10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                        to

Commission file number 33-81808

BUILDING MATERIALS CORPORATION OF AMERICA
(Exact name of registrant as specified in its charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	22-3276290 (IRS Employer Identification No.)
1361 Alps Road Wayne, New Jersey (Address of Principal Executive Offices)	07470 (Zip Code)

Registrant's Telephone Number, Including Area Code: (973) 628-3000
Securities registered pursuant to Section 12(b) of the Act: none
Securities registered pursuant to Section 12(g) of the Act: none
See table of additional registrants below

          Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
         Yes o    No ý

          Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ý    No o

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer ý    (Do not check if a smaller reporting company)	Smaller reporting company o

          Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
         Yes o    No ý

          As of March 28, 2008, 1,015,010 shares of Class A Common Stock, $.001 par value of Building Materials Corporation of America were outstanding. There is no trading market for the common stock of Building Materials Corporation of America.

          As of March 28, 2008, the additional registrant had the number of shares outstanding which is shown on the table below. There is no trading market for the common stock of the additional registrant. As of March 28, 2008, no shares of the registrant or the additional registrant were held by non-affiliates.

ADDITIONAL REGISTRANTS

Exact name of registrant as specified in its charter	State or other jurisdiction of incorporation or organization	No. of Shares outstanding	Registration No./ I.R.S. Employer Identification Number	Address, including zip code and telephone number, including area code, of registrant's principal executive office
Building Materials Manufacturing Corporation	Delaware	10	333-69749-01/ 22-3626208	1361 Alps Road Wayne, New Jersey 07470 (973) 628-3000

BUILDING MATERIALS CORPORATION OF AMERICA

Form 10-K
for the fiscal year ended December 31, 2007

TABLE OF CONTENTS

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	17
Item 3.	Legal Proceedings	18
Item 4.	Submission of Matters to a Vote of Security Holders	23
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6.	Selected Financial Data	24
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 8.	Financial Statements and Supplementary Data	24
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	24
Item 9A(T).	Controls and Procedures	24
Item 9B.	Other Information	25
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	26
Item 11.	Executive Compensation	27
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36
Item 13.	Certain Relationships and Related Transactions and Director Independence	37
Item 14.	Principal Accounting Fees and Services	39
PART IV
Item 15.	Exhibits and Financial Statement Schedules	40

PART I

The Business section and other parts of this annual report on Form 10-K contain both historical and forward-looking statements that involve risks and uncertainties. Many of the forward-looking statements are located in "Management's Discussion and Analysis of Financial Condition and Results of Operations." These forward-looking statements are only predictions and generally can be identified by words such as "anticipates," "expects," "believes," "intends," "plans," "predicts," "foresees" and other related terms. Similarly, statements that describe our objectives, plans or goals are also forward-looking statements. Our operations are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. The forward-looking statements included herein are made only as of the date of this annual report on Form 10-K. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Item 1.    Business.

General

        Building Materials Corporation of America or BMCA is a leading national manufacturer and marketer of a broad line of asphalt and polymer-based roofing products and accessories for the residential and commercial roofing markets. We also manufacture specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. We were incorporated under the laws of Delaware in 1994 and are a wholly-owned subsidiary of BMCA Holdings Corporation, which is a wholly-owned subsidiary of G-I Holdings Inc. In 1994, we acquired the operating assets and certain liabilities of GAF Building Materials Corporation, whose name has been changed to G-I Holdings Inc. G-I Holdings Inc. is a wholly-owned subsidiary of G Holdings Inc. ("G Holdings"). Samuel J. Heyman beneficially owns (as defined in Rule 13d-3 of the Securities Exchange Act) approximately 99% of G Holdings Inc. We do business under the name "GAF Materials Corporation." Unless otherwise indicated by the context, "we," "us," "our" and "BMCA" refer to Building Materials Corporation of America and its consolidated subsidiaries.

        To facilitate administrative efficiency, effective October 31, 2000, GAF Corporation, our former indirect parent, merged into its direct subsidiary, G-I Holdings Inc. G-I Holdings Inc. then merged into its direct subsidiary, G Industries Corp., which in turn merged into its direct subsidiary, GAF Fiberglass Corporation. In that merger GAF Fiberglass Corporation changed its name to GAF Corporation. Effective November 13, 2000, GAF Corporation merged into its direct subsidiary, GAF Building Materials Corporation, whose name was changed in the merger to G-I Holdings Inc. G-I Holdings Inc. is now our indirect parent, and our direct parent is BMCA Holdings Corporation. We refer to G-I Holdings Inc. and any and all of its predecessor corporations, including GAF Corporation, G-I Holdings Inc., G Industries Corp., GAF Fiberglass Corporation and GAF Building Materials Corporation in this report as "G-I Holdings."

        On January 5, 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey in Newark, New Jersey due to its asbestos-related bodily injury claims, which related to the inhalation of asbestos fiber. We refer to these claims in this report as "Asbestos Claims." G-I Holdings, the successor to GAF Corporation by merger, is a privately-held holding company and we are its only operating subsidiary. We are not included in the bankruptcy filing.

        On February 22, 2007 ("date of acquisition"), a subsidiary of BMCA acquired approximately 90% of the outstanding common shares of ElkCorp ("Elk"), a Dallas, Texas-based manufacturer of roofing products and building materials. The remaining shares of Elk were acquired on March 26, 2007, resulting in Elk becoming an indirect wholly-owned subsidiary of BMCA. See Acquisition of ElkCorp.

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        Our executive offices are located at 1361 Alps Road, Wayne, New Jersey 07470 and our telephone number is (973) 628-3000.

Residential Roofing

        We are a leading national manufacturer of a complete line of premium residential roofing products. Residential roofing product sales represented approximately 75%, 74% and 75% of our net sales in 2007, 2006 and 2005, respectively. Our principal residential roofing products consist of laminated and asphalt strip shingles. We have improved our sales mix of residential roofing products in recent years by increasing our emphasis on laminated shingles and accessory products, which generally are sold at higher prices with more attractive profit margins than our standard strip shingle products. We believe, based on unit sales, that we are the largest manufacturer of residential roofing shingles in the United States. Statements contained in this report as to our competitive position are based on management's estimates and industry information which we believe is reliable.

        Our two principal lines of residential roofing shingles are the Timberline® series and the Sovereign® series. We also produce a wide array of premium designer shingles.

The Timberline® Series.

        The Timberline® series offers a premium architectural laminated product line that adds dramatic shadow lines, while adding depth and dimension and substantially improving the appearance of a roof. The series includes:

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the Timberline® Prestique® 30 High-Definition shingle and the Timberline® Natural Shadow™ shingle, both mid-weight architectural laminated shingles, which serve as economical trade-ups for consumers from a 3-tab shingle, with 30-year limited warranties;



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the Timberline® Prestique® Select 40 shingle, a heavyweight architectural laminated shingle with superior durability and a 40-year limited warranty;



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the Timberline® Prestique® Lifetime shingle, a super-heavyweight architectural laminated shingle with the maximum durability of the Timberline® series, with a lifetime limited warranty; and



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the Timberline Grande™ shingle, which is larger than standard Timberline® shingles and reduces labor costs in installation because of its larger size, with a 40-year limited warranty.

The Sovereign® Series.

        The Sovereign® series includes:

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the economical 3-tab Sentinel® shingle, with a 20-year limited warranty;



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the Royal Sovereign® shingle, a heavier 3-tab shingle, designed to capitalize on the "middle market" for quality shingles, with a 25-year limited warranty; and



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the Marquis®WeatherMax® shingle, a superior performing heavyweight 3-tab shingle, with a 30-year limited warranty.

Premium Designer Shingles.

        Our premium designer asphalt shingles include:

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the Slateline® shingle, a designer strip shingle, which offers the appearance of natural slate at a fraction of the cost and reduces labor costs in installation because of its larger size, with a lifetime limited warranty;

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the Grand Slate™ shingle, a super-heavyweight premium designer laminated shingle, which offers the appearance of natural slate at a fraction of the cost and reduces labor costs in installation because of its larger size, with a lifetime limited warranty;



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the Grand Sequoia® shingle, a premium designer laminated shingle, which offers a rugged wood shake appearance and reduces labor costs in installation, with a lifetime limited warranty;



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the Grand Canyon™ shingle, a premium designer laminated shingle, with the extra-thick rugged wood shake appearance, which reduces labor costs in installation, with a lifetime limited warranty;



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the Country Mansion® shingle, a premium designer laminated shingle, designed for houses with a distinctive rich appearance, which reduces labor costs in installation because of its larger size, with a lifetime limited warranty;



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the Capstone® shingle, a premium designer laminated shingle, designed with the classic look of European slate, with a lifetime limited warranty; and



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the Camelot™ shingle, a super-heavyweight premium designer laminated shingle, which offers both natural beauty and uncompromising performance and reduces labor costs in installation because of its larger size, with a lifetime limited warranty.

Specialty Shingles.

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TruSlate™ 2.0 Roofing System, a patented, slate shingle system that combines real slate with our innovative hybrid technology designed for quick and easy installation, adds unique charm and character to any home and makes an architectural statement.

Weather Stopper® Integrated Roofing System™. In addition to shingles, we supply the major components necessary to install a complete roofing system. Our Weather Stopper® Integrated Roofing System™ begins with Weather Watch® and Stormguard® waterproof underlayments for eaves, valleys and flashings to protect against water seepage between the roof deck and the shingles caused by ice build-up and wind-driven rain. Our Weather Stopper® Integrated Roofing System™ also includes Shingle-Mate®, Leatherback®, and Deck-Armor™ underlayments; Timbertex®, Ridglass™, Seal-A-Ridge® and Z® Ridge Hip and Ridge shingles, which are thicker and typically larger than standard hip and ridge shingles and provide dramatic accents to the slopes and planes of a finished roof; and the Cobra® and Master Flow® Vent series, which provide attic ventilation.

Commercial Roofing

        We manufacture a full line of modified bitumen and asphalt built-up roofing products, thermoplastic polyolefin products, liquid applied membrane systems and roofing accessories for use in the application of commercial roofing systems. Commercial roofing represented approximately 19%, 22% and 21% of our net sales in 2007, 2006 and 2005, respectively. We also market, under the EverGuard® trademark, thermoplastic single-ply commercial roofing products. The EverGuard® products address the important and growing single ply segment of the commercial roofing market. The thermoplastic products offer building owners the reliability of heat-welded seams and ENERGY STAR® qualified systems. The EverGuard® brand also includes Freedom™ self-adhered TPO membranes, which feature faster installation without the need for hot asphalt, solvent-based adhesives, or open-flamed torches. We believe, based on unit sales, that we are the largest manufacturer of both asphalt built-up roofing products and modified bitumen products in the United States.

        We manufacture fiberglass-based felts, which are made from asphalt impregnated glass fiber mat for use as a component in asphalt built-up roofing systems under the GAFGLAS® trademark. Most of our fiberglass-based roofing systems are assembled on the roof by applying successive layers of roofing

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with asphalt and topped, in some applications, with gravel or mineral surfaced sheets. Thermal insulation may be applied beneath the membrane. We also manufacture base sheets, flashings and other roofing accessories for use in these systems; our TOPCOAT® roofing system, a liquid-applied membrane system designed to protect and waterproof existing roofing systems; and roof maintenance products. In addition, we market insulation products under the EnergyGuard™ brandname, which includes perlite and isocyanurate foam in addition to accessories, such as vent stacks, fasteners and cements and coatings. These products allow us to provide customers with a complete roofing system and the ability to market and sell extended guarantees.

        We sell modified bitumen products under the Ruberoid® trademark. Modified bitumen products are used in new and re-roofing applications or in combination with glass membranes in GAF CompositeRoof™ systems. These products consist of a roofing membrane utilizing polymer-modified asphalt, which strengthens and increases flexibility and is reinforced with a polyester non-woven mat or a glass mat. Modified bitumen systems provide an alternative to conventional built-up roofing systems, including ease of installation and maintenance.

Specialty Building Products and Accessories

        We manufacture and market a variety of specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries and other industries. Specialty products and accessories represented approximately 6%, 4% and 4% of our net sales in 2007, 2006 and 2005, respectively. These products primarily consist of metal and fiberglass air distribution products for the HVAC (heating, ventilating and air conditioning) industry, decking and railing products, manufactured decorative stone products and specialty fiber products. We also manufacture a line of specialty coatings for various industrial applications.

Marketing and Sales

        Our sales and marketing functions are designed to help customers grow their businesses and provide better service while offering property owners the best and safest choice from our product offerings. We believe we have one of the industry's largest roofing sales forces. We have a staff of technical professionals who work directly with architects, consultants, contractors and building owners and provide support to our sales force, distributors, lumberyards and retailers. We sell our roofing and specialty products and accessories through our own sales force of approximately 250 experienced, full-time employees and independent sales representatives located across the United States and Canada. A major portion of our roofing product sales are to wholesale distributors and retailers, who resell our products to roofing contractors, builders and property owners. We believe that the wholesale distribution channel represents the principal distribution channel for professionally-installed asphalt roofing products. As a result, we believe that our nationwide coverage has contributed to certain of our roofing products being among the most recognized and requested brands in the industry.

        Our certified contractor programs offer marketing and support services to nationwide networks of roofing and decorative stone installers, as well as residential homebuilders. We view these certified contractors and builders as an effective extension of our sales force, which promotes our products and support services (including enhanced warranty protection) directly to property owners, construction specifiers and architects.

Significant Customers

        We sell our products through multiple distribution channels with a strong presence in the wholesale, retail, manufactured housing and lumberyard distribution channels. No single customer accounted for over 10% of our net sales in 2007, 2006 and 2005, except for The Home Depot, Inc. and American Builders & Contractors Supply Company, Inc.

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Raw Materials

        The major raw materials required for the manufacture of our roofing products are asphalt, mineral stabilizer, glass fiber, glass fiber mat, polyester mat and granules. Asphalt and mineral stabilizer are available from a large number of suppliers on substantially similar terms. We currently have contracts with several of these suppliers, and others are available as substitutes. In 2007, prices of most raw materials, other than asphalt and other petroleum-based raw materials and energy, have been relatively stable, rising moderately with general industrial prices.

        The prices of energy and crude oil continued to rise in 2007 reaching record high levels, however the price of asphalt and other petroleum-based raw materials were relatively flat, although remaining at high historical levels. Due to the strength of our manufacturing operations, which allows us to use many types of asphalt, together with our ability to secure alternative sources of supply, we do not anticipate that any potential disruption in the supply of asphalt will have a material impact on future net sales, although no assurances can be provided in that regard. We will attempt to pass on future cost increases from suppliers as needed; however, no assurances can be provided that these price increases will be accepted in the marketplace.

        The major raw materials required for the manufacture of our specialty building products and accessories are steel tubes, sheet metal products, aluminum, motors and cartons. The major raw materials for the manufacture of our specialty decking and mat product lines are polypropylene, filler, fiberglass and binder. These raw materials are commodity-type products, the pricing for which is driven by supply and demand. Prices of other raw materials used in the manufacture of specialty building products and accessories are more closely tied to movements in inflation rates. All of these raw materials are available from a large number of suppliers on substantially similar terms.

        Three of our roofing plants have easy access to deep water ports thereby permitting delivery of asphalt by ship, which we believe is the most economical means of asphalt transport. Our Nashville, Tennessee plant manufactures a portion of our glass fiber requirements for use in our Chester, South Carolina, Shafter, California and Ennis, Texas plants, which manufacture glass fiber mat substrate.

        During 2007, we purchased the majority of our requirements for headlap roofing granules, colored roofing granules and algae-resistant granules from ISP Minerals Inc. ("ISP Minerals"), an affiliate of BMCA and International Specialty Products Inc., which is also an affiliate of BMCA, under a long-term requirements contract. We refer to International Specialty Products Inc. and its subsidiaries as "ISP."

Backlog

        Our backlog is not significant and is not material to our overall operations.

Seasonal Variations and Working Capital

        Sales of roofing and specialty building products and accessories in the northern regions of the United States generally decline during the winter months due to adverse weather conditions. Generally, our inventory practice includes increasing inventory levels in the first and second quarters of each year in order to meet peak season demand from June through November.

Warranty Claims

        We provide certain limited warranties covering most of our residential roofing products for periods generally ranging from 20 to 50 years, although certain of our product lines provide for a lifetime limited warranty. Although terms of warranties vary, we believe that our warranties generally are consistent with those offered by our competitors, with the exception of our unique "Golden Pledge™," "Peace of Mind™" and "Peak Performance®" warranties. We also offer certain limited warranties of

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varying duration covering most of our commercial roofing products. Most of our specialty building products and accessories carry limited warranties for periods generally ranging from 5 to 20 years, with lifetime limited warranties on certain products. We review the accruals established for estimated probable future warranty claims on a periodic basis.

Competition

        The roofing products industry is highly competitive and includes a number of national competitors. These competitors in the residential roofing and accessories markets are Owens Corning, Tamko and CertainTeed Corporation, and in the commercial roofing market are Johns Manville, Firestone Building Products, Carlisle Companies, Inc., Tamko and CertainTeed Corporation. In addition, there are numerous regional competitors, principally in the commercial roofing market.

        Competition is based largely upon products and service quality, distribution capability, price and credit terms. We believe that we are well-positioned in the marketplace as a result of our broad product lines in the residential and commercial markets, consistently high product quality, strong sales force and national distribution capabilities.

        Our specialty building products and accessories business is highly competitive with numerous competitors due to the breadth of the product lines we market. Major competitors include Gibraltar, Southwark Metal Manufacturing Co., Lomanco Inc., Standex International Corp. and Hart & Cooley, Inc.

Research and Development

        We primarily focus our research and development activities on the development of new products and process improvements and the testing of alternative raw materials and supplies. Our research and development activities, which are dedicated to residential, commercial and fiberglass products, are located at technical centers in Ennis, Texas; Wayne, New Jersey; Chester, South Carolina and Walpole, Massachusetts. Our research and development expenditures were approximately $8.7, $8.0 and $9.4 million in 2007, 2006 and 2005, respectively.

Intellectual Property

        We hold a number of patents, trademarks and licenses obtained over a number of years and expiring at various times consistent with our business needs. Generally, we seek statutory protection for strategic or financially important intellectual property, including patents, trademarks and licenses developed in connection with our businesses. Certain intellectual property, where appropriate, is protected by contracts, licenses, confidentiality or other similar agreements.

        We own numerous United States and foreign patents (and their respective counterparts), the more important of which cover those technologies and inventions embodied in current products, or which are used in the manufacture of those products. While we believe our patent portfolio is important to our business operations and in the aggregate constitutes a valuable asset, no single patent, or group of patents, is critical to the success of our businesses. We also, from time to time, grant licenses under our patents and technology and obtain licenses under the patents and technology of others.

        In addition, we own numerous registered trademarks in the United States and in many foreign countries that apply to our product offerings and businesses. Most works of authorship, such as computer programs, catalogs, product brochures and sales literature, carry appropriate notices indicating our claim to copyright protection under United States laws and, where appropriate, under international treaties.

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Environmental Compliance

        Since 1970, federal, state and local authorities have adopted and amended a wide variety of federal, state and local environmental laws and regulations relating to environmental matters. The environmental laws and regulations deal with air and water emissions or discharges into the environment, as well as the generation, storage, treatment, transportation and disposal of solid and hazardous waste and the remediation of any releases of hazardous substances and materials to the environment. These laws and regulations affect us because of the nature of our operations and that of our predecessor and certain of the substances that are, or have been used, produced or discharged at our or our predecessor's plants or at other locations. We made capital expenditures of approximately $0.4, $1.0 and $0.6 million in 2007, 2006 and 2005, respectively, relating to environmental compliance. These expenditures are included in additions to property, plant and equipment.

        We believe that our manufacturing facilities comply in all material respects with applicable environmental laws and regulations, and, while we cannot predict whether more burdensome requirements will be adopted by governmental authorities in the future, nor can we predict with certainty future capital expenditures or operating costs for environmental compliance, we do not believe they will have a material effect on our business, liquidity, results of operations, cash flows, financial position or competitive position.

        See Item 3, "Legal Proceedings—Environmental Litigation."

Employees

        At December 31, 2007, we employed approximately 4,200 people worldwide, approximately 900 of whom were subject to 14 union contracts. The contracts are effective for one to five year periods. During 2007 and the first quarter of 2008, three labor contracts expired and were renegotiated. We believe that our relations with our employees and their unions are satisfactory.

Acquisition of ElkCorp

        On February 9, 2007, BMCA Acquisition Sub Inc., ("BMCA Acquisition Sub"), and BMCA Acquisition Inc. (together with BMCA Acquisition Sub, "the Purchasers"), both wholly-owned subsidiaries of BMCA, entered into a merger agreement with Elk ("the Merger Agreement"). On February 22, 2007, an equity tender offer closed, and as a result thereof (and the purchase of shares from one of its affilates), BMCA Acquisition Sub acquired approximately 90% of Elk's shares at a purchase price of $43.50 per share. In accordance with the Merger Agreement, the remaining Elk shares were acquired on March 26, 2007 in a second step merger in exchange for $43.50 per share in cash. In the merger, BMCA Acquisition Sub was merged with and into Elk, which then became an indirect wholly-owned subsidiary of BMCA. The acquisition of the Elk shares was completed at a purchase price of approximately $945.3 million, net of $0.1 million of cash acquired and net of the repayment of $195.0 million of the then outstanding Elk senior notes which were assumed in connection with the acquisition and were repaid in March 2007.

        We financed the purchase of Elk and refinanced certain of BMCA's then outstanding debt and repaid all of Elk's then outstanding senior notes of $195.0 million with the proceeds from our new senior secured credit facilities. Our new senior secured credit facilities consist of a $600.0 million Senior Secured Revolving Credit Facility, (the "Senior Secured Revolving Credit Facility"), a $975.0 million Term Loan Facility (the "Term Loan") and a $325.0 million Junior Lien Term Loan Facility (the "Junior Lien Term Loan", and collectively with the Senior Secured Revolving Credit Facility and the Term Loan, the "Senior Secured Credit Facilities").

        We believe the acquisition of Elk will strategically position us for future growth in the roofing industry and other building product markets. The acquisition is expected to provide us with an

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increased market leadership position, create comprehensive market-leading product offerings, generate natural cost savings from synergies, including plant rationalization and re-alignment of distribution networks, raw material procurement, administrative and logistical efficiencies, and leverage the organizational strengths of both BMCA and Elk.

Other Information

        Any materials that we have filed with the Securities and Exchange Commission may be read and copied by the public at the SEC's Public Reference Room located at 450 Fifth Street, N.W., Washington, DC 20549 or by telephoning the SEC at 1-800-SEC-0330. These reports are also available electronically on the SEC's EDGAR website at www.sec.gov. Alternatively, if you wish to receive a paper copy of our reports or any of the exhibits filed with or furnished to the SEC, they may be obtained by writing to: the Corporate Secretary, Building Materials Corporation of America, 1361 Alps Road, Wayne, New Jersey 07470.

Item 1A.    Risk Factors.

Risks Related to Investing in our Securities

We may be forced to contribute assets to our indirect parent to satisfy its bankruptcy creditors, potentially rendering us unable to pay principal and interest on our credit obligations.

        On January 5, 2001, our indirect parent, G-I Holdings Inc., filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to its asbestos-related bodily injury claims, which relate to the inhalation of asbestos fiber. G-I Holdings, the successor to GAF Corporation by merger, is a privately-held holding company, and we are its only operating subsidiary. Although we were not included in the bankruptcy filing, the Official Committee of Asbestos Claimants (the "creditors' committee") in the G-I Holdings case petitioned to substantively consolidate us with G-I Holdings or cause us to file for bankruptcy protection. Although the petition was denied by the Bankruptcy Court on a preliminary basis, the creditors' committee is still seeking such relief. On July 7, 2004, the Bankruptcy Court entered an order authorizing the creditors' committee to commence an adversary proceeding against us and others challenging, as a fraudulent conveyance, the transactions entered into in connection with our formation in 1994 (the "1994 transaction") in which G-I Holdings caused to be transferred to us all of its roofing business and assets and in which we assumed certain liabilities relating to those assets, including a specified amount of asbestos liabilities. The Bankruptcy Court also permitted the creditors' committee (in the name of G-I Holdings) to pursue a claim against holders of our bank and bond debt outstanding in 2000, seeking recovery from them, based on the creditors' committee's theory that the 1994 transaction was a fraudulent conveyance. On July 20, 2004 the creditors' committee appealed certain aspects of the Bankruptcy Court's order (and a June 8, 2004 decision upon which the order was based). G-I Holdings, the holders of our bank and bond debt and BMCA cross-appealed. The District Court entered an order on June 21, 2006 affirming in part and vacating in part the Bankruptcy Court's July 7, 2004 order. Among other things, the District Court vacated that aspect of the Bankruptcy Court's order authorizing the creditors' committee to pursue avoidance claims against us and the holders of our bank and bond debt as of 2000. This issue has been remanded to the Bankruptcy Court for further proceedings consistent with the District Court's opinion.

        Claimants in the G-I Holdings bankruptcy case may seek to file their asbestos-related bodily injury claims against us or additional claims of the G-I Holdings estate under alternative arguments. In these actions, claimants generally do not specify damages and seek to hold BMCA directly liable for damages as would be established in unspecified future judicial proceedings arising out of asbestos-containing products for which G-I Holdings would be responsible. In March 2007, after participating in a mediation which resulted in the parties agreeing to an outline of the principal terms of a settlement of the G-I Holdings bankruptcy and all related litigations, the parties agreed to a stay of proceedings

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pending the completion of their negotiations. The judges presiding over the G-I Holdings bankruptcy proceeding and the related litigations, have each entered stipulated orders implementing the stay. By notices dated February 1, 2008 the creditors' committee and legal representative of present and future demand holders of asbestos-related demands elected to terminate the stay of proceedings in the G-I Holdings bankruptcy and related litigation. The parties continue to participate in mediation; however there can be no assurance of a settlement of any claims.

        If we are not successful in defending against one or more such claims, we may be forced to file for bankruptcy protection and/or contribute all or a substantial portion of our assets to satisfy the claims of G-I Holdings' creditors. Either of these events, or the substantive consolidation of G-I Holdings and BMCA, would weaken our operations and cause us to divert a material amount of our cash flow to satisfy the asbestos claims of G-I Holdings, and may render us unable to pay interest or principal on our Senior Secured Credit Facilities, our 8% Senior Notes due 2008 (the "2008 Notes") and our 7³/4% Senior Notes due 2014 (the "2014 Notes"). We refer to our 2008 Notes and 2014 Notes collectively as the "Senior Notes." See Item 3—"Legal Proceedings."

There will be a change of control if our outstanding common stock is liquidated as a result of our parent company's bankruptcy. If a change of control occurs, we may be unable to satisfy our obligations under our Senior Secured Credit Facilities, our Senior Notes or other debt instruments.

        Even if we are not forced to file for bankruptcy protection, contribute our assets to satisfy the claims of G-I Holdings' creditors or convey our assets to G-I Holdings, the bankruptcy court administering the G-I Holdings case may order the liquidation of the assets of G-I Holdings, which includes all of our parent company's outstanding common stock. The transfer of our parent company's capital stock could constitute a change of control under our Senior Secured Credit Facilities and the indentures governing our Senior Notes. A change of control is an event of default under our Senior Secured Credit Facilities, which could result in the acceleration of all our borrowings thereunder. Any such acceleration would be an event of default under our Senior Notes, pursuant to which payment under our Senior Notes may be accelerated. If a change of control occurs, we may be unable to satisfy our obligations under our Senior Secured Credit Facilities, our Senior Notes or other debt instruments.

        In addition, the indentures relating to the Senior Notes provide that if a change of control occurs, our noteholders will have the right to require us to repurchase their notes at a premium above the principal amount, plus any accrued and unpaid interest to the repurchase date. Our Senior Secured Credit Facilities limit us from repurchasing our Senior Notes. Any of our future credit facilities or other obligations may contain similar restrictions. In the event a change of control occurs at a time when we are effectively prohibited from purchasing our Senior Notes, we could seek the consent of the lenders to offer to purchase our Senior Notes or could attempt to refinance the borrowings that contain the prohibition. If we do not obtain such consent or refinance such borrowings, we will be prohibited from repurchasing our Senior Notes. Even if we are permitted to make a change of control offer, we may not have available funds sufficient to pay the change of control purchase price for any or all of our Senior Notes that are delivered by holders for repurchase. Any failure to repurchase our Senior Notes, whether or not prohibited by our other debt instruments, would constitute an event of default under the relevant indentures, which in turn would constitute a default under the Senior Secured Revolving Credit Facility. If any of these events of default were to occur, we may be unable to pay the accelerated principal amount of and interest on our Senior Notes and our noteholders will lose some or all of their investments.

Our substantial leverage could impair our ability to fulfill our obligations under our existing debt and restrict our future operations.

        We have substantial outstanding debt and, as a result, significant debt service obligations. At December 31, 2007, we had total outstanding consolidated debt of $1,806.9 million (including

9

$52.8 million of loans payable to our parent corporation). For the year ended December 31, 2007 we had $181.4 million of interest expense. We anticipate funding these obligations principally from our cash on hand, cash flow from operations and/or borrowings under our Senior Secured Revolving Credit Facility. Our substantial outstanding debt has important consequences to our debtholders, including the risk that we may not generate sufficient cash flow from operations to pay principal and interest on our debt, including our Senior Secured Credit Facilities and our Senior Notes, or to invest in our businesses. We may not be able to satisfy our obligations, including those under our Senior Secured Credit Facilities and our Senior Notes, from our cash flow from operations and refinancings. If we cannot, we might be able to raise cash to satisfy our obligations through potential sales of assets or equity. Our ability to do so, however, depends on our results of operations, market conditions, restrictions contained in our Senior Secured Credit Facilities and the indentures relating to our Senior Notes and other factors. If we are unable to refinance debt or raise funds though sales of assets or equity or otherwise, we may be unable to pay principal of and interest on our Senior Secured Credit Facilities and our Senior Notes potentially causing foreclosure by our creditors on our assets and potentially rendering us unable to continue as a going concern.

Our substantial leverage could have additional important consequences to our business including:

•

limiting our ability to obtain additional financing on satisfactory terms to fund our working capital requirements, capital expenditures, debt service requirements and other general corporate purposes;



•

reducing the availability of our cash flow to fund our working capital requirements, capital expenditures, and other general corporate requirements because we will be required to use a significant portion of our cash flow to service our debt obligations;



•

increasing our vulnerability to general economic downturns and adverse industry conditions;



•

increasing our exposure to interest rate increases because a portion of our borrowings is at variable interest rates; and



•

placing us at a competitive disadvantage to competitors that have less relative amounts of debt.

        In addition, subject to covenants contained in our Senior Secured Credit Facilities and the indenture relating to the 2014 Notes, we may incur additional debt in the future. Under the most restrictive debt incurrence covenant of our debt instruments, which is the Senior Secured Credit Facilities, we could incur additional debt of approximately $138.0 million as of December 31, 2007. This does not include any availability under our Senior Secured Revolving Credit Facility, which amounted to $210.4 million at December 31, 2007. To the extent we incur any additional debt, the risks discussed above will be intensified. Moreover, some of the debt we may incur may be secured by first-priority liens in the collateral securing our Senior Notes, which would have priority over the rights of holders of the Senior Notes, with respect to the collateral.

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The value of the collateral securing the Senior Secured Credit Facilities and the Senior Notes may not be sufficient to satisfy our obligations on the Senior Secured Credit Facilities and the Senior Notes and the collateral securing the Senior Secured Credit Facilities and the Senior Notes may be diluted or reduced under certain circumstances.

