregate, all other Pledged Collateral owned by such Grantor. Such Grantor is the direct, sole beneficial owner and sole holder of record of the Pledged Collateral listed on Exhibit G as being owned by it, free and clear of any Liens, except for any Liens permitted by Section 4.1(e). Such Grantor further represents and warrants that (i) all Pledged Collateral owned by it constituting an Equity Interest in any Subsidiary has been (to the extent such concepts are relevant with respect to such Pledged Collateral) duly authorized, validly issued, and is fully paid and non-assessable, (ii) with respect to any certificates delivered to

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the Administrative Agent representing an Equity Interest, except as disclosed by the Borrower to the Administrative Agent, such certificates are Securities as defined in Article 8 of the UCC as a result of actions by the issuer or otherwise, (iii) all such Pledged Collateral held by a securities intermediary (other than in connection with any Securities Account that is an Excluded Account) is covered by a control agreement among such Grantor, the securities intermediary and the Administrative Agent pursuant to which the Administrative Agent has Control, and (iv) all Pledged Collateral which represents Indebtedness owed to such Grantor has, to such Grantor’s actual knowledge, been duly authorized, authenticated or issued and delivered by the issuer of such Indebtedness, is the legal, valid and binding obligation of such issuer and such issuer is not in default thereunder.

(b) In addition, (i) none of the Pledged Collateral owned by it has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject, (ii) no options, warrants, calls or commitments of any character whatsoever

(A) exist relating to such Pledged Collateral or (B) obligate the issuer of any Equity Interest included in the Pledged Collateral to issue additional Equity Interests, and (iii) no consent, approval, authorization, or other

action by, and no giving of notice, filing with, any governmental authority or any other Person is required for the

pledge by such Grantor of such Pledged Collateral pursuant to this Security Agreement or for the execution, delivery and performance of this Security Agreement by such Grantor, or for the exercise by the Administrative Agent of the voting or other rights provided for in this Security Agreement or for the remedies in respect of the Pledged Collateral pursuant to this Security Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally.

(c) Except as set forth in Exhibit G, as of the most recent Exhibit Effective Date, such Grantor owns 100% of the issued and outstanding Equity Interests which constitute Pledged Collateral owned by it.   Except as set forth in Exhibit G, none of the Pledged Collateral that is set forth in Exhibit G which represents Indebtedness owed to such Grantor is subordinated in right of payment to other Indebtedness or subject to the terms of an indenture; provided that in no event shall any Receivable owed to such Grantor be subordinated in right of payment to other Indebtedness or subject to the terms of an indenture.

ARTICLE IV

COVENANTS

From the date of this Security Agreement and thereafter until this Security Agreement is terminated pursuant to the terms hereof, each Grantor party hereto as of the date hereof agrees, and from and after the effective date of any Security Agreement Supplement applicable to any Grantor (and after giving effect to supplements, if any, to each of the Exhibits hereto with respect to such subsequent Grantor as attached to such Security Agreement Supplement or as the Exhibits are otherwise updated from time to time in accordance with this Security Agreement) and thereafter until this Security Agreement is terminated pursuant to the terms hereof, each such additional Grantor agrees that:

4.1. General.

(a) Organizational and Identification Numbers; Mailing Address. Promptly upon request by the Administrative Agent therefor, such Grantor agrees to furnish any of the following information to the Administrative Agent:

(i) the organizational number issued to such Grantor by its state of organization and its federal employer identification number;

(ii) such Grantor’s mailing address, or the location of its records concerning the Collateral as set forth in this Security Agreement; and

(i)

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(iii) such Grantor’s location of its place of business (if it has only one) or its chief executive office (if it has more than one place of business),

(b) Authorization to File Financing Statements; Ratification.     Such Grantor   hereby authorizes the Administrative Agent to file, and if requested will deliver to the Administrative Agent, all financing statements and other documents and take such other actions as may from time to time be requested by the Administrative Agent in order to maintain a first priority perfected security interest in and, if applicable, Control of, the Collateral owned by such Grantor, in each case to the extent required to ensure the accuracy of the representation set forth in Section 3.16 of the Credit Agreement.   Any financing statement filed by the Administrative Agent may be filed in any filing office in any UCC jurisdiction and may (i) indicate such Grantor’s Collateral (1) as all assets of the Grantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC of such jurisdiction, or

(2) by  any  other description which  reasonably  approximates the description contained  in this Security Agreement, and (ii) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organization identification number issued to such Grantor, and

(B) in the case of a financing statement filed as a fixture filing or indicating such Grantor’s Collateral as as- extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates.

Such Grantor also agrees to furnish any such information described in the foregoing sentence to the

Administrative Agent promptly upon request. Such Grantor also ratifies its authorization for the Administrative Agent to have filed in any UCC jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof.

(c) Further Assurances.   Such Grantor agrees to take any and all actions necessary to defend its ownership interests in the Collateral against all persons, and to defend the security interest of the Administrative Agent in its Collateral and the priority thereof against any Lien not expressly permitted under the Credit Agreement or hereunder.

(d) Disposition of Collateral. Such Grantor will not sell, lease or otherwise dispose of the Collateral owned by it except for dispositions permitted pursuant to Section 6.05 of the Credit Agreement.

(e) Liens. Such Grantor will not create, incur, or suffer to exist any Lien on the Collateral owned by it except (i) the security interest created by this Security Agreement, and (ii) Liens permitted pursuant to Section 6.02 of the Credit Agreement.

(f) Other Financing Statements.  Such Grantor will not authorize the filing of any financing statement naming it as debtor covering all or any portion of the Collateral owned by it, except for financing statements (i) naming the Administrative Agent on behalf of the Secured Parties as the secured party, and (ii) perfecting Liens permitted by Section 4.1(e). Such Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement filed in favor of the Administrative Agent pursuant to this Security Agreement or any other Loan Document without the prior written consent of the Administrative Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of the UCC.

(g) Locations. Such Grantor will not (i) maintain (A) any Collateral that constitutes Eligible Inventory with a market value in excess of $250,000 in the aggregate or (B) any other Collateral with a market value in excess of $1,000,000 in the aggregate, in each case, other than Collateral in transit in the ordinary course of business, at any location other than those locations listed on Exhibit A, or (ii) otherwise change, or add to, such locations other than as permitted by Section 4.15.

(h) Compliance with Terms. Such Grantor will perform and comply with all obligations in respect of the Collateral owned by it and all agreements to which it is a party or by which it is bound relating to such Collateral except where the failure to perform or comply would be reasonably likely to result in Material

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Adverse Effect.

