TO:

 

 

 

 

 

GRANTED BY:

 

 

 

 

Terms used herein and defined in the Personal Property Security Act (Ontario) or similar legislation of any other Canadian jurisdiction, the laws of which are required by such legislation to be applied in connection with the issue, perfection, enforcement, opposability, validity or effect of security interests (collectively the “PPSA”) shall have the same meanings as in the PPSA unless the context otherwise requires;

Terms used herein and defined in the Securities Transfer Act (Ontario) (the “STA”) shall have the same meanings as in the STA unless the context otherwise requires;

Capitalized terms not otherwise defined herein shall have the same meanings as ascribed to them in the Credit Agreement, unless the context otherwise requires;

Any reference to “Collateral” shall, unless the context otherwise requires, refer to “Collateral or any part thereof”;

The term “security interest” and the grant of the “security interest” herein provided for shall include, without limitation, a fixed mortgage, hypothecation, pledge, charge and assignment of the Collateral in favour of the Collateral Agent (for itself and on behalf of the Secured Parties);

“Additional Pledged Collateral” means any Pledged Collateral acquired by the Debtor after the date hereof and in which a security interest is granted pursuant to Section 1 (Grant of Security Interest), including, to the extent a security interest is granted therein pursuant to Section 1 (Grant of Security Interest), (i) all Stock and Stock Equivalents of any Person that are acquired by the Debtor after the date hereof, together with all certificates, instruments or other documents representing any of the foregoing and all Security Entitlements of the Debtor in respect of any of the foregoing, (ii) all additional Indebtedness from time to time owed to the Debtor by any obligor on the Pledged Debt Instruments and the Instruments evidencing such Indebtedness and (iii) all interest, cash, Instruments and other property or Proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any of the foregoing. “Additional Pledged Collateral” may be Intangibles (including Intellectual Property), Instruments or Investment Property;

“Blocked Account” means a deposit account maintained by the Debtor with a Blocked Account Bank which account is the subject of an effective Blocked Account Letter, and includes all monies on deposit therein and all certificates and instruments, if any, representing or evidencing such Blocked Account;

“Blocked Account Bank” means a financial institution approved (such approval not to be unreasonably withheld) by the Administrative Agent and with respect to which the Debtor has delivered to the Collateral Agent an executed Blocked Account Letter (hereinafter defined);

“Blocked Account Letter” means a letter agreement in a form acceptable to the Collateral Agent, executed by the Debtor and the Collateral Agent and acknowledged and agreed to by the relevant Blocked Account Bank;

“Cash Collateral Account” means any deposit account or Securities Account that is (a) established by the Collateral Agent from time to time in its sole discretion to receive cash and Cash Equivalents (or purchase cash or Cash Equivalents with funds received) from the Debtor or any other Loan Party or their Subsidiaries or Affiliates or Persons acting on their behalf pursuant to the Loan Documents, (b) with such depositaries and securities intermediaries as the Collateral Agent may determine in its sole discretion, (c) in the name of the Collateral Agent (although such account may also have words referring to the Debtor and the account’s purpose), (d) under the control of the Collateral Agent and (e) in the case of a Securities Account, with respect to which the Collateral Agent shall be the Entitlement Holder and the only Person authorized to give Entitlement Orders with respect thereto, except as otherwise provided in Section 3.9 hereof. Notwithstanding the foregoing, the Special Cash Collateral Account shall not constitute a Cash Collateral Account;

“CCQ” means the Civil Code of Quebec;

“Certificated Security” has the meaning given to such term in the PPSA;

“CIPO” means the Canadian Intellectual Property Office;

“Collateral” has the meaning specified in Section 1.1 hereof;

“Collateral Agent” shall include, in addition to the Collateral Agent referred to in the preamble of the Credit Agreement, any successors and assigns to the Collateral Agent appointed pursuant to the Credit Agreement and means the “Collateral Agent” in its capacity as collateral agent for the benefit of the Secured Parties with respect to the Secured Obligations;

“Control Account” means a securities account maintained by the Debtor with the relevant approved Securities Intermediary which account is the subject of an effective Control Account Agreement, and includes all monies and other assets on deposit or otherwise held therein;

“Control Account Agreement” means a letter agreement in a form acceptable to the Collateral Agent, executed by the Debtor, the Collateral Agent and the relevant approved Securities Intermediary;

“Copyright License” means any agreement, whether written or oral, providing for the grant by or to the Debtor of any right under any Copyright, including the grant of any right to use, copy, publicly perform, display, create derivative works of, manufacture, distribute, exploit or sell materials derived from any Copyright;

“Copyrights” means (a) all copyrights arising under the laws of Canada, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof and all applications for registration or recording in connection therewith, including all registrations, recordings and applications for registration or recording with CIPO or in any foreign counterparts thereof, and (b) the right to obtain all renewals, reversions and extensions thereof;

“Credit Agreement” shall mean that certain Credit Agreement dated the date hereof among, inter alia, the Debtor, as borrower, the financial institutions, together with their respective successors and assigns, listed on the signature pages thereof from time to time, as Lenders, and the Collateral Agent, as the same may be amended, supplemented, revised, restated or replaced from time to time;

“Discharge of Lender Claims” means the payment in full in cash of the principal of, interest and premium, if any, on all Secured Obligations and, with respect to Hedging Obligations, Hedging Obligations or letters of credit outstanding thereunder, delivery of cash collateral or backstop letters of credit in respect thereof in compliance with the terms hereof, of the Credit Agreement, in each case after or concurrently with termination of all Commitments, and payment in full in cash of any other Secured Obligations that are due and payable at or prior to the time such principal and interest are paid;