        Our Senior Secured Revolving Credit Facility is secured by a first-priority lien on our accounts receivable, inventory, precious metals, deposit accounts, other current assets and the proceeds thereof (the "Senior Secured Revolving Credit Facility Collateral"). Our Term Loan and Senior Notes are secured by a first-priority lien on substantially all of the other assets other than the Senior Secured Revolving Credit Facility Collateral (the "Term Loan Collateral") and by a second-priority lien on the Senior Secured Revolving Credit Facility Collateral. Our Junior Term Loan is secured by second-priority liens on the Term Loan Collateral and by third-priority liens on the Senior Secured Revolving Credit Facility Collateral, to the extent and for so long as such assets are used to secure borrowings under our Senior Secured Credit Facilities, including refinancings.

        As of December 31, 2007, we and our subsidiaries had $122.0 million of debt secured by the Senior Secured Revolving Credit Facility Collateral and $1,545.8 million of debt secured by the Term Loan Collateral. The collateral securing the Senior Secured Credit Facilities may also secure additional debt to the extent permitted by our Senior Secured Credit Facilities and the indenture governing the 2014 Notes. Except to the extent that they do not permit us to incur additional debt, the indentures relating to the Senior Notes and our Senior Secured Revolving Credit Facilities do not limit the amount of debt that may be secured either senior to or equally and ratably with the Senior Notes. There can be no assurances that the value of the collateral will be sufficient to repay our borrowings under our new Senior Secured Credit Facilities and our other secured obligations, including our Senior Notes. In addition, other parties may hold liens (including statutory liens), whether or not permitted by the indenture governing the Senior Notes, which may entitle them to share in the value of the collateral, and thereby reduce the proceeds available to satisfy the obligations under our Senior Notes.

        As of December 31, 2007, the value of the Senior Secured Revolving Credit Facility Collateral was $649.4 million and the value of the Term Loan Collateral was $1,681.2 million. Certain of the assets were appraised in 2007 in connection with the merger of Elk. The value of the collateral in the event of liquidation may be less than book value and will depend upon market and economic conditions, the availability of buyers, the quantity of assets being sold and the speed at which they are to be sold and other factors. By their nature, portions of the collateral may be illiquid and may have no readily ascertainable market value. In addition, a significant portion of the collateral includes assets that may only be usable, and thus retain value, as part of our operating business. Accordingly, any such sale of the collateral separate from the sale of certain operating businesses may not be feasible or of significant value.

The collateral securing our Senior Notes may be subject to the exclusive control of the lenders under our Senior Secured Revolving Credit Facility and the value of such collateral may therefore not be available to our noteholders.

        The lenders under our Senior Secured Revolving Credit Facility may release all or any portion of the collateral securing that facility and securing the existing Senior Notes in a number of circumstances without the consent of the holders of the Senior Notes. In addition, if the new Senior Secured Credit Facilities are repaid in full and not refinanced with other secured debt, and certain other conditions are satisfied, the liens securing the Senior Notes will be released.

        At any time our Senior Secured Credit Facilities are outstanding, our senior lenders generally have the exclusive right to exercise rights and remedies against the collateral, including the ability to direct the commencement of enforcement proceedings. As a result, if there was an event of default under the Senior Notes, the lenders under our Senior Secured Credit Facilities could decide not to foreclose on

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the collateral, regardless of whether or not there is a default under the Senior Secured Credit Facilities. In such an event, the only remedy available to the holders of the Senior Notes would be to sue for payment on the Senior Notes and the subsidiary guarantees related thereto. The interests of our senior lenders and other creditors with first-priority liens on the collateral may differ from our noteholders and the holders of the Senior Notes will have no control over the collateral following an event of default on the Senior Notes.

Our creditors' ability to foreclose upon and sell the collateral is limited by applicable bankruptcy laws and the value of such collateral may therefore not be available to our noteholders.

        If a bankruptcy petition were filed by or against us, the ability of the collateral agent to exercise remedies against the collateral would be automatically stayed pending bankruptcy court approval. The United States Bankruptcy Code permits a debtor to use collateral even though the debtor is in default under applicable debt instruments, provided that the secured creditor is given "adequate protection." The meaning of the term "adequate protection" may vary according to the circumstances, but it is intended in general to protect the value of the secured creditor's interest in collateral. In view of the lack of a precise definition of the term "adequate protection" and the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments with respect to our Senior Notes could be delayed following commencement of a bankruptcy case, whether or when the collateral agent could repossess or dispose of the collateral for the benefit of the secured creditors, or whether and to what extent the holders of the Senior Notes would receive any value for the Senior Notes.

Our parent corporations are dependent upon our cash flow to satisfy their obligations, including asbestos-related and tax liabilities, and they could cause us to make distributions to them that would reduce our liquidity or result in a change of control.

        G-I Holdings and BMCA Holdings Corporation, our parent corporations, are dependent upon the cash flow of our company and their other subsidiaries in order to satisfy their obligations, including asbestos-related claims and tax liabilities. In order to satisfy those obligations, those corporations might take various actions that would reduce our liquidity, including causing us to make distributions to our stockholders by means of dividends or otherwise, or causing us to make loans to them. Although our Senior Secured Revolving Credit Facility and the indenture relating to our 2014 Notes restrict our ability to pay dividends or make distributions or loans to our parent corporations, there are a number of exceptions to such restrictions. Our parent corporations might also cause BMCA Holdings Corporation to sell our common stock, resulting in a change of control. Their creditors could also seek to cause our parent corporations to sell our common stock or take similar action in order to satisfy liabilities owed to them. The only significant asset of our parent corporations is the stock of our company.

We could be held liable for Federal income tax liabilities of the G-I Holdings consolidated group.

        On September 15, 1997, G-I Holdings Inc. received a notice from the Internal Revenue Service, (the "IRS") of a deficiency in the amount of $84.4 million (after taking into account the use of net operating losses and foreign tax credits otherwise available for use in other years) in connection with the formation in 1990 of Rhône Poulenc Surfactants and Specialties, L.P. (the "surfactants partnership"), a partnership in which GAF Fiberglass Corporation, another predecessor to G-I Holdings, held an interest. This notice could result in G-I Holdings incurring liabilities significantly in excess of its deferred tax liability. On September 21, 2001, the IRS filed a proof of claim with respect to such deficiency against G-I Holdings in the G-I Holdings' bankruptcy. G-I Holdings has filed an objection to the proof of claim, which is the subject of an adversary proceeding pending in the United States District Court for the District of New Jersey. If the IRS were to prevail for the years in which we and/or certain of our subsidiaries were not part of the G-I Holdings Group, and G-I Holdings

12

is unable to satisfy its tax obligations, it might take the various actions described in the risk factor above, and we could be liable for approximately $40.0 million in taxes plus interest, although this calculation is subject to uncertainty depending upon various factors including G-I Holdings' ability to satisfy its tax liabilities and the application of tax credits and deductions. If such proof of claim is sustained for years in which we were part of the G-I Holdings Group, we and/or certain of our subsidiaries together with G-I Holdings and several current and former subsidiaries of G-I Holdings could be severally liable for those taxes and interest. See Item 3—"Legal Proceedings—Tax Claim Against G-I Holdings" and Item 13—"Certain Relationships and Related Transactions and Director Independence—Tax Sharing Agreement."

Federal and state statutes allow courts, under specific circumstances, to void the subsidiary guarantees and the liens securing the subsidiary guarantees.

        Our creditors or the creditors of the subsidiary guarantors could challenge the subsidiary guarantees and the liens granted by our subsidiaries securing the Senior Notes as fraudulent conveyances or on other grounds. Also, the creditors of our parent corporation, which could include the previously mentioned asbestos claimants under certain circumstances, could challenge the liens granted by our subsidiaries securing the subsidiary guarantees as fraudulent conveyances, preferences or on other grounds. See Item 3—"Legal Proceedings." The delivery of the subsidiary guarantees and the grant of the liens securing the Senior Notes and the subsidiary guarantees could be found to be a fraudulent transfer and declared void if a court determines that: (1) the subsidiary guarantee was delivered or the lien was granted with the intent to hinder, delay or defraud the subsidiary guarantor's existing or future creditors, (2) the subsidiary guarantor did not receive fair consideration for the delivery of the guarantee or the incurrence of the lien or (3) the subsidiary guarantor was insolvent at the time it delivered the subsidiary guarantee or granted the lien or was rendered insolvent by such delivery or grant.

        The measure of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a subsidiary guarantor would be considered insolvent if:

•

the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets;



•

if the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or



•

it could not pay its debts as they became due.

        If a court declares the security interests in respect of the Senior Notes to be void, any claim asserted against us for amounts payable on the Senior Notes would be unsecured. If a court declares either the subsidiary guarantees or the security interests in respect thereof to be void, or if the subsidiary guarantees must be limited or voided in accordance with their terms, any claim that noteholders make against the subsidiary guarantors for amounts payable on the subsidiary guarantees would be unsecured or subordinated to the debt and other liabilities of our subsidiary guarantors, including trade payables.

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Restrictive covenants in our Senior Secured Credit Facilities and the indenture governing our 2014 Notes may prevent us from pursuing business activities that could otherwise improve our results of operations.

        The terms of our Senior Secured Credit Facilities and the indenture governing our 2014 Notes limit our ability and the ability of our subsidiaries to, among other things:

•

incur debt;



•

issue capital stock of our subsidiaries;



•

make certain payments and pay dividends;



•

create liens;



•

enter into transactions with stockholders and affiliates;



•

enter into restrictions affecting the ability of our subsidiaries to make distributions, loans or advances to us or other subsidiaries;



•

sell certain assets;



•

make capital expenditures;



•

issue guarantees; and



•

merge or consolidate with, or sell all or substantially all of our assets to, an unaffiliated third party.

        Our Senior Secured Credit Facilities also require us to maintain certain financial ratios commencing in the second quarter of 2008. Complying with these restrictive covenants and the financial ratios, as well as those that may be contained in any future debt agreements, may impair our ability to finance our future operations or capital needs or to take advantage of other favorable business opportunities. They may also limit our ability to pay interest or principal on our Senior Notes. Our ability to comply with these restrictive covenants and the financial ratios will depend on our future performance, which may be affected by events beyond our control. Our failure to comply with the restrictive covenants or financial ratios when they apply will result in a default under the particular debt instrument, which could permit acceleration of the debt under the instrument and the acceleration of debt under our other debt instruments. If our debt is accelerated, we may not have sufficient funds available to make the required payments under our debt.

Risks Related to our Business

Changes in economic conditions may adversely affect our results of operations.

        Our business can be affected by certain economic conditions. While our net sales are predominantly derived from re-roofing, a prolonged housing downturn would have an impact on our results of operations. A slowdown in the demand for asphalt roofing products arising from general economic conditions would result in a decreased demand for our products, adverse pricing and a reduction in our plant capacity utilization.

Increased raw material, energy costs and transportation costs or shortages of raw materials could reduce our profitability.

        Our business relies on the availability of reasonably priced raw materials that are used in the production of our products. The availability and prices of these materials may be influenced by a number of different factors, many of which are not within our control. Shortages of and price increases for certain of these materials, including asphalt, some of which are directly correlated to increases in

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the price of crude oil, have occurred from time to time and may occur in the future. Any significant price increases for our raw materials or increases in energy costs or transportation costs would reduce our margins to the extent we are unable to pass such price increases on to our customers. Any significant changes in our suppliers of raw materials could involve delays and costs that could significantly harm our business, financial condition and results of operations. See Item 1—"Business—Raw Materials."

We face significant competition in the markets we serve.

        The roofing products industry is highly competitive in most product categories and geographic regions. Some of our competitors are companies or divisions or operating units of companies that have greater financial and other resources than we do. Competition is based largely upon products and service quality, distribution capability and price. We compete for retail and wholesale business with both large national manufacturers and smaller regional producers. In certain circumstances, due primarily to factors such as freight rates and customer preference for local brands, manufacturers with better access to certain geographic markets may have a competitive advantage in such markets. In addition, should the roofing products industry experience a prolonged period of excess capacity, it could result in downward pricing pressure and intensified competition. Given these factors, we may not be able to continue to compete successfully against existing or new competitors. Any such failure could dramatically reduce our cash flows and adversely affect our results of operations and financial condition. See Item 1—"Business—Competition."

The loss of one or two large customers could weaken our business and results of operations.

        During 2007, sales to The Home Depot and American Builders & Contractors Supply Company each represented more than 10% of our overall net sales. If we lose either or both of these customers or other significant customers, or experience extended delays or cancellations of significant volume or a significant decline in the level of purchases from either or both of them or other significant customers, our net sales could decline and our business, financial condition and results of operations could be significantly harmed.

Variations in extreme weather conditions can increase or decrease demand for our products and could have a significant affect on our results of operations.

        Our sales are generally seasonal in nature with our peak season in demand coming between June and November. Variations in extreme weather conditions, such as snow, hail, ice storms, hurricanes and tornadoes, or the lack thereof, may increase or decrease the demand for our products and may significantly impact our business, financial condition and results of operations.

Higher interest rates could affect our borrowing costs.

        We anticipate relying on our cash and cash equivalents on hand and our Senior Secured Revolving Credit Facility to support our overall cash flow requirements. Higher interest rates would affect our Senior Secured Credit Facilities and other variable interest rate debt instruments and adversely impact our borrowing costs.

Increases in labor union organizing activity and work stoppages at our facilities or the facilities of our suppliers could weaken our financial performance.

        Our financial performance is affected by the availability of qualified manufacturing personnel. At December 31, 2007, approximately 22% of our employees were represented by fourteen labor unions. Our business, financial condition and results of operations could suffer if a strike or other type of conflict with personnel arises or if we become the subject of union organizing activity. Furthermore,

15

some of our direct and indirect suppliers have unionized work forces. Strikes, work stoppages or slowdowns experienced by these suppliers could result in slowdowns or closures of facilities where components of our products are manufactured. Any interruption in the production or delivery of our products could reduce sales of our products and increase our costs.

We are dependent on certain key personnel, the loss of whom could weaken our financial performance and prospects.

        Our continued success depends to a large extent upon the continued services of our senior management and certain key employees. Our senior executive management team has significant company and industry experience. The senior operating team has an aggregate of approximately 120 years of work experience with BMCA and/or Elk and has an extensive knowledge of our company, customers, competitors and the industry. This team has been instrumental in developing a successful business strategy, while successfully integrating two distinct companies into one. Members of our senior management may not continue in their current positions. The loss of the services of any of these individuals could result in reduced revenues and could weaken our financial performance and results of operations.

Environmental laws and regulations could subject us to significant future liabilities.

        Our manufacturing facilities are subject to extensive and changing Federal, state and local environmental laws and regulations. These laws and regulations pertain to air and water emissions or discharges into the environment, the generation, storage, treatment, transportation and disposal of solid and hazardous waste, and the remediation of any releases of hazardous substances and materials to the environment. We, together with other companies, are a party to a variety of proceedings and lawsuits involving environmental matters under the U.S. Comprehensive Environmental Response Compensation and Liability Act and similar state laws. In those proceedings and lawsuits, recovery is sought for the cost of cleanup of contaminated sites or remedial obligations are imposed. A number of those are in the early stages or have been dormant for protracted periods. See Item 3—"Legal Proceedings—Environmental Litigation." We believe that our manufacturing facilities comply in all material respects with applicable laws and regulations. The discovery of presently unknown environmental conditions, changes in scope or enforcement of environmental laws and regulations or their interpretation, or other unanticipated events may give rise to expenditures or liabilities that may weaken our business, financial condition or results of operations. See Item 3—"Legal Proceedings—Environmental Litigation."

Our controlling stockholder has the ability to elect our entire Board of Directors and can control the outcome of any matter submitted to our stockholders.

        We are an indirect subsidiary of G-I Holdings, which is 99% beneficially owned (as defined in Rule 13d-3 of the Securities Exchange Act of 1934) by Samuel J. Heyman. Mr. Heyman is a director of G-I Holdings and was our Acting Chief Executive Officer from October 2005 through April 2006. Accordingly, Mr. Heyman has the ability to elect our entire Board of Directors and to determine the outcome of any other matter submitted to our stockholders for approval, including, subject to the terms of the indentures relating to the Senior Notes, mergers, consolidations and the sale of all, or substantially all, of our assets. Mr. Heyman may exercise his control over us according to interests that are different from the interests of our noteholders. See Item 12—"Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters."

Item 1B.    Unresolved Staff Comments.

        Not applicable.

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Item 2.    Properties

        Our corporate headquarters is located at a 100-acre campus-like office and research park owned by a subsidiary of International Specialty Products, Inc., at 1361 Alps Road, Wayne, New Jersey 07470. We occupy our headquarters pursuant to our management agreement with ISP. See Item 13—"Certain Relationships and Related Transactions and Director Independence—Management Agreement."

        We own or lease the principal real properties described below. Unless otherwise indicated, the properties are owned in fee. Included in the principal facilities listed below are regional sales offices and warehouses that we maintain, substantially all of which are in leased premises under relatively short-term leases.

LOCATION		FACILITY
Alabama
	Saraland	Warehouse*
	Tuscaloosa	Plant, Warehouse*, Storage/Staging Areas*
California
	Bakersfield	Warehouse*
	Fontana	Plant, Regional Sales Office, Warehouse*
	Fresno	Plant, Warehouses, Warehouses*
	Shafter	Plant, Plant
	Stockton	Plant, Warehouse*
Florida
	Tampa	Plant, Regional Sales Office*
Georgia
	Cumming	Plant
	Savannah	Plant
Illinois
	Woodridge	Regional Sales Office*
Indiana
	Evansville	Warehouse*
	Michigan City	Plant, Administrative Office, Warehouse*
	Mount Vernon	Plant, Plant
Kansas
	Lenexa	Plant*
Maryland
	Baltimore	Plant, Warehouse*, Warehouse
Massachusetts
	Millis	Warehouse*
	Walpole	Plant*
Minnesota
	Lakeville	Warehouse*
	Minneapolis	Plant
New Jersey
	Bridgewater	Warehouse*
	North Branch	Plant
	Wayne	Headquarters*, Corporate Administrative Offices*, Research Center*
North Carolina
	Burgaw	Plant
	Goldsboro	Plant, Warehouse*
Ohio

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	Cleveland	Plant
	Wadsworth	Plant*
Pennsylvania
	Myerstown	Plant, Regional Sales Office
	Quakertown	Plant
	Wind Gap	Plant
South Carolina
	Chester	Plant, Research Center
Tennessee
	Nashville	Plant, Quality Control Center*
Texas
	Dallas	Administrative Offices*, Regional Sales Office*, Plant, Warehouse
	Ennis	Plant, Research Center
	Gainesville	Plant
	Port Arthur	Plant, Technical Service Center
	San Antonio	Warehouse*
	Waxahachie	Plant, Warehouse
Wisconsin
	Edgerton	Warehouse*

*

Leased Property

        In addition to the foregoing list, we have manufacturing facilities in Mobile, Alabama; Hollister, California; Stockton, California; Millis, Massachusetts; Albuquerque, New Mexico; Erie, Pennsylvania and Port Arthur, Texas that are currently closed or have limited operations, and we announced in January 2008, that our Goldsboro, North Carolina and Quakertown, Pennsylvania manufacturing facilities will close in 2008, primarily due to the increased capacity provided by the manufacturing facilities acquired from Elk. We believe that our plants and facilities, which are of varying ages and are of different construction types, have been satisfactorily maintained, are in good condition, are suitable for their respective operations and generally provide sufficient capacity to meet production requirements. Due to the seasonality of our business, our production facilities generally run at full capacity during the months necessary to meet our peak seasonal operating demands. Each plant has adequate transportation facilities for both raw materials and finished products. In 2007, in addition to our $945.3 million acquisition of Elk, we made capital expenditures and an acquisition of land and buildings aggregating to approximately $84.5 million relating to property, plant and equipment.

Item 3.    Legal Proceedings.

        Asbestos Bodily Injury Claims.    In connection with our formation, we contractually assumed and agreed to pay the first $204.4 million of liabilities for asbestos-related bodily injury claims relating to the inhalation of asbestos fiber ("Asbestos Claims") of our indirect parent, G-I Holdings. As of March 30, 1997, we had paid all of our assumed liabilities for Asbestos Claims. G-I Holdings has agreed to indemnify us against any other existing or future claims related to asbestos-related liabilities if asserted against us. In January 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to Asbestos Claims. Most Asbestos Claims do not specify the amount of damages sought and the value of the Asbestos Claims asserted against G-I Holdings is a contested issue in that bankruptcy which remains pending.

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        Claimants in the G-I Holdings' bankruptcy, including judgment creditors, might seek to satisfy their claims by asking the Bankruptcy Court to require the sale of G-I Holdings' assets, including its holdings of BMCA Holdings Corporation's common stock and its indirect holdings of our common stock. Such action could result in a change of control of our company. In addition, those creditors may attempt to assert Asbestos Claims against our company. (Approximately 1,900 Asbestos Claims were filed against us prior to February 2, 2001.) We believe that we will not sustain any liability in connection with these or any other Asbestos Claims. On February 2, 2001, the United States Bankruptcy Court for the District of New Jersey issued a temporary restraining order enjoining any existing or future claimant from bringing or prosecuting an Asbestos Claim against us. By oral opinion on June 22, 2001, and written order entered February 22, 2002, the Bankruptcy Court converted the temporary restraints into a preliminary injunction prohibiting the bringing or prosecution of any such Asbestos Claims against us.

        On February 7, 2001, G-I Holdings filed an action in the United States Bankruptcy Court for the District of New Jersey seeking a declaratory judgment that BMCA has no successor liability for Asbestos Claims against G-I Holdings and that it is not the alter ego of G-I Holdings (the "BMCA Action"). One of the parties to this matter, the Official Committee of Asbestos Claimants (the "creditors' committee"), subsequently filed a counterclaim against us seeking a declaration that BMCA has successor liability for Asbestos Claims against G-I Holdings and that it is the alter ego of G-I Holdings. On May 13, 2003, the United States District Court for the District of New Jersey overseeing the G-I Holdings' Bankruptcy Court withdrew the reference of the BMCA Action from the Bankruptcy Court, and this matter will therefore be heard by the District Court. We believe we will prevail on our claim for a declaratory judgement. Although we believe our claims are meritorious and that we do not have asbestos-related liability, it is not possible to predict the outcome of this litigation, or, if we do not prevail, the outcome of any subsequent litigation regarding the continuation of the preliminary injuction and/or prosecution of Asbestos Claims against us.

        In March 2007, after participating in a mediation which resulted in the parties agreeing to an outline of the principal terms of a settlement of the G-I Holdings bankruptcy and all related litigations, the parties agreed to a stay of proceedings pending the completion of their negotiations. The judges presiding over the G-I Holdings bankruptcy proceeding and the related litigations, including the BMCA Action and the fraudulent conveyance action (discussed below), each entered stipulated orders dated March 22, 2007, March 23, 2007 and April 4, 2007, respectively, implementing the stay. By notices dated February 1, 2008, the creditors' committee and legal representative of present and future holders of asbestos-related demands elected to terminate the stay of proceedings in the G-I Holdings bankruptcy and related litigation. The parties continue to participate in mediation; however there can be no assurance of a settlement of any claims.

        Actions Relating to G-I Holdings' Bankruptcy.    On or about February 8, 2001, the creditors' committee filed a complaint in the United States Bankruptcy Court, District of New Jersey against G-I Holdings and us. The complaint requests substantive consolidation of BMCA with G-I Holdings or an order directing G-I Holdings to cause BMCA to file for bankruptcy protection. We and G-I Holdings intend to vigorously defend the lawsuit. The plaintiffs also filed for interim relief absent the granting of their requested relief described above. On March 21, 2001, the Bankruptcy Court denied plaintiffs' application for interim relief. In November 2002, the creditors' committee, joined in by the legal representative of future demand holders, filed a motion for appointment of a trustee in the G-I Holdings' bankruptcy. In December 2002, the Bankruptcy Court denied the motion. The creditors' committee appealed the ruling to the United States District Court, which denied the appeal on June 27, 2003. The creditors' committee appealed the denial to the Third Circuit Court of Appeals, which denied the appeal on September 24, 2004. The creditors' committee filed a petition with the Third Circuit Court of Appeals for a rehearing of its denial of the creditors' committee's appeal, which was denied by the Court of Appeals on October 26, 2004.

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        On July 7, 2004, the Bankruptcy Court entered an order authorizing the creditors' committee to commence an adversary proceeding against us and others challenging, as a fraudulent conveyance, certain transactions entered into in connection with our formation in 1994, in which G-I Holdings caused to be transferred to our company all of its roofing business and assets and in which we assumed certain liabilities relating to those assets, including a specified amount of asbestos liabilities (the "1994 transaction"). The Bankruptcy Court also permitted the creditors' committee to pursue a claim against holders of our bank and bond debt outstanding in 2000, seeking recovery from them, based on the creditors' committee's theory that the 1994 transaction was a fraudulent conveyance. On July 20, 2004, the creditors' committee appealed certain aspects of the Bankruptcy Court's order (and a June 8, 2004 decision upon which the order was based). G-I Holdings, the holders of our bank and bond debt and BMCA cross-appealed. The District Court entered an order on June 21, 2006 affirming in part and vacating in part the Bankruptcy Court's July 7, 2004 order. Among other things, the District Court vacated that aspect of the Bankruptcy Court's order authorizing the creditors' committee to pursue avoidance claims against us and the holders of our bank and bond debt as of 2000. This issue has been remanded to the Bankruptcy Court for further proceedings consistent with the District Court's opinion. We believe the creditors' committee's avoidance claims are without merit and that the Bankruptcy Court should not permit the committee to pursue such claims against us and the holders of our bank and bond debt as of 2000.

        In March 2007, after participating in a mediation which resulted in the parties agreeing to an outline of the principal terms of a settlement of the G-I Holdings bankruptcy and all related litigations, the parties agreed to a stay of proceedings pending the completion of their negotiations. By notices dated February 1, 2008, the creditors' committee and legal representative of present and future holders of asbestos-related demands elected to terminate the stay of proceedings in the G-I Holdings bankruptcy-related litigation. The parties continue to participate in mediation; however there can be no assurance of a settlement of any claims.

        If the Company is not successful in defending against one or more of these claims, the Company may be forced to file for bankruptcy protection and/or contribute all or a substantial portion of its assets to satisfy the claims of G-I Holdings' creditors. Either of these events, or the substantive consolidation of G-I Holdings and the Company, would weaken its operations and cause it to divert a material amount of its cash flow to satisfy the asbestos claims of G-I Holdings and may render it unable to pay interest or principal on its credit obligations.

        Asbestos-in-Building Claims.    G-I Holdings has also been named as a co-defendant in asbestos-in-buildings cases for economic and property damage or other injuries based upon an alleged present or future need to remove asbestos-containing materials from public and private buildings. We refer to the asbestos-in-building claims as the "Building Claims." Most Building Claims do not seek to recover an amount of specific damages. Since these actions were first initiated approximately 20 years ago, G-I Holdings has not only successfully disposed of approximately 145 of these cases, but is a co-defendant in only three remaining lawsuits, one of which has been dormant. These actions have been stayed as to G-I Holdings pursuant to the G-I Holdings' bankruptcy case. No new Building Claims were filed in 2007. We have not assumed any liabilities with respect to Building Claims, and believe we will not sustain any liability in connection with such claims.

        Insurance Matters.    In October 1983, G-I Holdings filed a lawsuit in Los Angeles, California Superior Court against its past insurance carriers to obtain a judicial determination that those carriers were obligated to defend and indemnify it for Building Claims. G-I Holdings is seeking declaratory relief as well as compensatory damages. This action is presently in the pre-trial pleading stage. The parties have agreed to hold this action in abeyance pending developments in the Building Claims. Because this litigation is in early stages and evidence and interpretations of important legal questions are presently unavailable, it is not possible to predict the future of this litigation.

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        In all the Building Claims, which are presently stayed as to G-I Holdings as a result of the G-I Holdings' bankruptcy filing, G-I Holdings' defense costs have been paid by one of its primary carriers. While G-I Holdings expects that this primary carrier will continue to be obligated to defend and indemnify G-I Holdings, this primary carrier has reserved its rights to later refuse to defend and indemnify G-I Holdings and to seek reimbursement for some or all of the fees paid to defend and resolve the Building Claims.

Environmental Litigation

        We, together with other companies, are a party to a variety of proceedings and lawsuits involving environmental matters under the U.S. Comprehensive Environmental Response Compensation and Liability Act, and similar state laws, in which recovery is sought for the cost of cleanup of contaminated sites or remedial obligations are imposed, a number of which are in the early stages or have been dormant for protracted periods. We refer to these proceedings and lawsuits below as "Environmental Claims." Most of the Environmental Claims do not seek to recover an amount of specific damages.

        In connection with our formation, we contractually assumed all environmental liabilities of G-I Holdings relating to existing plant sites and our business as then conducted. The estimates referred to below reflect those environmental liabilities assumed by us and our other environmental liabilities. The environmental liabilities of G-I Holdings that we did not assume relate primarily to closed manufacturing facilities. G-I Holdings estimates that, as of December 31, 2007, its liability in respect of the environmental liabilities of G-I Holdings not assumed by us was approximately $11.5 million, not accounting for any possible reduction of liability as a result of the G-I Holdings' bankruptcy, before insurance recoveries reflected on its balance sheet of $3.7 million. We estimate our liability as of December 31, 2007, in respect of assumed and other environmental liabilities is $2.6 million, and expect insurance recoveries, as discussed below, of $1.7 million. Insurance recoveries reflected on these balance sheets relate to both past expenses and estimated future liabilities. We refer to these recoveries below as "estimated recoveries."

        At most sites, we anticipate that liability will be apportioned among the companies found to be responsible for the presence of hazardous substances at the site. Although it is difficult to predict the ultimate resolution of these claims, based on our evaluation of the financial responsibility of the parties involved and their insurers, relevant legal issues and cost sharing arrangements now in place, we estimate that our liability in respect of all Environmental Claims, including certain environmental compliance expenses, will be as discussed above. While we cannot predict whether adverse decisions or events can occur in the future, we believe that the ultimate disposition of such matters will not have a material adverse effect on our liquidity, results of operations, cash flows or financial position. However, adverse decisions or events, particularly as to increases in remedial costs, discovery of new contamination, assertion of natural resource damages, and the liability and the financial responsibility of our insurers and of the other parties involved at each site and their insurers, could cause us to increase our estimate of our liability in respect of those matters. It is not currently possible to estimate the amount or range of any additional liability. For information relating to other environmental compliance expenses, see Item 1, "Business—Environmental Compliance."

        After considering the relevant legal issues and other pertinent factors, we believe that it is probable that we will receive the estimated recoveries, although our insurers have not affirmed a legal obligation under the policies to provide indemnity for those claims.

        In June 1997, G-I Holdings commenced litigation on behalf of itself and its predecessors, successors, subsidiaries and related corporate entities in the Superior Court of New Jersey, Somerset County, seeking amounts substantially in excess of the estimated recoveries. This action was removed to the United States Bankruptcy Court for the District of New Jersey in February 2001 in conjunction with the G-I Holdings' bankruptcy case. In November 2002, the parties agreed to have the action

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remanded to the Superior Court of New Jersey, Somerset County where it is pending. While we believe that our claims are meritorious, there can be no assurance that we will prevail in our efforts to obtain amounts equal to, or in excess of, the estimated recoveries.

        We believe that we will not sustain any liability for environmental liabilities of G-I Holdings other than those that we have contractually assumed or that relate to the operations of our business. While we cannot predict whether any claims for non-assumed environmental liabilities will be asserted against us or our assets, or the outcome of any litigation relative to those claims, we believe that we have meritorious defenses to those claims.