4.2. Receivables.

(a) Certain Agreements on Receivables. Such Grantor will not make or agree to make any discount, credit, rebate or other reduction in the original amount owing on a Receivable or accept in satisfaction of a Receivable less than the original amount thereof, except that such Grantor may take any such action listed above in accordance with its reasonable business judgment.

(b) Collection of Receivables. Except as otherwise provided in this Security Agreement, such Grantor will collect and enforce, at such Grantor’s sole expense and to the extent determined appropriate in accordance with its reasonable business judgment, all amounts due or hereafter due to such Grantor under the Receivables owned by it.

(c) Delivery of Invoices. After the occurrence and during the continuance of an Event of Default or during any Liquidity Condition Period, each Grantor will deliver to the Administrative Agent promptly upon its request (which request shall be made in its Permitted Discretion) duplicate invoices with respect to each Account owned by it.

(d) Disclosure of Counterclaims on Receivables.   If to the knowledge of any Grantor (i) any discount, credit or agreement to make a rebate or to otherwise reduce the amount owing on any Receivable owned by such Grantor exists in an amount in excess of $5,000,000 or (ii) if, to the knowledge of such Grantor, any dispute, setoff, claim, counterclaim or defense exists or has been asserted or threatened with respect to any such Receivable in an amount in excess of $5,000,000, such Grantor will promptly disclose such fact to the Administrative Agent in writing.   Such Grantor shall send the Administrative Agent a copy of each credit memorandum in excess of $5,000,000 as soon as issued, and such Grantor shall promptly report each credit memorandum and each of the facts required to be disclosed to the Administrative Agent in accordance with this Section 4.2(d) on the Revolving Borrowing Base Certificates and FILO Borrowing Base Certificates submitted by it.

(e) Electronic Chattel Paper.   Such Grantor shall take all steps necessary to grant the Administrative Agent Control of all electronic chattel paper if (i) the face amount thereof is in excess of

$5,000,000 or (ii) the face amount thereof, when taken together with all other electronic chattel paper to which

the Administrative Agent was not previously granted Control is in excess of $10,000,000 in the aggregate (with all such electronic chattel paper then being required to be made subject to the Administrative Agent’s Control), in accordance with the UCC and all “transferable records” as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act.

4.3. Inventory and Equipment.

(a) [Reserved].

(b) Returned Inventory. If, to the knowledge of any Grantor, an Account Debtor returns any Inventory to such Grantor, then such Grantor shall immediately report to the Administrative Agent any return involving an amount in excess of $10,000,000. Each such report shall indicate the reasons for the returns and the locations and condition of the returned Inventory. In the event any Account Debtor returns Inventory to such Grantor when an Event of Default exists, such Grantor, upon the request of the Administrative Agent, shall, in the event that either (x) such Inventory was returned due to a product recall   or (y) such Grantor determines in its reasonable business judgment that such Inventory is unfit for sale: (i) hold the returned Inventory in trust for the Administrative Agent; (ii) segregate all returned Inventory from all of its other property; (iii) dispose of  the returned Inventory  solely  according  to the Administrative Agent’s written instructions; and (iv) not issue any credits or allowances with respect thereto without the Administrative Agent’s prior written consent. All returned Inventory shall be subject to the Administrative Agent’s Liens thereon.

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Whenever any Inventory is returned, the related Account shall be deemed ineligible to the extent of the amount owing by the Account Debtor with respect to such returned Inventory.

(c) Inventory Count. Such Grantor will conduct a physical count of its Inventory at least once per fiscal year (which may be on a “cycle count” basis consistent with the Borrower’s historical practice), and after and during the continuation of an Event of Default, at such other times as the Administrative Agent requests. Such Grantor, at its own expense, shall deliver to the Administrative Agent the results of each physical verification, which such Grantor has made, or has caused any other Person to make on its behalf, of all or any portion of its Inventory in such form and detail as the Administrative Agent may request in its Permitted Discretion.

(d) Equipment.   Such Grantor shall promptly inform the Administrative Agent of any deletions from its Eligible Equipment subject to a certificate of title (other than forklifts) which individually or in the aggregate exceed $1,000,000.   Such Grantor will not, without the Administrative Agent’s prior written consent, alter or remove any identifying symbol or number on any of such Grantor’s Equipment constituting Collateral.

(e) Titled Equipment. On and after the first date on which Revolving Availability is less than $100,000,000, the Administrative Agent may request that its Lien on all Equipment subject to a certificate of title (such as, but not limited to, vehicles) be noted thereon. The Grantors, promptly upon receipt of such request, shall take all steps reasonably requested by the Administrative Agent to cause such Lien to be noted on such certificate, including, without limitation, delivering such certificates of title to the Administrative Agent and/or delivering such certificates to the applicable secretaries of state (or other applicable governmental entities) in order to have such Lien officially noted on such certificates by such secretaries of state or other governmental entities.

4.4. Delivery of Instruments, Securities, Chattel Paper and Documents. Such Grantor will (a) deliver to the Administrative Agent immediately upon execution of this Security Agreement (or with respect to Pledged Stock, in any event, during the time period provided in Section 5.14 of the Credit Agreement) (x) all Chattel Paper, Securities and Instruments (other than Pledged Stock or Settlement Notes) constituting Collateral owned by it (if any then exist and other than those constituting Permitted Investments) if (i) the amount thereof is in excess of $5,000,000 or (ii) the amount thereof, when taken together with all other Chattel Paper, Securities and Instruments not previously delivered to the Administrative Agent is in excess of $10,000,000 in the aggregate (with all such Chattel Paper,   Securities and Instruments then being required to be delivered to the Administrative Agent), (y) Settlement Notes if the outstanding principal amount is in excess of $1,000,000 individually or $10,000,000 in the aggregate and (z) all Pledged Stock; provided, that an original copy of an Instrument shall not be required to be delivered if such Grantor only possesses a duplicate copy thereof; provided, further, that if requested by the Administrative Agent while an Event of Default is outstanding, such Grantor shall use reasonable efforts to obtain the original thereof, (b) hold in trust for the Administrative Agent upon receipt and immediately thereafter deliver to the Administrative Agent any such Pledged Stock, Chattel Paper, Securities and Instruments constituting Collateral required to be delivered pursuant to clause (a) above,

(c) upon the Administrative Agent’s request, deliver to the Administrative Agent (and thereafter hold in trust for the Administrative Agent upon receipt and immediately deliver to the Administrative Agent) any Document evidencing or constituting Collateral and (d) promptly upon the Administrative Agent’s request, deliver to the Administrative Agent a duly executed amendment to this Security Agreement, in the form of Exhibit I hereto (the “Amendment”), pursuant to which such Grantor will pledge such additional Collateral required to be delivered pursuant to clauses (a), (b) or (c) above. Such Grantor hereby authorizes the Administrative Agent to attach each Amendment to this Security Agreement and agrees that all additional Collateral owned by it set forth in such Amendments shall be considered to be part of the Collateral.