“Entitlement Holder” has the meaning given to such term in the PPSA;

“Entitlement Order” has the meaning given to such term in the PPSA;

“Excluded Property” means, collectively, (i) any permit, lease, license, contract, instrument or other agreement held by the Debtor that validly prohibits the creation by the Debtor of a Lien thereon, or any permit, lease, license, contract, instrument or other agreement held by the Debtor to the extent that any Requirement of Law applicable thereto prohibits the creation of a Lien thereon, but only, in each case, to the extent, and for so long as, such prohibition is not removed, terminated or rendered unenforceable or otherwise deemed ineffective by the PPSA or any other Requirement of Law; and (ii) any Equipment owned by the Debtor that is charged by a “purchase-money security interest” (as defined in the PPSA) or subject to a Capital Lease if the contract or other agreement in which such Lien is granted (or in the documentation providing for such Capital Lease) prohibits or requires the consent of any Person other than the Debtor as a condition to the creation of any other Lien on such Equipment; provided, however, “Excluded Property” shall not include any Proceeds, substitutions or replacements of Excluded Property (unless such Proceeds, substitutions or replacements would constitute Excluded Property);

“Financial Assets” has the meaning given to such term in the PPSA;

“Hedging Obligations” means all obligations of any Person under any Hedging Contract;

“Instrument” has the meaning given to such term in the PPSA;

“Intellectual Property” means, collectively, (a) all right, title and interest of the Debtor in intellectual property, whether arising under Canadian, multinational or foreign laws or otherwise, including Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark Licenses, trade secrets, Internet domain names, Websites, advertising rights, rights in designs, including registrations thereof, and rights in data, and (b) all rights to income, royalties, proceeds and damages now or hereafter due and/or payable under and with respect thereto, including all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof;

“Investment Property” has the meaning given to such term in the PPSA;

“LLC” means each limited liability company in which the Debtor has an equity interest, including those set forth on;

“LLC Agreement” means each operating agreement with respect to a LLC, as each agreement has heretofore been, and may hereafter be, amended, restated, supplemented or otherwise modified from time to time;

“Material Intellectual Property” means Intellectual Property owned by or licensed to the Debtor and material to Debtor’s business;

“Partnership” means each partnership in which the Debtor has an equity interest, including those set forth on;

“Partnership Agreement” means each partnership agreement governing a Partnership, as each such agreement has heretofore been, and may hereafter be, amended, restated, supplemented or otherwise modified;

“Patent License” means all agreements, whether written or oral, providing for the grant by or to the Debtor of any right to manufacture, have manufactured, use, import, lease, sell or offer for sale any product, design or process covered in whole or in part by a Patent;

“Patents” means (a) all patents of Canada or any other country or patent rights arising under multinational laws, (b) all applications for patents of Canada or any other country or patent rights arising under multinational laws and (c) all rights to obtain any reissues, extensions, divisions, continuations and continuations-in-part of the foregoing;

“Pledged Certificated Stock” means all Certificated Securities and any other Stock and Stock Equivalent of a Person evidenced by a certificate, Instrument or other equivalent document, in each case owned by the Debtor, including all Stock listed on;

“Pledged Collateral” means, collectively, the Pledged Stock, Pledged Debt Instruments, any other Investment Property of the Debtor (other than Pledged Stock, Pledged Debt Instruments and other Investment Property whose value, in the aggregate, does not exceed $1,000,000), all chattel paper, certificates or other Instruments representing any of the foregoing and all Security Entitlements of the Debtor in respect of any of the foregoing. Pledged Collateral may be Intangibles, Instruments or Investment Property;

“Pledged Debt Instrument” means all right, title and interest of the Debtor in Instruments evidencing any Indebtedness owed to the Debtor, including all Indebtedness described on, issued by the obligors named therein;

“Pledged Stock” means all Pledged Certificated Stock and all Pledged Uncertificated Stock;

“Pledged Uncertificated Stock” means any Stock or Stock Equivalent of any Person that is not a Pledged Certificated Stock, including all right, title and interest of the Debtor as a limited or general partner in any Partnership or as a member of any LLC and all right, title and interest of the Debtor in, to and under any Partnership Agreement or LLC Agreement to which it is a party;

“Receiver” shall have the meaning provided to such term in Section 6.4 hereof;

“Registerable Intellectual Property” means any Intellectual Property in respect of which ownership, title, security interests, hypothecs, charges or encumbrances are capable of registration, recording or notation with any applicable authority pursuant to applicable law;

“Restricted Account” means a deposit account maintained by the Debtor with a Restricted Account Bank which account is the subject of an effective Restricted Account Letter, and includes all monies on deposit therein and all certificates and instruments, if any, representing or evidencing such Restricted Account;

“Restricted Account Bank” means a financial institution selected or approved (such approval not to be unreasonably withheld) by the Administrative Agent and with respect to which the Debtor has delivered an executed Restricted Account Letter;

“Restricted Account Letter” means a letter agreement in a form acceptable to the Administrative Agent, executed by the Debtor;

“Securities Intermediaries” has the meaning given to such term in the PPSA;

“Securities Account” has the meaning given to such term in the PPSA;

“Security Entitlement” has the meaning given to such term in the PPSA;