Other Litigation

        On or about April 29, 1996, an action was commenced in the Circuit Court of Mobile County, Alabama against G-I Holdings on behalf of a purported nationwide class of purchasers or current owners of, buildings with certain asphalt shingles manufactured by G-I Holdings and affiliated entities. The action alleged, among other things, that those shingles were defective and sought unspecified damages on behalf of the purported class. On September 25, 1998, we agreed to settle this litigation on a national, class-wide basis for asphalt shingles manufactured between January 1, 1973 and December 31, 1997. Following a fairness hearing, the court granted final approval of the class-wide settlement in April 1999. Under the terms of the settlement, we will provide property owners whose shingles were manufactured during this period and which suffer certain damages during the term of their original warranty period, and who file a qualifying claim, with an opportunity to receive certain limited benefits beyond those already provided in their existing warranty.

        In October 1998, G-I Holdings brought suit in the Superior Court of New Jersey—Middlesex County, on our behalf, against certain of its insurers for recovery of the defense costs in connection with the Mobile County, Alabama class action and a declaration that the insurers are obligated to provide indemnification for all damages paid pursuant to the settlement of this class action and for other damages. This action is pending.

*  *  *

        The cases described above under "Legal Proceedings—Asbestos-in-Building Claims," "Environmental Litigation" and "Other Litigation" generally do not seek only specific amounts of damages, but rather seek all damages from whatever claims are asserted. We believe that the ultimate disposition of the cases, however, will not, individually or in the aggregate, have a material adverse effect on the Company's liquidity, financial position or results of operations.

Tax Claim Against G-I Holdings

        On September 15, 1997, G-I Holdings received a notice from the IRS of a deficiency in the amount of $84.4 million (after taking into account the use of net operating losses and foreign tax credits otherwise available for use in later years) in connection with the formation in 1990 of Rhône-Poulenc Surfactants and Specialties, L.P., or the surfactants partnership, a partnership in which G-I Holdings held an interest. On September 21, 2001, the IRS filed a proof of claim with respect to such deficiency against G-I Holdings in the G-I Holdings' bankruptcy. If such proof of claim is sustained, we and/or certain of our subsidiaries together with G-I Holdings and several current and former subsidiaries of G-I Holdings could be severally liable for those taxes and interest. G-I Holdings has filed an objection to the proof of claim, which is the subject of an adversary proceeding pending in the United States District Court for the District of New Jersey. By opinion and order dated September 8, 2006, the District Court ruled on the parties' respective motions for Partial Summary Judgment, granting the government summary judgment on the issue of "adequate disclosure" for statute of limitation purposes and denying G-I Holdings summary judgment on its other statute of limitations defense (finding material issues of fact that must be tried). If the IRS were to prevail for the years in

22

which we and/or certain of our subsidiaries were not part of the G-I Holdings Group, we nevertheless could be liable for approximately $40.0 million in taxes plus interest, although this calculation is subject to uncertainty depending upon various factors including G-I Holdings' ability to satisfy its tax liabilities and the application of tax credits and deductions. In an opinion dated June 8, 2007, the District Court decided that G-I Holdings cannot avail itself of the "binding contract" transitional relief with respect to the 1999 distribution of U.S. Treasury Bonds to G-I Holdings. We believe that we will not be required to pay any incremental income tax to the Federal government with respect to this matter and that the ultimate disposition will not have a material adverse effect on our business, financial position or results of operations.

Item 4.    Submission of Matters to a Vote of Security Holders.

        Not applicable.

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
                Equity Securities.

        All of our outstanding shares of Class A common stock are owned by BMCA Holdings Corporation, or BHC. Accordingly, there is no public trading market for our common stock.

        In 2007 we did not declare or pay a cash dividend to our parent corporation. In 2006 and 2005, we declared and paid cash dividends of $15.0 million each year to our parent corporation. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 20 to our consolidated financial statements included in this annual report on Form 10-K for information regarding restrictions on the payment of dividends. Any decision to pay dividends, and the timing and amount thereof, is dependent upon, among other things, our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our Board of Directors.

Item 6.    Selected Financial Data.

        See page F-28.

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

        See page F-2.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

        See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Financial Condition—Market-Sensitive Instruments and Risk Management" on page F-26.

Item 8.    Financial Statements and Supplementary Data.

        See Index on page F-1 and Financial Statements and Supplementary Data on pages F-2 to F-89.

Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

        Not applicable.

Item 9A(T).    Controls and Procedures.

(a)   Evaluation of Disclosure Controls and Procedures

        Our management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports filed, furnished or submitted under the Exchange Act. Our Chief Executive Officer and Chief Financial Officer also concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

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(b)   Management's Annual Report on Internal Control over Financial Reporting

        Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

        Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, the Company's principal executive and financial officers and affected by the Company's Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation and the prevention and detection of misstatements. Projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

        Our management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of internal control over financial reporting using the criteria established in "Internal Control—Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of the end of the period covered by this report.

        This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

Changes in Internal Control over Financial Reporting

        There were no significant changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in management's evaluation during the fourth quarter of fiscal year 2007 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Item 9B.    Other Information

        None.

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PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers of the Registrant

        The following are the name, age and respective positions of our directors and executive officers as of March 28, 2008.

Name	Age	Position
Robert B. Tafaro	57	Chief Executive Officer, President and Director
Richard A. Nowak	66	Executive Vice President, Chief Operating Officer and Director
John F. Rebele	53	Senior Vice President, Chief Financial Officer, Chief Administrative Officer and Director
David A. Harrison	51	Senior Vice President, Chief Marketing Officer and Director
Matti Kiik	65	Senior Vice President, Chief Technology Officer and Director
Jan E. Jerger-Stevens	45	Senior Vice President, Human Resources and Director

        Set forth below is a description of the backgrounds, including business experience over the past five years, for each of our directors and executive officers. There are no family relationships that exist between any of our directors or executive officers. Under our bylaws, our officers are elected by the Board of Directors and hold office until their respective successors are duly elected and qualified.

Robert B. Tafaro—Mr. Tafaro has been President and Chief Executive Officer of BMCA and some of our subsidiaries since April 2006. He previously held the position of Chief Operating Officer of BMCA and some of our subsidiaries from October 2005 to April 2006 and he was Executive Vice President, Roofing Systems of BMCA and some of our subsidiaries from February 2005 to April 2006. He was also Senior Vice President and General Manager—Roofing Systems Sales of BMCA and some of our subsidiaries from October 2003 to February 2005 and he held the position of Senior Vice President and General Manager—Residential Systems of BMCA and some of our subsidiaries from July 2000 to October 2003. Mr. Tafaro has also been director of BMCA and some of our subsidiaries for more than five years.

Richard A. Nowak—Upon the acquisition of Elk on February 22, 2007, Mr. Nowak was appointed Executive Vice President and Chief Operating Officer of BMCA and some of our subsidiaries. In January 2008, Mr. Nowak was appointed to the Board of Directors of BMCA. Prior to the acquisition of Elk, Mr. Nowak was the President, Chief Operating Officer and Director of Elk from March 31, 2002 through February 22, 2007.

John F. Rebele—Mr. Rebele has been Chief Administrative Officer since April 2005 and Senior Vice President and Chief Financial Officer of BMCA and some of our subsidiaries for more than five years. Mr. Rebele has been a director of BMCA and of BMCA's subsidiaries for more than five years.

David A. Harrison—Mr. Harrison has been Senior Vice President and Chief Marketing Officer of BMCA and some of our subsidiaries since December 2006. Prior to that, from July 2000 through December 2006, he held the position of Senior Vice President-Marketing, Contractor Services and Corporate Development of BMCA and some of our subsidiaries. He has also served as President of GAF Materials Corporation (Canada) for more than five years. Mr. Harrison has been a director of BMCA and some of our subsidiaries for more than five years.

Matti Kiik—Upon the acquisition of Elk on February 22, 2007, Mr. Kiik was appointed Senior Vice President and Chief Technology Officer of BMCA and some of our subsidiaries. In January 2008, Mr. Kiik was appointed to the Board of Directors of BMCA. Prior to the acquisition of Elk, Mr. Kiik

26

was the Senior Vice President and Chief Technology Officer of Elk from December 2006 through February 22, 2007. Prior to December 2006, Mr. Kiik was the Senior Vice President, Research and Development of Elk for more than five years.

Jan E. Jerger-Stevens—Upon the acquisition of Elk on February 22, 2007, Ms. Jerger-Stevens was appointed Vice President, Human Resources of BMCA and some of our subsidiaries. In January 2008, Ms. Jerger-Stevens was appointed Senior Vice President, Human Resources of BMCA and some of our subsidiaries and was appointed to the Board of Directors of BMCA. Prior to the acquisition of Elk, Ms. Jerger-Stevens was the Vice President, Human Resources of Elk from April 2006 through February 22, 2007. Prior to April 2006, Ms. Jerger-Stevens was employed by Jacuzzi Brands, Inc. as Director of Human Resources since 2004. Previously, Ms. Jerger-Stevens spent four years as Vice President, Human Resources for the Specialty Equipment Business of Ingersoll-Rand Company.

Audit Committee Financial Expert

        We are not issuers of securities as that term is defined in the Securities Exchange Act of 1934 and do not have any securities listed on a national exchange or association. Based on the foregoing, our Board of Directors does not, nor is it required to have an audit committee and therefore is not required to determine anyone to be an audit committee financial expert. Our Board of Directors performs customary audit committee functions for us.

Code of Ethics

        All of our employees, including our principal executive officer, principal financial officer, principal accounting officer and the persons performing similar functions, are required to abide by our code of ethics and business conduct policies to ensure that our business is conducted in a consistently legal and ethical manner. We intend to disclose any changes in or waivers from our code of ethics by filing a current report on Form 8-K with the Securities and Exchange Commission. We will provide to any person, without charge, upon request, a copy of our code of ethics by writing to: the Corporate Secretary, Building Materials Corporation of America, 1361 Alps Road, Wayne, New Jersey 07470.

Item 11.    Executive Compensation.

Compensation Discussion and Analysis

Compensation Philosophy

        The primary goal of the Company with respect to executive compensation is to attract, retain and motivate the most qualified and dedicated executives, who possess the high-quality skills and talent required for the success of the business, to tie annual and long-term incentive compensation to achievement of certain performance objectives for the individual executives and for the Company, and to encourage executive performance that contributes to the long-term growth of the Company. For this reason, the Company has formed an internal compensation committee comprised of the Chief Financial Officer, the Chief Executive Officer and the Senior Vice President of Human Resources. Since we are not a publicly-held company, we are not required to form a compensation committee comprised of independent directors, as required by applicable laws and regulations, including the Sarbanes-Oxley Act, and applicable listing requirements.

        To achieve the Company's executive compensation objectives, the compensation committee implements and maintains compensation plans and policies that ensure that executive compensation is fair, reasonable and competitive, and that reward executives' contributions to the overall short and long-term growth of the Company. We use short-term compensation (base salaries and annual cash bonuses) and long-term incentive compensation in the form of incentive units to achieve our goal of driving long-term growth in net book value per share as defined in the 2001 Long-Term Incentive Plan (see below). The Company's compensation policy links each executive's earnings opportunity with the Company's short and long-term performance. To maintain this link, the committee bases performance on the achievement of pre-determined financial targets and operational goals measured by metrics such as operating income and growth, as well as each executive's individual contributions.

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        The Company maintains two compensation plans—the 2001 Long-Term Incentive Plan and the Executive Incentive Compensation Plan. The compensation committee meets at least once each year with respect to distributions and grants under each of these plans. The compensation committee also meets annually to review and approve a compensation budget, including any changes in executive salaries.

Setting Executive Compensation

        In setting compensation, the compensation committee evaluates individual executive performance with the goal of setting compensation at levels they believe are comparable with executives in other companies of similar size, with similar revenues and in similar industries, while taking into account our relative performance and our own strategic goals. The compensation committee conducts an annual benchmark review of the aggregate level of our executive compensation as well as the mix of elements used to compensate our executive officers, including base salary, bonus, total cash compensation and long-term compensation. The compensation committee reviews several executive compensation surveys that compare the amounts paid to executives in 12 to 14 peer companies. The compensation committee reviews companies of comparable size for purposes of benchmarking executive compensation. The various survey results are then compared, and the compensation committee benchmarks our executive compensation against the median updated compensation paid by the aforementioned groups of companies. Once the committee has completed its benchmark review, it outlines its findings regarding current market pricing for executive salaries and these findings are used as a basis for recommending salary adjustments, bonuses and incentive plan grants. The Company used Buck Consultants in 2007 to assist with its benchmark process. The committee does not have a pre-established policy or target for allocating among salary, cash bonuses and long-term incentive compensation. The proper compensation mix is determined based on the performance of the Company and of the individual executive, as compared to goals that were established at the beginning of the year for which incentive compensation is to be paid.

Elements of Compensation

        For the fiscal year ended December 31, 2007, the Company's compensation components for the named executive officers included the following elements:

•

Base salary;



•

Annual bonus (EIC);



•

Long-term incentive compensation;



•

Post-termination compensation;



•

Other bonuses; and



•

Perquisites and other personal benefits.

Base Salary

        The Company pays base salaries to its named executive officers and all other employees to compensate them for their services during the fiscal year. Base salaries for our executives are established based on the scope of their responsibilities, taking into account competitive market compensation paid by other companies for similar positions. Generally, we believe that executive base salaries should be targeted near the median of the range of salaries for executives in similar positions with similar responsibilities at companies of similar size, with similar revenues and in similar industries, in line with our compensation philosophy. Base salaries are reviewed annually, and may be adjusted from time to time to reflect changes in market levels after taking into account the individual

28

responsibilities, performance and experience of each executive as compared with executives in similar positions with similar responsibilities in the peer group.

Annual Bonus (EIC)

        The compensation committee may award discretionary annual bonuses to the named executive officers and to other employees, which amounts are usually paid under the Executive Incentive Compensation Plan, with limited exceptions. The annual incentive bonuses are intended to compensate officers for achieving financial and operational goals and for achieving individual annual performance objectives. The Executive Incentive Compensation Plan is an annual cash incentive plan that is overseen by the compensation committee. When the compensation committee decides to award a bonus, they determine the pool of eligible employees and the amount that those employees will be eligible to receive under the plan. The plan includes various incentive levels based on the participant's accountability and impact on Company operations, and target award opportunities are established as a percentage of base salary, ranging from 20% of base salary to 45% of base salary for the Company's named executive officers. In addition, discretionary bonus amounts may be paid to named executives based on individual performance under the Executive Incentive Compensation Plan.

        Each year, the compensation committee sets minimum, target and maximum levels for corporate and individual performance goals, and payment of awards is based upon the achievement of those goals for that year. Upon completion of the fiscal year, the compensation committee assesses the performance of the Company and the individual with respect to those goals, and an overall percentage amount for the corporate financial goals is calculated. The annual bonus is paid in cash and is ordinarily paid in a single installment in the February or March following the completion of a given fiscal year.

        For the fiscal years ended December 31, 2007 and 2006, each of the named executive officers received the following payments in March 2008 and February 2007, respectively. The 2006 Bonus Awards and a portion of the 2007 Bonus Awards for Mr. Tafaro were made under the executive compensation plan, and for Messrs. Rebele and Harrison, such bonuses were made under the Executive Incentive Compensation Plan. The remainder of the 2007 Bonus Awards reflect a one-time integration bonus paid to each of the executives in recognition of the success of the integration of BMCA and Elk.

Executive Name	2007 Bonus Award		2006 Bonus Award
Robert B. Tafaro	$	500,000	$	435,000
Richard A. Nowak	$	250,000	$	—
John F. Rebele	$	250,000	$	230,000
David A. Harrison	$	180,000	$	135,000
Matti Kiik	$	150,000	$	—
Jan E. Jerger-Stevens	$	100,000	$	—

        Awards were made to the above-named executive officers in March 2008 and February 2007 for performance in 2007 and 2006, respectively and are reflected in the Bonus column of the Summary Compensation Table on page 32.

Long-Term Incentive Compensation

        The Company employs two forms of equity incentives: restricted stock and incentive units. These incentives foster the long-term perspective necessary for the continued success in the Company's business.

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Restricted Stock

        On January 1, 1996, the Company established the BMCA Preferred Stock Option Plan (the "1996 Plan") to issue options to certain employees to purchase shares of redeemable convertible preferred stock ("Preferred Stock") of the Company, exercisable at a price of $100 per share. Each share of Preferred Stock was convertible, at the holder's option, into shares of common stock of the Company at a formula price based on the Company's Book Value as of the date of grant. The options vested rateably over five years and expired after nine years. Dividends would accrue on the Preferred Stock from the date of issuance at the rate of 6% per annum. The Preferred Stock was redeemable, at the Company's option, for a redemption price equal to $100 per share plus accrued and unpaid dividends. The Preferred Stock, and common stock issuable upon conversion of Preferred Stock into common stock, was subject to repurchase by the Company under certain circumstances, at a price equal to current Book Value (as defined in the option agreement). The exercise price of the options to purchase Preferred Stock was equal to the estimated fair value per share of the Preferred Stock at the date of grant. As of December 31, 2007, options to purchase 400,000 shares of Preferred Stock remained available under the 1996 Plan. No options were granted in 2007, 2006 and 2005 and there are no outstanding options as of March 28, 2008.

Incentive Units

        Effective December 31, 2000, the Company adopted the 2001 Long-Term Incentive Plan, which allowed employees participating in the 1996 Plan to also participate in the 2001 Long-Term Incentive Plan. During 2001, all employees exchanged their Preferred Stock options for incentive plan units effective as of December 31, 2000. The 2001 Long-Term Incentive Plan provides long-term compensation to employees and key management personnel based on the Company's book value. Our 2001 Long-Term Incentive Plan authorizes the compensation committee to grant Incentive Units ("Incentive Units") to eligible employees. The number of Incentive Units granted is determined by the compensation committee in its discretion, and the determination of that number is based on the performance of the individual, the performance of the Company, and the individual's contribution to the long-term growth of the Company. Generally, Incentive Units vest cumulatively, in 20% increments over five years, except that Incentive Units granted in exchange for Preferred Stock options retain the vested status and vesting schedule of the options exchanged. The compensation committee may, in its sole discretion, however, grant Incentive Units with any vesting schedule, other than that normally provided in the 2001 Long-Term Incentive Plan. Vesting will end upon an employee's employment with BMCA or any subsidiary for any reason. Incentive Units generally are exercisable for a period of six years from the date of grant. If, after a change of control of BMCA, an employee's employment is terminated for any reason other than Good Cause, as a result of death or permanent disability, or by the employee for Good Reason, all Incentive Units will become fully and immediately vested and payable in cash.

        At the end of each fiscal quarter, the value of Incentive Units is calculated based on our book value, as defined in the plan, at that date less book value as of the date of grant divided by 1,000,010. Upon exercise of an Incentive Unit, a participant receives in cash the excess, if any, of the value of such Incentive Unit as of the relevant valuation date on or, in the event of an exercise between valuation dates, immediately preceding the exercise date, over the initial value of such Incentive Unit, subject to all appropriate withholdings. Accordingly, the dollar value of future payouts is not readily ascertainable.

        In December 2005, the compensation committee exercised its rights to amend the Plan, and extended the term of the Plan through December 2007. In December 2007, the compensation committee further extended the term of the Plan through December 2009, which could result in future additional compensation expense.

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Post-Termination Compensation

        In order for the Company to attract and retain well-qualified executives and key personnel, to provide certain security to itself and to each executive and to provide for continuity of management in the event of a change in control of the Company, in 2001 the Company entered into employment security agreements with certain of our executive officers and key personnel, including Messrs. Tafaro, Rebele and Harrison.

        The agreements have no expiration date, are supported by irrevocable letters of credit and provide for a single-sum payment consisting of two times salary and bonus and related benefits if employment is terminated or a change in employment responsibilities occurs within a thirty-six month period following the change in control event. At December 31, 2007, the aggregate value of the security agreement related to the above-named individuals was $4.3 million, which excludes the cost of medical benefits and any amounts due under the 2001 Long-Term Incentive Plan.

        A change of control, as defined in the agreements, would occur when (1) the Heyman Group (as described below) ceases to be the beneficial owner, directly or indirectly, of a majority voting power of the voting stock of BMCA, (2) the transfer or sale of a substantial portion of the property of BMCA in any transaction or series of transactions to any entity or entities other than an entity of which the Heyman Group owns at least 80% of such entity's capital stock or beneficial interest or (3) any person or entity, other than the Heyman group, assumes, without the consent of the Heyman Group, management responsibilities for the affairs of G-I Holdings or any subsidiary thereof. The filing of the Chapter 11 case by G-I Holdings did not constitute a change in control but a change in control could occur in the future depending on the outcome of the bankruptcy proceeding. See Item 1A—"Risk Factors."

        Under the agreements, the "Heyman Group:" means (1) Samuel J. Heyman, his heirs, administrators, executors and entities of which a majority of the voting stock is owned by Samuel J. Heyman, his heirs, administrators or executors and (2) any entity controlled, directly or indirectly, by Samuel J. Heyman or his heirs, administrators or executors. Also for purposes of this section "beneficial ownership" shall be determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

        Additionally, under their respective employment agreements dated August 9, 2007, Messrs. Nowak and Kiik are entitled to severance payments, which are based on the timing of their termination.

Other Bonuses

        Pursuant to their employment agreements dated August 9, 2007, Messrs. Nowak and Kiik each received a signing bonus in the amount of $1.0 and $0.3 million, respectively. Additionally, each is entitled to interim stay bonuses in exchange for remaining an employee of the Company through specified dates.

Perquisites and Other Personal Benefits

        The Company provides named executive officers with certain perquisites and other personal benefits that the compensation committee believes are reasonable and consistent with the overall compensation philosophy to attract, retain and motivate the most qualified and dedicated employees for key positions. The compensation committee periodically reviews the levels of perquisites and other personal benefits provided to named executive officers.

        The named executive officers are provided use of company automobiles, payment of premiums for life insurance policies and long-term disability insurance policies, Company contributions to the 401(k) plan, and participation in the plans and programs described above. In certain instances and on a case-by-case basis, the Company may reimburse relocation expenses and pay relocation bonuses to

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executives who are required, due to promotions or reorganizations, to move to another Company location. Additionally, the Company may pay special one-time bonuses to certain executives when their performance far-exceeds any targets or goals set by the compensation committee. Such bonuses are not common and are not paid through any formal compensation plan.

Compensation Committee Report

        The compensation committee, reviewed and discussed the above Compensation Discussion and Analysis ("CD&A") with the Company's management. Based on the review and discussion, the compensation committee recommended to the Company's Board of Directors that the CD&A be included in this Annual Report or Form 10-K.

Robert B. Tafaro
Jan E. Jerger-Stevens
John F. Rebele

Summary Compensation Table

        The following table sets forth the cash and non-cash compensation for each of the last two fiscal years awarded to or earned by our Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers as of December 31, 2007.

Summary Compensation Table

Name and Principal Position	Year	Salary			Bonus(1)			Option Awards		All Other Compensation			Total
Robert B. Tafaro Chief Executive Officer and President(2)	2007 2006	$ $	525,000 450,000		$ $	500,000 435,000	(2)	$ $	190,120 660,108	$ $	34,474 36,815	(2) (2)	$ $	1,249,594 1,581,923
Richard A. Nowak Executive Vice President and Chief Operating Officer(3)	2007 2006	$ $	374,318 —	(3)	$ $	1,250,000 —	(3)	$ $	3,656 —	$ $	34,517 —	(3)	$ $	1,662,491 —
John F. Rebele Senior Vice President, Chief Financial Officer and Chief Administrative Officer(4)	2007 2006	$ $	339,900 315,833		$ $	250,000 230,000	(4)	$ $	82,689 438,325	$ $	37,415 37,308	(4) (4)	$ $	710,004 1,021,466
David A. Harrison Senior Vice President and Chief Marketing Officer(5)	2007 2006	$ $	314,563 290,613		$ $	180,000 135,000	(5)	$ $	75,922 353,270	$ $	30,254 26,338	(5) (5)	$ $	600,739 805,221
Matti Kiik Senior Vice President and Chief Technology Officer(6)	2007 2006	$ $	218,755 —	(6)	$ $	450,000 —	(6)	$ $	1,755 —	$ $	25,418 —	(6)	$ $	695,928 —

(1)

Bonus amounts for 2006 and a portion of the bonus amounts for certain executives in 2007 are payable pursuant to our Executive Incentive Compensation Plan with the exception of Mr. Tafaro with respect to his bonus amount, which is payable pursuant to the executive compensation plan.

(2)

Included in "Bonus" for Mr. Tafaro for 2007 are amounts awarded under the executive compensation plan and a one-time integration bonus. Included in "All Other Compensation" for Mr. Tafaro are: $16,250 and $15,900 representing our contribution under the 401(k) plan in 2007 and 2006, respectively; $6,615 and $8,849 representing the amount of imputed income for the personal use of an automobile in 2007 and 2006, respectively; $10,434 and $10,491 for the premiums paid by us for a life insurance policy in 2007 and 2006, respectively; and $1,175 and $1,575 for the premiums paid by us for a long-term disability policy in 2007 and

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2006, respectively. The amount included in "Option Awards" for Mr. Tafaro represents the expense incurred in 2007 and 2006, respectively, by us in relation to all incentive units outstanding under BMCA's 2001 Long-Term Incentive Plan. See "Long-Term Incentive Plan."

(3)

The salary for Mr. Nowak only reflects compensation for services since the date of acquisition. Included in "Bonus" for Mr. Nowak for 2007 are $1,000,000 representing a signing bonus paid in 2007 and a one-time integration bonus. Included in "All Other Compensation" for Mr. Nowak are: $26,332 representing our contribution under the Elk 401(k) plan in 2007 since the date of acquisition; $4,282 representing the amount of imputed income for the personal use of an automobile in 2007 since the date of acquisition; $2,050 for the premiums paid by us for a life insurance policy in 2007 since the date of acquisition; and $1,853 for the premiums paid by us for a long-term disability policy in 2007 since the date of acquisition. The amount included in "Option Awards" for Mr. Nowak represents the expense incurred in 2007 since the date of acquisition by us in relation to all incentive units outstanding under BMCA's 2001 Long-Term Incentive Plan. See "Long-Term Incentive Plan."

(4)

Included in "Bonus" for Mr. Rebele for 2007 are amounts awarded under the Executive Incentive Compensation Plan, and a one-time integration bonus. Included in "All Other Compensation" for Mr. Rebele are: $16,250 and $15,900 representing our contribution under the 401(k) plan in 2007 and 2006, respectively; $12,661 and $12,825 representing the amount of imputed income for the personal use of an automobile in 2007 and 2006, respectively; $7,329 and $7,008 for the premiums paid by us for a life insurance policy in 2007 and 2006, respectively; and $1,175 and $1,575 for the premiums paid by us for a long-term disability policy in 2007 and 2006, respectively. The amount included in "Option Awards" for Mr. Rebele represents the expense incurred in 2007 and 2006, respectively, by us in relation to all incentive units outstanding under BMCA's 2001 Long-Term Incentive Plan. See "Long-Term Incentive Plan."

(5)

Included in "Bonus" for Mr. Harrison for 2007 are amounts awarded under the Executive Incentive Compensation Plan, and a one-time integration bonus. Included in "All Other Compensation" for Mr. Harrison are: $16,250 and $15,900 representing our contribution under the 401(k) plan in 2007 and 2006, respectively; $12,829 and $2,405 representing the amount of imputed income for the personal use of an automobile in 2007 and 2006, respectively; $0 and $6,458 for the premiums paid by us for a life insurance policy in 2007 and 2006, respectively; and $1,175 and $1,575 for the premiums paid by us for a long-term disability policy in 2007 and 2006, respectively. The amount included in "Option Awards" for Mr. Harrison represents the expense incurred in 2007 and 2006, respectively, by us in relation to all incentive units outstanding under BMCA's 2001 Long-Term Incentive Plan. See "Long-Term Incentive Plan."

(6)

The salary for Mr. Kiik only reflects compensation for services since the date of acquisition. Included in "Bonus" for Mr. Kiik for 2007 are $300,000 representing a signing bonus paid in 2007 and a one-time integration bonus. Included in "All Other Compensation" for Mr. Kiik are: $19,974 representing our contribution under the Elk 401(k) plan in 2007 since the date of acquisition; $2,575 representing the amount of imputed income for the personal use of an automobile in 2007 since the date of acquisition; $996 for the premiums paid by us for a life insurance policy in 2007 since the date of acquisition; and $1,873 for the premiums paid by us for a long-term disability policy in 2007 since the date of acquisition. The amount included in "Option Awards" for Mr. Kiik represents the expense incurred in 2007 since the date of acquisition by us in relation to all incentive units outstanding under BMCA's 2001 Long-Term Incentive Plan. See "Long-Term Incentive Plan."

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Long-Term Incentive Plan

        The following table sets forth information on awards (being incentive units) granted to the executive officers named in the Summary Compensation Table above during 2007 under our 2001 Long-Term Incentive Plan.

2007 Grants of Plan—Based Awards(1)

Name	Grant Date	Date of Compensation Committee Action	All Other Option Awards; Number of Securities Underlying Options	Exercise or Base Price of Option Awards(2)(3)
Robert B. Tafaro	1/07	1/07	5,000	583.08
Richard A. Nowak	7/07	8/07	5,000	589.43
John F. Rebele	1/07	1/07	2,300	583.08
David A. Harrison	1/07	1/07	1,900	583.08
Matti Kiik	7/07	8/07	3,000	589.43

(1)

Effective December 31, 2000, we adopted our 2001 Long-Term Incentive Plan. The Plan provides long-term compensation to employees and key management personnel based on BMCA's book value (as defined in the plan). Our 2001 Long-Term Incentive Plan authorizes the grant of incentive units to eligible employees. "Option Awards" referenced in the table above are incentive units granted under the 2001 Long-Term Incentive Plan. Our 2001 Long-Term Incentive Plan is administered by a committee appointed by our board of directors. The number of incentive units granted is determined by the committee in its sole discretion. Generally, incentive units vest cumulatively, in 20% increments over five years, except that incentive units granted in exchange for preferred stock options previously granted under the 1996 Plan retain the vested status and vesting schedule of the options exchanged. The committee may, in its sole discretion, however, grant incentive units with any vesting schedule, other than the vesting schedule provided for in the 2001 Long-Term Incentive Plan. Vesting will end upon the termination of an employee's employment with BMCA or any subsidiary for any reason. Incentive units generally are exercisable for a period of six years from the date of grant. If, after a change of control of BMCA, (as defined) an employee's employment is terminated for any reason other than Good Cause (as defined), as a result of death or permanent disability, or by the employee for Good Reason (as defined), all incentive units will become fully and immediately vested and payable in cash.

(2)

Set forth under the "Exercise or Base Price of Option Awards" column is the initial value (as defined) per unit at which the respective incentive units were granted. The value of incentive units is determined at the end of each fiscal quarter based on our book value, as defined in the plan at that date less book value as of the date of grant divided by 1,000,010 and is payable in cash upon exercise. Our 2001 Long-Term Incentive Plan was to terminate five years after its effective date of December 2000, however, in December 2005, the committee exercised its rights to amend the Plan, and extended the term of the Plan through December 2007. In December 2007, the compensation committee further extended the term of the Plan through December 2009, which could result in future additional compensation expense.

(3)

Upon exercise of an incentive unit, a participant will receive in cash the excess, if any, of the value of such incentive unit as of the relevant valuation date on or, in the event of an exercise between valuation dates, immediately preceding the exercise date, over the initial value of such incentive unit, subject to all appropriate withholdings. Accordingly, the amount of future payouts is not readily ascertainable.

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        The following tables set forth detailed information on awards of our executive officers named in the Summary Compensation Table above during 2007 under our 2001 Long-Term Incentive Plan.