4.5. Uncertificated Pledged Collateral.   Such Grantor will permit the Administrative Agent from time to time to cause the appropriate issuers (and, if held with a securities intermediary,  such securities intermediary) of uncertificated securities or other types of Pledged Collateral owned by it not represented by certificates to xxxx their books and records with the numbers and face amounts of all such uncertificated

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securities or other types of Pledged Collateral not represented by certificates and all rollovers and replacements therefor to reflect the Lien of the Administrative Agent granted pursuant to this Security Agreement.   With respect to any Pledged Collateral owned by it, such Grantor will take any actions necessary to cause (a) the issuers of uncertificated securities which are Pledged Collateral and (b) any securities intermediary (other than in connection with any   Securities Account that is an Excluded Account) which is the holder of any such Pledged Collateral, to cause the Administrative Agent to have and retain Control over such Pledged Collateral. Without limiting the foregoing, such Grantor will, with respect to any such Pledged Collateral held with a securities intermediary (other than in connection with any Securities Account that is an Excluded Account), cause such securities intermediary to enter into a control agreement with the Administrative Agent, in form and substance satisfactory to the Administrative Agent in its Permitted Discretion, giving the Administrative Agent Control.

4.6. Pledged Collateral.

(a) Changes in Capital Structure of Issuers. Such Grantor will not (i) permit or suffer any issuer of an Equity Interest constituting Pledged Collateral owned by it to dissolve, merge, liquidate, retire any of its Equity Interests or other Instruments or Securities evidencing ownership, reduce its capital, sell or encumber all or substantially all of its assets (except for Liens permitted pursuant to Section 4.1(e) and sales of assets permitted pursuant to Section 4.1(d)) or merge or consolidate with any other entity (except, with respect to each of the foregoing in this clause (a), as permitted by the Credit Agreement), or (ii) vote any such Pledged Collateral in favor of any of the foregoing.

(b) Issuance of Additional Securities. Such Grantor will not permit or suffer the issuer of an Equity Interest constituting Pledged Collateral owned by it to issue additional Equity Interests, any right to receive the same or any right to receive earnings, except to such Grantor and as otherwise permitted by the Credit Agreement.

(c) Registration of Pledged Collateral. Such Grantor will permit any registerable Pledged Collateral owned by it to be registered in the name of the Administrative Agent or its nominee at any time in the Permitted Discretion of the Administrative Agent.

(d) Exercise of Rights in Pledged Collateral.

(i) Without in any way limiting the foregoing and subject to clause (ii) below, such Grantor shall have the right to exercise all voting rights or other rights relating to the Pledged Collateral owned by it for all purposes not inconsistent with this Security Agreement, the Credit Agreement or any other Loan Document; provided however, that no vote or other right shall be exercised or action taken which would have the effect of impairing the rights of the Administrative Agent in respect of such Pledged Collateral.

(ii) Such Grantor will permit the Administrative Agent or its nominee at any time after the occurrence and during the continuance of an Event of Default, without notice, to exercise all voting rights or other rights relating to the Pledged Collateral owned by it, including, without limitation, exchange, subscription or any other rights, privileges, or options pertaining to any Equity Interest or Investment Property constituting such Pledged Collateral as if it were the absolute owner thereof.

(iii) Such Grantor shall be entitled to collect and receive for its own use all cash dividends and interest paid in respect of the Pledged Collateral owned by it to the extent not in violation of the Credit Agreement other than any of the following distributions and payments (collectively referred to as the “Excluded Payments”): (A) dividends and interest paid or payable other than in cash in respect of such Pledged Collateral, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral;   (B) dividends and other distributions paid or payable in cash in respect of such Pledged Collateral in connection with a partial or

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total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in capital of an issuer; and (C) cash paid, payable or otherwise distributed, in respect of principal of, or in redemption of, or in exchange for, such Pledged Collateral; provided however, that until actually paid, all rights to such distributions shall remain subject to the Lien created by this Security Agreement; provided, however, that no payment by one Grantor to another Grantor or by a Subsidiary of a Grantor to a Grantor shall be deemed an Excluded Payment; and

(iv) Upon request of the Administrative Agent after the occurrence and during the continuance of an Event of Default, all Excluded Payments and all other distributions in respect of any Pledged Collateral owned by such Grantor, whenever paid or made, shall be delivered to the Administrative Agent to hold as Pledged Collateral and shall, if received by such Grantor, be received in trust for the benefit of the Administrative Agent, be segregated from the other property or funds of such Grantor, and be forthwith delivered to the Administrative Agent as Pledged Collateral in the same form as so received (with any necessary endorsement).

(v) Such Grantor hereby authorizes and instructs each issuer of any Investment Property pledged by such Grantor hereunder to, and each Grantor that is an issuer of Investment Property pledged by another Grantor agrees and consents to, after the occurrence and during the continuance of an Event of Default, (i) comply with any instruction received by it from the Administrative Agent in writing (and any other issuer from time to time hereby agrees to comply with such instruction) that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Security Agreement,  without any other or further instructions from such Grantor, and each Grantor agrees that each issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Investment Property directly to the Administrative Agent.

(e) Interests in Limited Liability Companies and Limited Partnerships.   Each Grantor agrees that no ownership interests in a limited liability company or a limited partnership which are included within the Collateral owned by such Grantor shall at any time constitute a Security under Article 8 of the UCC of the applicable jurisdiction unless such Grantor takes all actions necessary to pledge such Security in accordance with the Credit Agreement and this Security Agreement (including, without limitation, Section 4.4).

4.7. Intellectual Property.

(a) Such Grantor will use its best efforts to secure all consents and approvals necessary or appropriate for the assignment to or benefit of the Administrative Agent of any License held by such Grantor and to enforce the security interests granted hereunder.

(b) Such Grantor shall notify the Administrative Agent immediately if it knows or has reason to know that any application or registration relating to any material Patent, Trademark or Copyright (now or hereafter existing) may become abandoned or dedicated, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding such Grantor’s ownership of any Patent, Trademark or Copyright, its right to register the same, or to keep and maintain the same.

(c) In the event such Grantor, either directly or through any agent, employee, licensee or designee, file an application for the registration of any Patent, Trademark or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency such Grantor shall provide written notice thereof to the Administrative Agent concurrently with the delivery of the certificate of a Financial Officer of the Borrower as required by Section 5.01(c) of the Credit Agreement, and, upon request of the Administrative Agent, such Grantor shall execute and deliver any and all security agreements as the Administrative Agent may request to evidence the Administrative Agent’s first priority security interest on such

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Patent, Trademark or Copyright, and the General Intangibles of such Grantor relating thereto or represented thereby.