“Security Interest” means, collectively, each security interest, mortgage, charge, assignment or transfer in or of Collateral granted or created by the Debtor under this Agreement;

“Third Party Intellectual Property Rights” means any right, title or interest of any Person under patent, copyright, trademark or trade secret law or any other statutory provision or common law doctrine relating to intellectual property or proprietary rights;

“Trademark License” means any agreement, whether written or oral, providing for the grant by or to the Debtor of any right under any Trademark.;

“Trademarks” means (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, service marks, logos and other source or business identifiers, and, in each case, all goodwill associated therewith, whether now existing or hereafter adopted or acquired, all registrations and recordings thereof and all applications for registration or recording in connection therewith, in each case whether in CIPO or in any similar office or agency of Canada, any Province or Territory thereof or any other country or any political subdivision thereof and all common-law rights related thereto, and (b) the right to obtain all renewals thereof; and

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

the Debtor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all its duties and obligations thereunder to the same extent as if this Agreement had not been executed;

the exercise by the Collateral Agent of any of the rights or remedies hereunder shall not release the Debtor from any of its duties or obligations under the contracts and agreements included in the Collateral; and

the Collateral Agent shall not have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Collateral Agent be obligated to perform any of the obligations or duties of the Debtor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

The Pledged Stock that constitutes Pledged Collateral pledged hereunder by the Debtor is listed on and constitutes that percentage of the issued and outstanding equity of all classes of each issuer thereof as set forth on.

All of the Pledged Stock (other than Pledged Stock in limited liability companies and partnerships) that constitutes Pledged Collateral has been duly and validly issued and are fully paid and nonassessable.

All Pledged Collateral and, if applicable, any Additional Pledged Collateral, consisting of Certificated Securities or Instruments has been delivered to the Collateral Agent in accordance with Section 3.5(a) (Pledged Collateral) hereof, and Section 7.11 of the Credit Agreement and such other pledge agreement or other Collateral Documents entered into by the Debtor in favour of the Collateral Agent.

Subject to Section 3.5(a), all Pledged Collateral held by a Securities Intermediary in a Securities Account is subject to a Control Account Agreement.

Other than Pledged Stock constituting Intangibles, there is no Pledged Collateral other than (i) that represented by Certificated Securities or (ii) Instruments in the possession of the Collateral Agent or that consisting of Financial Assets held in a Securities Account that is subject to a Control Account Agreement.

The Constituent Documents of any Person governing any Pledged Stock do not prohibit (i) the Collateral Agent, upon the occurrence and during the continuance of an Event of Default, from exercising all of the rights of the Debtor granting the security interest therein, and (ii) a transferee or assignee of Stock of such Person from becoming a member, partner or, as the case may be, other holder of such Pledged Stock to the same extent as the Debtor entitled to participate in the management of such Person and, pursuant to the Constituent Documents of any Person governing any Pledged Stock, upon the transfer of the entire interest of the Debtor, the Debtor shall cease to be a member, partner or, as the case may be, other holder of such Pledged Stock.

(i) sets forth a true and complete list of all Intellectual Property of the Debtor on the date hereof (other than licenses to commercial off-the-shelf software), separately identifying that owned by the Debtor and that licensed by or to such Debtor and (ii) sets forth a true and complete list of all Material Intellectual Property owned by or licensed to the Debtor on the date hereof (other than licenses to commercial off-the-shelf software), separately identifying that owned by the Debtor and that licensed by or to the Debtor. The Material Intellectual Property set forth on constitutes all of the material intellectual property rights necessary for the Debtor to conduct its business as currently and as proposed to be conducted.

On the date hereof, all Material Intellectual Property owned by the Debtor is valid, in full force and effect, subsisting, unexpired and enforceable, has not been adjudged invalid and has not been abandoned. To the knowledge of the Debtor, the business of the Debtor, and the use of the Material Intellectual Property in connection therewith, does not infringe, misappropriate, dilute or violate any Third Party Intellectual Property Rights. The Debtor is not party to or the subject of any pending or, to the Debtor’s knowledge, threatened claim of infringement, misappropriation, dilution or violation of any Third Party Intellectual Property Rights, and there are no facts or circumstances that the Debtor reasonably believes are likely to form the basis for any such claim, and the Debtor has not received written notice of any such claim, or a written offer of a license to any Third Party Intellectual Property Rights, or any written notice regarding the existence of any Third Party Intellectual Property Rights that would be likely to have a Material Adverse Effect on the Debtor or otherwise would impair any Material Intellectual Property.

Except as set forth in (c), on the date hereof, none of the Material Intellectual Property owned by the Debtor is the subject of any licensing or franchise agreement pursuant to which the Debtor is the licensor or franchisor.

No holding, decision or judgment has been rendered by any Governmental Authority challenging the Debtor’s rights in the Material Intellectual Property or that would limit or otherwise impair the ownership, use, validity or enforceability of any Material Intellectual Property.

No action or proceeding challenging the Debtor’s rights in the Intellectual Property or the ownership, use, validity or enforceability of any Material Intellectual Property owned by the Debtor is on the date hereof pending or, to the knowledge of the Debtor, threatened. There are no claims, judgments or settlements to be paid by the Debtor relating to the Material Intellectual Property. To the Debtor’s knowledge, no Person has been or is infringing, misappropriating, diluting or violating the Material Intellectual Property owned by the Debtor.