Outstanding Equity Awards at December 31, 2007

Option Awards(1)

Name	Number of Securities Underlying Unexercised Options Exercisable	Number of Securities Underlying Unexercised Options Unexercisable	Equity Incentive Plan Awards: Numbers of Securities Underlying Unexercised Unearned Options	Option Exercise Price		Option Expiration Date
Robert B. Tafaro	1,000	—	—	$	297.90	1/08
	1,100	—	—	$	323.30	7/08
	880	—	1,320	$	478.16	4/11
	2,000	—	3,000	$	534.19	1/12
	—	—	5,000	$	583.08	1/13
Richard A. Nowak	—	—	5,000	$	583.49	7/13
John F. Rebele	1,100	—	—	$	323.30	7/08
	600	—	—	$	300.00	1/10
	720	—	1,080	$	478.16	4/11
	—	—	2,300	$	583.08	1/13
David A. Harrison	1,100	—	—	$	323.30	7/08
	1,100	—	—	$	300.00	1/10
	640	—	960	$	478.16	4/11
	—	—	1,900	$	583.08	1/13
Matti Kiik	—	—	3,000	$	583.49	7/13

(1)

"Option Awards" referenced in the table above are incentive units granted under the 2001 Long-Term Incentive Plan.

Option Exercises in 2007(1)

Name	Number of Shares Acquired on Exercise	Value Realized on Exercise
Robert B. Tafaro	1,700	$	481,236
Richard A. Nowak	—	$	—
John F. Rebele	1,500	$	451,161
David A. Harrison	1,546	$	463,120
Matti Kiik	—	$	—

(1)

"Option Exercises" referenced in the table above are incentive units granted under the 2001 Long-Term Incentive Plan.

Employment Security Agreements

        In June 2001, we entered into employment security agreements with certain of our executive officers and key personnel, including Messrs. Tafaro, Rebele and Harrison, in an effort to retain these individuals as well as provide security to us and the executives and to provide for continuity of

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management in the event of a change in control. The agreements have no expiration date, are supported by irrevocable letters of credit and provide for a single-sum payment consisting of two times salary and bonus and related benefits if employment is terminated or a change in employment responsibilities occurs within a 36-month period following the change in control event, as defined. At December 31, 2007, the aggregate value of the security agreements related to the above-named individuals (see Directors and Executive Officers of the Registrant) was $4.3 million, which excludes the cost of medical benefits and any amounts due under the 2001 Long-Term Incentive Plan.

        A change of control, as defined in the agreements, would occur when (1) the Heyman Group (as described below) ceases to be the beneficial owner, directly or indirectly, of a majority voting power of the voting stock of BMCA, (2) the transfer or sale of a substantial portion of the property of BMCA in any transaction or series of transactions to any entity or entities other than an entity of which the Heyman Group owns at least 80% of such entity's capital stock or beneficial interest or (3) any person or entity, other than the Heyman Group, assumes, without the consent of the Heyman Group, management responsibilities for the affairs of G-I Holdings or any subsidiary thereof. The filing of the Chapter 11 case by G-I Holdings did not constitute a change in control but a change in control could occur in the future depending on the outcome of the bankruptcy proceeding.

        Under the agreements, the "Heyman Group" means (1) Samuel J. Heyman, his heirs, administrators, executors and entities of which a majority of the voting stock is owned by Samuel J. Heyman, his heirs, administrators or executors and (2) any entity controlled, directly or indirectly, by Samuel J. Heyman or his heirs, administrators or executors. Also for purposes of this section, "beneficial ownership" shall be determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

        Additionally, under their respective employment agreements dated August 9, 2007, Messrs. Nowak and Kiik are entitled to severance payments, which are based on the timing of their termination.

Compensation of Directors

        Our directors do not receive any additional compensation for their services as directors.

Compensation Committee Interlocks and Insider Participations

        We do not have a separate compensation committee within the rules prescribed by the Sarbanes-Oxley Act. Compensation policies are established by our internal compensation committee, comprised of our Chief Executive Officer, Chief Financial Officer and Senior Vice-President of Human Resources. See Item 13, "Certain Relationships and Related Transactions and Director Independence."

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Securities Authorized for Issuance Under Equity Compensation Plans

        As of December 31, 2007, options to purchase 400,000 shares of preferred stock remain available for grants under our 1996 Preferred Stock Option Plan.

Securities Ownership of Certain Beneficial Owners and Management

        As of March 28, 2008, 100% of our outstanding shares of Class A common stock were owned of record by BMCA Holdings Corporation.

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        The following table sets forth information with respect to the ownership of our common stock, as of March 28, 2008, by each other person known to us to own beneficially more than 5% of the common stock outstanding on that date and by all of our directors and executive officers as a group.

Title of Class	Name and Address of Beneficial Owner(1)	Amount and Nature of Beneficial Ownership		Percent of Class	Total Voting Power
Class A Common Stock	Samuel J. Heyman	1,015,010	(2)	100.0%	100.0%
	All directors and executive officers as a group (7 persons)	—		—	—

(1)

The business address for Mr. Heyman is 667 Madison Avenue, New York, New York 10021.

(2)

The number of shares shown as being beneficially owned (as defined in Rule 13d-3 of the Exchange Act) by Mr. Heyman attributes ownership of the shares of our common stock owned by BMCA Holdings Corporation, an indirect wholly-owned subsidiary of G Holdings, to Mr. Heyman. As of March 28, 2008, Mr. Heyman beneficially owned (as defined in Rule 13d-3 of the Exchange Act) approximately 99% of the capital stock of G Holdings.

Item 13.    Certain Relationships and Related Transactions and Director Independence.

        Although no formal written policy is in place, our Board of Directors is responsible for reviewing and approving the terms and conditions of all significant related party transactions.

Management Agreement

        Pursuant to a management agreement, a subsidiary of ISP (of which Samuel J. Heyman beneficially owns, as defined in Rule 13d-3 of the Exchange Act, approximately 100%), provides certain general management, administrative, legal and facilities services to us, including the use of our headquarters in Wayne, New Jersey. We were charged approximately $6.7, $6.1 and $5.8 million in 2007, 2006 and 2005, respectively, for these services under the management agreement, inclusive of the services provided to G-I Holdings. These charges consist of management fees and other reimbursable expenses attributable to us, or incurred by ISP for our benefit. They are based on an estimate of the costs ISP incurs to provide those services. The amount payable to ISP for management fees as of December 31, 2007 and 2006 was $0.5 and $0.4 million, respectively. The management agreement also provides that we are responsible for providing management services to G-I Holdings and some of its subsidiaries and that G-I Holdings pay to us a management fee for these services. The aggregate amount paid by G-I Holdings to us for services rendered under the management agreement in 2007, 2006 and 2005 was $0.8, $0.9 and $0.8 million, respectively. We also allocate a portion of the management fees payable by us under the management agreement as lease payments for the use of our headquarters.

        Due to the unique nature of the services provided under the management agreements, comparisons with third party arrangements are difficult. However, we believe that the terms of the management agreement taken as a whole are no less favorable to us than could be obtained from an unaffiliated third party.

Certain Purchases

        We purchase a substantial portion of our headlap roofing granules, colored roofing granules and algae-resistant granules requirements under a long-term requirements contract from ISP Minerals. We believe our long-term supply requirements contract with ISP Minerals, taken as a whole, is no less favorable to us than could be obtained from an unaffiliated third party. In 2007, 2006 and 2005, we

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purchased in the aggregate approximately $106.3, $102.3 and $108.3 million of roofing granules from ISP Minerals, respectively.

Tax Sharing Agreement

        We entered into a tax sharing agreement (the "Tax Sharing Agreement") dated January 31, 1994 and later amended on March 19, 2001, with G-I Holdings, with respect to the payment of Federal income taxes and related matters. During the term of the Tax Sharing Agreement, which is effective for the period during which we or any of our domestic subsidiaries is included in a consolidated Federal income tax return for the G Holdings' consolidated tax group, we are obligated to pay G Holdings an amount equal to those Federal income taxes we would have incurred if we, on behalf of ourselves and our domestic subsidiaries, filed our own Federal income tax return. Unused tax attributes will carry forward for use in reducing amounts payable by us to G Holdings in future years, but cannot be carried back. Our unused tax attributes currently consist of a net operating loss carryforward of $91.4 million, which will not expire until 2027. If we ever were to leave the G Holdings' consolidated tax group, we would be required to pay to G Holdings the value of any tax attributes to which we would succeed under the consolidated return regulations to the extent the tax attributes reduced the amounts otherwise payable by us under the Tax Sharing Agreement. Under limited circumstances, the provisions of the Tax Sharing Agreement could result in us having a greater liability under the agreement than we would have had if we and our domestic subsidiaries had filed our own separate Federal income tax return. Under the Tax Sharing Agreement, we and each of our domestic subsidiaries are responsible for any taxes that would be payable by reason of any adjustment to the tax returns of G Holdings or its subsidiaries for years prior to the adoption of the Tax Sharing Agreement that relate to our business or assets or the business or assets of any of our domestic subsidiaries. Although, as a member of the G Holdings' consolidated tax group, we are severally liable for certain Federal income tax liabilities of the G Holdings' consolidated tax group, including tax liabilities not related to our business, we should have no liability other than liabilities arising from our operations and the operations of our domestic subsidiaries and tax liabilities for tax years pre-dating the Tax Sharing Agreement that relate to our business or assets and the business or assets of any of our domestic subsidiaries. The Tax Sharing Agreement provides for analogous principles to be applied to any consolidated, combined or unitary state or local income taxes. Under the Tax Sharing Agreement, G Holdings makes all decisions with respect to all matters relating to taxes of the G Holdings' consolidated tax group. The provisions of the Tax Sharing Agreement take into account both the Federal income taxes we would have incurred if we filed our own separate Federal income tax return and the fact that we are a member of the G Holdings' consolidated tax group for Federal income tax purposes.

Intercompany Borrowings

        We make loans to, and borrow from, our parent corporations from time to time at rates ranging from 7.3% to 8.3% in 2007. As of December 31, 2007 and 2006, BMCA Holdings Corporation owed us $56.2 and $56.0 million, including interest of $1.0 and $0.8 million, respectively, and we owed BMCA Holdings Corporation $52.8 and $52.8 million, respectively. Interest income on our loans to BMCA Holdings Corporation amounted to $5.0, $4.9 and $4.0 million in 2007, 2006 and 2005, respectively. Interest expense on our loans from BMCA Holdings Corporation amounted to $4.8, $4.7 and $3.8 million in 2007, 2006 and 2005, respectively. Loans payable to/receivable from our parent corporation are due on demand and provide each party with the right of offset of its related obligation to the other party and are subject to limitations as outlined in our Senior Secured Credit Facilities and our Senior Notes. Under the terms of our Senior Secured Credit Facility and the indentures governing our Senior Notes at December 31, 2007, we could repay demand loans to our parent corporation amounting to $52.8 million, subject to certain conditions. We also make non-interest bearing advances to affiliates, of which no balance was outstanding at December 31, 2007. In addition, we did not enter

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into any borrowing or lending activity with other affiliates. See Note 19 to our consolidated financial statements included in this annual report on Form 10-K.

Director Independence

        Our Board of Directors is comprised of Messrs. Tafaro, Nowak, Rebele, Harrison, Kiik and Ms. Jerger-Stevens, none of whom are independent.

Item 14.    Principal Accounting Fees and Services.

        The following table presents fees for professional services rendered by our independent registered public accounting firm, Ernst & Young LLP, and our former independent registered public accounting firm, KPMG LLP, for the fiscal years ended December 31, 2007 and 2006.

Audit and Non-Audit Fees(1)

		2007		2006
Audit Fees(2)		$	542,800	$	535,000
Audit-Related Fees(3)			67,000		21,000
Tax Fees(4)			241,818		30,000
All Other Fees(5)			1,165,916		131,100
	Total	$	2,017,534	$	717,100

(1)

On September 18, 2006, we replaced KPMG LLP as our independent registered public accountants and appointed Ernst & Young LLP as our new independent registered public accountants.

(2)

Audit fees relate to professional services rendered by Ernst & Young LLP in 2007 and Ernst & Young LLP and KPMG LLP in 2006 in connection with the audit of our annual financial statements, quarterly review of financial statements included in our Forms 10-Q, and audit services provided in connection with other statutory and regulatory filings.

(3)

Audit-related fees include professional services rendered by Ernst & Young LLP in 2007 and by KPMG LLP in 2007 and 2006 related to the audit of our employee benefit plans. In addition, 2007 audit related fees include professional services rendered by Grant Thornton LLP related to the Elk employee benefit plans.

(4)

Tax fees include professional services rendered by Ernst & Young LLP for 2006 paid in 2007 and professional services rendered in 2007 to be paid in 2008 in connection with tax compliance. In addition, 2007 tax fees include professional services rendered by Ernst & Young LLP for tax compliance related to Elk that were rendered and paid in 2007. We do not engage Ernst & Young LLP to perform personal tax services for our executive officers.

(5)

All other fees in 2007 and 2006 include professional services rendered by Ernst & Young LLP related to merger and acquisition due diligence, post-acquisition financial statement review, a comfort letter issued in connection with the acquisition and merger of Elk and a consent issued in connection with our franchise offering circular. In addition, all other fees in 2007 include professional services rendered by KPMG LLP, Grant Thornton LLP and Price Waterhouse Coopers LLP related to the reissuance of their respective opinions and/or comfort letters in connection with the acquisition of Elk while all other fees in 2006 include professional services rendered by KPMG LLP in connection with the change in independent registered public accountants.

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Policy on Pre-Approval of Audit and Non-Audit Services Performed by the Independent Registered Public Accountants

        Our Board of Directors approves, prior to the engagement of our independent registered public accountants, consistent with the Sarbanes-Oxley Act of 2002 and the requirements of the Securities and Exchange Commission, any audit, audit-related and permitted non-audit services reasonably likely to be required by us from Ernst & Young LLP during the coming fiscal year. The Board may delegate the approval of unanticipated (but otherwise permitted) non-audit services during the coming fiscal year to our principal financial officer (who is a member of the Board of Directors) or our principal accounting officer as required.

PART IV

Item 15.    Exhibits and Financial Statement Schedules.

        The following documents are filed as part of this report:

        (a)(1) Financial Statements: See Index on page F-1.

        (a)(2) Financial Statement Schedules: See Index on page F-1.

        (a)(3) Exhibits:

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EXHIBIT INDEX

Exhibit Number	Description
2.1	Reorganization Agreement, dated as of December 31, 1998, by and among BMCA, Building Materials Manufacturing Corporation and Building Materials Investment Corporation (incorporated by reference to Exhibit 2.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-69749) (the "2008 Notes S-4")).
3.1	Amended and Restated Certificate of Incorporation of BMCA (incorporated by reference to Exhibit 3.1 to BMCA's Form 10-K for the fiscal year ended December 31, 1999).
3.2	By-laws of BMCA (incorporated by reference to Exhibit 3.2 to BMCA's Registration Statement on Form S-4 (Registration No. 33-81808)) (the "Deferred Coupon Note Registration Statement").
3.3	Certificate of Incorporation of Building Materials Manufacturing Corporation (incorporated by reference to Exhibit 3.3 to BMCA's Form 10-K for the fiscal year ended December 31, 1998 (the "1998 Form 10-K")).
3.4	By-laws of Building Materials Manufacturing Corporation (incorporated by reference to Exhibit 3.4 to the 1998 Form 10-K).
3.5	Certificate of Incorporation of Building Materials Investment Corporation (incorporated by reference to Exhibit 3.5 to the 1998 Form 10-K).
3.6	By-laws of Building Materials Investment Corporation (incorporated by reference to Exhibit 3.6 to the 1998 Form 10-K).
4.1	Indenture, dated as of December 3, 1998, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to the 2008 Notes S-4).
4.2	First Supplemental Indenture dated as of January 1, 1999 to Indenture dated as of December 3, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.4 to the 2008 Notes S-4).
4.3	Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of December 3, 1998, among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.12 to BMCA's Form 10-K for the fiscal year ended December 31, 2000 (the "2000 Form 10-K").
*4.4	Third Supplemental Indenture, dated as of January 4, 2007 to Indenture dated as of December 3, 1998, among BMCA, the guarantors signatory thereto and The Bank of New York, as trustee.
4.5	Indenture, dated as of July 26, 2004, among BMCA, as issuer, BMCA Insulation Products Inc., BMCA Quakertown Inc., Building Materials Investment Corporation, Building Materials Manufacturing Corporation, Ductwork Manufacturing Corporation, GAF Leatherback Corp., GAF Materials Corporation (Canada), GAF Premium Products Inc., GAF Real Properties, Inc., GAFTECH Corporation, LL Building Products Inc., Pequannock Valley Claim Service Company, Inc., South Ponca Realty Corp. and Wind Gap Real Property Acquisition Corp., as guarantors, and Wilmington Trust Company as trustee (incorporated by reference to Exhibit 4.10 to BMCA's Registration Statement on Form S-4 (Registration No. 333-119608)).

41

*4.6	First Supplemental Indenture, dated as of December 29, 2006, to the Indenture dated as of July 26, 2004, among BMCA, as issuer, the guarantors signatory thereto and Wilmington Trust Company, as trustee.
*4.7	Second Supplemental Indenture, dated as of December 29, 2006, to the Indenture dated as of July 26, 2004, among BMCA, as issuer, the guarantors signatory thereto and Wilmington Trust Company, as trustee.
*4.8	Third Supplemental Indenture, dated as of December 29, 2006, to the Indenture dated as of July 26, 2004, among BMCA, as issuer, the guarantors signatory thereto and Wilmington Trust Company, as trustee.
*4.9	Fourth Supplemental Indenture, dated as of February 21, 2007, to the Indenture dated as of July 26, 2004, among BMCA, as issuer, the guarantors signatory thereto and Wilmington Trust Company, as trustee.
*4.10	Fifth Supplemental Indenture, dated as of February 22, 2007, to the Indenture dated as of July 26, 2004, among BMCA, as issuer, the guarantors signatory thereto and Wilmington Trust Company, as trustee.
*4.11	Sixth Supplemental Indenture, dated as of March 26, 2007, to the Indenture dated as of July 26, 2004, among BMCA, as issuer, the guarantors signatory thereto and Wilmington Trust Company, as trustee.
10.1	Amended and Restated Management Agreement, dated as of January 1, 1999, among GAF, G-I Holdings Inc., G Industries Corp., Merick Inc., GAF Fiberglass Corporation, ISP, GAF Building Materials Corporation, GAF Broadcasting Company,  Inc., BMCA and ISP Opco Holdings Inc. (incorporated by reference to Exhibit 10.1 to the 1998 Form 10-K).
10.2	Amendment No. 1 to the Management Agreement, dated as of January 1, 2000 (incorporated by reference to Exhibit 10.2 to International Specialty Products Inc. annual report on Form 10-K for the fiscal year ended December 31, 1999).
10.3	Amendment No. 2 to the Management Agreement, dated as of January 1, 2001 (incorporated by reference to Exhibit 10.3 to International Specialty Products Inc. annual report on Form 10-K for the fiscal year ended December 31, 2000).
10.4	Amendment No. 3 to the Amended and Restated Management Agreement, dated as of June 27, 2001, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., ISP Investco LLC, GAF Broadcasting Company,  Inc., Building Materials Corporation of America and ISP Management Company, Inc., as assignee of ISP Chemco Inc. (incorporated by reference to Exhibit 10.7 to the ISP Chemco Inc. Registration Statement on Form S-4 (Registration No. 333-70144)).
10.5	Amendment No. 4 to the Amended and Restated Management Agreement, dated as of January 1, 2002, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., ISP Investco LLC, GAF Broadcasting Company, Inc., Building Materials Corporation of America and ISP Management Company, Inc. (incorporated by reference to Exhibit 10.5 to BMCA's Form 10-K for the fiscal year ended December 31, 2001 (the "2001 Form 10-K") ).

42

10.6	Amendment No. 5 to the Amended and Restated Management Agreement, dated as of January 1, 2003, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., ISP Investco LLC, GAF Broadcasting Company, Inc., Building Materials Corporation of America and ISP Management Company, Inc. (incorporated by reference to Exhibit 10.1 to BMCA's Form 10-Q for the quarterly period ended March 30, 2003).
10.7	Amendment No. 6 to the Amended and Restated Management Agreement, dated as of January 1, 2004, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., International Specialty Holdings Inc., ISP Synthetic Elastomers LP, ISP Investco LLC, GAF Broadcasting Company, Inc., BMCA and ISP Management Company, Inc. as assignee of ISP Chemco, Inc. (incorporated by reference to Exhibit 10.1 to BMCA's Form 10-Q for the quarterly period ended April 4, 2004).
10.8	Amendment No. 7 to the Amended and Restated Management Agreement, dated as of January 1, 2005, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., International Specialty Holdings Inc., ISP Synthetic Elastomers LP, ISP Investco LLC, GAF Broadcasting Company, Inc., Building Materials Corporation of America and ISP Management Company, Inc. as assignee of ISP Chemco, Inc. (incorporated by reference to Exhibit 10.1 to BMCA's Form 10-Q for the quarterly period ended July 3, 2005).
10.9	Amendment No. 8 to the Amended and Restated Management Agreement, dated as of January 1, 2006, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., International Specialty Holdings Inc., ISP Minerals Inc., ISP Investco LLC, GAF Broadcasting Company, Inc., Building Materials Corporation of America and ISP Management Company, Inc. as assignee of ISP Chemco, Inc. (incorporated by reference to Exhibit 10.1 to BMCA's Form 10-Q for the quarterly period ended July 2, 2006).
10.10	Amendment No. 9 to the Amended and Restated Management Agreement, dated as of January 1, 2007, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., International Specialty Holdings LLC, ISP Minerals Inc., ISP Investco LLC, GAF Broadcasting Company, Inc., Building Materials Corporation of America and ISP Management Company, Inc. as assignee of ISP Chemco, LLC, formerly ISP Chemco, Inc. (incorporated by reference to Exhibit 10.1 to BMCA's current report on Form 8-K dated February 19, 2008).
10.11	BMCA 2001 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.8 to the 2000 Form 10-K).
10.12	Form of BMCA 2001 Long-Term Incentive Plan Incentive Unit Grant Agreement (incorporated by reference to Exhibit 10.2 to BMCA's Form 10-Q for the quarterly period ended July 3, 2005).
10.13	First Amendment to the BMCA 2001 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.11 to BMCA's Form 10-K for the fiscal year ended December 31, 2005).
10.14	Second Amendment to the BMCA 2001 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to BMCA's current report on Form 8-K dated December 31, 2007).
10.15	Tax Sharing Agreement, dated as of January 31, 1994, among GAF, G-I Holdings Inc. and BMCA (incorporated by reference to Exhibit 10.6 to the Deferred Coupon Note Registration Statement).
10.16	Amendment to Tax Sharing Agreement, dated as of March 19, 2001, between G-I Holdings and BMCA (incorporated by reference to Exhibit 10.10 to the 2000 Form 10-K).

43

10.17	Reorganization Agreement, dated as of January 31, 1994, among GAF Building Materials Corporation, G-I Holdings Inc. and BMCA (incorporated by reference to Exhibit 10.9 to the Deferred Coupon Note Registration Statement).
10.25	Revolving Credit Agreement, dated as of February 22, 2007, among Building Materials Corporation of America, BMCA Acquisition Inc. and BMCA Acquisition Sub Inc., as borrowers; the initial lenders, initial issuing bank and swing line bank named therein, as initial lenders, initial issuing bank and swing line bank; Deutsche Bank AG New York Branch, as collateral monitoring agent and administrative agent; Deutsche Bank Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers; Bear Stearns & Co. Inc., as syndication agent; and J.P. Morgan Securities Inc., as documentation agent (incorporated by reference to Exhibit 10.1 to BMCA's Current Report on Form 8-K dated February 22, 2007).
10.26	Amendment No. 1 to the Revolving Credit Agreement, dated as of March 12, 2007, among Building Materials Corporation of America, BMCA Acquisition Inc. and BMCA Acquisition Sub Inc., as borrowers; the initial lenders, initial issuing bank and swing line bank named therein, as initial lenders, initial issuing bank and swing line bank; Deutsche Bank AG New York Branch, as collateral monitoring agent and administrative agent; Deutsche Bank Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers; Bear Stearns & Co. Inc., as syndication agent; and J.P. Morgan Securities Inc., as documentation agent (incorporated by reference to Exhibit 10.2 to BMCA's Current Report on Form 8-K dated March 15, 2007).
10.27	Term Loan Agreement, dated as of February 22, 2007, among Building Materials Corporation of America, BMCA Acquisition Inc. and BMCA Acquisition Sub Inc., as borrowers; the initial lenders named therein, as initial lenders; Deutsche Bank AG New York Branch, as administrative agent; Deutsche Bank Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers; Bear Stearns & Co. Inc., as syndication agent; and J.P. Morgan Securities Inc., as documentation agent (incorporated by reference to Exhibit 10.2 to BMCA's Current Report on Form 8-K dated February 22, 2007).
10.28	Amendment No. 1 to the Term Loan Agreement, dated as of March 15, 2007, among Building Materials Corporation of America, BMCA Acquisition Inc. and BMCA Acquisition Sub Inc., as borrowers; the initial lenders named therein, as initial lenders; Deutsche Bank AG New York Branch, as administrative agent; Deutsche Bank Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers; Bear Stearns & Co. Inc., as syndication agent; and J.P. Morgan Securities Inc., as documentation agent (incorporated by reference to Exhibit 10.3 to BMCA's Current Report on Form 8-K dated March 15, 2007).
10.29	Bridge Loan Agreement, dated as of February 22, 2007, among Building Materials Corporation of America, BMCA Acquisition Inc. and BMCA Acquisition Sub Inc., as borrowers; the initial lenders named therein, as initial lenders; Deutsche Bank AG Cayman Islands Branch, as collateral agent and administrative agent; Deutsche Bank AG Cayman Islands Branch and Bear Stearns Corporate Lending Inc., as joint lead arrangers; and Deutsche Bank AG Cayman Islands Branch, Bear Stearns Corporate Lending Inc. and JPMorgan Chase Bank, N.A., as joint book managers (incorporated by reference to Exhibit 10.3 to BMCA's Current Report on Form 8-K dated February 22, 2007).

44

10.30	Junior Lien Term Loan Agreement, (amending and restating in its entirety the Bridge Loan Agreement dated as of February 22, 2007) dated as of March 15, 2007, among Building Materials Corporation of America, BMCA Acquisition Inc. and BMCA Acquisition Sub Inc., as borrowers; the lenders named therein, as lenders; Deutsche Bank AG New York Branch, as collateral agent and administrative agent; Deutsche Bank Securities, Inc., Bear Stearns & Co. Inc., and J.P. Morgan Securities, Inc. as joint lead arrangers and joint book managers; and Deutsche Bank AG Cayman Islands Branch, Bear Stearns Corporate Lending Inc. and J.P. Morgan Securities, Inc., as documentation agent, and Bear Stearns & Co. Inc., as syndication agents (incorporated by reference to Exhibit 10.1 to BMCA's Current Report on Form 8-K dated March 15, 2007).
10.32	Employment Security Agreement between BMCA and David A. Harrison, effective June 2001 (incorporated by reference to Exhibit 10.23 to the 2001 Form 10-K).
10.33	Employment Security Agreement between BMCA and Robert B. Tafaro, effective June 2001 (incorporated by reference to Exhibit 10.24 to the 2001 Form 10-K).
10.35	Employment Security Agreement between BMCA and John F. Rebele, effective June 2001 (incorporated by reference to Exhibit 10.26 to the 2001 Form 10-K).
10.36	Employment Agreement, dated August 9, 2007, between Richard A. Nowak and GAF Materials Corporation (incorporated by reference to Exhibit 10.1 to BMCA's Form 10-Q for the quarterly period ended July 1, 2007).
10.37	Employment Agreement, dated August 9, 2007 between Matti Kiik and GAF Materials Corporation (incorporated by reference to Exhibit 10.2 to BMCA's Form 10-Q for the quarterly period ended July 1, 2007).
*10.38	Collateral Agency Agreement, dated as of February 22, 2007, by and among BMCA, the guarantors party thereto, Deutsche Bank AG New York Branch, as Administrative Agent, The Bank of New York and Wilmington Trust Company, as trustees, and Deutsche Bank Trust Company Americas, as collateral agent.
*10.39	Security Agreement dated February 22, 2007, made by BMCA and the other grantors party thereto to Deutsche Bank Trust Company Americas, as collateral agent.
*10.40	Security Agreement dated February 22, 2007, made by BMCA and the other grantors party thereto to Deutsche Bank AG New York Branch, as collateral agent.
*10.41	Amended and Restated Security Agreement dated March 15, 2007, made by BMCA and the other grantors party thereto to Deutsche Bank AG New York Branch, as collateral agent.
*10.42	Security Agreement Supplement dated March 26, 2007, made by the additional grantors party thereto to Deutsche Bank AG New York Branch, as collateral agent.
*10.43	General Intercreditor Agreement dated as of February 22, 2007, among Deutsche Bank Trust Company Americas, as first lien collateral agent, and Deutsche Bank AG Cayman Islands Branch, as junior lien collateral agent.
*10.44	Additional Party Addendum to General Intercreditor Agreement dated as of February 22, 2007, by Deutsche Bank AG New York Branch, as collateral agent under the Junior Lien Term Loan Agreement.

45

*10.45	Revolver Intercreditor Agreement dated as of February 22, 2007, among Deutsche Bank AG New York Branch, as first lien collateral agent, Deutsche Bank Trust Company Americas, as second lien collateral agent, and Deutsche Bank AG Cayman Islands Branch, as third lien collateral agent.
*10.46	Additional Party Addendum to Revolver Intercreditor Agreement dated as of February 22, 2007, by Deutsche Bank AG New York Branch, as collateral agent under the Junior Lien Term Loan Agreement.
16	Letter dated September 22, 2006, from KPMG LLP to the Securities and Exchange Commission regarding the change in certifying accountant (incorporated by reference to Exhibit 16.1 to BMCA's current report on Form 8-K filed September 22, 2006).
*21	Subsidiaries of BMCA.
*31.1	Rule 13a-14(a)/Rule 15d-14(a) Certification of the Chief Executive Officer.
*31.2	Rule 13a-14(a)/Rule 15d-14(a) Certification of the Chief Financial Officer.
*32.1	Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.

*

Filed herewith.

46

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BUILDING MATERIALS CORPORATION OF AMERICA BUILDING MATERIALS MANUFACTURING CORPORATION
Date: March 28, 2008	By:	/s/  JOHN F. REBELE
		Name: Title:	John F. Rebele Senior Vice President, Chief Financial Officer and Chief Administrative Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 28, 2008 by the following persons on behalf of each registrant and in the capacities indicated.