(d) Such Grantor shall take all actions necessary or requested by the Administrative Agent to maintain and pursue each application, to obtain the relevant registration and to maintain the registration of each of its Patents, Trademarks and Copyrights (now or hereafter existing), including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings   provided that no such actions shall be required in connection with any applications or Patents, Trademarks and Copyrights that such Grantor reasonably determines are no longer necessary or cost effective for its business or operations.

(e) Such Grantor shall, unless it shall (x) reasonably determine that such Patent, Trademark or Copyright is not material to the conduct of its business or operations or (y) determine in its reasonable business judgment that such infringement, misappropriation or dilution shall not materially impact its business or financial condition, promptly xxx for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as the Administrative Agent shall deem appropriate under the circumstances to protect such Patent, Trademark or Copyright. In the event that such Grantor institutes suit because any of its Patents, Trademarks or Copyrights constituting Collateral is infringed upon, or misappropriated or diluted by a third party, such Grantor shall comply with Section 4.8.

4.8       Commercial Tort Claims. If, after the date hereof, any Grantor identifies the existence of a Commercial Tort Claim belonging to such Grantor that it reasonably determines to be worth in excess of

$10,000,000 and that has arisen in the course of such Grantor’s business in addition to the Commercial Tort

Claims described in Exhibit J, which are all of such Grantor’s Commercial Tort Claims as of the Effective Date that it reasonably determines to be worth in excess of $10,000,000, such Grantor shall within thirty (30) days after the same is acquired by it (i) notify the Administrative Agent of such Commercial Tort Claim and (ii) unless the Administrative Agent otherwise consents, promptly enter into an amendment to this Security Agreement, in the form of Exhibit I hereto, granting to Administrative Agent a first priority security interest such Commercial Tort Claim.

4.9. Letter-of-Credit Rights. If such Grantor is or becomes the beneficiary of a letter of credit in excess of $5,000,000, it shall promptly, and in any event within thirty (30) days after becoming a beneficiary, notify the Administrative Agent thereof and shall use commercially reasonable efforts to cause the issuer and/or confirmation bank to (i) consent to the assignment of any Letter-of-Credit Rights to the Administrative Agent and (ii) agree to direct all payments thereunder to a Deposit Account at the Administrative Agent or subject to a Deposit Account Control Agreement for application to the Secured Obligations, in accordance with Section 2.18 of the Credit Agreement, all in form and substance reasonably satisfactory to the Administrative Agent in its Permitted Discretion.

4.10. Federal, State or Municipal Claims. Such Grantor will promptly notify the Administrative Agent of any Collateral represented by the Borrower as an Eligible Account which constitutes a claim against the United States government or any state or local government or any instrumentality or agency thereof, the assignment of which claim is restricted by federal, state or municipal law.

4.11. No Interference.  Such Grantor agrees that it will not interfere with any right, power and remedy of the Administrative Agent provided for in this Security Agreement or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by the Administrative Agent of any one or more of such rights, powers or remedies.

4.12. Insurance.  (a)   In the event any Collateral is located in any area that has been designated by the Federal Emergency Management Agency as a “Special Flood Hazard Area”, such Grantor shall purchase and maintain flood insurance on such Collateral (including any personal property which is located on any real

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property leased by such Loan Party within a “Special Flood Hazard Area”). The amount of flood insurance required by this Section shall comply with applicable law, including Flood Laws.

(b) All commercial general liability, umbrella and property insurance policies required hereunder and under Section 5.10 of the Credit Agreement shall name the Administrative Agent (for the benefit of the Administrative Agent and the Lenders) as an additional insured or as lender loss payee, as applicable, and all such property insurance policies shall contain lender loss payable clauses through endorsements in form and substance satisfactory to the Administrative Agent in its Permitted Discretion,  which provide that: (i) all proceeds thereunder with respect to any Collateral shall be payable to the Administrative Agent following notice from the Administrative Agent (which notice the Administrative Agent may provide only following the occurrence and during the continuation of an Event of Default); (ii) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy; and (iii) such policy and lender loss payable clauses may be canceled, amended, or terminated by the applicable insurer only upon at least thirty

(30) days’ prior written notice from such insurer (or, for cancelation or termination as a result of non-payment, ten (10) days’ prior written notice from such insurer) given to the Administrative Agent.

(c) Upon the request of the Administrative Agent, the Borrower shall execute and deliver, and cause each other applicable Loan Party to execute and deliver, and take commercially reasonable efforts to cause the applicable insurance carrier to execute and deliver, to Administrative Agent a collateral assignment, in form and substance satisfactory to Administrative Agent, of each business interruption insurance policy maintained by the Loan Parties.

(d) All premiums on any such insurance shall be paid when due by such Grantor.   If such Grantor fails to obtain any insurance as required by this Section and such failure continues for five (5) Business Days following notice by the Administrative Agent to the Borrower, the Administrative Agent may obtain such insurance at the Borrower’s expense.   By purchasing such insurance, the Administrative Agent shall not be deemed to have waived any Default arising from the Grantor’s failure to maintain such insurance or pay any premiums therefor.

(e) The Administrative Agent acknowledges that the insurance policies delivered to the Administrative Agent on or prior to the date hereof are sufficient and acceptable to the Administrative Agent to satisfy the conditions set forth in this Section 4.12 on the Effective Date.

4.13. Collateral Access Agreements.       Such Grantor shall use commercially reasonable efforts to obtain a Collateral Access Agreement, from the lessor of the leased or sub-leased property or mortgagee of the owned property where such Grantor’s principal place of business is located, which agreement or letter shall provide access rights, contain a waiver or subordination of all Liens or claims that the landlord or mortgagee may assert against the Collateral at that location, and shall otherwise be reasonably satisfactory in form and substance to the Administrative Agent. The Grantors shall have the reasonable discretion to determine (i) if it is commercially reasonable to pursue a Collateral Access Agreement at a specific location and (ii) if it has made commercially reasonable efforts to obtain an effective, fully executed Collateral Access Agreement with respect to any of its locations.

4.14. Deposit Account Control Agreements. Subject to Section 7.2, such Grantor will provide to the Administrative Agent upon the Administrative Agent’s request, a Deposit Account Control Agreement duly executed on behalf of each financial institution holding a Collateral Deposit Account of such Grantor as set forth in Exhibit B of this Security Agreement.