The Debtor is not in material breach of any Copyright License, Patent License or Trademark License nor in breach of any Material License. The consummation of the transactions contemplated by this Agreement shall not impair any of the Debtor’s right in, cause a breach of, or impair the validity or enforceability of, any Material Intellectual Property.

The Debtor shall maintain the security interests created by this Agreement as perfected security interests having at least the priority described in Section 2.2 (Perfection and Priority) and shall defend such security interests and such priority against the claims and demands of all Persons.

The Debtor shall furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request in writing, all in detail and in form and substance reasonably satisfactory to the Collateral Agent.

At any time and from time to time, upon the written request of the Collateral Agent, and at the sole expense of the Debtor, the Debtor shall promptly and duly execute and deliver to the Collateral Agent, and have recorded, such further instruments and documents and take such further action as the Collateral Agent may reasonably request (or be directed to request by the Administrative Agent at the Administrative Agent’s reasonable request) for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including the filing of any financing or continuation statement under the PPSA (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby and the execution and delivery of Blocked Account Letters or Restricted Account Letters and Control Account Agreements.

Except upon 15 or more days’ prior written notice to the Collateral Agent and delivery to the Collateral Agent of (i) all additional financing statements and other documents reasonably requested by the Collateral Agent to maintain the validity, perfection and priority of the security interests provided for herein and (ii) if applicable, a written supplement to showing (A) any additional locations at which Inventory or Equipment shall be kept or (B) any changes in any location where Inventory or Equipment shall be kept that would require the Collateral Agent to take any action to maintain perfected security interests in such Collateral, the Debtor shall not do any of the following:

permit any Inventory or Equipment to be kept at a location other than those listed on, except for Inventory or Equipment in transit;

change its jurisdiction of organization from that referred to in Section 2.3 (Jurisdiction of Organization; Chief Executive Office); or

change its legal name, or organizational identification number, if any, or corporation, unlimited liability company, limited liability company or other organizational structure to such an extent that any financing statement filed in connection with this Agreement would become misleading.

The Debtor shall keep and maintain at its own cost and expense satisfactory and complete records of the Collateral, including a record of all payments received and all credits granted with respect to the Collateral and all other dealings with the Collateral.

The Debtor shall (i) deliver to the Collateral Agent for the benefit of the Secured Parties, all certificates and Instruments representing or evidencing any Pledged Collateral (including Additional Pledged Collateral), whether now existing or hereafter acquired, in suitable form for transfer by delivery or, as applicable, accompanied by such Debtor’s endorsement, where necessary, or duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Collateral Agent, together, in respect of any Additional Pledged Collateral, with a pledge amendment, duly executed by the Debtor, in a form reasonably acceptable to the Collateral Agent, an acknowledgment, or such other documentation acceptable to the Collateral Agent and (ii) maintain all other Pledged Collateral constituting Investment Property in a Securities Account subject to a Control Account Agreement. The Collateral Agent shall have the right, following an Event of Default and without notice to the Debtor, to transfer to or to register in its name or in the name of its nominees any Pledged Collateral. The Collateral Agent shall have the right at any time to exchange any certificate or instrument representing or evidencing any Pledged Collateral for certificates or instruments of smaller or larger denominations.

Except as provided in Section 6 (Remedies on Default), the Debtor shall be entitled to receive all cash dividends paid in respect of the Pledged Collateral (other than liquidating or distributing dividends). Any sums paid upon or in respect of any Pledged Collateral upon the liquidation or dissolution of any issuer of any Pledged Collateral, any distribution of capital made on or in respect of any Pledged Collateral or any property distributed upon or with respect to any Pledged Collateral pursuant to the recapitalization or reclassification of the capital of any issuer of Pledged Collateral or pursuant to the reorganization thereof (except, in each case, to the extent resulting in cash being distributed to the Debtor) shall, unless otherwise subject to a perfected security interest (with the priorities contemplated herein) in favour of the Collateral Agent, be delivered to the Collateral Agent to be held by it hereunder as additional collateral security for the Secured Obligations. If any sum of money or property so paid or distributed in respect of any Pledged Collateral shall be received by the Debtor, the Debtor shall, until such money or property is paid or delivered to the Collateral Agent, hold such money or property in trust for the Collateral Agent, segregated from other funds of the Debtor, as additional security for the Secured Obligations.

Except as provided in Section 6 (Remedies on Default), the Debtor shall be entitled to exercise all voting, consent and corporate, partnership, unlimited liability company, limited liability company and similar rights with respect to the Pledged Collateral; provided, however, that no vote shall be cast, consent given or right exercised or other action taken by the Debtor that would impair the Collateral, be inconsistent with or result in any violation of any provision of the Credit Agreement, this Agreement or any other Loan Document or, without prior notice to the Collateral Agent, enable or permit any issuer of Pledged Collateral to issue any Stock or other equity Securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any Stock or other equity Securities of any nature of any issuer of Pledged Collateral.

The Debtor shall not grant control (within the meaning of such term under the STA) over any Investment Property to any Person other than the Collateral Agent.

In the case the Debtor is an issuer of Pledged Collateral, the Debtor agrees to be bound by the terms of this Agreement relating to the Pledged Collateral issued by it and shall comply with such terms insofar as such terms are applicable to it. In the case the Debtor is a holder of any Stock or Stock Equivalent in any Person that is an issuer of Pledged Collateral, the Debtor consents to (i) the exercise of the rights granted to the Collateral Agent hereunder (including those described in Section 6.10 (Pledged Collateral)), and to the transfer of such Pledged Stock to the Collateral Agent or its nominee and to the substitution of the Collateral Agent or its nominee as a holder of such Pledged Stock with all the rights, powers and duties of other holders of Pledged Stock of the same class and, if the Debtor having pledged such Pledged Stock hereunder had any right, power or duty at the time of such pledge or at the time of such substitution beyond that of such other holders, with all such additional rights, powers and duties. The Debtor agrees to execute and deliver to the Collateral Agent such certificates, agreements and other documents as may be necessary to evidence, formalize or otherwise give effect to the consents given in this clause (e).