Signature	Title
/s/  ROBERT B. TAFARO Robert B. Tafaro	Chief Executive Officer, President and Director (Principal Executive Officer)
/s/  JOHN F. REBELE John F. Rebele	Senior Vice President, Chief Financial Officer, Chief Administrative Officer and Director (Principal Financial Officer)
/s/  RICHARD A. NOWAK Richard A. Nowak	Director
/s/  DAVID A. HARRISON David A. Harrison	Director
/s/  MATTI KIIK Matti Kiik	Director
/s/  JAN E. JERGER-STEVENS Jan E. Jerger-Stevens	Director
/s/  JAMES T. ESPOSITO James T. Esposito	Vice President and Controller (Principal Accounting Officer)

47

BUILDING MATERIALS CORPORATION OF AMERICA

FORM 10-K

INDEX TO MANAGEMENT'S DISCUSSION AND ANALYSIS, CONSOLIDATED

FINANCIAL STATEMENTS AND SCHEDULES

		Page
Management's Discussion and Analysis of Financial Condition and Results of Operations		F-2
Selected Financial Data		F-28
Report of Independent Registered Public Accounting Firm		F-29
Report of Independent Registered Public Accounting Firm		F-30
Consolidated Statements of Operations for the three years ended December 31, 2007		F-31
Consolidated Balance Sheets as of December 31, 2007 and 2006		F-32
Consolidated Statements of Cash Flows for the three years ended December 31, 2007		F-33
Consolidated Statements of Stockholders' Equity (Deficit) for the three years ended December 31, 2007		F-35
Notes to Consolidated Financial Statements		F-36
Supplementary Data (Unaudited):
	Quarterly Financial Data (Unaudited)	F-89
SCHEDULES
Consolidated Financial Statement Schedule:
	Schedule II—Valuation and Qualifying Accounts	S-1

F-1

BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Overview

        Building Materials Corporation of America or BMCA, a subsidiary of BMCA Holdings Corporation, was formed on January 31, 1994 to acquire the operating assets and certain liabilities of GAF Building Materials Corporation, whose name was changed to G-I Holdings Inc., our indirect parent. G-I Holdings Inc. is a wholly-owned subsidiary of G Holdings Inc. See Note 1 to our Consolidated Financial Statements. Unless otherwise indicated by the context, "we," "us" and "our" refer to Building Materials Corporation of America and its consolidated subsidiaries.

        To facilitate administrative efficiency, effective October 31, 2000, GAF Corporation, the former indirect parent of BMCA, merged into its direct subsidiary, G-I Holdings Inc. G-I Holdings Inc. then merged into its direct subsidiary, G Industries Corp., which in turn merged into its direct subsidiary, GAF Fiberglass Corporation. In that merger, GAF Fiberglass Corporation changed its name to GAF Corporation. Effective November 13, 2000, GAF Corporation (formerly known as GAF Fiberglass Corporation) merged into its direct subsidiary, GAF Building Materials Corporation, whose name was changed in the merger to G-I Holdings Inc. G-I Holdings Inc. is now an indirect parent of BMCA and BMCA's direct parent is BMCA Holdings Corporation. References herein to "G-I Holdings" mean G-I Holdings Inc. and any and all of its predecessor corporations, including GAF Corporation, G-I Holdings Inc., G Industries Corp., GAF Fiberglass Corporation and GAF Building Materials Corporation.

        On February 22, 2007, which we refer to as the date of acquisition, a subsidiary of Building Materials Corporation of America acquired approximately 90% of the outstanding common shares of ElkCorp, which we refer to as Elk, a Dallas, Texas-based manufacturer of roofing products and building materials. The remaining shares of Elk were acquired on March 26, 2007, resulting in Elk becoming an indirect wholly-owned subsidiary of BMCA. See Acquisition.

        We are a leading national manufacturer and marketer of a broad line of asphalt and polymer-based roofing products and accessories for the residential and commercial roofing markets. We also manufacture specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. We have 31 strategically located manufacturing facilities currently operating across the United States. Our manufacturing facilities include: 16 asphalt roofing manufacturing facilities, three roofing accessory plants, two thermoplastic polyolefin plants, one glass fiber manufacturing plant, two glass mat manufacturing plants, one glass mat and asphalt roofing manufacturing facility, one fiber-cement shingle and siding plant, one liquid roofing membrane and adhesive plant, one injection molding attic ventilation plant, one attic ventilation and air distribution product plant, one chromium-chemical coating plant and one composite-decking plant.

        Our products are marketed in three groups: residential roofing, commercial roofing and specialty building products and accessories.

Residential Roofing

        We are a leading national manufacturer of a complete line of residential roofing products. In February 2007, we acquired Elk, which we believe has strategically positioned us for future growth in the roofing industry and building products market. We also believe the acquisition of Elk has allowed us to build on our market leadership position and create comprehensive market leading product offerings. Our principal lines of residential roofing shingles are the Timberline® series, the Sovereign® series, Premium Designer Shingles and Specialty Shingles. The Timberline® series includes the Timberline® Prestique® 30 High-Definition, Timberline® Natural Shadow^TM, Timberline® Prestique®

F-2

BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

Select 40, Timberline® Prestique® Lifetime and Timberline Grande^TM shingles. Our premium designer shingles include the Slateline®, Grand Slate^TM, Grand Sequoia®, Grand Canyon^TM, Country Mansion®, Capstone®, and Camelot^TM shingles. We sell specialty shingles under the TruSlate^TM product line, which offers a slate shingle system. We supply the major components necessary to install a complete roofing system from underlayments to attic ventilation products and accessories, under the Weather Stopper® Integrated Roofing System^TM. In recent years, we have improved our sales mix of residential roofing products by increasing our emphasis on laminated shingles and accessory products (the Timberline® series, premium designer shingles and specialty shingles), which are generally sold at higher prices and more attractive profit margins than our standard asphalt strip shingle products (the Sovereign® series). We believe, based on unit sales, that we are the largest manufacturer of residential roofing shingles in the United States.

Commercial Roofing

        We manufacture a full line of modified bitumen and asphalt built-up roofing products, thermoplastic polyolefin products, liquid applied membrane systems and roofing accessories for use in the application of commercial roofing systems. We also market thermoplastic single-ply commercial roofing products, which address the important and growing single-ply segment of the commercial roofing market. We believe, based on unit sales, that we are the largest manufacturer of both asphalt built-up roofing products and modified bitumen products in the United States.

        We sell modified bitumen products under the Ruberoid® and Brai® trademarks. Modified bitumen products are used in new and re-roofing applications or in combination with glass membranes in GAF CompositeRoof™ systems. Modified bitumen systems provide an alternative to conventional built-up roofing systems, including ease of installation and maintenance.

        Over the past five years, over 80% of industry sales of both residential and commercial roofing products were for re-roofing, as opposed to new construction. As a result, we believe our exposure and the roofing industry's exposure to cyclical downturns in the new construction market are substantially lower than for other building material manufacturers. We expect that future demand for residential re-roofing will continue to increase as the existing housing stock ages and as homeowners upgrade from standard strip roofing shingles to premium laminated shingles for enhanced aesthetics and durability. We also expect commercial roofing demand to rise as construction of new commercial facilities increases and existing buildings age.

        Our business relies on the availability of reasonably-priced raw materials and energy for the production of our products. Shortages of these products and increases in their prices, specifically with regard to asphalt, which is normally correlated to increases in the price of crude oil, have occurred from time to time and may occur in the future. To mitigate the effect of the petroleum-based and other cost increases, we will attempt to pass on future cost increases from our suppliers as needed, although no assurances can be provided that these price increases will be accepted in the marketplace.

        Our net sales for 2007 were $2,310.1 million, which included the net sales of Elk from the date of acquisition and $15.1 million of restructuring-related sales discounts compared with net sales of $1,969.2 million in 2006. We had a loss before interest and income taxes of $27.4 million in 2007, which included the operating results of Elk and $181.0 million of restructuring and other expenses, compared with income before interest and income taxes of $124.8 million in 2006. See Results of Operations below.

F-3

BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

Critical Accounting Policies

        The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an ongoing basis, we evaluate our estimates, including but not limited to those related to customer incentives, doubtful accounts, inventory valuation, product warranty claims, extended and enhanced product warranties, environmental liabilities, the carrying value of goodwill, the carrying value of long-lived tangible and intangible assets, pensions and other post-employment benefits and contingent liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. In the opinion of our management, the consolidated financial statements herein contain all adjustments necessary to present fairly our financial position and our results of operations and cash flows for the periods presented. We do not anticipate any changes in management estimates that would have a material impact on our operations, liquidity or capital resources, subject to the matters discussed in Note 20 to Consolidated Financial Statements. We believe the following critical accounting policies are the most important to the portrayal of our financial condition and results of operations and require our management's more significant judgments and estimates in the preparation of our consolidated financial statements.

Revenue Recognition

        Revenue is recognized at the time products are shipped to the customer. Products are generally shipped Freight on Board, or FOB, shipping point. Title and risk of loss pass to the customer at the time of shipment.

Customer Incentives

        We maintain allowances for customer incentives and volume rebates resulting from promotional programs to certain of our customers. The customer incentives and volume rebates are recorded as a reduction in gross sales, and accruals are recorded based on customers' purchase levels of specific products and the promotional programs related to these products. Management evaluates customer performance against these incentives and volume rebate programs from time to time. If adjustments to our estimates are required, additional allowances or reductions to the customer incentive reserves would be recorded.

Allowance for Doubtful Accounts

        We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Management continuously assesses the financial condition of our customers and the markets in which these customers participate and adjusts credit limits or the allowance for doubtful accounts based on this periodic review, which includes a detailed analysis of financial statements and performance against key financial performance metrics and historical financial information. If the financial condition of our customers were to deteriorate, resulting in their inability to make payments, our ability to collect on accounts could be negatively impacted, in which case additional allowances may be required.

F-4

BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

Inventories

        Inventories are valued at the lower of cost or market. The LIFO (last-in, first-out) method is used to determine cost for asphalt-based products used to produce our products, which we believe provides a more appropriate matching of revenue and expense. All other inventories are valued on the FIFO (first-in, first-out) method. We adjust our inventories for estimated obsolescence or unmarketable inventories equal to the difference between the cost of inventories and their estimated market value based upon assumptions related to future demand and market conditions. If actual market conditions differ from those projected by management, additional inventory adjustments may be required. Sales of inventories and the resulting receivables are included in working capital items in the consolidated statement of cash flows.

Long-Lived Asset Impairment

        We follow the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", or SFAS No. 144, which addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed. For purposes of recognizing and measuring impairment of long-lived assets, we evaluate assets of our associated facilities because this is the lowest level of independent cash flows ascertainable to evaluate impairment. We review long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. For long-lived assets to be held and used, an impairment exists when the carrying amount of the asset exceeds the estimated undiscounted cash flows. Any resulting impairment is measured based on the fair value of the related asset. Fair value is determined based on future projected demand and estimated discounted cash flows.

        During the year ended December 31, 2007, we closed several of our manufacturing facilities, in addition to our previously closed manufacturing facilities. The closing of these manufacturing facilities in 2007 was primarily due to additional manufacturing capacity from our acquisition of Elk and reduced market demand. For the year ended December 31, 2007 we recognized a $97.0 million SFAS No. 144 impairment loss. See Notes 2 and 5 to the Consolidated Financial Statements.

Asset Retirement Obligations

        We follow the provisions of FASB Interpretation No. (FIN) 47 "Accounting for Conditional Asset Retirement Obligations," which we refer to as FIN 47, which was issued by the Financial Accounting Standards Board, which we refer to as FASB. FIN 47 clarifies how the term conditional asset retirement obligation is used in SFAS No. 143 "Accounting for Asset Retirement Obligations," which we refer to as SFAS No. 143. SFAS No. 143 applies to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN 47 clarifies that an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. We performed an asset retirement obligation analysis at December 31, 2007 and noted that no significant conditional asset retirement obligations existed.

Goodwill

        In accordance with the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets", or SFAS No. 142, goodwill is not amortized but is subject to at least an annual assessment for impairment and more frequently if circumstances indicate a possible impairment.

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

        We evaluated the recoverability of goodwill for our roofing products and specialty building products and accessories reporting units. Our methodology included evaluations using estimated future discounted cash flows, multiples of net sales and multiples of earnings before interest, taxes, depreciation and the amortization of intangibles and other assets, or EBITDA. Our analysis was completed for each of the reporting units to which the goodwill relates. If the estimated range of fair values from the methodologies employed are less than the carrying value of the related reporting unit, impairment losses for goodwill are charged to results of operations. In determining the estimated future discounted cash flows, we considered projected future levels of income, future business trends and market and economic conditions. Our analysis related to multiples of net sales and EBITDA are based on related industry data. We prepared an SFAS No. 142 impairment analysis at December 31, 2007 and 2006, and noted no impairment existed. See Note 6 to the Consolidated Financial Statements.

Intangible Assets

        We account for our intangible assets in accordance with the provisions of SFAS No. 142. SFAS No. 142 requires disclosure of information relating to intangible assets subsequent to their acquisition that was not previously reported, which includes disclosure concerning the changes in the carrying amount of intangible assets by major intangible asset class for those assets subject to amortization and for those not subject to amortization. SFAS No. 142 also requires disclosure related to actual year-to-date intangible asset amortization expense and the estimated intangible asset amortization expense for each of the next five years. As of December 31, 2007, we have not recorded any impairment losses related to our intangible assets and have not written-off any acquired research and development assets. See Note 7 to the Consolidated Financial Statements.

Hedging Activity

        In connection with the acquisition of Elk on February 22, 2007, and the related debt refinancings, we have a substantial portion of variable rate debt. In order to maintain a reasonable balance between our fixed rate debt and variable rate debt, in March 2007, we entered into forward-starting Eurodollar rate, or LIBOR, based pay fixed income interest rate swaps related to our $975.0 million Term Loan, or Term Loan, with an effective date of April 23, 2007 and a maturity date of April 23, 2012. In October 2007, we entered into additional interest rate swaps related to our Term Loan with an effective date of October 23, 2007 and a maturity date of October 23, 2012 under similar terms as the swaps we entered into in March 2007.

        We account for our hedging activity in accordance with SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities," or SFAS No. 133, which requires a company to measure hedge effectiveness by assessing, on a quarterly basis, the historical and probable future of high correlation of changes in the fair value of the hedged item. Any ineffective portion is recorded in our statement of operations.

        In accordance with SFAS No. 133 our swaps are treated as cash flow hedges. At December 31, 2007, we had no ineffectiveness related to our swaps and based on changes in the closing LIBOR rate on such date, we recorded a fair value loss on our fixed income interest rate swaps of $30.0 million to other liabilities, while the offset was recorded as an other comprehensive loss, net of tax of $11.4 million. We have also recorded $2.0 million in year-to-date interest income as of December 31, 2007 related to our fixed income interest rate swaps.

        In July 2007, we entered into treasury locks as additional hedging instruments against our Term Loan. Our treasury locks had a settlement date of October 30, 2007 and a maturity date of July 31,

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

2012. Our treasury locks fixed the U.S. treasury component, while excluding the swap component of the forward benchmark LIBOR interest rate. According to SFAS No. 133 our treasury locks were also cash flow hedges, and were accounted for in the same manner as our swaps. On October 30, 2007 we settled our open treasury lock hedging positions, which resulted in a pre-tax loss and cash settlement of approximately $4.9 million, which is being amortized into our statement of operations over the life of the Term Loan pursuant to SFAS No. 133.

        We are also exposed to credit loss in the event of non-performance by our counterparties holding our derivative instruments. Although non-performance is possible, we do not anticipate non-performance on our interest rate swaps, as these contracts are, in management's opinion, with creditworthy counterparties. See Notes 2 and 14 to the Consolidated Financial Statements.

Product Warranty Claims

        We provide certain limited warranties covering most of our residential roofing products for periods generally ranging from 20 to 50 years, although certain of our product lines provide for a lifetime limited warranty. We also offer certain limited warranties of varying duration covering most of our commercial roofing products. Most of our specialty building products and accessories carry limited warranties for periods generally ranging from 5 to 20 years, with lifetime limited warranties on certain products. The accrual for product warranty claims is estimated on the basis of historical and projected claims activity, as well as other factors. The accuracy of the estimate of additional costs is dependent on both the number and cost of future claims submitted during the warranty periods. We believe that the accruals established for estimated probable future product warranty claims are adequate. If actual claims differ from these estimates, adjustments to this accrual may be required.

Deferred Revenue and Extended Product Warranty

        We offer extended warranty contracts on sales of our commercial roofing products. The life of these commercial warranties range from ten to twenty years. In addition, we offer enhanced warranties on certain of our residential roofing products. These enhanced warranties are the "Golden Pledge Warranty™", "Peace of Mind™" and "Peak Performance®" warranty programs. All revenue for the sale of these warranty programs is deferred and amortized on a straight-line basis over the life of these warranty programs, which is in accordance with the accounting prescribed by FASB Technical Bulletin No. 90-1 "Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts", which we refer to as FTB No. 90-1. Incremental direct costs associated with the acquisition of the warranties are capitalized and amortized on a straight-line basis over the average life of these warranty programs. Current costs of services performed related to claims paid under these warranty programs are expensed as incurred. Our analysis of these warranty programs as of December 31, 2007 indicated that deferred revenue is in excess of deferred costs and accordingly, no loss was recognized. However, if the total expected costs of providing services under these warranty programs exceed deferred revenues less deferred costs, then a loss would be recognized.

Income Taxes

        Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to offset any deferred tax asset if it is more-likely-than-not that some or all of the deferred tax asset will not be realized. The determination of the amount of a valuation allowance to be provided on recorded deferred tax assets involves estimates regarding (1) the timing and amount of the reversal of taxable temporary differences, (2) expected future taxable income and (3) the impact of tax planning strategies. In assessing the need for a valuation allowance, we consider past operating results, projections of future taxable income and the feasibility of ongoing tax planning strategies. The projections of future taxable income include a number of estimates and assumptions regarding our volume, pricing and costs. Additionally, valuation allowances related to deferred tax assets can be impacted by changes to tax laws. We are party to a tax sharing agreement, which we refer to as the Tax Sharing Agreement. See Note 10 to the Consolidated Financial Statements.

        We use judgment in determining income tax provisions under SFAS No. 109 "Accounting for Income Taxes," which we refer to as SFAS No. 109, and in evaluating our tax positions. Additional provisions for income taxes are established when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold as defined by FIN No. 48, "Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109", which we refer to as FIN 48, adopted by us on January 1, 2007, which is a tax position that is more-likely-than-not to be sustained upon examination by the applicable taxing authority. We and our subsidiaries are examined by various Federal and state tax authorities. We regularly assess the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of our provision for income taxes. We continually assess the likelihood and amount of potential adjustments and adjust the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise to a revision become known.

Environmental Liabilities

        We accrue environmental costs when it is probable that we have incurred a liability and the expected amount can be reasonably estimated and, review on an ongoing basis, our estimated environmental liabilities. The amount accrued reflects our assumptions about remedial requirements at the contaminated site, the nature of the remedy, the outcome of discussions with regulatory agencies and other potential responsible parties at multi-party sites and the number and financial viability of other potentially responsible parties. Adverse decisions or events, particularly as to increases in remedial costs, discovery of new contamination, assertion of natural resource damages, and the liability and the financial responsibility of our insurers and of the other parties involved at each site and their insurers, could cause us to increase our estimate of liability in respect of those matters. It is not currently possible to estimate the amount or range of any additional liabilities or whether any liabilities exist.

Pension and Other Postemployment Benefits

        We maintain defined benefit plans that provide eligible employees with retirement benefits. In addition, while we generally do not provide postretirement medical and life insurance benefits, we subsidize such life insurance benefits for certain employees and certain retirees. The costs and obligations related to these benefits reflect our assumptions related to general economic conditions (particularly interest rates), expected return on plan assets and rate of compensation increases for employees. We set the discount rate assumption annually for our retirement-related benefit plans at the measurement dates to reflect the yield of high-quality fixed-income debt instruments. The expected

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

long-term rate of return on assets is derived from a detailed periodic study conducted by our actuaries and our financial management. The study includes a review of anticipated future long-term performance of individual asset categories. While the study gives appropriate consideration to recent plan performance and historical returns, the assumption is primarily a long-term prospective rate. Our discount rate as of December 31, 2007 and 2006 for determining projected benefit obligations was 6.25% and 6.0%, respectively. A 25 basis point increase or decrease in the discount rate assumption would result in a plus or minus $0.2 million impact on pension expense and a plus or minus $1.4 million impact on the projected benefit obligation. Our expected long-term rate of return on assets assumption for our retirement plans was 9.5% in 2007 and 2006, respectively. In addition, a 25 basis point increase or decrease in the expected long-term rate of return on assets assumption would result in a plus or minus $0.1 million impact on pension expense.

        The cost of providing plan benefits also depends on demographic assumptions including retirements, mortality, turnover and plan participation. If actual experience differs from these assumptions, the cost of providing these benefits could increase or decrease.

Results of Operations

        Roofing product sales is our dominant business, typically accounting for approximately 95% of our consolidated net sales. The main drivers of our roofing business include: the nation's aging housing stock; existing home sales; new home construction; larger new homes; increased home ownership rates; and severe weather and energy concerns. Our roofing business is also affected by raw material costs, including asphalt and other petroleum-based raw materials, as well as energy, and transportation and distribution costs.

2007 Compared with 2006

        We recorded a net loss in 2007 of $134.5 million compared with net income of $38.7 million for 2006. The increase in reported net loss for 2007 was primarily attributable to approximately $119.9 million of higher interest expense, as well as restructuring and other expenses due to the acquisition of Elk. Our net loss in 2007 included $116.6 million of after-tax ($181.0 million pre-tax) restructuring and other expenses, of which $9.7 million after tax ($15.1 million pre-tax) was included as a reduction in net sales and $15.7 million after tax ($24.3 million pre-tax) was included in cost of products sold related to the integration of Elk operations; and $14.9 million of after-tax ($23.2 million pre-tax) debt restructuring costs also related to the acquisition. Included in restructuring and other expenses are plant closing expenses related to the closure of several manufacturing facilities together with the write-down of plant assets at these facilities, integration-related costs and the write-down of selected inventories. Excluding these items, net loss for 2007 was $3.0 million, which included Elk's operations from the date of acquisition.

        Net sales for 2007 were $2,310.1 million as compared with $1,969.2 million in 2006. The increase in net sales for 2007 was primarily attributable to the acquisition of Elk, which was partially offset by lower net sales of residential roofing products and commercial roofing products driven by lower unit volumes resulting from softer market demand and $15.1 million of restructuring-related sales discounts.

        We had a loss before interest expense and income taxes for 2007 of $27.4 million compared with income before interest expense and income taxes of $124.8 million in 2006. Our loss before interest expense and income taxes in 2007 included $181.0 million of restructuring and other expenses, of which $15.1 million was included as a reduction in net sales and $24.3 million was included in cost of products sold. Excluding these items, 2007 income before interest and income taxes was $153.6 million, which included the results of operations of Elk from the date of acquisition. The increase in income before interest expense and income taxes for 2007 was positively affected by the operating results of Elk and lower selling, general and administrative expenses, mostly due to a decline in volume-related distribution costs, partially offset by a decline in net sales of residential roofing products.

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

Interest expense in 2007 increased to $181.4 million as compared with $61.5 million in 2006. Interest expense in 2007 included $23.2 million of debt restructuring costs and an additional $3.5 million of interest expense of Elk from the date of acquisition. Included in debt restructuring costs are the tender premiums and write-off of the remaining deferred financing fees and discounts associated with certain of our then outstanding 8% Senior Notes due 2007, which we refer to as the 2007 Notes, and our 8% Senior Notes due 2008, which we refer to as the 2008 Notes, of BMCA and all of the then outstanding senior notes of Elk, all of which were redeemed in the first quarter of 2007. Excluding the impact of the debt restructuring costs and the additional Elk interest, interest expense for 2007 was $154.7 million. The increase in interest expense for 2007 was primarily due to higher average borrowings and a slightly higher average interest rate, due to the acquisition of Elk.

Business Segment Information

        Net Sales.    Net sales of roofing products increased to $2,173.2 million for 2007, which included net sales of roofing products related to Elk from the date of acquisition and $15.1 million of restructuring-related sales discounts, compared with $1,893.6 million for 2006. The increase in 2007 net sales of roofing products was primarily attributable to the acquisition of Elk, which was partially offset by lower net sales of residential roofing products and commercial roofing products driven by lower unit volumes resulting from softer market demand and $15.1 million of restructuring-related sales discounts. Net sales of specialty building products and accessories increased to $316.9 million for 2007, which included net sales of specialty building products and accessories related to Elk from the date of acquisition as compared with $75.6 million for 2006.

        Gross Margin.    Our overall gross margin was $614.5 million for 2007 or 26.6% of net sales as compared with $572.8 million or 29.1% of net sales for 2006. Included in our overall gross margin for 2007 was $15.1 million of restructuring-related sales discounts included as a reduction in net sales, $24.3 million of restructuring and other expenses, which were included in cost of products sold and gross margin related to Elk from the date of acquisition. Our gross margin was positively affected by the gross margin related to Elk, which was more than offset by a decrease in net sales of residential and commercial roofing products primarily driven by lower unit volumes.

2006 Compared with 2005

        We recorded net income in 2006 of $38.7 million compared with net income of $61.0 million for 2005. The decrease in 2006 net income was primarily the result of lower income before interest and income taxes, partially offset by slightly lower interest expense.

        Net sales for 2006 were $1,969.2 million compared with $1,955.8 million in 2005. Higher net sales in 2006 were primarily due to an increase in net sales of commercial roofing products, partially offset by a decrease in net sales of residential roofing products. The increase in net sales of commercial roofing products primarily resulted from higher average selling prices, while the decrease in net sales of residential roofing products was driven by lower unit volumes, partially offset by higher average selling prices.

        Income before interest and income taxes for 2006 was $124.8 million compared with $160.6 million in 2005, representing a decrease of $35.8 million. Income before interest and income tax in 2006 was positively affected by higher net sales of commercial roofing products and a decline in other expense net, which was more than offset by a decrease in net sales of residential roofing products, higher raw

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

material costs, including asphalt and unabsorbed overhead costs resulting from plant shutdowns, higher energy costs and higher selling, general and administrative expenses mostly due to higher distribution costs, primarily resulting from a rise in fuel prices.

        Interest expense decreased to $61.5 million in 2006 from $62.3 million in 2005, primarily due to lower average borrowings.

Business Segment Information

        Net Sales.    Net sales of roofing products for 2006 increased to $1,893.6 million from $1,876.0 million for 2005, representing an increase of $17.6 million. The increase in net sales of roofing products was primarily attributable to higher net sales of commercial roofing products primarily due to higher average selling prices, partially offset by a decrease in net sales of residential roofing products. The increase in net sales of commercial roofing products primarily resulted from higher average selling prices, while the decrease in net sales of residential roofing products was driven by lower unit volumes, partially offset by higher average selling prices. Net sales of specialty building products and accessories decreased by $4.2 million or 5.3% for 2006 to $75.6 million, compared to $79.8 million for 2005.

        Gross Margin.    Our overall gross margin for 2006 decreased to $572.8 million or 29.1% from $596.2 million or 30.5% for 2005. The decrease in our overall gross margin is primarily attributable to higher raw material costs and a decrease in net sales of residential roofing products.

Liquidity and Financial Condition

Cash Flows and Cash Position

        Sales of roofing products and specialty building products and accessories in the northern regions of the United States generally decline in the late fall and winter months due to cold weather. In addition, extreme weather conditions can result in higher customer demand during our peak operating season depending on the extent and severity of the damage from these extreme weather conditions. Due to the seasonal demands of our business together with extreme weather conditions, we generally have negative cash flows from operations during the first six months of our fiscal year. Our negative cash flows from operations are primarily driven by our cash invested in both accounts receivable and inventories to meet these seasonal operating demands. Generally, in the third and fourth quarters of our fiscal year, our cash flows from operations become positive for each quarter, as our investment in inventories and accounts receivable no longer continues to increase, as is customary in the first six months of our fiscal year. Our seasonal working capital needs, together with our debt service obligations, capital expenditure requirements and other contracted arrangements, adversely impact our liquidity during this period. We rely on our cash and cash equivalents on hand and our new $600.0 million Senior Secured Revolving Credit Facility due February 2012, which we refer to as our Senior Secured Revolving Credit Facility (see Debt Instruments, Financial Covenants and Restrictions below), to support our overall cash flow requirements during these periods. We expect to continue to rely on our cash and cash equivalents on hand and external financings to maintain operations over the short and long-term and to continue to have access to the financing markets, subject to the then prevailing market terms and conditions.

        Net cash outflow from operating and investing activities was $904.9 million during 2007, including $945.3 million related to the acquisition of Elk, net of $0.1 million of cash acquired, the reinvestment of $84.5 million for capital programs and an acquisition of land and buildings in Fresno, California

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

partially offset by $6.7 million of proceeds from the sale of precious metals and $118.2 million of cash provided by operations.

        Cash generated from a decrease in working capital totaled $55.4 million during 2007, reflecting a decrease in total accounts receivable of $71.0 million, primarily due to the decrease in our net sales of residential roofing products as a result of the decline in the housing market and the lack of extreme weather conditions in 2007, a $28.9 million decrease in inventories primarily resulting from a reduction of capacity due to the decline in the housing market and the lack of extreme weather conditions in 2007, a $9.4 million decrease in other current assets, a $10.8 million increase in accounts payable and accrued liabilities and an increase of $64.7 million in payments for restructuring and other expenses. The net cash provided by operating activities also included a $9.3 million net increase in the payable to related parties/parent corporations, primarily attributable to a $10.2 million net increase in amounts due under our long-term granule supply agreement with an affiliated company partially offset by a $0.9 million increase in federal income taxes receivable, pursuant to our Tax Sharing Agreement with our parent corporation. In addition, net cash provided by operating activities also included $181.0 million in restructuring and other expenses, which primarily included a $97.0 million write-down of property, plant and equipment, $21.5 million of plant closing expenses, a $24.3 million write-down of selected inventories, which were included in cost of products sold and $15.1 million of restructuring-related sales discounts, which were included as a reduction of net sales (see Restructuring and Other Expenses). Cash provided by operating activities also included a $6.4 million increase in other assets, primarily related to a $5.9 million increase in deferred warranty related program costs, net of amortization; a $7.8 million increase in other liabilities, which is primarily related to a $10.5 million increase in deferred warranty-related program revenues, net of amortization; and a $4.5 million gain on sale of assets related to our sale of precious metals at our Nashville, Tennessee manufacturing facility.

        Net cash provided by financing activities totaled $903.4 million during 2007, including $2,457.7 million of aggregate proceeds from the issuance of long-term debt, related to 2007 cumulative borrowings of $1,131.8 million under our new $600.0 million Senior Secured Revolving Credit Facility and our old $450.0 million Senior Secured Revolving Credit Facility, which we refer to as our Old Senior Secured Revolving Credit Facility. In addition, proceeds from the issuance of long-term debt included $975.0 million under our new $975.0 million Term Loan, $325.0 million under our new $325.0 million Junior Lien Term Loan Facility, which we refer to as the Junior Lien Term Loan, and $25.9 million of borrowings under the old Elk Revolving Credit Facility (see Debt Instruments, Financial Covenants and Restrictions). In addition, financing activities included proceeds of $45.0 million related to sale-leasebacks on our machinery and equipment located at our Gainesville, Texas and Baltimore, Maryland manufacturing facilities. Financing activities also included $1,557.6 million in aggregate repayments of long-term debt, of which $1,069.8 million related to 2007 cumulative repayments under our Senior Secured Revolving Credit Facility and our Old Senior Secured Revolving Credit Facility, $28.6 million related to repayments under the old Elk Revolving Credit Facility and $9.6 million related to repayments under the Term Loan. In addition, repayments of long-term debt included $100.0 million related to our outstanding 2007 Notes, $150.1 million related to our outstanding 2008 Notes, $25.0 million related to the then outstanding Elk 4.69% Senior Notes due 2007, $60.0 million related to the then outstanding Elk 6.99% Senior Notes due 2009, $60.0 million related to the then outstanding Elk 7.49% Senior Notes due 2012 and $50.0 million related to the then outstanding Elk 6.28% Senior Notes due 2014. Financing activities also included $36.5 million in financing fees and expenses, primarily related to debt restructuring costs associated with our new Senior Secured Revolving Credit Facility, Term Loan and Junior Lien Term Loan. In addition, on

F-12

BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

October 30, 2007, we settled all of our open treasury lock positions, which resulted in a cash payment of $4.9 million (see Hedging Activities).