4.15. Change of Name or Location . Such Grantor shall not (a) change its name as it appears in official filings in the state of its incorporation or organization, (b) change its chief executive office or principal place of business to the extent such change would adversely affect the validity,   perfection or priority of the Administrative Agent’s security interest in the Collateral, (c) change corporate offices or warehouses or locations at which (A) any Collateral that constitutes Eligible Inventory with a market value in excess of

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$250,000 in the aggregate or (B) any other Collateral with a market value in excess of $1,000,000 in the aggregate is held or stored, (d) change the type of entity that it is, or (e) change its state of incorporation or organization, in each case, unless the Administrative Agent shall have received at least ten (10) Business Days (or such shorter period as the Administrative Agent may agree in its sole discretion) prior written notice of such change and the Administrative Agent shall have acknowledged in writing that either (1) such change will not adversely affect the validity, perfection or priority of the Administrative Agent’s security interest in the Collateral, or (2) any reasonable action requested by the Administrative Agent in connection therewith has been completed or taken (including any action to continue the perfection of any Liens in favor of the Administrative Agent, on behalf of the Secured Parties, in any Collateral), provided that, any new location shall be in the continental U.S.   Notwithstanding the foregoing, no notice hereunder shall be required for the merger of Essendant Receivables LLC into Essendant Financial Services LLC, or the concurrent or subsequent renaming of Essendant Financial Services LLC to “Essendant Receivables LLC”; provided that after such merger and re- naming is consummated, the Borrower shall promptly (and in any event within five (5) Business Days) provide the Administrative Agent written notice thereof.

4.16 Updating of Exhibits to the Security Agreement. The Borrower will provide to the Administrative Agent, (i) concurrently with the delivery of the certificate of a Financial Officer of the Borrower as required by Section 5.01(c) of the Credit Agreement regarding financial statements required by Section 5.01(a) of the Credit Agreement (and,  if  an Event of Default has  occurred  and  is  continuing, Section 5.01(b) of  the Credit Agreement), updated versions of the Exhibits to this Security Agreement (provided that if there have been no changes to any such Exhibits since the previous updating thereof required hereby, the Borrower shall indicate that there has been “no change” to the applicable Exhibit(s)) or (ii) with respect to each of Exhibits A and B as often as the Borrower deems appropriate or required to make its representations and warranties materially true and accurate, updated versions of such Exhibits A and B to this Security Agreement delivered with an officer’s certificate of the Borrower reasonably satisfactory to the Administrative Agent, that certifies that the updated versions of the Exhibits are true and correct as of the date such officer’s certificate is delivered. Notwithstanding the foregoing, to the extent any action or inaction resulting in a change to the information contained in any Exhibit to this Security Agreement required compliance with any other provision of this Security Agreement, the Credit Agreement or any other Loan Document, then the updating of the relevant Exhibit shall not relieve, waive or excuse the Default arising from such Grantor’s non-compliance with any such provision pertaining to the underlying action or inaction.

ARTICLE V

EVENTS OF DEFAULT AND REMEDIES

5.1. Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default hereunder:

(a) Any representation or warranty made by or on behalf of any Grantor under or in connection with this Security Agreement shall be materially false as of the date on which made.

(b) Any Grantor shall fail to observe or perform any of the terms or provisions of Sections 4.1(b), 4.1(f), 4.4, 4.5, 4.6, 4.11, 4.15 (other than 4.15(c)), 7.1(a), 7.1(b) and 7.2.

(c) Any Grantor shall fail to observe or perform any of the terms or provisions of Sections 4.1(g) and 4.15(c) and such failure shall continue unremedied for a period of five (5) Business Days after the earlier of knowledge of such breach or notice thereof from the Administrative Agent.

(d) Any Grantor shall fail to observe or perform any of the terms or provisions of this Security Agreement (other than a breach which constitutes an Event of Default under any other Section of this Article V) and such failure shall continue unremedied for a period of thirty (30) days after the earlier of

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knowledge of such breach or notice thereof from the Administrative Agent.

Agreement.

(e)

The occurrence of any “Event of Default” under, and as defined in, the Credit

(a)

5.2. Remedies.

(a) After the occurrence and during the continuance of an Event of   Default, the Administrative Agent may or at the direction of the Required Lenders, shall exercise any or all of the following rights and remedies:

(i) those rights and remedies provided in this Security Agreement, the Credit Agreement, or any other Loan Document; provided that, this Section 5.2(a) shall not be understood to limit any rights or remedies available to the Administrative Agent and the other Secured Parties prior to an Event of Default;

(ii) those rights and remedies available to a secured party under the UCC (whether or not the UCC applies to the affected Collateral) or under any other applicable law (including, without limitation, any law governing the exercise of a bank’s right of setoff or bankers’ lien) when a debtor is in default under a security agreement;

(iii) give notice of sole control or any other instruction under any Deposit Account Control Agreement or any other control agreement with any securities intermediary and take any action therein with respect to such Collateral;

(iv) without notice (except as specifically provided in Section 8.1 or elsewhere herein), demand or advertisement of any kind to any Grantor or any other Person, enter the premises of any Grantor where any Collateral is located (through self-help and without judicial process) to collect, receive, assemble, process, appropriate, sell, lease, assign, grant an option or options to purchase or otherwise dispose of, deliver, or realize upon, the Collateral or any part thereof in one or more parcels at public or private sale or sales (which sales may be adjourned or continued from time to time with or without notice and may take place at any Grantor’s premises or elsewhere), for cash, on credit or for future delivery without assumption of any credit risk, and upon such other terms as the Administrative Agent may deem commercially reasonable; and

(v) concurrently with written notice to the applicable Grantor, transfer and register in its name or in the name of its nominee the whole or any part of the Pledged Collateral, to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations, exercise the voting and all other rights as a holder with respect thereto, to collect and receive all cash dividends, interest, principal and other distributions made thereon and to otherwise act with respect to the Pledged Collateral as though the Administrative Agent was the outright owner thereof.

(b) The Administrative Agent, on behalf of the Secured Parties, may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and such compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

(c) The Administrative Agent shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of the Administrative

(a)

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Agent and the other Secured Parties, the whole or any part of the Collateral so sold, free of any right of equity redemption, which equity redemption the Grantor hereby expressly releases.

(d) Subject to applicable law, after the occurrence and during the continuance of an Event of Default, until the Administrative Agent is able to effect a sale, lease, or other disposition of Collateral, the Administrative Agent shall have the right to hold or use Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of preserving Collateral or its value or for any other purpose deemed appropriate by the Administrative Agent.   After the occurrence and during the continuance of an Event of Default, the Administrative Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of Collateral and to enforce any of the Administrative Agent’s remedies (for the benefit of the Administrative Agent and the other Secured Parties), with respect to such appointment without prior notice or hearing as to such appointment.