The Debtor shall not, and shall not permit any of its Subsidiaries (to the extent the Stock of such Subsidiary constitutes Collateral), without the consent of the Collateral Agent, agree to any amendment of any Constituent Document that in any way adversely affects the perfection of the security interest of the Collateral Agent in the Pledged Collateral pledged by the Debtor hereunder or any election to turn any previously uncertificated Stock that is part of the Pledged Collateral into certificated Stock.

The Debtor (either itself or through licensees) shall (and shall cause all licensees or sublicensees thereof to) (i) continue to use each Trademark that is Material Intellectual Property in order to maintain such Trademark in full force and effect with respect to each class of goods for which such Trademark is currently used, free from any claim of abandonment for non-use, (ii) maintain as in the past the quality of products and services offered under such Trademark, (iii) use such Trademark with the appropriate notice of registration and all other notices and legends required by applicable Requirements of Law, (iv) execute and file all documents necessary to perfect a security interest pursuant to this Agreement in favour of the Collateral Agent promptly upon adopting or using any mark that is confusingly similar or a colorable imitation of such Trademark and (v) not do any act or knowingly omit to do any act (and not permit or direct by express act or omission any licensee or sublicensee thereof to do any act) whereby such Trademark (or any goodwill associated therewith) may become destroyed, invalidated, impaired or harmed in any way; provided, however, that (i) to (iii) and (v) above shall be subject to the good faith exercise by the Debtor of its reasonable business judgment consistent with past practices.

The Debtor shall not (and shall not permit or direct by express act or omission any licensee or sublicensee thereof to) do any act, or omit to do any act, whereby any Patent that is Material Intellectual Property may become forfeited, abandoned or dedicated to the public.

The Debtor (i) shall not (and shall not permit or direct by express act or omission any licensee or sublicensee thereof to) do any act or omit to do any act whereby any portion of the Copyrights that is Material Intellectual Property may become invalidated or otherwise impaired and (ii) shall not (and shall not permit or direct by express act or omission any licensee or sublicensee thereof to) do any act whereby any portion of the Copyrights that is Material Intellectual Property may fall into the public domain.

The Debtor shall not knowingly (and shall not permit or direct by express act or omission any licensee or sublicensee thereof to) do any act, or knowingly omit to do any act, whereby any trade secret that is Material Intellectual Property may become publicly available or otherwise unprotectable.

The Debtor shall not (and shall not permit or direct by express act or omission any licensee or sublicensee thereof to) do any act that knowingly infringes, misappropriates, dilutes or violates any Third Party Intellectual Property Rights.

The Debtor shall promptly inform the Collateral Agent in writing of the acquisition by the Debtor of any Registerable Intellectual Property, and the Debtor shall execute and deliver, at its own expense, from time to time amendments to this Agreement or additional security agreements or schedules as may be required by the Collateral Agent in order that the Security Interest shall attach to such Registerable Intellectual Property.

The Debtor shall notify the Collateral Agent immediately if it knows, or has reason to know, that any application for registration or recording, registration or recording relating to any Material Intellectual Property may become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in CIPO, the Federal Court of Canada or any other court or tribunal in any other country) regarding Debtor’s ownership of, right to use, interest in, or the validity or enforceability of, any Material Intellectual Property or Debtor’s right to register the same or to own and maintain the same.

As set forth below, whenever the Debtor, either by itself or through its counsel or any agent or designee, shall file an application for the registration or recording of any Intellectual Property with CIPO or any similar office or agency within or outside Canada or register any Internet domain name, the Debtor shall report such filing to the Collateral Agent within five Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the Collateral Agent, the Debtor shall execute and deliver, and have recorded, all agreements, instruments, documents and papers as the Collateral Agent may request to evidence the Collateral Agent’s security interest in any such Copyright, Patent, Trademark or Internet domain name and the goodwill and intangibles of the Debtor relating thereto or represented thereby.

The Debtor shall take all reasonable actions that are (i) necessary (subject to the good faith exercise by the Debtor of its reasonable business judgment consistent with past practices) or (ii) requested by the Collateral Agent, including in any proceeding before CIPO or any similar office or agency and any Internet domain name registrar, to maintain and pursue each application for registration or recording (and to obtain the relevant registration or recording) and to maintain each registration and recording of any Copyright, Trademark, Patent or Internet domain name that is Material Intellectual Property, including filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition and interference and cancellation proceedings.

In the event that any Material Intellectual Property is infringed, misappropriated, diluted or violated by a third party, the Debtor shall notify the Collateral Agent promptly after the Debtor learns thereof. The Debtor shall take appropriate action in response to any infringement, misappropriation, dilution or violation of the Material Intellectual Property, including promptly bringing suit for infringement, misappropriation, dilution or violation and to recover all damages for such infringement, misappropriation, dilution or violation, and shall take such other actions may be appropriate under the circumstances to protect such Intellectual Property; provided, however, that the foregoing shall be subject to the good faith exercise by the Debtor of its reasonable business judgment consistent with past practices.