Acquisition

        On February 9, 2007, BMCA Acquisition Sub Inc., which we refer to as BMCA Acquisition Sub, and BMCA Acquisition Inc., which together with BMCA Acquisition Sub, we collectively refer to as the Purchasers, both wholly-owned subsidiaries of BMCA, entered into a merger agreement with Elk, which we refer to as the Merger Agreement. On February 22, 2007, an equity tender offer closed, and, as a result thereof (and the purchase of shares from one of its affilates), BMCA Acquisition Sub acquired approximately 90% of Elk's shares at a purchase price of $43.50 per share. In accordance with the Merger Agreement, the remaining Elk shares were acquired on March 26, 2007 in a second step merger in exchange for the right to receive $43.50 per share in cash. In the merger, BMCA Acquisition Sub was merged with and into Elk, which then became an indirect wholly-owned subsidiary of BMCA. The acquisition of the Elk shares was completed at a purchase price of approximately $945.3 million, net of $0.1 million of cash acquired and net of the repayment of $195.0 million of the then outstanding Elk senior notes, which were assumed in connection with the acquisition and were repaid in March 2007.

        We financed the purchase of Elk, and refinanced certain of BMCA's then outstanding debt and repaid all of Elk's then outstanding senior notes of $195.0 million with the proceeds from our new senior secured credit facilities. Our new senior secured credit facilities consist of a $600.0 million Senior Secured Revolving Credit Facility, a $975.0 million Term Loan and a $325.0 million Junior Lien Term Loan Facility (see Debt Instruments, Financial Covenants and Restrictions below).

        We believe the acquisition of Elk will strategically position us for future growth in the roofing industry and other building product markets. The acquisition is expected to provide us with an increased market leadership position; create comprehensive market-leading product offerings; generate natural cost savings from synergies, including plant rationalization and re-alignment of distribution networks, raw material procurement, administrative and logistical efficiencies; and leverage the organizational strengths of both BMCA and Elk.

        The Elk acquisition was accounted for under the purchase method of accounting as prescribed by SFAS No. 141 "Business Combinations," which we refer to as SFAS No. 141, which requires the total purchase price to be allocated to the fair value of assets acquired and liabilities assumed based on their fair values at the date of acquisition, with amounts exceeding their fair value being recorded as goodwill. The allocation process required an analysis of property, plant and equipment, inventories, customer lists and relationships, contractual commitments and brand strategies, among others, to identify and record the fair value of assets acquired and liabilities assumed. In connection with the acquisition, we used estimated economic lives of 5 to 25 years for land improvements, 10 to 40 years for buildings and building improvements, 3 to 25 years for machinery and equipment, which includes furniture and fixtures, and 1 to 25 years for intangible assets.

        In valuing acquired assets and assumed liabilities, fair values were based on, but not limited to: future expected discounted cash flows for trade names and customer relationships; current replacement costs for similar capacity and obsolescence for certain fixed assets and inventory; and comparable market rates for contractual obligations, including real estate and liabilities. During the fourth quarter of 2007, we completed a valuation analysis of the assets and liabilities acquired from Elk, and we

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

expect to finalize our purchase price allocation during the first quarter of 2008. Based on the completion of our valuation analysis at December 31, 2007, we recorded $590.4 million of goodwill (see Note 6 to the Consolidated Financial Statements) and $207.6 million of intangible assets, net of amortization of $6.8 million (see Note 7 to the Consolidated Financial Statements), related to the acquisition of Elk. The operating results of the Elk acquisition are included in our results of operations from the date of acquisition.

        The following unaudited pro-forma consolidated results of operations assume the acquisition of Elk was completed as of January 1^st for each of the years presented below:

	Year Ended December 31,
	2007			2006
	(Millions)
Net sales	$	2,383.8		$	2,865.4
Income (loss) before interest and income taxes	$	(54.7	)	$	195.4
Net income (loss)	$	(160.2	)	$	21.9

        The unaudited pro-forma consolidated results of operations for the year ended December 31, 2007 include $181.0 million pre-tax ($116.6 million after-tax) of restructuring and other expenses, respectively, of which $15.1 million pre-tax ($9.7 million after-tax) was included as a reduction of net sales due to restructuring-related sales discounts and $24.3 million pre-tax ($15.7 million after-tax) was included in cost of products sold, respectively, related to the acquisition of Elk. In addition, the unaudited pro-forma consolidated results of operations for the year ended December 31, 2007 above includes $13.6 million of merger-related expenses of Elk and $23.2 million of debt restructuring costs of both BMCA and Elk related to the acquisition of Elk.

        Our pro-forma results include a reduction in compensation expense related to Elk employees who were terminated due to the acquisition of Elk of $7.8 and $13.2 million for the years ended December 31, 2007 and December 31, 2006, respectively. Our pro-forma results also include a reduction in lease expense for excess lease capacity at two Elk facilities. The reduction in lease expense was computed based on the remaining lease payments discounted to present value on a straight-line basis over the applicable pro-forma period with the present value offset being recorded in interest expense. For the years ended December 31, 2007 and December 31, 2006, we recorded a reduction in lease expense of $0.5 and $2.1 million, respectively, and an increase to interest expense of $0.3 and $1.2 million, respectively.

        In addition, our pro-forma results for the years ended December 31, 2007 and December 31, 2006 include additional interest expense associated with variable rate debt instruments based on LIBOR, plus a specified fixed margin, due to the acquisition of Elk. A ¹/8% change in these variable interest rates would result in a plus or minus $0.3 and $1.9 million in interest expense for the years ended December 31, 2007 and December 31, 2006, respectively.

        The following represents the fair values of assets acquired and liabilities assumed related to the acquisition of Elk as of the acquisition date of February 22, 2007, with amounts exceeding their fair value being recorded as goodwill.

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
RELATED TO THE ACQUISITION OF ELK
FEBRUARY 22, 2007
(Thousands)

		Fair Value
		February 22, 2007
Current assets		$	269,632
Property, plant and equipment, net			304,408
Goodwill			590,406
Intangible assets			214,420
Other noncurrent assets			34,411
	Total assets acquired	$	1,413,277
Current liabilities		$	106,297
Long-term debt			178,872
Deferred income tax liabilities			139,597
Other long-term liabilities			43,115
	Net assets acquired	$	945,396

        Pro-forma data may not be indicative of the results that would have been achieved had these events actually occurred at the beginning of the periods presented, nor does it intend to be a projection of future results.

        During the second quarter of 2007, we initiated a restructuring plan, which we refer to as the 2007 Restructuring Plan, which was formulated in connection with the February 22, 2007 acquisition of Elk. See Restructuring and Other Expenses below. In connection with the acquisition of Elk, pursuant to Emerging Issues Task Force, which we refer to as EITF, No. 95-3 "Recognition of Liabilities in Connection with a Purchase Business Combination," which we refer to as EITF No. 95-3, we have identified $8.4 million in purchase accounting adjustments, which relate to employee severance payments to former Elk employees and lease termination expenses. As of December 31, 2007, we paid $2.5 million of employee severance costs and $0.6 million of lease termination costs. We expect to make approximately $5.3 million of lease termination payments through 2019. Our employee severance payments included the termination of approximately 125 Elk employees, including certain management level positions, in the manufacturing and selling and administrative functional areas.

Restructuring and Other Expenses

        The 2007 Restructuring Plan was created to eliminate cost redundancies recognized due to the acquisition of Elk and to reduce our current cost structure. The 2007 Restructuring Plan is expected to be fully implemented by the end of our first quarter of 2008. We account for our restructuring activities in accordance with SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" which we refer to as SFAS No. 146, SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" and EITF No. 96-9 "Classification of Inventory Markdowns and Other Costs Associated with Restructuring" which we refer to as EITF No. 96-9.

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

        In connection with the acquisition of Elk, we identified approximately $191.9 million in restructuring and other expenses, of which $97.0 million relates to property, plant and equipment write-downs at certain of our existing manufacturing facilities and $25.1 million of plant closing expenses. The plants included were Erie, Pennsylvania; Stockton, California; Hollister, California; Millis, Massachusetts; Mobile, Alabama; Dallas, Texas; Port Arthur, Texas; Goldsboro, North Carolina and Quakertown, Pennsylvania. Restructuring and other expenses also include $2.0 million in employee severance payments and $67.8 million in integration-related expenses, which primarily consist of $24.3 million of inventory-related write-downs, $15.1 million of restructuring-related sales discounts, $1.4 million of lease termination expenses and $27.0 million of other integration expenses. We recorded $181.0 million of the aforementioned restructuring and other expenses as of December 31, 2007, of which $15.1 million was reflected as a reduction in net sales due to restructuring-related sales discounts, $24.3 million was charged to cost of products sold and $141.6 million was charged to restructuring and other expenses in our statement of operations. We expect to incur the remaining $10.9 million of identified restructuring and other expenses and make the remaining cash payments related to our accrual by the end of our first quarter in 2008.

        Our employee severance payments included the termination of approximately 85 BMCA employees, including certain management positions, in the manufacturing and selling and administrative functional areas.

        The table below details our restructuring and other expense accruals and the charges made against these accruals during 2007:

Restructuring and Other Expenses	PP&E Write-Down			Plant Closing Expenses			Employee Severance Payments			Integration Expenses			Total
	(Thousands)
Beginning balance, as of December 31, 2006	$	—		$	—		$	—		$	—		$	—
Accrued costs recognized due to the acquisition of Elk		97,007			21,474			2,000			60,531			181,012
Cash payments		—			(17,024	)		(2,000	)		(45,689	)		(64,713	)
Amount charged to property, plant and equipment for asset write-down		(97,007	)		—			—			—			(97,007	)
Amount charged to write-off inventory		—			(1,545	)		—			(3,021	)		(4,566	)
Non-cash items		—			—			—			(876	)		(876	)
Ending balance, as of December 31, 2007	$	—		$	2,905		$	—		$	10,945		$	13,850

Debt Instruments, Financial Covenants and Restrictions

        On February 22, 2007, BMCA and the Purchasers entered into senior secured credit facilities consisting of a $975.0 million Term Loan, a $600.0 million Senior Secured Revolving Credit Facility and a $325.0 million Bridge Loan Facility, which we refer to as the Bridge Loan, which was subsequently replaced by a $325.0 million Junior Lien Term Loan. We refer to these facilities collectively as the "Senior Secured Credit Facilities".

        The initial borrowings under the Senior Secured Credit Facilities were used to (i) pay for shares tendered by Elk shareholders in an equity tender offer, (ii) repay amounts outstanding under BMCA's

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

Old Senior Secured Revolving Credit Facility, (iii) make payments in connection with the completion by BMCA and Building Materials Manufacturing Corporation, which we refer to as BMMC, of the tender offer and consent solicitation for their 2007 Notes, (iv) make payments in connection with the completion by BMCA of its previously announced tender offer and consent solicitation for its outstanding 2008 Notes, (v) pay for transaction fees and expenses incurred in connection with each of the foregoing transactions and (vi) repay all of the existing Elk senior note debt.

        The Senior Secured Revolving Credit Facility, which has a maturity date of February 22, 2012, replaced our $450.0 million Old Senior Secured Revolving Credit Facility, which would have expired in September 2011. All amounts outstanding under the Senior Secured Revolving Credit Facility are secured by a first priority perfected security interest in all receivables, inventory, precious metals, deposit accounts and other current assets of BMCA and its domestic subsidiaries and all proceeds thereof, which we refer to as the Senior Secured Revolving Credit Facility Collateral.

        Credit availability under the Senior Secured Revolving Credit Facility is based upon eligible accounts receivable, inventory and precious metals used in the production of inventory, as defined, and includes a sub-limit for letters of credit of $150.0 million. Loans under the Senior Secured Revolving Credit Facility bear interest at a variable rate based upon either the Base Rate or the Eurodollar Rate as defined in the Senior Secured Revolving Credit Facility, at the borrowers' option, plus a specified margin in each case. These interest rates are recalculated periodically based on changes in the Base Rate or Eurodollar Rate and also based on an availability-based pricing grid. The Senior Secured Revolving Credit Facility requires us to pay unused commitment fees. The Senior Secured Revolving Credit Facility provides for optional reductions by us in the overall $600.0 million commitment, under certain conditions and provides for optional and mandatory pre-payments of borrowings outstanding under the Senior Secured Revolving Credit Facility, subject to certain conditions. The Senior Secured Revolving Credit Facility also provides the borrowers with the ability to increase the size of the facility by up to $350.0 million, depending on the ability to obtain commitments from lenders and meeting specified conditions.

        Under the terms of the Senior Secured Revolving Credit Facility, the borrowers are subject to an interest coverage ratio financial covenant when liquidity falls below a specified threshold. In addition, the borrowers are required to comply with other customary covenants and various restrictive covenants, including those with respect to incurring additional indebtedness or guarantees, creating liens or other encumbrances, making capital expenditures, making restricted payments, including dividends and distributions to BMCA's parent corporations, and making certain investments. In the event of a change of control of BMCA, as defined, the Senior Secured Revolving Credit Facility could be accelerated by the holders of that indebtedness.

        The Term Loan will mature on February 22, 2014. All amounts outstanding under the Term Loan are secured by (i) a first priority perfected security interest in substantially all of the assets and properties of BMCA and its domestic subsidiaries, other than the Senior Secured Revolving Credit Facility Collateral, which we refer to as the Term Loan Collateral, and (ii) a second priority perfected security interest in the Senior Secured Revolving Credit Facility Collateral.

        Amounts due under the Term Loan bear interest at a variable rate based upon either the base rate or Eurodollar rate, as defined in the Term Loan, at the borrowers' option, plus a specified margin in each case. These interest rates are recalculated periodically based on changes in the base rate and Eurodollar rate, if applicable. The Term Loan provides for optional and mandatory pre-payments under

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

certain conditions and also provides the borrowers with the ability to increase the size of the facility by up to $250.0 million (less any increase in the Senior Secured Revolving Credit Facility in excess of $100.0 million), depending on the ability to obtain commitments from lenders and meeting specified conditions.

        Under the terms of the Term Loan, the borrowers are subject to an interest coverage ratio financial covenant, as defined, and a leverage ratio financial covenant, as defined, and BMCA must comply with each of these covenants starting as of the end of BMCA's second fiscal quarter in 2008. In addition, the borrowers are also required to comply with various restrictive covenants, including with respect to incurring additional indebtedness or guarantees, creating liens or other encumbrances, making capital expenditures, making restricted payments, including dividends and distributions to BMCA's parent corporations, and making certain investments. In the event of a change of control of BMCA, as defined, the maturity date of the Term Loan could be accelerated by the holders of that indebtedness.

        The Bridge Loan was amended and restated on March 15, 2007, and redesignated as the Junior Lien Term Loan. The Junior Lien Term Loan matures on September 15, 2014. All amounts outstanding under the Junior Lien Term Loan are secured by (i) a second priority perfected security interest in the Term Loan Collateral and (ii) a third priority perfected security interest in the Senior Secured Revolving Credit Facility Collateral. Loans under the Junior Lien Term Loan bear interest at a variable rate based upon either the base rate or Eurodollar rate, as defined in the Junior Lien Term Loan at the borrowers' option, plus a specified margin in each case. These interest rates are recalculated periodically based on changes in the base rate or Eurodollar rate, as applicable. The Junior Lien Term Loan provides for optional and mandatory prepayments under certain conditions.

        Under the terms of the Junior Lien Term Loan, the borrowers are subject to a leverage ratio financial covenant, as defined, which will need to be complied with starting as of the end of BMCA's second fiscal quarter in 2008. The borrowers are also required to comply with various restrictive covenants, including with respect to incurring additional indebtedness or guarantees, creating liens or other encumbrances, making capital expenditures, making restricted payments, including dividends and distributions to BMCA's parent corporations and making certain investments. In the event of a change of control of BMCA, as defined, the maturity date of the Junior Lien Term Loan could be accelerated by the holders of that indebtedness.

        On February 22, 2007, BMCA repurchased approximately $97.5 million, or 97.5%, of the aggregate $100.0 million principal amount outstanding of the 2007 Notes and $150.1 million, or 96.9%, of the aggregate $155.0 million principal amount outstanding of the 2008 Notes. In connection with the completion of the tender offer for the 2007 Notes and the 2008 Notes in February 2007, substantially all of the covenants included in the indentures governing the 2007 Notes and 2008 Notes were eliminated. On October 15, 2007, we redeemed all of our remaining $2.5 million outstanding 2007 Notes, including accrued and unpaid interest on such notes through the date of redemption.

        On March 26, 2007, we repurchased all of Elk's then outstanding $25.0 million in aggregate principal amount of 4.69% Senior Notes due 2007, $60.0 million in aggregate principal amount of 6.99% Senior Notes due 2009, $60.0 million in aggregate principal amount of 7.49% Senior Notes due 2012 and $50.0 million in aggregate principal amount of 6.28% Senior Notes due 2014.

        In December 2007, we consummated a $30.0 and $15.0 million sale-leaseback, of certain machinery and equipment located at our Baltimore, Maryland and Gainesville, Texas manufacturing facilities,

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

respectively, which were accounted for as capital leases, as according to SFAS No. 13 "Accounting for Leases", which we refer to as SFAS No. 13. The sale of the Baltimore machinery and equipment resulted in a deferred gain of $24.7 million, which will be amortized over the life of the lease term. The Baltimore and Gainesville lease terms extend through December 2015 and December 2014, respectively, with early buyout options in September 2012 and December 2013, respectively.

        In December 2007, we also consummated lease extensions of our original operating leases of certain machinery and equipment located at our Michigan City, Indiana and Shafter, California manufacturing facilities, respectively, which were accounted for as capital leases, as according to SFAS No. 13. The Michigan City and Shafter lease terms extend through September 2016 and December 2015, respectively, with early purchase options in September 2014 and September 2012, respectively.

        In 2006, we repurchased and retired $6.3 million of industrial revenue bond certificates issued by us in 1990 with respect to the Fontana, California Industrial Revenue Development Bond. We have two remaining industrial development revenue bond issues outstanding, which bear interest at floating rates. Interest rates on the foregoing obligations ranged between 3.1% and 4.3% during 2007. Our industrial development revenue bonds are secured by letters of credit under the Senior Secured Revolving Credit Facility.

        In July 2004, we issued $200.0 million in aggregate principal amount of 7³/4% Senior Notes due 2014, with an additional $50.0 million in aggregate principal amount of 7³/4% Senior Notes due 2014 issued in November 2004, collectively the 2014 Notes. The additional 2014 Notes were issued under an indenture dated July 2004, pursuant to which we previously issued our original $200.0 million of 7³/4% Senior Notes due 2014. These additional 2014 Notes rank equally with and formed a part of a single series with such original 2014 Notes and have the same terms and conditions. The net proceeds from the issuance of the 2014 Notes, after deducting the initial purchasers discounts, commission and offering expenses and including the addition of the applicable premium on the 2014 Notes issued in November 2004 were approximately $246.5 million. The premium of approximately $0.9 million is included in long-term debt and will be amortized over the life of the 2014 Notes.

        Under the terms and conditions of the 2014 Notes, the noteholders have the right under the indentures governing such notes to require us to purchase the 2014 Notes at a price of 101% of the principal amount thereof, plus any accrued and unpaid interest, in the event of a change in control, as defined in the 2014 Notes. Upon the expiration of this right, we would have the option to purchase the 2014 Notes at a purchase price equal to 100% of the aggregate principal amount, plus the applicable premium, as defined in the 2014 Notes, together with any accrued and unpaid interest. We also have the option to redeem some or all of the 2014 Notes beginning on August 1, 2009 through August 1, 2012, at specified redemption premiums, as defined in the 2014 Notes. Our 2008 Notes and 2014 Notes, collectively, the Senior Notes, are secured by a first-priority lien on the Term Loan Collateral and a second-priority lien on the Senior Secured Revolving Credit Facility Collateral, in each case, having equal priority with the lien securing our obligations under the Term Loan.

        In July 2003, we entered into a $19.7 million secured loan, which we refer to as the Chester Loan, with the proceeds being used to repay a $19.7 million obligation associated with an early buyout option on a previously transacted capital lease on certain machinery and equipment at our Chester, South Carolina facility. The Chester Loan is secured by a sole security interest in the machinery and equipment, matures in 2010, requires monthly payments of principal and interest commencing in August 2003 and bears a fixed annual interest rate of 7.41%.

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

        As of December 31, 2007, after giving effect to the most restrictive of the aforementioned restrictions, we could have paid dividends or made other restricted payments to our parent corporation. In addition, at December 31, 2007, we could repay demand loans to our parent corporation amounting to $52.8 million, subject to certain conditions as outlined in the Senior Secured Revolving Credit Facility and the indentures governing our Senior Notes.

        As of December 31, 2007, we had total outstanding consolidated indebtedness of $1,806.9 million, which amount includes $52.8 million of demand loans to our parent corporation and $24.6 million that matures prior to December 31, 2007. Our total outstanding consolidated indebtedness also includes $122.0 million of borrowings outstanding under our Senior Secured Revolving Credit Facility. We anticipate funding these obligations principally from our cash and cash equivalents on hand, cash flow from operations and/or borrowings under our Senior Secured Revolving Credit Facility.

        As of December 31, 2007, we were in compliance with all covenants under the Senior Secured Revolving Credit Facility, the Term Loan, the Junior Lien Term Loan and the indentures governing the Senior Notes. As of December 31, 2007, the net book value of the collateral securing the Senior Secured Revolving Credit Facility Collateral and the Term Loan Collateral was $649.4 and $1,681.2 million, respectively.

        At December 31, 2007, we had outstanding letters of credit of approximately $56.0 million, which includes approximately $11.1 million of standby letters of credit related to certain obligations of G-I Holdings. During 2007, we paid $0.2 million as a distribution to our indirect parent corporation related to previously outstanding standby letters of credit.

        See Note 13 to the Consolidated Financial Statements for further information regarding our Long-Term Debt.

Intercompany Transactions

        We make loans to and borrow from, our parent corporations from time to time at rates ranging from 7.3% to 8.3% in 2007. At December 31, 2007 and 2006, BMCA Holdings Corporation owed us $56.2 and $56.0 million, including interest of $1.0 and $0.8 million, respectively; and we owed BMCA Holdings Corporation $52.8 and $52.8 million, respectively, with no unpaid interest. Interest income on our loans to BMCA Holdings Corporation amounted to $5.0, $4.9 and $4.0 million in 2007, 2006 and 2005, respectively. Interest expense on our loans from BMCA Holdings Corporation amounted to $4.8, $4.7 and $3.8 million in 2007, 2006 and 2005, respectively. Loans payable to/receivable from our parent corporations are due on demand and provide each party with the right to offset of its related obligation to the other party and are subject to limitations as outlined in our Senior Secured Revolving Credit Facility, our Term Loan, our Junior Lien Term Loan and our Senior Notes. Under the terms of our Senior Secured Revolving Credit Facility and the indentures governing our Senior Notes at December 31, 2007, we could repay demand loans to our parent corporation amounting to $52.8 million, subject to certain conditions.

        We also make non-interest bearing advances to affiliates, of which no amounts were outstanding at December 31, 2007. In addition, we did not enter into any borrowing or lending activities with other affiliates. See Note 19 to the Consolidated Financial Statements.

        In 2007 we did not declare or pay a cash dividend to our parent corporation. On December 29, 2006, we declared and paid a cash dividend, amounting to $15.0 million to our parent corporation.

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

        During the years ended December 31, 2007 and December 31, 2006 we paid $0 and $24.1 million, respectively, in federal income tax payments to our parent corporation pursuant to the Tax Sharing Agreement. These amounts are included in the change in net receivable from/payable to related parties/parent corporations in the consolidated statement of cash flows.

        On January 5, 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to asbestos claims. See Item 3, "Legal Proceedings" for further information regarding asbestos-related matters. See Note 8 to the Consolidated Financial Statements.

        Our parent corporations, G-I Holdings and BMCA Holdings Corporation, are essentially holding companies without independent businesses or operations. As a result, they are presently dependent upon the earnings and cash flows of their subsidiaries, principally our company, in order to satisfy their obligations, including various tax and other claims and liabilities including tax liabilities relating to Rhône-Poulenc Surfactants & Specialties, L.P. (the "surfactants partnership"), a partnership in which G-I Holdings held an interest. We do not believe that the dependence of our parent corporations on the cash flows of their subsidiaries should have a material adverse effect on our operations, liquidity or capital resources. See Notes 8, 10, 13, 19 and 20 to the Consolidated Financial Statements.

        We purchase a substantial portion of our headlap roofing granules, colored roofing granules and algae-resistant granules under a long-term requirements contract with ISP Minerals Inc., which we refer to as ISP Minerals, our affiliate and an affiliate of International Specialty Products Inc., which is also our affiliate. We refer to International Specialty Products Inc. and its subsidiaries as ISP. In 2007, 2006 and 2005, we purchased in the aggregate approximately $106.3, $102.3 and $108.3 million, respectively, of roofing granules from ISP Minerals. The amount payable to ISP Minerals at December 31, 2007 and 2006 for such purchases was $15.1 and $5.2 million, respectively, and is included in payable to related parties in the consolidated balance sheets. We believe our long-term supply requirements contract with ISP Minerals, taken as a whole, is no less favorable to us than could be obtained from an unaffiliated third party.

        Pursuant to a management agreement, a subsidiary of ISP provides certain general management, administrative, legal and facilities services to us, including the use of our headquarters in Wayne, New Jersey. Charges to us by ISP for these services under the management agreement, inclusive of the services provided to G-I Holdings, discussed below, aggregated $6.7, $6.1 and $5.8 million for 2007, 2006 and 2005, respectively. These charges consist of management fees and other reimbursable expenses attributable to us, or incurred by ISP for the benefit of us. The amount payable to ISP for management fees as of December 31, 2007 and 2006 was $0.5 and $0.4 million, respectively, and is included in payable to related parties in the consolidated balance sheets. The management agreement also provides that we are responsible for providing management services to G-I Holdings and certain of its subsidiaries and that G-I Holdings pay to us a management fee for these services. The aggregate amount paid by G-I Holdings to us for services rendered under the management agreement in 2007, 2006 and 2005 was approximately $0.8, $0.9 and $0.8 million, respectively. We also allocate a portion of the management fees payable by us under the management agreement as lease payments for the use of our headquarters.

        As of December 31, 2007 and 2006, we included on our consolidated balance sheet a tax receivable from parent corporation of $10.0 and $9.1 million, representing amounts paid in excess of amounts due to G-I Holdings with respect to 2006 under the Tax Sharing Agreement. See Note 10 to the Consolidated Financial Statements.

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

Capital Expenditures

        We use capital resources to maintain existing facilities, expand our operations and make acquisitions. In 2008, we expect to spend approximately $79.8 million on maintenance and compliance and expansion capital. We expect to generate funding for our capital programs from results of operations and additional borrowings under our Senior Secured Revolving Credit Facility.

Property Dispositions

        In June 2005, we sold property in Houston, Texas for cash proceeds of approximately $4.1 million, which approximated carrying value.

        As a result of the factors described above related to 2007, cash and cash equivalents decreased by $1.5 million during 2007 to $6.3 million.

Economic Outlook

        We do not believe that inflation has had a material effect on our results of operations during the past three years. However, we cannot assure you that our business will not be affected by inflation in the future, or by increases in the cost of energy and asphalt purchases used in our manufacturing process principally due to fluctuating oil prices.

        The prices of energy and crude oil continued to rise in 2007 reaching record high levels, however the price of asphalt and other petroleum-based raw materials remained flat, although remaining at high historical levels. Due to the strength of our manufacturing operations which allows us to use many types of asphalt together with our ability to secure alternative sources of supply, we do not anticipate that any future disruption in the supply of asphalt will have a material impact on future net sales, although no assurances can be provided in that regard. We will attempt to pass on future cost increases from suppliers as needed; however, no assurances can be provided that these price increases will be accepted in the marketplace.

Contractual Obligations and Commercial Commitments

        At December 31, 2007, the table below summarizes our significant contractual obligations and commercial commitments.

		Payments Due by Period
Contractual Obligations		Total		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years
		(Millions)
Long-term Debt(1)		$	1,754.0	$	24.7	$	40.3	$	163.8	$	1,525.2
Purchase Obligations(2)			142.9		98.6		44.3		—		—
Operating Leases			104.0		22.0		34.2		21.8		26.0
Interest Expense(3)			757.8		125.6		250.3		232.5		149.4
	Total	$	2,758.7	$	270.9	$	369.1	$	418.1	$	1,700.6

(1)

Our long-term debt obligations include our capital leases related to our Michigan City, Indiana; Shafter, California; Baltimore, Maryland; and Gainesville, Texas manufacturing facilities.

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BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

(2)

We have entered into certain contractual obligations primarily related to the purchase of raw materials and the use of asphalt terminals at specific locations. Pricing under these contractual obligations is generally fixed; however, these contracts are subject to certain conditions which allow for prices to be adjusted upward or downward. Certain of these contracts also contain minimum annual purchase requirements, which we expect will be met and we do not expect any losses under these specific contracts.

(3)

Interest rates on our $325.0 million Junior Lien Term Loan and our $975.0 million Term Loan are at variable rates. We have utilized an expected rate of LIBOR (3.00%) plus a specified fixed rate (2.75%) as of December 31, 2007, for purposes of estimating our interest expense on the Term Loan throughout the duration of the loan and an expected rate of LIBOR (3.00%) plus a specified fixed rate of (5.75%) as of December 31, 2007, for purposes of estimating our interest expense on the Junior Lien Term Loan throughout the duration of the loan. In 2007, we entered into multiple five-year fixed income interest rate swap contracts as hedging instruments against our variable rate Term Loan. Interest expense related to the swaps is included in the table above. At December 31, 2007, we had $122.0 million of long-term debt related to our Senior Secured Revolving Credit Facility. Interest expense on this variable rate facility is not included in the above table as it cannot be reasonably estimated due to daily fluctuations in the principal amount of this debt facility. A ¹/8% change in LIBOR due to changes in the prevailing market rates would result in a plus or minus $5.2 million adjustment to our interest expense over the life of our variable rate debt in the table above.

        We also have a management agreement with ISP Management Company Inc., a subsidiary of International Specialty Products, Inc., which we refer to as the ISP Management Agreement, to provide us with certain management services. The management fees payable under the ISP Management Agreement are adjusted annually. Based on services provided to us in 2007 under the ISP Management Agreement, the aggregate amount payable to ISP under the ISP Management Agreement for 2008 inclusive of the services provided to G-I Holdings, is not yet available, however it is estimated to be consistent, after adjusting for inflationary factors, with the $6.7 million paid in 2007. For a further discussion on the ISP Management Agreement reference is made to Management's Discussion and Analysis of Financial Condition and Results of Operations, "Intercompany Transactions."

        We purchase a substantial portion of our headlap roofing granules, colored roofing granules and algae-resistant granules under a long-term requirements contract with ISP Minerals. The amount of roofing granules purchased each year under the ISP Minerals contract is based on current demand and is not subject to minimum purchase requirements. Since the total annual amount of roofing granules expected to be purchased cannot be determined at this time, no amount is included in the above table related to this contract. In 2007, 2006 and 2005, we purchased $106.3, $102.3 and $108.3 million, respectively, of roofing granules from ISP Minerals under this contract.

        At December 31, 2007, we have contractual guarantees and commitments as follows:

		Expiration per period
Contractual Guarantees and Commitments		Total		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years
		(Millions)
Letters of Credit		$	56.0	$	56.0	$	—	$	—	$	—
	Total	$	56.0	$	56.0	$	—	$	—	$	—

F-23

BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

        At December 31, 2007, letters of credit of $56.0 million, of which are all standby letters of credit, are irrevocable obligations of an issuing bank. These letters of credit are guaranteed by us.

Other Obligations

        At December 31, 2007, we have other obligations as follows:

Other Obligations		2007 Actual Spending		2008 Projected Spending
		(Millions)
Environmental Matters		$	0.4	$	1.0
Pension and Other Benefits			0.9		1.5
	Total	$	1.3	$	2.5

        Our expenditures for environmental compliance capital projects were $0.4 and $1.0 million in 2007 and 2006, respectively. We anticipate that environmental regulations will continue to be imposed on the roofing industry. Although we cannot predict with certainty environmental expenditures beyond 2007, management believes the estimation in the table above is adequate.