(e) If, after the Credit Agreement has terminated by its terms and all of the Obligations have been paid in full, there remain Swap Agreement Obligations or Banking Services Obligations outstanding, the Secured Parties holding in the aggregate at a least a majority of the aggregate net early termination payments and all other amounts then due and unpaid under outstanding Swap Agreements and agreements evidencing Banking Services may exercise the remedies provided in this Section 5.2 upon the occurrence and during the continuance of any event which would allow or require the termination or acceleration of any Swap Agreement Obligations pursuant to the terms of the Swap Agreement or any Banking Services Obligations pursuant to the terms of any agreement evidencing Banking Services.

(f) Notwithstanding the foregoing, neither the Administrative Agent nor any other Secured Party shall be required to (i) make any demand upon, or pursue or exhaust any of its rights or remedies against, any Grantor, any other obligor, guarantor, pledgor or any other Person with respect to the payment of the Secured Obligations or to pursue or exhaust any of its rights or remedies with respect to any Collateral therefor or any direct or indirect guarantee thereof, (ii) marshal the Collateral or any guarantee of the Secured Obligations or to resort to the Collateral or any such guarantee in any particular order, or (iii) effect a public sale of any Collateral.

(g) Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Collateral and may be compelled to resort to one or more private sales thereof in accordance with clause (a) above. Each Grantor also acknowledges that any private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not be deemed to have been made in a commercially unreasonable manner solely by virtue of such sale being private. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit any Grantor or the issuer of the Pledged Collateral to register such securities for public sale under the Securities Act of 1933, as amended, or under applicable state securities laws, even if the applicable Grantor and the issuer would agree to do so.

5.3. Grantor’s Obligations Upon Default. Upon the request of the Administrative Agent following the occurrence and during the continuance of an Event of Default, each Grantor will:

(a) assemble and make available to the Administrative Agent the Collateral and all books and records relating thereto at any place or places specified by the Administrative Agent, whether at such Grantor’s premises or elsewhere; and

(b) permit the Administrative Agent, by the Administrative Agent’s representatives and agents, to enter, occupy and use any premises where all or any part of the Collateral, or the books and records relating thereto, or both, are located, to take possession of all or any part of the Collateral or the books and records relating thereto, or both, to remove all or any part of the Collateral or the books and records relating thereto, or both, and to conduct sales of the Collateral, without any obligation to pay the Grantor for such use

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and occupancy.

5.4. Grant of Intellectual Property License. For the purpose of enabling the Administrative Agent to exercise the rights and remedies under this Article V after and during the continuance of an Event of Default at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby (a) grants to the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to any Grantor) to use, license or sublicense any intellectual property rights now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof and (b) irrevocably agrees that the Administrative Agent may sell any of such Grantor’s Inventory directly to any person, including without limitation persons who have previously purchased the Grantor’s Inventory from such Grantor and in connection with any such sale or other enforcement of the Administrative Agent’s rights under this Security Agreement, may sell Inventory which bears any Trademark owned by or licensed to such Grantor and any Inventory that is covered by any Copyright owned by or licensed to such Grantor and the Administrative Agent may finish any work in process and affix any Trademark owned by or licensed to such Grantor and sell such Inventory as provided herein, in each case whether under clause (a) or clause (b), to the extent allowed under the terms or limitation of any such license or other agreement.

ARTICLE VI

ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY

6.1. Account Verification. The Administrative Agent may at any time in its Permitted Discretion, in the name of a nominee of the Administrative Agent or other pseudonym that will not readily identify the Administrative Agent as a financial institution (or during the continuation of an Event of Default, in the Administrative Agent’s own name), in the name of any Grantor communicate (by mail, telephone, facsimile or otherwise) with the Account Debtors of any such Grantor, parties to contracts with any such Grantor and obligors in respect of Instruments of any such Grantor to verify with such Persons, to the Administrative Agent’s satisfaction, the existence, amount, terms of, and any other matter relating to, Accounts, Instruments, Chattel Paper, payment intangibles and/or other Receivables. Other than after the occurrence and during the continuation of an Event of Default or during any field examination of a Grantor permitted under the Credit Agreement (including under Section 5.06 of the Credit Agreement), not less than ten (10) Business Days prior to engaging in such communication, the Administrative Agent shall give the Borrower notice of any such communications, identifying the persons with whom the Administrative Agent intends to communicate.

6.2. Authorization for Administrative Agent to Take Certain Action.

(a) Each Grantor irrevocably authorizes the Administrative Agent at any time and from time to time in the Permitted Discretion of the Administrative Agent and appoints the Administrative Agent as its attorney in fact (i) to execute on behalf of such Grantor as debtor and to file financing statements necessary or desirable in the Administrative Agent’s Permitted Discretion to perfect and to maintain the perfection and priority of the Administrative Agent’s security interest in the Collateral, (ii) after the occurrence and during the continuance of an Event of Default, to endorse and collect any cash proceeds of the Collateral, (iii) to file a carbon, photographic or other reproduction of this Security Agreement or any financing statement with respect to the Collateral as a financing statement and to file any other financing statement or amendment of a financing statement (which does not add new collateral or add a debtor) in such offices as the Administrative Agent in its Permitted Discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the Administrative Agent’s security interest in the Collateral, (iv) to contact and enter into one or more agreements with the issuers of uncertificated securities which are Pledged Collateral or with securities intermediaries holding Pledged Collateral as may be necessary or advisable to give the Administrative Agent Control over such Pledged Collateral, (v) to apply, the proceeds of any Collateral received by the Administrative Agent to the Secured Obligations as provided in Section 7.3, (vi) to discharge past due taxes, assessments, charges, fees or

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Liens on the Collateral (except for such Liens that are permitted by Section 4.1(e)), (vii) after the occurrence and during the continuance of an Event of Default, to contact Account Debtors for any reason, (viii) after the occurrence and during the continuance of an Event of Default, to demand payment or enforce payment of the Receivables in the name of the Administrative Agent or such Grantor and to endorse any and all checks, drafts, and other instruments for the payment of money relating to the Receivables, (ix) after the occurrence and during the continuance of an Event of Default, to sign such Grantor’s name on any invoice or xxxx of lading relating to the Receivables, drafts against any Account Debtor of the Grantor, assignments and verifications of Receivables, (x) after the occurrence and during the continuance of an Event of Default, to exercise all of such Grantor’s rights and remedies with respect to the collection of the Receivables and any other Collateral, (xi) after the occurrence and during the continuance of an Event of Default, to settle, adjust, compromise, extend or renew the Receivables, (xii) after the occurrence and during the continuance of an Event of Default, to settle, adjust or compromise any legal proceedings brought to collect Receivables, (xiii) to prepare, file and sign such Grantor’s name on a proof of claim in bankruptcy or similar document against any Account Debtor of such Grantor, (xiv) after the occurrence and during the continuance of an Event of Default, to prepare, file and sign such Grantor’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables, and (xv) after the occurrence and during the continuance of an Event of Default, to change the address for delivery of mail addressed to such Grantor to such address as the Administrative Agent may designate and to receive, open and dispose of all mail addressed to such Grantor; and such Grantor agrees to reimburse the Administrative Agent on demand for any payment made or any expense incurred by the Administrative Agent in connection with any of the foregoing; provided that, this authorization shall not relieve such Grantor of any of its obligations under this Security Agreement or under the Credit Agreement.