Unless otherwise agreed to by the Collateral Agent the Debtor shall execute and deliver to the Collateral Agent for filing in (i) the United States Copyright Office or any similar office or agency a short-form copyright security agreement in the form attached hereto as 1 for all Copyrights of the Debtor registered therein from time to time, (ii) in the United States Patent and Trademark Office or any similar office or agency a short-form patent security agreement in the form attached hereto as 2 for all Patents of the Debtor registered therein from time to time, (iii) the United States Patent and Trademark Office or any similar office or agency and with the appropriate department or division of all appropriate States of the United States a short-form trademark security agreement in form attached hereto as 3 for all Trademarks of the Debtor registered therein from time to time and (iv) with the appropriate Internet domain name registrar, a duly executed form of assignment of all Internet domain names of the Debtor to the Collateral Agent (together with appropriate supporting documentation as may be requested by the Collateral Agent) in form and substance reasonably acceptable to the Collateral Agent. In the case of clause (iv) above, the Debtor hereby authorizes the Collateral Agent to file such assignment in the Debtor’s name and to otherwise perform in the name of the Debtor all other necessary actions to complete such assignment, and the Debtor agrees to perform all appropriate actions deemed necessary by the Collateral Agent for the Collateral Agent to ensure such Internet domain name is registered in the name of the Collateral Agent.

On the Closing Date (or such later date as agreed by the Collateral Agent), the Debtor shall cause to be delivered (i) to the Collateral Agent, a duly executed and effective Blocked Account Letter for each existing deposit account identified as a concentration account on Schedule 7 maintained by the Debtor and (ii) to each Restricted Account Bank (with a copy to the Collateral Agent), a Restricted Account Letter for each other deposit account (subject only to clause (b) below) duly executed by the Debtor to each such deposit account.

The Debtor shall (i) deposit in a Blocked Account or Restricted Account all cash and all Proceeds received by the Debtor and (ii) not establish or maintain any deposit account with any financial or other institution other than a Blocked Account Bank, a Restricted Account Bank, the Collateral Agent or the Administrative Agent; provided, however, that the Debtor may at any time maintain the following accounts not subject to this Section 3.8(b)(i) deposit accounts or Securities Accounts (or their foreign equivalents) located outside of Canada with cash or Cash Equivalents not in excess of an aggregate amount of $3,000,000, (ii) deposit accounts or Securities Accounts located in Canada with cash or Cash Equivalents not in excess of an aggregate amount of $1,000,000 and (iii) payroll tax, employee deductions at source, withholding tax, goods and services and sales tax, and other fiduciary accounts as required for operations in the ordinary course of business.

The Debtor shall instruct each account debtor or other Person obligated to make a payment to the Debtor to make payment, or to continue to make payment, as the case may be, to a lock-box linked to a Blocked Account or a Restricted Account, as the case may be, and the Debtor shall deposit in a Blocked Account or a Restricted Account all Proceeds received by the Debtor from any other Person immediately upon receipt.

In the event (i) the Debtor or a Blocked Account Bank or Restricted Account Bank shall, after the date hereof, terminate an agreement with respect to the maintenance of a Blocked Account or Restricted Account, as the case may be, for any reason, (ii) the Collateral Agent shall demand termination of a Blocked Account Letter or a Restricted Account Letter as a result of the failure of a Blocked Account Bank or Restricted Account Bank, as the case may be, to comply with the terms of the applicable letter agreement or (iii) the Collateral Agent determines in its sole discretion that the financial condition of a Blocked Account Bank or Restricted Account Bank has materially deteriorated, then, in each case, the Debtor shall notify all of its account debtors that were making payments to such terminated Blocked Account Bank or Restricted Account Bank to make all future payments to such other Blocked Account Bank or Restricted Account Bank, as specified by the Collateral Agent.

The Collateral Agent agrees that it shall not deliver to any Blocked Account Bank a sweep activation notice under any Blocked Account Letter with such Blocked Account Bank unless there has occurred and is continuing an Event of Default or Available Credit has been less than 15% of the Aggregate Borrowing Limit for five or more consecutive Business Days.

The Collateral Agent may establish one or more Cash Collateral Accounts with such depositaries and Securities Intermediaries as it in its sole discretion shall determine. The Debtor agrees that each such Cash Collateral Account shall be under the control of the Collateral Agent and that the Collateral Agent shall be the Entitlement Holder with respect to each such Cash Collateral Account that is a Securities Account and the only Person authorized to give Entitlement Orders with respect to each such Securities Account. Without limiting the foregoing, funds on deposit in any Cash Collateral Account may be invested in Permitted Cash Equivalents at the direction of the Collateral Agent and, except during the continuance of an Event of Default (unless otherwise agreed to by the Administrative Agent in its sole discretion), the Collateral Agent agrees with the Debtor to issue Entitlement Orders for such investments in Permitted Cash Equivalents as requested by the Debtor; provided, however, that the Collateral Agent shall not have any responsibility for, or bear any risk of loss of, any such requested investment or income thereon and the Collateral Agent shall have no obligation to make or cause to be made any such investment absent a request by the Borrower for a specific investment in Permitted Cash Equivalents. Neither any Warnaco Entity nor any other Person claiming on behalf of or through any Warnaco Entity shall have any right to demand payment of any funds held in any Cash Collateral Account at any time prior to Discharge of Lender Claims, except (i) as provided in Section 2.9(f) of the Credit Agreement and (ii) that the Debtor may request that the Collateral Agent apply funds in any Cash Collateral Account directly to the immediate payment of the Loans and if paid in full then to the cash collateralization of Letter of Credit Obligations (and not to be delivered to any Warnaco Entity). The Collateral Agent shall apply all funds on deposit in a Cash Collateral Account as provided in Section 2.9(f) of the Credit Agreement.