        Our policy for pension plans is to accumulate plan assets that, over the long run, will approximate the present value of projected benefit obligations. In 2007 we made pension contributions of $0.8 million. In 2006, we did not make any pension contributions. In 2008, based on current actuarial data, we expect to make a pension contribution of $1.3 million. Actual contributions in 2008 and future years may vary based on a number of factors including prevailing interest rates and return on plan assets.

        Spending associated with other benefit plans, primarily retiree medical and life insurance and long-term disability, amounted to $0.1 and $0.2 million in 2007 and 2006, respectively. We expect spending to continue at comparable levels in 2008.

Available Sources of Liquidity

        At December 31, 2007, we have available sources of liquidity, net of amounts used, as follows:

		Expiration per period
Available Sources of Liquidity		Total		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years
		(Millions)
Unused Lines of Credit		$	210.4	$	—	$	—	$	210.4	$	—
	Total	$	210.4	$	—	$	—	$	210.4	$	—

        We have a new $600.0 million Senior Secured Revolving Credit Facility, of which $56.0 million of letters of credit were used at December 31, 2007. Available sources of liquidity consisted of $210.4 million of unused lines of credit at December 31, 2007, subject to the borrowing base availability as defined in the Senior Secured Revolving Credit Facility.

F-24

BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

New Accounting Pronouncements

        In July 2006, the FASB issued FIN 48, "Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109" which we refer to as FIN 48. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken in a tax return. A company must determine whether it is "more-likely-than-not" that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured to determine the amount of benefit to recognize in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006. In May 2007, the FASB issued FASB Staff Position (FSP) FIN 48-1 "Definition of Settlement in FASB Interpretation No. 48," which we refer to as FSP FIN 48-1, which amended FIN 48 to provide guidance on how a reporting entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. Under FSP FIN 48-1, a tax position will be considered effectively settled and any previously unrecognized tax benefits should be recognized based on the terms of settlement if (a) the taxing authority has completed its examination, including all appeals, (b) the reporting entity does not intend to appeal or litigate any aspect of the tax position; and (c) based on the taxing authority's policies and practices, the reporting entity considers it remote that the taxing authority will re-examine the tax position. We adopted the provisions of FIN 48 as of January 1, 2007 in a manner that is consistent with the provisions of FSP FIN 48-1, and as a result of the adoption, we reviewed certain tax positions and determined that we did not need to recognize any material adjustments to our accruals for uncertain tax positions. See Note 10 to the Consolidated Financial Statements.

        In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which we refer to as SFAS No. 157, which clarifies the definition of fair value, establishes a framework for measuring fair value and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued FASB Staff Position, which we refer to as FSP, 157-2 "Partial Deferral of the Effective Date of Statement 157," which we refer to as FSP 157-2, which excludes SFAS No. 13, "Accounting for Leases," defers certain non-financial assets and non-financial liabilities and further clarifies the principles in SFAS No. 157 on the fair value measurement of liabilities. The FSP defers the effective date of SFAS 157 for non-financial assets and liabilities to fiscal years beginning after November 15, 2008. We will adopt the provisions of SFAS No. 157 for all other items not deferred beginning in the first quarter of 2008 and do not expect the adoption of SFAS No. 157 and FSP 157-2 to have a material effect on our consolidated financial statements.

        In September 2006, the FASB issued FSP, AUG AIR-1 "Accounting for Planned Major Maintenance Activities," which we refer to as FSP AUG AIR-1, which prohibits the use of the accrue-in-advance method of accounting in annual and interim financial reporting periods for planned major maintenance activities. Prior to FSP AUG AIR-1, companies could recognize planned major maintenance costs by accruing a liability over several reporting periods before the maintenance was performed. FSP AUG AIR-1 still allows the direct expense, built-in-overhaul and deferral methods of accounting as acceptable; however, it does mandate that companies apply the same method of accounting in both interim and annual financial reporting periods and that the method be retrospectively applied if applicable. FSP AUG AIR-1 is effective for fiscal years beginning after December 15, 2006. We adopted the provisions of FSP AUG AIR-1 in our first quarter of 2007. FSP AUG AIR-1 has not had a material effect on our consolidated financial statements.

F-25

BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

        In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115," which we refer to as SFAS No. 159, which permits entities to elect to measure specified financial instruments and warranty and insurance contracts at fair value on a contract-by-contract basis, with changes in fair value recognized in earnings each reporting period. The election, called the "fair value option," will enable some companies to reduce the volatility in reported earnings caused by measuring related assets and liabilities differently, and it is simpler than using the complex hedge-accounting provisions of SFAS No. 133 to achieve similar results. SFAS No. 159 applies to all entities and contains financial statement presentation and disclosure requirements for assets and liabilities reported at fair value as a consequence of the election. SFAS No. 159 is expected to expand the use of fair value measurements for financial instruments. SFAS No. 159 is effective as of the beginning of a company's first fiscal year that begins after November 15, 2007. Retrospective application is not permitted. We may adopt the provisions of SFAS No. 159 beginning in our first quarter of 2008 and therefore, have not yet determined the effect, if any, the adoption of SFAS No. 159 will have on our results of operations or financial position.

        In December 2007, the FASB issued SFAS No. 141 (revised 2007) "Business Combinations," which we refer to as SFAS No. 141R, which provides revised guidance on how an acquiring company should recognize and measure the identifiable assets acquired, liabilities assumed, any noncontrolling interests, and goodwill acquired in a business combination. SFAS No. 141R also expands the required disclosures related to the nature and financial statement effects of business combinations. SFAS No. 141R is effective, on a prospective basis, for business combinations completed in fiscal years beginning after December 15, 2008. We will adopt SFAS No. 141R during our fiscal year ending December 31, 2009 and, therefore, have not determined the effect, if any, the adoption of SFAS No. 141R will have on our results of operations or financial position.

        In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements," which we refer to as SFAS No. 160. SFAS No. 160 establishes requirements for ownership interests in subsidiaries held by parties other than us (minority interests) be clearly identified and disclosed in the consolidated statement of financial position within equity, but separate from the parent's equity. Any changes in the parent's ownership interests are required to be accounted for in a consistent manner as equity transactions and any noncontrolling equity investments in deconsolidated subsidiaries must be measured initially at fair value. SFAS No. 160 is effective, on a prospective basis, for fiscal years beginning after December 15, 2008, however, presentation and disclosure requirements must be retrospectively applied to comparative financial statements. We will adopt SFAS No. 160 in our fiscal year ending December 31, 2009. However, we do not expect the adoption of SFAS No. 160 to have any impact on our results of operations or financial position because we do not have any noncontrolling interests.

Market-Sensitive Instruments and Risk Management

        Under the terms of the Senior Secured Revolving Credit Facility, we are only permitted to enter into investments in highly-rated commercial paper, U.S. government-backed securities, certain time deposits and hedging arrangements that protect against or mitigate the effect of fluctuations in interest rates on variable interest rate debt, foreign exchange rates or prices of commodities used in our business. In 2007, BMCA entered into fixed income interest rate swaps and treasury locks, respectively, to hedge against fluctuations in the variable interest rate of our $975.0 million Term Loan. See

F-26

BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

"Market-Sensitive Instruments" caption included in Note 2 and also see Note 14 to the Consolidated Financial Statements.

* * *

Forward-looking Statements

        This annual report on Form 10-K contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of section 27A of the Securities Act of 1933, as amended and section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are only predictions and generally can be identified by use of statements that include phrases such as "believe," "expect," "anticipate," "intend," "plan," "foresee" or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals also are forward-looking statements. Our operations are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. The forward-looking statements included herein are made only as of the date of this annual report on Form 10-K and we undertake no obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances. We cannot assure you that projected results or events will be achieved.

F-27

BUILDING MATERIALS CORPORATION OF AMERICA

SELECTED FINANCIAL DATA

        The following table presents our selected consolidated financial data. The selected historical consolidated financial data for the five fiscal years ended December 31, 2007, 2006, 2005, 2004 and 2003 are derived from our audited consolidated financial statements. See Note 19 to the Consolidated Financial Statements for cash dividends paid to parent corporation.

		Year Ended December 31,
		2007(1)			2006		2005		2004		2003
		(Millions)
Operating Data:
	Net sales	$	2,310.1	*	$	1,969.2	$	1,955.8	$	1,773.4	$	1,607.8
	Income (loss) before interest and income taxes		(27.4)	**		124.8		160.6		150.2		130.4	**
	Interest expense		181.4	***		61.5		62.3		62.7		56.7
	Income (loss) before income taxes		(208.8	)		63.3		98.3		87.5		73.7
	Net income (loss)		(134.5	)		38.7		61.0		54.9		47.2

*

Net sales in 2007 reflected a $15.1 million reduction due to restructuring-related sales discounts.

**

The loss before interest and income taxes for the year ended December 31, 2007 includes a $4.5 million gain on the sale of assets related to precious metals at our Nashville, Tennessee manufacturing facility and $181.0 million in restructuring and other expenses related to the acquisition of ElkCorp ("Elk"), of which $15.1 million is reflected as a reduction in net sales and $24.3 million is included in cost of products sold. Income before interest and income taxes for the year ended December 31, 2003 includes a $5.7 million gain on the sale of assets and a $3.8 million loss on the write-down of manufacturing facility assets.

***

Interest expense for the year ended December 31, 2007 includes $23.2 million of debt restructuring charges related to refinancings due to the acquisition of Elk and an additional $3.5 million of interest expense of Elk from February 22, 2007 ("date of acquisition").

		December 31,
		2007(1)			2006		2005		2004			2003
		(Millions)
Balance Sheet Data:
	Total working capital	$	232.7		$	123.0	$	191.7	$	157.7		$	140.9
	Goodwill		655.2			64.8		67.1		63.3			63.3
	Total assets		2,274.4			1,029.8		1,004.3		1,065.5			808.0
	Long-term debt less current maturities		1,729.4			484.4		533.5		536.0			545.7
	Total stockholders' equity (deficit)		(96.3	)		62.2		43.0		(2.7	)		(42.1	)

		Year Ended December 31,
		2007(1)		2006		2005		2004		2003
		(Millions)
Other Data:
	Depreciation	$	69.0	$	49.3	$	45.1	$	43.9	$	39.4
	Intangible asset amortization		6.8		—		—		—		—
	Software amortization		3.4		3.0		2.7		2.7		2.1
	Acquisition of Elk, net of cash acquired of $0.1 million		945.3		—		—		—		—
	Capital expenditures and acquisitions		84.5		87.5		65.1		67.2		43.3

(1)

The selected consolidated financial data for the fiscal year ended December 31, 2007 included Elk from the date of acquisition.

F-28

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Building Materials Corporation of America:

        We have audited the accompanying consolidated balance sheets of Building Materials Corporation of America and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of operations, cash flows and shareholders' equity (deficit) for the years then ended. Our audits also included the December 31, 2007 and 2006 financial statement Schedule II included on page S-1. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Building Materials Corporation of America and subsidiaries at December 31, 2007 and 2006, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement Schedule II, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

        As discussed in Notes 2 and 20 to the consolidated financial statements, during the fourth quarter of 2006, the Company adopted Securities and Exchange Commission Staff Accounting Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements." In accordance with the transition provisions of SAB No. 108, the Company recorded a $9.3 million cumulative decrease, net of tax of $5.7 million, to retained earnings as of January 1, 2006. As discussed in Notes 2 and 11 to the consolidated financial statements, effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 151, "Inventory Costs."

Ernst & Young LLP

New York, New York
March 14, 2008

F-29

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Building Materials Corporation of America:

        We have audited the accompanying consolidated statements of operations, stockholders' equity (deficit) and cash flows of Building Materials Corporation of America and subsidiaries for the year ended December 31, 2005. In connection with our audit of the consolidated financial statements, we also have audited the consolidated financial statement schedule II for the year ended December 31, 2005 on page S-1. These consolidated financial statements and consolidated financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and consolidated financial statement schedule based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and the cash flows of Building Materials Corporation of America and subsidiaries for the year ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related consolidated financial statement schedule for the year ended December 31, 2005, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

KPMG LLP

Short Hills, New Jersey
March 29, 2006

F-30

BUILDING MATERIALS CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF OPERATIONS

			Year Ended December 31,
			2007			2006			2005
			(Thousands)
Net sales			$	2,310,073		$	1,969,170		$	1,955,785
Costs and expenses, net:
	Cost of products sold			1,695,584			1,396,376			1,359,593
	Selling, general and administrative			496,216			447,655			431,377
	Amortization of intangible assets			6,785			—			—
	Restructuring and other expenses			141,643			—			—
	Other (income) expense, net			(2,755	)		282			4,164
		Total costs and expenses, net		2,337,473			1,844,313			1,795,134
Income (loss) before interest and income taxes				(27,400	)		124,857			160,651
Interest expense				(181,438	)		(61,509	)		(62,304	)
Income (loss) before income taxes				(208,838	)		63,348			98,347
Income tax (expense) benefit				74,312			(24,598	)		(37,357	)
Net income (loss)			$	(134,526	)	$	38,750		$	60,990

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

F-31

BUILDING MATERIALS CORPORATION OF AMERICA

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

				December 31,
				2007			2006
				(Thousands)
Assets
Current Assets:
	Cash and cash equivalents			$	6,324		$	7,777
	Accounts receivable, trade, net				210,857			190,859
	Accounts receivable, other				10,792			5,599
	Income tax receivable				11,968			—
	Income tax receivable from parent corporation				10,016			9,132
	Inventories, net				316,912			238,709
	Deferred income tax assets				38,017			21,710
	Other current assets				13,698			12,209
		Total Current Assets			618,584			485,995
Property, plant and equipment, net					672,813			411,729
Goodwill					655,200			64,794
Intangible assets, net					207,635			—
Other noncurrent assets					120,159			67,323
Total Assets				$	2,274,391		$	1,029,841
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
	Current maturities of long-term debt			$	24,630		$	102,918
	Accounts payable				142,250			90,951
	Payable to related parties				16,133			5,952
	Loans payable to parent corporation				52,840			52,840
	Accrued liabilities				135,976			101,382
	Product warranty claims				13,500			9,000
	Discontinued operations—current liabilities				560			—
		Total Current Liabilities			385,889			363,043
Long-term debt					1,729,395			484,406
Product warranty claims					31,224			17,972
Deferred income tax liabilities					60,869			39,551
Other liabilities					163,332			62,664
Commitments and Contingencies—Note 20
Stockholders' Equity (Deficit):
	Series A Cumulative Redeemable Convertible Preferred Stock, $.01 par value per share; 400,000 shares authorized; no shares issued				—			—
	Class A Common Stock, $.001 par value per share; 1,300,000 shares authorized; 1,015,010 shares issued and outstanding; 0 shares issued in 2007 and 2006				1			1
	Class B Common Stock, $.001 par value per share; 100,000 shares authorized; 0 shares issued and outstanding in 2007 and 2006				—			—
	Loans receivable from parent corporation				(56,224	)		(56,031	)
	Retained earnings (accumulated deficit)				(16,496	)		118,201
	Accumulated other comprehensive income (loss)				(23,599	)		34
			Total Stockholders' Equity (Deficit)		(96,318	)		62,205
Total Liabilities and Stockholders' Equity (Deficit)				$	2,274,391		$	1,029,841

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

F-32

BUILDING MATERIALS CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Year Ended December 31,
			2007			2006			2005
			(Thousands)
Cash and cash equivalents, beginning of year			$	7,777		$	6,882		$	129,482
Cash provided by operating activities:
	Net income (loss)			(134,526	)		38,750			60,990
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Gain on sale of assets		(4,453	)		—			—
		Depreciation		69,006			49,321			45,110
		Amortization of intangible and other assets		10,242			2,993			2,687
		Restructuring and other expenses		181,012			—			—
		Deferred income taxes		(80,635	)		2,770			16,232
		Noncash interest charges		9,449			4,596			5,485
	(Increase) decrease in working capital items			55,363			(7,148	)		(29,473	)
	Increase (decrease) in product warranty claims			877			(825	)		(911	)
	Increase in other assets			(6,377	)		(11,964	)		(8,450	)
	Increase in other liabilities			7,758			7,651			2,305
	Change in net receivable from/payable to related parties/parent corporations			9,297			(14,463	)		(5,617	)
	Other, net			1,179			872			1,312
Net cash provided by operating activities				118,192			72,553			89,670
Cash used in investing activities:
	Acquisition of ElkCorp, net of cash acquired of $0.1 million			(945,295	)		—			—
	Capital expenditures and acquisitions			(84,511	)		(87,450	)		(65,060	)
	Proceeds from sale of assets			6,755			—			4,717
Net cash used in investing activities				(1,023,051	)		(87,450	)		(60,343	)
Cash provided by (used in) financing activities:
	Proceeds from issuance of long-term debt			2,457,749			824,000			553,000
	Purchase of industrial development revenue bond certificates issued by the Company			—			(6,325	)		—
	Repayments of long-term debt			(1,557,599	)		(783,948	)		(688,902	)
	Proceeds from sale-leasebacks			45,000			—			—
	Settlement of treasury lock hedges			(4,896	)		—			—
	Distributions to parent corporation			(171	)		(521	)		(47	)
	Dividends to parent corporation			—			(15,000	)		(15,000	)
	Loan to parent corporation			(193	)		(191	)		(149	)
	Financing fees and expenses			(36,484	)		(2,223	)		(829	)
Net cash provided by (used in) financing activities				903,406			15,792			(151,927	)
Net change in cash and cash equivalents				(1,453	)		895			(122,600	)
Cash and cash equivalents, end of year			$	6,324		$	7,777		$	6,882

(continued on the following page)

F-33

BUILDING MATERIALS CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

		Year Ended December 31,
		2007			2006			2005
		(Thousands)
Supplemental Cash Flow Information:
Effect on cash from changes in working capital items*:
	(Increase) decrease in accounts receivable trade and accounts receivable other	$	71,037		$	79,986		$	(20,928	)
	(Increase) decrease in inventories, net		28,905			(36,011	)		(27,274	)
	(Increase) decrease in other current assets		9,362			6,322			(7,071	)
	Increase (decrease) in accounts payable		12,855			(33,970	)		3,714
	Increase (decrease) in accrued liabilities		(2,083	)		(23,475	)		22,086
	Payments for restructuring and other expenses		(64,713	)		—			—
	Net effect on cash from (increase) decrease in working capital items	$	55,363		$	(7,148	)	$	(29,473	)
Cash paid during the period for:
	Interest (net of amount capitalized of $2,225, $2,704 and $1,080 in 2007, 2006 and 2005, respectively)	$	139,469		$	54,733		$	56,226
	Income taxes (including Federal income taxes paid pursuant to a Tax Sharing Agreement of $0, $24,101 and $21,953 in 2007, 2006 and 2005, respectively)	$	2,532		$	25,307		$	23,140

*

Working capital items exclude cash and cash equivalents, income tax receivable, income tax receivable from parent corporation, deferred income tax assets, current maturities of long-term debt, product warranty claims, net receivables and loans from/payable to related parties/parent corporations and discontinued operations.

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

F-34

BUILDING MATERIALS CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

			Capital Stock and Additional Paid-in Capital		Loans Receivable From Parent Corporation			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)
			(Thousands)
Balance, December 31, 2004			$	1	$	(55,691	)	$	58,332		$	(5,353	)
	Comprehensive income (loss)     year-ended December 31, 2005:
		Net income		—		—			60,990			—		$	60,990
		Other comprehensive loss, net of     tax:
		Minimum pension liability     adjustment, net of tax of $33		—		—			—			(57	)		(57	)
	Comprehensive income													$	60,933
	Distributions to parent corporation			—		—			(47	)		—
	Dividends to parent corporation			—		—			(15,000	)		—
	Loan to parent corporation			—		(149	)		—			—
Balance, December 31, 2005			$	1	$	(55,840	)	$	104,275		$	(5,410	)
	Comprehensive income (loss)     year-ended December 31,     2006:
		Net income		—		—			38,750			—		$	38,750
		Other comprehensive income     (loss), net of tax:
		Pension plan adjustment, net of     tax of ($849)		—		—			—			1,445			1,445
		Postretirement plan adjustment     net of tax of ($2,348)		—		—			—			3,999			3,999
	Comprehensive income													$	44,194
	SAB No. 108 adjustments, net of     tax of $5,701			—		—			(9,303	)		—
	Distribution to parent corporation			—		—			(521	)		—
	Dividend to parent corporation			—		—			(15,000	)		—
	Loan to parent corporation			—		(191	)		—			—
Balance, December 31, 2006			$	1	$	(56,031	)	$	118,201		$	34
	Comprehensive income (loss)     year-ended December 31, 2007:
		Net loss		—		—			(134,526	)		—		$	(134,526	)
		Other comprehensive income     (loss), net of tax:
		Derivative fair value adjustment     interest rate swaps net of tax     of $11,392		—		—			—			(18,588	)		(18,588	)
		Derivative fair value     adjustment-treasury locks, net     of tax of $1,776		—		—			—			(2,896	)		(2,896	)
		Pension plan adjustment, net of     tax of $1,078		—		—			—			(1,760	)		(1,760	)
		Postretirement plan adjustment     net of tax of $238		—		—			—			(389	)		(389	)
	Comprehensive loss													$	(158,159	)
	Distribution to parent corporation			—		—			(171	)		—
	Loan to parent corporation			—		(193	)		—			—
Balance, December 31, 2007			$	1	$	(56,224	)	$	(16,496	)	$	(23,599	)

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

F-35

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Formation of the Company

        Building Materials Corporation of America (the "Company" or "BMCA") is a leading national manufacturer and marketer of a broad line of asphalt and polymer-based roofing products and accessories for the residential and commercial roofing markets. The Company also manufactures and markets specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. See Note 18.

        The Company was formed on January 31, 1994 and is a wholly-owned subsidiary of BMCA Holdings Corporation ("BHC"), which is a wholly-owned subsidiary of G-I Holdings Inc. G-I Holdings Inc. is a wholly-owned subsidiary of G Holdings Inc. ("G Holdings").

        To facilitate administrative efficiency, effective October 31, 2000, GAF Corporation, the former indirect parent of the Company, merged into its direct subsidiary, G-I Holdings Inc. G-I Holdings Inc. then merged into its direct subsidiary, G Industries Corp., which in turn merged into its direct subsidiary, GAF Fiberglass Corporation. In that merger, GAF Fiberglass Corporation changed its name to GAF Corporation. Effective November 13, 2000, GAF Corporation merged into its direct subsidiary, GAF Building Materials Corporation, whose name was changed in the merger to G-I Holdings Inc. G-I Holdings Inc. is now an indirect parent of the Company and the Company's direct parent is BHC. References below to G-I Holdings means G-I Holdings Inc. and any and all of its predecessor corporations, including GAF Corporation, G-I Holdings Inc., G Industries Corp., GAF Fiberglass Corporation and GAF Building Materials Corporation.

        Effective as of January 31, 1994, G-I Holdings transferred to the Company all of its business and assets, other than three closed manufacturing facilities, certain deferred tax assets and receivables from affiliates. The Company recorded the assets and liabilities related to such transfer at G-I Holdings' historical costs. The Company contractually assumed all of G-I Holdings' liabilities, except (i) all of G-I Holdings' environmental liabilities, other than environmental liabilities relating to the Company's plant sites and its business as then-conducted, (ii) all of G-I Holdings' tax liabilities, other than tax liabilities arising from the operations or business of the Company and (iii) all of G-I Holdings' asbestos-related liabilities, other than the first $204.4 million of such liabilities (whether for indemnity or defense) relating to then-pending asbestos-related bodily injury cases and previously settled asbestos-related bodily injury cases, which the Company contractually assumed and agreed to pay.

        On February 22, 2007, (the "date of acquisition"), a subsidiary of Building Materials Corporation of America acquired approximately 90% of the outstanding common shares of ElkCorp ("Elk") a Dallas, Texas-based manufacturer of roofing products and building materials. The remaining shares of Elk were acquired on March 26, 2007, resulting in Elk becoming an indirect wholly-owned subsidiary of BMCA. See Note 4.

Note 2.    Summary of Significant Accounting Policies

Principles of Consolidation

        The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Net sales of roofing products and specialty business products and accessories are generally seasonal in nature.

F-36

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (Continued)

Financial Statement Estimates

        The preparation of the Company's consolidated financial statements in conformity with U.S. generally accepted accounting principles requires the Company's management to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an ongoing basis the Company evaluates its estimates including but not limited to those related to doubtful accounts, inventory valuation, product warranty claims, extended and enhanced product warranties, environmental liabilities, the carrying value of goodwill, the carrying value of long-lived tangible and intangible assets, pensions and other post-employment benefits and contingent liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. In the opinion of management, the consolidated financial statements herein contain all adjustments necessary to present fairly the financial position and the results of operations and cash flows of the Company for the periods presented. The Company does not anticipate any changes in management estimates that would have a material impact on operations, liquidity or capital resources, subject to the matters discussed in Note 20.

Cash and Cash Equivalents

        Cash and cash equivalents include cash on deposit and commercial paper purchased with original maturities of three months or less.

Market Sensitive Instruments

        Under the Company's new $600.0 million Senior Secured Revolving Credit Facility (the "Senior Secured Revolving Credit Facility") the Company is limited to entering into investments in highly-rated commercial paper, U.S. government-backed securities, certain time deposits and hedging arrangements that protect against or mitigate the effect of fluctuations in interest rates on variable rate debt, foreign exchange rates or prices of commodities used in the Company's business. In 2007, the Company entered into fixed income interest rate swaps and treasury locks, respectively, to hedge against fluctuations in the variable interest rate of the Company's $975.0 million Term Loan (the "Term Loan"). See Hedging Activity in Note 2 and see Note 14.

Accounts Receivable

        Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of credit losses in the Company's existing accounts receivable. The Company determines the allowance based on historical write-off experience, as well as customer operating performance and payment practices. Consequently, an adverse change in the financial condition of a particular customer could affect the Company's estimate of its bad debts. The Company reviews its allowance for doubtful accounts periodically. Past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its

F-37

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (Continued)

customers. Accounts receivable are net of the allowance for doubtful accounts and the allowance for customer incentives of $68.3 and $52.3 million at December 31, 2007 and 2006, respectively.

Inventories

        Inventories are stated at the lower of cost or market. The LIFO (last-in, first-out) method is utilized to determine the cost for certain asphalt-based products used to produce the Company's products, which the Company believes provides a more appropriate matching of revenue and expense. All other inventories are valued on the FIFO (first-in, first-out) method. The Company adjusts its inventories for estimated obsolescence or unmarketable inventories equal to the difference between the cost of inventories and their estimated market value based upon assumptions related to future demand and market conditions. If actual market conditions differ from those projected by management, additional inventory adjustments may be required. Sales of inventories and their resulting receivables are included in working capital items in the consolidated statement of cash flows.

Property, Plant and Equipment

        Property, plant and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed on the straight-line method based on the estimated economic lives of the assets. The Company uses an economic life of 5 to 25 years for land improvements, 10 to 40 years for buildings and building equipment and 3 to 20 years for machinery and equipment, which includes furniture and fixtures. Repairs in excess of $10,000 ($5,000 in 2005) are capitalized if the repair both extends the useful life of an asset beyond its original estimated useful life and adds to the value of the asset. Interest charges are capitalized during the period of construction as part of the cost of property, plant and equipment. Interest capitalized amounted to $2.2, $2.7 and $1.1 million for 2007, 2006 and 2005, respectively.

Long-Lived Asset Impairment

        The Company follows the provisions of Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), which addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed. For purposes of recognizing and measuring impairment of long-lived assets, the Company evaluates assets of its facilities because this is the lowest level of independent cash flows ascertainable to evaluate impairment. The Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. For long-lived assets to be held and used, an impairment exists when the carrying amount of the asset exceeds the estimated undiscounted cash flows. Any resulting impairment is measured based on the fair value of the related asset. Fair value is determined based on future projected demand and estimated discounted cash flows. During the year ended December 31, 2007, the Company closed several of its manufacturing facilities, in addition to its previously closed manufacturing facilities. The closing of these manufacturing facilities in 2007 was primarily due to additional manufacturing capacity from the acquisition of Elk and reduced market demand. For the year ended December 31, 2007, the Company recognized a $97.0 million SFAS No. 144 impairment loss. See Note 5.

F-38

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (Continued)

Asset Retirement Obligations

        The Company follows the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. ("FIN") 47 "Accounting for Conditional Asset Retirement Obligations" ("FIN 47"). FIN 47 clarifies how the term conditional asset retirement obligation is used in SFAS No. 143 "Accounting for Asset Retirement Obligations" ("SFAS No. 143"). SFAS No. 143 applies to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN 47 clarifies that an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. The Company performed an asset retirement obligation analysis at December 31, 2007 and noted that no significant conditional asset retirement obligations existed.

Goodwill

        The Company's goodwill principally arose from the acquisition of Elk, other acquisitions and from the 1989 management-led buyout of the predecessor company. The Company amortized goodwill using the straight-line method over a period of approximately 40 years prior to January 1, 2002. With the adoption of SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142") goodwill is not amortized but is subject to at least an annual assessment for impairment and more frequently if circumstances indicate a possible impairment. See Note 6.

Intangible Assets

        The Company accounts for its intangible assets acquired in connection with the acquisition of Elk in accordance with the provisions of SFAS No. 142. SFAS No. 142 requires disclosure of information relating to intangible assets subsequent to their acquisition that was not previously reported, which includes disclosure concerning the changes in the carrying amount of intangible assets by major intangible asset class for those assets subject to amortization and for those not subject to amortization. SFAS No. 142 also requires disclosure related to actual year-to-date intangible asset amortization expense and the estimated intangible asset amortization expense for each of the next five years. As of December 31, 2007, the Company has not recorded an impairment loss related to its intangible assets. See Note 7.

Hedging Activity

        In connection with the Company's acquisition of Elk on February 22, 2007 and the related debt refinancings, the Company has a substantial portion of variable rate debt. In order to maintain a reasonable balance between its fixed rate debt and variable rate debt in March 2007, the Company entered into forward-starting Eurodollar rate ("LIBOR") based pay fixed income interest rate swaps related to its Term Loan. In October 2007, the Company entered into additional interest rate swaps related to its Term Loan with similar terms as the swaps the Company entered into in March 2007. In July 2007, the Company entered into treasury locks as additional hedging instruments against its Term Loan.

        The Company accounts for its hedging activity in accordance with SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"), which requires a company to measure hedge effectiveness by assessing, on a quarterly basis, the historical and probable future of

F-39

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (Continued)

high correlation of changes in the fair value of the hedged item. Any ineffective portion is recorded in the Company's statement of operations. See Note 14.

Debt Issuance Costs

        Unamortized financing fees and expenses of $37.1 and $9.9 million are included in other noncurrent assets in the consolidated balance sheets at December 31, 2007 and 2006, respectively. Unamortized financing fees and expenses in 2007 are primarily due to the Company's borrowings related to the acquisition of Elk. See Note 4. Financing fees and expenses are amortized to interest expense over the life of the related debt on a straight-line basis, which approximates the effective interest rate method. In 2007, 2006 and 2005, the Company amortized $9.3, $4.3 and $5.1 million, respectively, related to such expenses.

Accrued Interest

        Accrued interest liabilities of $25.0 and $11.6 million are included in accrued liabilities in the consolidated balance sheets at December 31, 2007 and 2006, respectively, related to the Company's long-term debt obligations.