(b) All acts of said attorney or designee are hereby ratified and approved. The powers conferred on the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, under this Section 6.2 are solely to protect the Administrative Agent’s interests in the Collateral and shall not impose any duty upon the Administrative Agent or any other Secured Party to exercise any such powers.

6.3. Proxy. EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE  ADMINISTRATIVE  AGENT AS ITS  PROXY  AND ATTORNEY-IN-FACT (AS  SET FORTH  IN SECTION 6.2 ABOVE) WITH RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE ANY OF THE PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO; PROVIDED, THAT THE ADMINISTRATIVE AGENT SHALL ONLY ACT IN SUCH ROLE DURING THE CONTINUANCE OF AN EVENT OF DEFAULT. IN ADDITION TO THE RIGHT TO VOTE ANY OF THE PLEDGED COLLATERAL, THE APPOINTMENT OF THE ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF ANY OF THE PLEDGED COLLATERAL   WOULD   BE   ENTITLED   (INCLUDING   GIVING   OR   WITHHOLDING   WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL   MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY OF THE PLEDGED COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE   ISSUER OF THE PLEDGED COLLATERAL OR ANY OFFICER OR AGENT THEREOF), AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF A DEFAULT.

6.4. Nature   of   Appointment;   Limitation   of   Duty.       THE    APPOINTMENT   OF   THE ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS   ARTICLE VI IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY   AGREEMENT     IS   TERMINATED     IN     ACCORDANCE     WITH   SECTION   8.14. NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NONE OF THE ADMINISTRATIVE AGENT, ANY LENDER, ANY OTHER SECURED PARTY, ANY OF THEIR AFFILIATES, OR ANY OF THEIR OR THEIR   AFFILIATES’     RESPECTIVE   OFFICERS,   DIRECTORS,   EMPLOYEES,   AGENTS   OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED

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HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

ARTICLE VII

COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS

7.1. Collection of Receivables.

(a) On or before the Effective Date (or, solely with respect to the Xxxxxx Sales Account, the 30th day after the Effective Date (or such later date as may be agreed to by the Administrative Agent in its sole discretion)), each Grantor shall execute and deliver to the Administrative Agent Deposit Account Control Agreements for each Deposit Account (other than Liberty Xxxx BAML Receivables Accounts) maintained by such Grantor into which all cash, checks or other similar payments relating to or constituting payments made in respect of Receivables and proceeds resulting from the sale or disposition of Collateral are required to be deposited (each, a “Collateral Deposit Account”), which Collateral Deposit Accounts are identified as such on Exhibit B.   Operating Accounts and Excluded Accounts shall not be subject to this requirement as they shall not be Deposit Accounts in which cash, checks or other similar payments relating to or constituting payments made in respect of Receivables and proceeds resulting from the sale or disposition of Collateral shall be initially deposited.  After the Effective Date, each Grantor will comply with the terms of Section 7.2.

(b) Each Grantor shall direct all of its Account Debtors to forward payments in respect of Receivables directly to a Collateral Deposit Account (or shall have implemented policies and procedures designed to ensure the prompt deposit of payments made by Account Debtors directly to a Grantor into a Collateral Deposit Account),  or solely in accordance with the following sentence, a Liberty Xxxx BAML Receivables Account. No cash, checks or other similar payments relating to or constituting payments made in respect of Receivables and proceeds resulting from the sale or disposition of Collateral will be deposited in any Operating Account, Excluded Account or other Deposit Account other than a Collateral Deposit Account; provided, however, that (i) Account Debtors that are members of the buying group known as “Affiliated Distributors” may make payments to such buying group so long as such buying group complies with this requirement as if it were the Account Debtor with respect thereto, and (ii) until April 30, 2017 (as such date may be extended by the Administrative Agent in its sole discretion), Account Debtors of Liberty Xxxx Equipment Corporation may continue to forward payments to, and cash, checks and other similar payments received from such Account Debtors may continue to be deposited in, the Liberty Xxxx BAML Receivables Account. Prior to a Cash Dominion Period, the Grantors shall only transfer funds from Collateral Deposit Accounts, the Funding Account or the Liberty Xxxx BAML Receivables Accounts to Operating Accounts. No amounts shall be remitted to or otherwise remain on deposit in Operating Accounts other than those amounts transferred from Collateral Deposit Accounts or Liberty Xxxx BAML Receivables Accounts. At no time after the occurrence and during the continuance of an Event of Default or during a Cash Dominion Period shall any Grantor remove any item from a Collateral Deposit Account without the Administrative Agent’s prior written consent.   If any Grantor should refuse or neglect to notify any Account Debtor to forward payments directly to a Collateral Deposit Account then, after notice from the Administrative Agent, the Administrative Agent shall be entitled to make such notification directly to such Account Debtor. If any Grantor should refuse or neglect to implement policies and procedures designed to ensure the prompt deposit of payments made by Account Debtors directly to a Grantor into a Collateral Deposit Account then, after notice from the Administrative Agent, the Administrative Agent shall be entitled to make such notification directly to such Account Debtor or shall be entitled to take other reasonable actions as the Administrative Agent reasonably determines is necessary to ensure the prompt deposit of such payments directly to a Collateral Deposit Account. If notwithstanding the foregoing instructions, any Grantor receives any proceeds of any Receivables or proceeds resulting from the sale or disposition of any Collateral, such Grantor shall receive such payments as the Administrative Agent’s trustee, and shall promptly

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deposit all cash, checks or other similar payments related to or constituting payments made in respect of Receivables and proceeds resulting from the sale or disposition of Collateral received by it to a Collateral Deposit Account. At all times after the occurrence and during the continuance of an Event of Default or during a Cash Dominion Period (x) unless the Administrative Agent shall have waived such requirement in writing, the Grantors shall promptly cause all funds deposited into an Operating Account or a Liberty Xxxx BAML Receivables Account to be swept into a Collateral Deposit Account and (y) all funds deposited into a Collateral Deposit Account will be swept on a daily basis into a concentration account (the “Collection Account”) maintained by such Grantor at a bank or banks satisfactory to the Administrative Agent in its sole discretion (which, at the discretion of the Administrative Agent may be an account maintained by such Grantor with the Administrative Agent) which Collection Account shall be in the sole Control of the Administrative Agent.   No Grantor shall have any Control whatsoever over the Collection Account. The Administrative Agent shall have sole access to the Collection Account at all times and each Grantor shall take all actions necessary to grant the Administrative Agent such sole access. The Administrative Agent shall hold and apply funds received into the Collection Account as provided by the terms of Section 7.3.