In addition to, and not in substitution for, any similar requirement in the Credit Agreement, if required by the Collateral Agent at any time during the continuance of an Event of Default, any payment of Accounts Receivable or payment in respect of Intangibles, when collected by the Debtor, shall be forthwith (and, in any event, within two Business Days) deposited by the Debtor in the exact form received, duly indorsed by the Debtor to the Collateral Agent, in a Blocked Account or a Cash Collateral Account, subject to withdrawal by the Collateral Agent as provided in Section 6.11 (Proceeds to be Turned Over To Collateral Agent). Until so turned over, such payment shall be held by the Debtor in trust for the Collateral Agent, segregated from other funds of the Debtor. Each such deposit of Proceeds of Accounts Receivable and payments in respect of Intangibles shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.

At the Collateral Agent’s request, during the continuance of an Event of Default, the Debtor shall deliver to the Collateral Agent all original and other documents evidencing, and relating to, the agreements and transactions that gave rise to the Accounts Receivable or payments in respect of Intangibles, including all original orders, invoices and shipping receipts.

Subject to the terms of the Credit Agreement, the Collateral Agent may, without notice, at any time during the continuance of an Event of Default, limit or terminate the authority of the Debtor to collect its Accounts Receivable or amounts due under Intangibles or any thereof.

The Collateral Agent in its own name or in the name of others may at any time during the continuance of an Event of Default communicate with account debtors to verify with them to the Collateral Agent’s satisfaction the existence, amount and terms of any Account or amounts due under any Intangible.

Upon the request of the Collateral Agent at any time during the continuance of an Event of Default, the Debtor shall notify account debtors that it has granted to the Collateral Agent a lien on and security interest in, all of its right, title and interest in, to and under the Accounts Receivable or Intangibles that have been collaterally assigned to the Collateral Agent and that payments in respect thereof shall be made directly to the Collateral Agent. In addition, the Collateral Agent may at any time during the continuance of an Event of Default, to the extent permitted by applicable law, enforce the Debtor’s rights against such account debtors and obligors of Intangibles.

Anything herein to the contrary notwithstanding, the Debtor shall remain liable under each of the Accounts Receivable and payments in respect of Intangibles to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. Neither the Collateral Agent nor any other Secured Party shall have any obligation or liability under any agreement giving rise to an Account or a payment in respect of an Intangible by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Party of any payment relating thereto, nor shall the Collateral Agent nor any other Secured Party be obligated in any manner to perform any obligation of the Debtor under or pursuant to any agreement giving rise to an Account or a payment in respect of an Intangible, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts that may have been assigned to it or to which it may be entitled at any time or times.

During the continuance of an Event of Default, upon notice by the Collateral Agent to the Debtor, (i) the Collateral Agent shall have the right to receive any Proceeds of the Pledged Collateral and make application thereof to the Secured Obligations in the order set forth in the Credit Agreement and (ii) the Collateral Agent or its nominee may exercise (A) any voting, consent, corporate and other right pertaining to the Pledged Collateral at any meeting of shareholders, partners or members, as the case may be, of the relevant issuer or issuers of Pledged Collateral or otherwise and (B) any right of conversion, exchange and subscription and any other right, privilege or option pertaining to the Pledged Collateral as if it were the absolute owner thereof (including the right to exchange at its discretion any of the Pledged Collateral upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of any issuer of Pledged Stock and the right to deposit and deliver any Pledged Collateral with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Collateral Agent may determine), all without liability except to account for property actually received by it; provided, however, that the Collateral Agent shall have no duty to the Debtor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.

In order to permit the Collateral Agent to exercise the voting and other consensual rights that it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions that it may be entitled to receive hereunder, (i) the Debtor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all such proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request and (ii) without limiting the effect of clause (i) above, the Debtor hereby grants to the Collateral Agent an irrevocable proxy to vote all or any part of the Pledged Collateral and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Collateral would be entitled (including giving or withholding written consents of shareholders, partners or members, as the case may be, calling special meetings of shareholders, partners or members, as the case may be, and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Collateral on the record books of the issuer thereof) by any other person (including the issuer of such Pledged Collateral or any officer or agent thereof) during the continuance of an Event of Default and which proxy shall only terminate upon Discharge of Lender Claims.

The Debtor hereby expressly authorizes and instructs each issuer of any Pledged Collateral pledged hereunder by the Debtor to (i) comply with any instruction received by it from the Collateral Agent in writing that (A) states that an Event of Default has occurred and is continuing and (B) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from the Debtor, and the Debtor agrees that such issuer shall be fully protected in so complying and (ii) unless otherwise expressly permitted hereby, pay any dividend or other payment with respect to the Pledged Collateral directly to the Collateral Agent

During the continuance of an Event of Default, if the Collateral Agent shall determine to exercise its right to sell any of the Pledged Collateral, and if in the reasonable opinion of the Collateral Agent it is necessary or advisable to have the Pledged Collateral, or any portion thereof, registered under the provisions of the STA or any similar securities laws in any other applicable jurisdiction (the “Securities Act”), the Debtor shall use its reasonable efforts to cause the issuer thereof to (i) execute and deliver, and cause the directors and officers of such issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Collateral Agent, necessary or advisable to register the Pledged Collateral, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its reasonable efforts to cause the registration statement relating thereto to

become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Collateral, or that portion thereof to be sold and (iii) make all amendments thereto or to the related prospectus that, in the opinion of the Collateral Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of any securities commission applicable thereto. The Debtor agrees to cause such issuer to comply with the provisions of the applicable securities laws of any jurisdiction that the Collateral Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) satisfying the provisions of the Securities Act.

The Debtor recognizes that the Collateral Agent may be unable to effect a public sale of any Pledged Collateral by reason of certain prohibitions contained in the Securities Act and applicable regulations or otherwise or may determine that a public sale is impracticable or not commercially reasonable and, accordingly, may resort to one or more private sales thereof to a restricted group of purchasers that shall be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. The Debtor acknowledges and agrees that any such private sale may result in prices and other terms less favourable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Collateral Agent shall be under no obligation to delay a sale of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register such securities for public sale under the Securities Act, even if such issuer would agree to do so.

During the continuance of an Event of Default, the Debtor agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Collateral pursuant to this Section 6.12 valid and binding and in compliance with all other applicable Requirements of Law. The Debtor further agrees that a breach of any covenant contained in this Section 6.12 will cause irreparable injury to the Collateral Agent and the other Secured Parties, that the Collateral Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.12 shall be specifically enforceable against the Debtor, and the Debtor hereby waives and agrees not to assert any defense against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement.

At the time provided in Section 10.7(b)(i) of the Credit Agreement, the Collateral shall be released from the Liens hereby and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Collateral Agent and the Debtor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Debtor. At the request and sole expense of the Debtor following any such termination, the Collateral Agent shall deliver to the Debtor any Collateral of the Debtor held by the Collateral Agent hereunder and execute and deliver to the Debtor, at the sole expense of the Debtor, such documents as the Debtor shall reasonably request to evidence such termination.

If the Collateral Agent shall be directed or permitted pursuant to Section 10.7(b)(ii) or (iii) of the Credit Agreement to release any Lien created hereby upon any Collateral (including any Collateral sold or disposed of by the Debtor in a transaction permitted by the Credit Agreement), such Collateral shall be released from the Lien created hereby to the extent provided under, and subject to the terms and conditions set forth in, Section 10.7(b)(ii) or (iii) of the Credit Agreement. In connection therewith but subject to the terms of the Credit Agreement, the Collateral Agent, at the request and sole expense of the Debtor, shall execute and deliver to the Debtor, all releases or other documents reasonably necessary or desirable for the release of the Lien created hereby on such Collateral.

At the request and sole expense of the Debtor, the Debtor shall be released from its obligations hereunder in the event that all the capital stock of the Debtor shall be so sold or disposed (but only so long as such sale or other disposition is permitted under the Credit Agreement); provided, however, that the Debtor shall have delivered to the Collateral Agent, at least ten Business Days prior to the date of the proposed release, a written request for release identifying the Debtor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Debtor in form and substance satisfactory to the Collateral Agent stating that such transaction is in compliance with the Loan Documents.

Any legal action or proceeding with respect to this Agreement may be brought in the courts of the Province of Ontario, and, by execution and delivery of this Agreement, the Debtor hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid court. The Debtor hereby irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that it may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions.

The Debtor hereby irrevocably consents to the service of any and all legal process, summons, notices and documents in any suit, action or proceeding brought in Canada arising out of or in connection with this Agreement by the mailing (by registered or certified mail, postage prepaid) or delivering of a copy of such process to the Debtor at Debtor’s registered office as set forth herein.. The Debtor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

Nothing contained in this Section 8.12 shall affect the right of the Collateral Agent or any other Secured Party to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Debtor in any other jurisdiction.

shall, upon receipt of notice to do so by the Collateral Agent, mark conspicuously each chattel paper evidencing or relating to Accounts Receivable and each related contract and, at the request of the Collateral Agent, each of its records pertaining to the Collateral with a legend, in form and substance satisfactory to the Collateral Agent, indicating that such chattel paper, related contract or Collateral is subject to the security interests granted hereby;

shall, if any Accounts Receivable shall be evidenced by a promissory note or other instrument or chattel paper, deliver and pledge to the Collateral Agent hereunder such note, instrument or chattel paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent;

shall execute and file such financing or continuation statements, or amendments, thereto, and such other instruments or notices, as may be necessary or desirable, or as the Collateral Agent may request, in order to perfect and preserve the security interests granted or purported to be granted hereby;

hereby authorizes the Collateral Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of the Debtor, where permitted by law; and

shall furnish to the Collateral Agent from time to time, upon request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail.

The Debtor agrees to indemnify and save harmless the Collateral Agent and the Secured Parties from and against any and all claims, losses and liabilities arising out of or resulting out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement).

The Debtor will upon demand pay to the Collateral Agent the amount of any and all expenses, including the fees and disbursements of its counsel and of any experts and agents, which the Collateral Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights or remedies of the Collateral Agent hereunder or (iv) the failure by the Debtor to perform or observe any of the provisions hereunder.

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REGISTERED COPYRIGHTS

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COPYRIGHT APPLICATIONS

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EXCLUSIVE COPYRIGHT LICENSES

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Notary Public

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REGISTERED TRADEMARKS

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