(c) Notwithstanding anything to the contrary set forth in this Section 7.1,   if any Receivables or proceeds resulting from the sale or disposition of Collateral are inadvertently deposited by a Grantor or an Account Debtor of a Grantor in a Deposit Account that is not a Collateral Deposit Account, such failure to comply with the agreements set forth in this Article VII shall not constitute an Event of Default so long as promptly (and in any event within five (5) Business Days of such inadvertent deposit) (x) such Receivables or proceeds are transferred to a Collateral Deposit Account and (y) such Grantor promptly notifies the Administrative Agent in writing of such inadvertent deposit (which notice shall include a reasonably detailed description of the actions taken to remedy such breach and of the policies and procedures that shall be promptly implemented by such Grantor to ensure compliance with the provisions set forth in Section 7.1(b) with respect to payments made in respect of Receivables and proceeds resulting from the sale or disposition of Collateral).

7.2. Covenant Regarding New Deposit Accounts; Lock Boxes; Liberty Xxxx BAML Receivables Accounts.   Before opening or replacing any Collateral Deposit Account or Operating Account, each Grantor shall (a) deliver written notice thereof to the Administrative Agent, which notice shall include an updated Exhibit B with respect to such new Deposit Account, and (b) cause each bank or financial institution in which it seeks to open a Collateral Deposit Account to enter into a Deposit Account Control Agreement with the Administrative Agent in order to give the Administrative Agent Control of such Collateral Deposit Account. In the case of Deposit Accounts maintained with Lenders, the terms of such letter shall be subject to the provisions of the Credit Agreement regarding setoffs.   After opening or replacing any Excluded Account, each Grantor shall promptly, but in any event within thirty (30) days of opening such Excluded Account, deliver written notice thereof to the Administrative Agent, which notice shall include an updated Exhibit B with respect to such new Excluded Account. Not later than April 30, 2017 (as such date may be extended by the Administrative Agent in its sole discretion), all payments to, and cash, checks and other similar payments received from Account Debtors that are deposited in any Liberty Xxxx BAML Receivables Account shall be deposited in a Collateral Deposit Account subject to a Deposit Account Control Agreement and the Liberty Xxxx BAML Receivables Accounts shall be closed.

7.3. Application of Proceeds; Deficiency. All amounts deposited in the Collection Account shall be deemed received by the Administrative Agent in accordance with Section 2.18 of the Credit Agreement and shall, after having been credited to the Collection Account, be applied (and allocated) by Administrative Agent in accordance with Section 2.10(b) of the Credit Agreement at all times when a Cash Dominion Period is in effect, and in accordance with Section 2.18(b) at all times when an Event of Default exists; provided that, so long as no Cash Dominion Period (with the understanding that a Cash Dominion Period may be discontinued no more than five (5) times during the term of the Credit Agreement) or Event of Default exists, collections which are received into the Collection Account shall be deposited into the Borrower’s Funding Account rather than being used to reduce amounts owing under the Credit Agreement.   After the occurrence and during the continuance of an Event of Default, the Administrative Agent shall require all other cash proceeds of the Collateral, which are not required to be applied to the Obligations pursuant to Section 2.11 of the Credit

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Agreement, to be deposited in a special non-interest bearing cash collateral account with the Administrative Agent and held there as security for the Secured Obligations. No Grantor shall have any control whatsoever over said cash collateral account. Any such proceeds of the Collateral shall be applied in the order set forth in Section 2.18(b) of the Credit Agreement unless a court of competent jurisdiction shall otherwise direct. The balance, if any, after all of the Secured Obligations have been satisfied, shall be deposited by the Administrative Agent into the Borrower’s Funding Account. The Grantors shall remain liable, jointly and severally, for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all Secured Obligations as and when due in accordance with the terms of the Loan Documents, including any attorneys’ fees and other expenses incurred by Administrative Agent or any other Secured Party to collect such deficiency.

ARTICLE VIII GENERAL PROVISIONS

8.1. Waivers. Each Grantor hereby waives notice of the time and place of any public sale or the time after which any private sale or other disposition of all or any part of the Collateral may be made. To the extent such notice may not be waived under applicable law, any notice made shall be deemed reasonable if sent to the Grantors, addressed as set forth in Article IX, at least ten (10) days prior to (i) the date of any such public sale or (ii) the time after which any such private sale or other disposition may be made. To the maximum extent permitted by applicable law, each Grantor waives all claims, damages, and demands against the Administrative Agent or any other Secured Party arising out of the repossession, retention or sale of the Collateral, except such as arise solely out of the gross negligence or willful misconduct of the Administrative Agent or such other Secured Party as finally determined by a court of competent jurisdiction. To the extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against the Administrative Agent or any other Secured Party, any valuation, stay, appraisal, extension, moratorium, redemption or similar laws and any and all rights or defenses it may have as a surety now or hereafter existing which, but for this provision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court,  or privately under the power of sale conferred by this Security Agreement, or otherwise.   Except as otherwise specifically provided herein,  each Grantor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral.

8.2. Limitation on Administrative Agent’s and Other Secured Parties’ Duty with Respect to the Collateral. The Administrative Agent shall have no obligation to clean-up or otherwise prepare the Collateral for sale. The Administrative Agent and each other Secured Party shall use reasonable care with respect to the Collateral in its possession or under its control. Neither the Administrative Agent nor any other Secured Party shall have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of the Administrative Agent or such other Secured Party, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. To the extent that applicable law imposes duties on the Administrative Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is commercially reasonable for the Administrative Agent (i) to fail to incur expenses deemed significant by the Administrative Agent to prepare Collateral for disposition or otherwise to transform raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as such Grantor, for expressions of interest in acquiring all or any portion of the Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have

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the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Administrative Agent against risks of loss, collection or disposition of Collateral or to provide to the Administrative Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Administrative Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Administrative Agent in the collection or disposition of any of the Collateral.   Each Grantor acknowledges that the purpose of this Section 8.2 is to provide non-exhaustive indications of what actions or omissions by the Administrative Agent would be commercially reasonable in the Administrative Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Administrative Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 8.2.  Without limitation upon the foregoing, nothing contained in this Section 8.2 shall be construed to grant any rights to any Grantor or to impose any duties on the Administrative Agent that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section 8.2.

8.3. Compromises and Collection of Collateral.   The Grantors and the Administrative Agent recognize that setoffs, counterclaims, defenses and other claims may