Software Development Costs

        Purchased software development costs of $9.9 and $11.4 million are included in other noncurrent assets in the consolidated balance sheets at December 31, 2007 and 2006, respectively. These costs are amortized to expense over a five year period. In 2007, 2006 and 2005, the Company amortized $3.4, $3.0 and $2.7 million, respectively, related to such costs.

Revenue Recognition

        Revenue is recognized at the time products are shipped to the customer. Products are generally shipped Freight on Board, or FOB shipping point. Title and risk of loss pass to the customer at the time of shipment.

Shipping and Handling Costs

        Accrued freight costs of $10.2 and $7.6 million are included in accrued liabilities in the consolidated balance sheets at December 31, 2007 and 2006, respectively. Shipping and handling costs are included in selling, general and administrative expenses and amounted to $192.5, $174.6 and $177.9 million in 2007, 2006 and 2005, respectively.

Advertising Costs

        Advertising costs are expensed as incurred and are included in selling, general and administrative expenses and amounted to $17.2, $17.4 and $9.6 million in 2007, 2006 and 2005, respectively.

Research and Development

        Research and development expenses, which are included in selling, general and administrative expenses, are charged to operations as incurred and amounted to $8.7, $8.0 and $9.4 million in 2007, 2006 and 2005, respectively.

F-40

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (Continued)

Warranty Claims

        The Company provides certain limited warranties covering most of its residential roofing products for periods generally ranging from 20 to 50 years, although certain product lines provide for a lifetime limited warranty. The Company also offers certain limited warranties of varying duration covering most of its commercial roofing products. Most of the Company's specialty building products and accessories carry limited warranties for periods generally ranging from 5 to 20 years, with lifetime limited warranties on certain products. The accrual for product warranty claims is estimated on the basis of historical and projected claims activity, as well as other factors. The accuracy of the estimate of additional costs is dependent on both the number and cost of future claims submitted during the warranty periods. The Company believes that the accruals established for estimated probable future product warranty claims are adequate. If actual claims differ from these estimates, adjustments to this accrual may be required.

        A settlement was reached in 1998 in a national class action lawsuit related to a specific alleged product defect related to prior production processes, which provides customers who purchased asphalt shingles manufactured from 1973 through 1997 the right to receive certain limited benefits beyond those already provided in their existing product warranty.

        In October 1998 G-I Holdings brought suit in the Superior Court of New Jersey—Middlesex County, on the Company's behalf, against certain of its insurers for recovery of the defense costs in connection with the class action described above and a declaration that the insurers are obligated to provide indemnification for all damages paid pursuant to the settlement of this class action and for other damages. As of December 31, 2007, this action is pending.

        In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). The Company provides product warranties, which are only subject to the disclosure requirements under FIN 45. The Company has adopted the disclosure provisions of FIN 45 as set forth below.

        The accrual for product warranty claims consists of the following, which for 2007 includes Elk from the date of acquisition:

	2007			2006
	(Thousands)
Balance, January 1	$	26,971		$	31,202
Charged to cost of products sold		20,997			21,220
Payments/deductions		(16,919	)		(22,951	)
Acquisition of Elk		13,675			—
Adjustment to Deferred Revenue and Extended Product     Warranty due to the adoption of SAB No. 108     (see below)		—			(10,290	)
Residential warranty adjustment due to the adoption of     SAB No. 108 (see below)		—			7,790
Balance, December 31	$	44,724		$	26,971

F-41

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (Continued)

        The Company adopted as of December 31, 2006 the provisions of Staff Accounting Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements" ("SAB No. 108") issued by the Securities and Exchange Commission ("SEC") in September 2006. In accordance with the transition provisions of SAB No. 108, the Company recorded a $4.8 million decrease, net of tax of $2.9 million, to January 1, 2006 opening retained earnings and a corresponding increase to the Company's accrual for product warranty claims of $7.8 million, related to the accrual for future residential warranty costs related to warranties that are not separately priced.

Deferred Revenue and Extended Product Warranty

        The Company offers extended warranty contracts on sales of its commercial roofing products. The life of these commercial warranties range from ten to twenty years. In addition, the Company offers enhanced warranties on certain of its residential roofing products. These enhanced warranties are the "Golden Pledge Warranty™", "Peace of Mind™" and "Peak Performance®" warranty programs. All revenue for the sale of these warranty programs is deferred and amortized on a straight-line basis over the life of these warranty programs, which is in accordance with the accounting prescribed by FASB Technical Bulletin No. 90-1 "Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts" ("FTB No. 90-1"). Incremental direct costs associated with the acquisition of the warranties are capitalized and amortized on a straight-line basis over the average life of these warranty programs. Current costs of services performed related to claims paid under these warranty programs are expensed as incurred. The analysis of these warranty programs as of December 31, 2007 indicates that deferred revenue is in excess of deferred costs and accordingly, no loss was recognized. However, if the total expected costs of providing services under these warranty programs exceed deferred revenues less deferred costs, then a loss would be recognized.

        The Company adopted the provisions of SAB No. 108 during its fourth quarter of 2006. In accordance with the transition provisions of SAB No. 108, the Company recorded a $2.6 million decrease, net of tax of $1.6 million, to opening retained earnings as of January 1, 2006, related to the method the Company uses to recognize revenue on sales of separately priced commercial and residential warranties in accordance with FTB No. 90-1. In addition, the Company reclassified $10.3 million of its commercial warranty reserve to deferred revenue and costs. At December 31, 2007 and 2006, the Company had deferred revenue of $70.8 and $59.9 million, of which $8.0 and $7.6 million is included in other current liabilities and $62.8 and $52.3 million is included in other liabilities, respectively. At December 31, 2007 and 2006, the Company also had deferred costs of $46.6 and $40.4 million, of which $5.1 and $4.9 million is included in other current assets and $41.5 and $35.5 million is included in other assets.

        BMCA management concluded that the 2006 adjustments are immaterial to prior years' consolidated financial statements under the Company's previous method of assessing materiality, and therefore has elected, as permitted under the transition provisions of SAB No. 108, to reflect the effect of these adjustments in opening assets and liabilities as of January 1, 2006, with the offsetting adjustment reflected as a cumulative effect adjustment to opening retained earnings as of January 1, 2006.

F-42

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (Continued)

Income Taxes

        Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to offset any deferred tax asset if it is more-likely-than-not that some or all of the deferred tax asset will not be realized. The determination of the amount of a valuation allowance to be provided on recorded deferred tax assets involves estimates regarding (1) the timing and amount of the reversal of taxable temporary differences, (2) expected future taxable income and (3) the impact of tax planning strategies. In assessing the need for a valuation allowance, the Company considers past operating results, projections of future taxable income and the feasibility of ongoing tax planning strategies. The projections of future taxable income include a number of estimates and assumptions regarding our volume, pricing and costs. Additionally, valuation allowances related to deferred tax assets can be impacted by changes to tax laws. The Company is party to a tax sharing agreement (the "Tax Sharing Agreement"). See Note 10.

        The Company uses judgment in determining income tax provisions under SFAS No. 109 "Accounting for Income Taxes" ("SFAS No. 109") and in evaluating its tax positions. Additional provisions for income taxes are established when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold as defined by FIN 48, "Accounting for Uncertainty in Income Taxes ("FIN 48"), which the Company adopted January 1, 2007, which is a tax position that is more-likely-than-not to be sustained upon examination by the applicable taxing authority. The Company and its subsidiaries are examined by various Federal and state tax authorities. The Company regularly assesses the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise to a revision become known.

Environmental Liabilities

        The Company, together with other companies, is a party to a variety of proceedings and lawsuits involving environmental matters under the U.S. Comprehensive Environmental Response Compensation and Liability Act, and similar state laws, in which recovery is sought for the cost of cleanup of contaminated sites or remedial obligations are imposed, a number of which are in the early stages or have been dormant for protracted periods. The Company refers to these proceedings and lawsuits as "Environmental Claims."

        The Company accrues environmental costs when it is probable that it has incurred a liability and the expected amount can be reasonably estimated and, reviews on an ongoing basis, its estimated environmental liabilities. The amount accrued reflects the Company's assumptions about remedial requirements at the contaminated site, the nature of the remedy, the outcome of discussions with regulatory agencies and other potential responsible parties at multi-party sites and the number and

F-43

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (Continued)

financial viability of other potentially responsible parties. Adverse decisions or events, particularly as to increases in remedial costs, discovery of new contamination, assertion of natural resource damages, and the liability and the financial responsibility of the Company's insurers and of the other parties involved at each site and their insurers, could cause the Company to increase its estimate of its liability in respect of those matters. The Company estimates that its liability as of December 31, 2007, in respect of assumed and other environmental liabilities, is $2.6 million, and expects insurance recoveries of $1.7 million. Insurance recoveries relate to amounts previously provided for in the consolidated balance sheets. The Company refers to these recoveries as "estimated recoveries." The Company's liability is reflected on an undiscounted basis. The gross environmental liability is included within accrued liabilities and other liabilities, and the estimated recoveries are included within other noncurrent assets. It is not currently possible to estimate the amount or range of any additional liabilities or whether any such liabilities exist.

Pension and Other Postemployment Benefits

        The Company maintains defined benefit plans that provide eligible employees with retirement benefits. In addition, while the Company generally does not provide postretirement medical and life insurance benefits, it subsidizes such life insurance benefits for certain employees and certain retirees. The costs and obligations related to these benefits reflect the Company's assumptions related to general economic conditions (particularly interest rates), expected return on plan assets and rate of compensation increases for employees. The Company sets the discount rate assumption annually for its retirement-related benefit plans at the measurement dates to reflect the yield of high-quality fixed-income debt instruments. The expected long-term rate of return on assets is derived from a detailed periodic study conducted by the Company's actuaries and its financial management. The study includes a review of anticipated future long-term performance of individual asset categories. While the study gives appropriate consideration to recent plan performance and historical returns, the assumption is primarily a long-term prospective rate. The Company's discount rate as of December 31, 2007 and 2006 for determining projected benefit obligations was 6.25% and 6.0%, respectively. A 25 basis point increase or decrease in the discount rate assumption would result in a plus or minus $0.2 million impact on pension expense and a plus or minus $1.4 million impact on the projected benefit obligation. The Company's expected long-term rate of return on assets assumption for its retirement plans was 9.5% in 2007 and 2006. In addition, a 25 basis point increase or decrease in the expected long-term rate of return on assets assumption would result in a plus or minus $0.1 million impact on pension expense.

        The cost of providing plan benefits also depends on demographic assumptions including retirements, mortality, turnover and plan participation. If actual experience differs from these assumptions, the cost of providing these benefits could increase or decrease.

2001 Long-Term Incentive Plan

        In December 2004, the FASB issued a revised SFAS No. 123 "Accounting for Stock-Based Compensation," ("SFAS No. 123(R)") "Share-Based Payment" which requires compensation costs related to share-based payments to be recognized in the financial statements. SFAS No. 123(R) establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees. SFAS No. 123(R) requires that share-based

F-44

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (Continued)

awards be classified as either an equity award or a liability award. SFAS No. 123(R) replaces the original SFAS No. 123 and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." The Company currently measures compensation as the amount by which the Book Value (as defined in the Company's 2001 Long-Term Incentive Plan) of the incentive units covered by the grant exceeds the option price or value specified of such incentive units at the date of grant. Changes, either increases or decreases, in the Book Value of those incentive units between the date of grant and the measurement date result in a change in the measure of compensation for the right or award. The Company adopted the provisions of SFAS No. 123(R) as of January 1, 2006, and its adoption did not have an impact on the Company's consolidated financial statements. See Note 17.

Accumulated Other Comprehensive Income (Loss)

        Comprehensive income (loss) and its components in the Company's consolidated financial statements include net income (loss), losses from derivative instruments and hedging activities, net of tax effect, pension plan adjustments, net of tax effect and postretirement plan adjustments, net of tax effect. The Company has disclosed comprehensive income (loss) in the consolidated statements of stockholders' equity (deficit).

        Changes in the components of accumulated other comprehensive income (loss) for the years 2007, 2006 and 2005 are as follows:

	Postretirement Plan Adjustment			Pension Plan Adjustment			Interest Rate Swap Adjustment			Treasury Lock Adjustment			Accumulated Other Comprehensive Income (Loss)
	(Thousands)
Balance, December 31, 2004	$	—		$	(5,353	)	$	—		$	—		$	(5,353	)
Change for the year 2005, net of     tax of $33		—			(57	)		—			—			(57	)
Balance, December 31, 2005		—			(5,410	)		—			—			(5,410	)
Change for the year 2006, net of     tax of $(3,197)		3,999			1,445			—			—			5,444
Balance, December 31, 2006		3,999			(3,965	)		—			—			34
Change for the year 2007, net of     tax of $14,484		(389	)		(1,760	)		(18,588	)		(2,896	)		(23,633	)
Balance, December 31, 2007	$	3,610		$	(5,725	)	$	(18,588	)	$	(2,896	)	$	(23,599	)

Concentration of Credit Risk

        Financial instruments which potentially subject the Company to a concentration of credit risk principally consist of cash equivalents, trade receivables and the Company's derivative instruments. The Company places its temporary cash investments with highly-rated U.S. Government instruments, commercial paper of prime quality and certain time deposits. To reduce credit risk, the Company performs periodic credit evaluations of its customers while monitoring the credit worthiness of its

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BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2.    Summary of Significant Accounting Policies (Continued)

customers to which it extends credit, but does not generally require advance payments or collateral. Concentration of credit risk with respect to trade receivables is generally limited other than to those significant customers as discussed in Note 20, as the Company's remaining customer base is comprised of a large number of other individual customers. The terms and conditions of the Company's credit type sales are specifically designed to mitigate concentration of credit risk with any single customer.

        The Company's long-term derivative instruments expose it to counterparty credit risk for nonperformance and to market risk related to changes in variable interest rates. The Company manages its exposure to counterparty credit risk through diversification of counterparties. The Company's derivative instruments are transacted with multiple large multi-national commercial banks with significant experience in derivative instruments. The Company manages its variable interest rate risk through its fixed income interest rate swaps. See Note 14.

Reclassifications

        Certain reclassifications have been made to conform to current year presentation.

Note 3.    New Accounting Pronouncements

        In July 2006, the FASB issued FIN 48, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken in a tax return. A company must determine whether it is "more-likely-than-not" that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured to determine the amount of benefit to recognize in the financial statements. FIN 48 became effective for fiscal years beginning after December 15, 2006. In May 2007, the FASB issued FASB Staff Position ("FSP") FIN 48-1 "Definition of Settlement in FASB Interpretation No. 48" ("FSP FIN 48-1"), which amended FIN 48 to provide guidance on how a reporting entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. Under FSP FIN 48-1, a tax position will be considered effectively settled and any previously unrecognized tax benefits should be recognized based on the terms of settlement if (a) the taxing authority has completed its examination, including all appeals, (b) the reporting entity does not intend to appeal or litigate any aspect of the tax position; and (c) based on the taxing authority's policies and practices, the reporting entity considers it remote that the taxing authority will re-examine the tax position. See Note 10. The Company adopted FIN 48 as of January 1, 2007 in a manner that is consistent with the provisions of FSP FIN 48-1, and as a result of the adoption, the Company reviewed certain tax positions and determined that it did not need to recognize any material adjustment to its accruals for uncertain tax positions.

F-46

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 3.    New Accounting Pronouncements (Continued)

        In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"), which clarifies the definition of fair value, establishes a framework for measuring fair value and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, with the exception of FSP 157-2. In February 2008, the FASB issued proposed FSP 157-2 "Partial Deferral to the Effective Date of Statement 157," which excludes SFAS No. 13, "Accounting for Leases," defers certain non-financial assets and non-financial liabilities and further clarifies the principles in SFAS No. 157 on the fair value measurement of liabilities. The FSP defers the effective date of SFAS 157 for non-financial assets and liabilities to fiscal years beginning after November 15, 2008. The Company will adopt the provisions of SFAS No. 157 for all other items not deferred by FSP 157-2 beginning in the first quarter of 2008 and does not expect the adoption of SFAS No. 157 and FSP 157-2 to have a material effect on its consolidated financial statements.

        In September 2006, the FASB issued FSP AUG AIR-1 "Accounting for Planned Major Maintenance Activities" ("FSP AUG AIR-1") which prohibits the use of the accrue-in-advance method of accounting in annual and interim financial reporting periods for planned major maintenance activities. Prior to FSP AUG AIR-1, companies could recognize planned major maintenance costs by accruing a liability over several reporting periods before the maintenance was performed. FSP AUG AIR-1 still allows the direct expense, built-in-overhaul and deferral methods of accounting as acceptable; however, it mandates that companies apply the same method of accounting in both interim and annual financial reporting periods and that the method be retrospectively applied if applicable. FSP AUG AIR-1 is effective for fiscal years beginning after December 15, 2006. The Company adopted the provisions of FSP AUG AIR-1 in its first quarter of 2007. FSP AUG AIR-1 has not had a material effect on its consolidated financial statements.

        In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115" ("SFAS No. 159"), which permits entities to elect to measure specified financial instruments and warranty and insurance contracts at fair value on a contract-by-contract basis, with changes in fair value recognized in earnings each reporting period. The election, called the "fair value option," will enable some companies to reduce the volatility in reported earnings caused by measuring related assets and liabilities differently, and it is simpler than using the complex hedge-accounting provisions of SFAS No. 133 to achieve similar results. SFAS No. 159 applies to all entities and contains financial statement presentation and disclosure requirements for assets and liabilities reported at fair value as a consequence of the election. SFAS No. 159 is expected to expand the use of fair value measurements for financial instruments. SFAS No. 159 is effective as of the beginning of a company's first fiscal year that begins after November 15, 2007. Retrospective application is not permitted. The Company may adopt the provisions of SFAS No. 159 beginning in its first quarter of 2008 and, therefore, has not yet determined the effect, if any, the adoption of SFAS No. 159 will have on its results of operations or financial position.

        In December 2007, the FASB issued SFAS No. 141 (revised 2007) "Business Combinations" ("SFAS No. 141R") which provides revised guidance on how an acquiring company should recognize and measure the identifiable assets acquired, liabilities assumed, any noncontrolling interests, and goodwill acquired in a business combination. SFAS No. 141R also expands the required disclosures related to the nature and financial statement effects of business combinations. SFAS No. 141R is effective, on a prospective basis, for business combinations completed in fiscal years beginning after December 15, 2008. The Company will adopt SFAS No. 141R during its fiscal year ending

F-47

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 3.    New Accounting Pronouncements (Continued)

December 31, 2009 and, therefore, has not determined the effect, if any, the adoption of SFAS No. 141R will have on its results of operations or financial position.

        In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements," ("SFAS No. 160"). SFAS No. 160 establishes requirements for ownership interests in subsidiaries held by parties other than the Company (minority interests) be clearly identified and disclosed in the consolidated statement of financial position within equity, but separate from the parent's equity. Any changes in the parent's ownership interests are required to be accounted for in a consistent manner as equity transactions and any noncontrolling equity investments in deconsolidated subsidiaries must be measured initially at fair value. SFAS No. 160 is effective, on a prospective basis, for fiscal years beginning after December 15, 2008. However, presentation and disclosure requirements must be retrospectively applied to comparative financial statements. The Company will adopt SFAS No. 160 in its fiscal year ending December 31, 2009. However, the Company does not expect the adoption of SFAS No. 160 to have any impact on its results of operations or financial position because it does not have any noncontrolling interests.

Note 4.    Acquisition

        On February 9, 2007, BMCA Acquisition Sub Inc. ("BMCA Acquisition Sub") and BMCA Acquisition Inc. (together with BMCA Acquisition Sub, the "Purchasers"), both wholly-owned subsidiaries of BMCA, entered into a merger agreement with Elk (the "Merger Agreement"). On February 22, 2007, an equity tender offer closed, and, as a result thereof (and the purchase of shares from one of its affiliates), BMCA Acquisition Sub acquired approximately 90% of Elk's shares at a purchase price of $43.50 per share. In accordance with the Merger Agreement, the remaining Elk shares were acquired on March 26, 2007 in a second step merger in exchange for the right to receive $43.50 per share in cash. In the merger, BMCA Acquisition Sub was merged with and into Elk, which then became an indirect wholly-owned subsidiary of BMCA. The acquisition of the Elk shares was completed at a purchase price of approximately $945.3 million, net of $0.1 million of cash acquired and net of the repayment of $195.0 million of the then outstanding Elk senior notes, which were assumed in connection with the acquisition and were repaid in March 2007.

        The Company financed the purchase of Elk and refinanced certain of BMCA's then outstanding debt and repaid all of Elk's then outstanding senior notes of $195.0 million with the proceeds from its new senior secured credit facilities. The Company's new senior secured credit facilities consist of a $600.0 million Senior Secured Revolving Credit Facility, a $975.0 million Term Loan and a $325.0 million Junior Lien Term Loan Facility (the "Junior Lien Term Loan", and collectively with the Senior Secured Revolving Credit Facility and the Term Loan, the "Senior Secured Credit Facilities"). See Note 13 for a description of the Senior Secured Credit Facilities.

        The Company believes the acquisition of Elk will strategically position it for future growth in the roofing industry and other building product markets. The acquisition is expected to provide the Company with an increased market leadership position; create comprehensive market-leading product offerings; generate natural cost savings from synergies, including plant rationalization and re-alignment of distribution networks, raw material procurement, administrative and logistical efficiencies; and leverage the organizational strengths of both BMCA and Elk.

        The Elk acquisition was accounted for under the purchase method of accounting as prescribed by SFAS No. 141 "Business Combinations" ("SFAS No. 141"), which requires the total purchase price to be allocated to the fair value of assets acquired and liabilities assumed based on their fair values at the date of acquisition, with amounts exceeding their fair value being recorded as goodwill. The allocation

F-48

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4.    Acquisition (Continued)

process required an analysis of property, plant and equipment, inventories, customer lists and relationships, contractual commitments and brand strategies, among others, to identify and record the fair value of assets acquired and liabilities assumed. In connection with the acquisition, the Company used an economic life of 5 to 25 years for land improvements, 10 to 40 years for buildings and building improvements, 3 to 25 years for machinery and equipment, which includes furniture and fixtures, and 1 to 25 years for intangible assets.

        In valuing acquired assets and assumed liabilities, fair values were based on, but not limited to: future expected discounted cash flows for trade names and customer relationships; current replacement costs for similar capacity and obsolescence for certain fixed assets and inventory; and comparable market rates for contractual obligations, including real estate and liabilities. During the fourth quarter of 2007 the Company completed a valuation analysis of the assets and liabilities acquired from Elk, and the Company expects to finalize its purchase price allocation during the first quarter of 2008. Based on the completion of the Company's valuation analysis at December 31, 2007, the Company recorded $590.4 million of goodwill (see Note 6) and $207.6 million of intangible assets, net of amortization of $6.8 million (see Note 7), related to the acquisition of Elk. The operating results of the Elk acquisition are included in the Company's results of operations from the date of acquisition.

        The following unaudited pro-forma consolidated results of operations assume the acquisition of Elk was completed as of January 1^st for each of the years presented below:

	Year Ended December 31,
	2007			2006
	(Millions)
Net sales	$	2,383.8		$	2,865.4
Income (loss) before interest and income taxes	$	(54.7	)	$	195.4
Net income (loss)	$	(160.2	)	$	21.9

        The unaudited pro-forma consolidated results of operations for the year ended December 31, 2007 include $181.0 million pre-tax ($116.6 million after-tax) of restructuring and other expenses, respectively, of which $15.1 million pre-tax ($9.7 million after-tax) was included as a reduction of net sales due to restructuring-related sales discounts and $24.3 million pre-tax ($15.7 million after-tax) was included in cost of products sold, respectively, related to the acquisition of Elk. In addition, the unaudited pro-forma consolidated results of operations for the year ended December 31, 2007 above includes $13.6 million of merger-related expenses of Elk and $23.2 million of debt restructuring costs of both BMCA and Elk related to the acquisition of Elk.

        The Company's pro-forma results include a reduction in compensation expense related to Elk employees who were terminated due to the acquisition of Elk of $7.8 and $13.2 million for the years ended December 31, 2007 and December 31, 2006, respectively. The Company's pro-forma results also include a reduction in lease expense for excess lease capacity at two Elk facilities. The reduction in lease expense was computed based on the remaining lease payments discounted to present value on a straight-line basis over the applicable pro-forma period with the present value offset being recorded in interest expense. For the years ended December 31, 2007 and December 31, 2006, the Company recorded a reduction in lease expense of $0.5 and $2.1 million, respectively, and an increase to interest expense of $0.3 and $1.2 million, respectively.

        In addition, the Company's pro-forma results for the years ended December 31, 2007 and December 31, 2006 include additional interest expense associated with variable rate debt instruments

F-49

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4.    Acquisition (Continued)

based on LIBOR, plus a specified fixed margin, due to the acquisiton of Elk. A ¹/8% change in these variable interest rates would result in a plus or minus $0.3 and $1.9 million in interest expense for the years ended December 31, 2007 and December 31, 2006, respectively.

        The following represents the fair values of assets acquired and liabilities assumed related to the acquisition of Elk as of the acquisition date of February 22, 2007, with amounts exceeding their fair value being recorded as goodwill.

FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
RELATED TO THE ACQUISITION OF ELK
FEBRUARY 22, 2007
(Thousands)

		Fair Value February 22, 2007
Current assets		$	269,632
Property, plant and equipment, net			304,408
Goodwill			590,406
Intangible assets			214,420
Other noncurrent assets			34,411
	Total assets acquired	$	1,413,277
Current liabilities		$	106,297
Long-term debt			178,872
Deferred income tax liabilities			139,597
Other long-term liabilities			43,115
	Net assets acquired	$	945,396

        Pro-forma data may not be indicative of the results that would have been achieved had these events actually occurred at the beginning of the periods presented, nor does it intend to be a projection of future results.

        During the second quarter of 2007, the Company initiated a restructuring plan (the "2007 Restructuring Plan"), which was formulated in connection with the February 22, 2007 acquisition of Elk (see Note 5). In connection with the acquisition of Elk pursuant to Emerging Issues Task Force ("EITF") No. 95-3 "Recognition of Liabilities in Connection with a Purchase Business Combination" ("EITF No. 95-3"), the Company identified $8.4 million in purchase accounting adjustments, which relate to employee severance payments to former Elk employees and lease termination expenses. As of December 31, 2007 the Company paid $2.5 million of severance costs and $0.6 million of lease termination expenses. The Company expects to make approximately $5.3 million of lease termination payments through 2019. The Company's employee severance payments included the termination of approximately 125 Elk employees, including certain management positions, in the manufacturing and selling and administrative functional areas.

Note 5.    Restructuring and Other Expenses

        The 2007 Restructuring Plan was created to eliminate cost redundancies recognized due to the acquisition of Elk and to reduce the Company's current cost structure. The 2007 Restructuring Plan is expected to be fully implemented by the end of the Company's first quarter of 2008. The Company

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BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 5.    Restructuring and Other Expenses (Continued)

accounts for its restructuring activities in accordance with SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS No. 146"), SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" and EITF No. 96-9 "Classification of Inventory Markdowns and Other Costs Associated with Restructuring" ("EITF No. 96-9").

        In connection with the acquisition of Elk, the Company identified approximately $191.9 million in restructuring and other expenses, of which $97.0 million relates to property, plant and equipment write-downs at certain of its existing manufacturing facilities and $25.1 million of plant closing expenses. The plants included were Erie, Pennsylvania; Stockton, California; Hollister, California; Millis, Massachusetts; Mobile, Alabama; Dallas, Texas; Port Arthur, Texas; Goldsboro, North Carolina and Quakertown, Pennsylvania. Restructuring and other expenses also include $2.0 million in employee severance payments and $67.8 million in integration-related expenses, which primarily consist of $24.3 million of inventory-related write-downs, $15.1 million of restructuring-related sales discounts, $1.4 million of lease termination expenses and $27.0 million of other integration expenses. The Company recorded $181.0 million of the aforementioned restructuring and other expenses as of December 31, 2007, of which $15.1 million was reflected as a reduction in net sales due to restructuring-related sales discounts, $24.3 million was charged to cost of products sold and $141.6 million was charged to restructuring and other expenses in its statement of operations. The Company expects to incur the remaining $10.9 million of identified restructuring and other expenses and make the remaining cash payments related to its accrual by the end of its first quarter in 2008.

        The Company's employee severance payments included the termination of approximately 85 BMCA employees, including certain management positions, in the manufacturing and selling and administrative functional areas.

        The table below details the Company's restructuring and other expense accruals and charges made against the accrual during 2007:

Restructuring and Other Expenses	PP&E Write-Down			Plant Closing Expenses			Employee Severance Payments			Integration Expenses			Total
	(Thousands)
Beginning balance, as of     December 31, 2006	$	—		$	—		$	—		$	—		$	—
Accrued costs recognized due to the     acquisition of Elk		97,007			21,474			2,000			60,531			181,012
Cash payments		—			(17,024	)		(2,000	)		(45,689	)		(64,713	)
Amount charged to property, plant and     equipment for asset write-down		(97,007	)		—			—			—			(97,007	)
Amount charged to write-off inventory		—			(1,545	)		—			(3,021	)		(4,566	)
Non-cash items		—			—			—			(876	)		(876	)
Ending balance, as of December 31, 2007	$	—		$	2,905		$	—		$	10,945		$	13,850

Note 6.    Goodwill

        The Company evaluated the recoverability of goodwill for its roofing products and specialty building products and accessories reporting units. The Company's methodology included evaluations using estimated future discounted cash flows, multiples of net sales and multiples of earnings before interest, taxes, depreciation and the amortization of intangibles and other assets ("EBITDA"). The Company's analysis was completed for each of the reporting units to which the goodwill relates. If the

F-51

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 6.    Goodwill (Continued)

estimated range of fair values from the methodologies employed are less than the carrying value of the related reporting unit, impairment losses for goodwill are charged to results of operations. In determining the estimated future discounted cash flows, the Company considered projected future levels of income, future business trends and market and economic conditions. The Company's analysis related to multiples of net sales and EBITDA are based on related industry data. The Company prepared an SFAS No. 142 impairment analysis at December 31, 2007 and 2006 and noted no impairment existed.

        The carrying amount of goodwill was $655.2 and $64.8 million as of December 31, 2007 and 2006. Such goodwill amounts to $649.7 and $59.3 million for the roofing products reporting unit and $5.5 and $5.5 million related to the specialty building products and accessories reporting unit as of December 31, 2007 and 2006, respectively. The increase in the carrying amount of goodwill of $590.4 million in 2007 was due to the acquisition of Elk, of which $0 is expected to be deductible for income tax purposes.

Note 7.    Intangible Assets

        The Company accounts for its intangible assets in accordance with the provisions of SFAS No. 142. SFAS No. 142 requires disclosure of information relating to intangible assets subsequent to their acquisition that was not previously reported, which includes disclosure concerning the changes in the carrying amount of intangible assets by major intangible asset class for those assets subject to amortization and for those not subject to amortization. SFAS No. 142 also requires disclosure related to actual year-to-date intangible asset amortization expense and the estimated intangible asset amortization expense for each of the next five years. As of December 31, 2007, the Company has not recorded any impairment losses related to its intangible assets and has not written-off any acquired research and development assets.

        Intangible assets, all of which were acquired from Elk, consisted of the following as of December 31, 2007.

			Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Amount
			(Thousands)
Intangible Assets Subject to Amortization:
	Customer Relationships		20 yrs.	$	138,350	$	3,634	$	134,716
	Trademark/Trade Names		15-25 yrs.		50,200		1,118		49,082
	Core Technology		10 yrs.		23,200		1,205		21,995
	Roofing Backlog—Current		1 yr		780		780		—
	Computer Software		2 yrs.		190		48		142
		Total Intangible Assets Subject to Amortization		$	212,720	$	6,785	$	205,935
Intangible Assets Not Subject to Amortization:
	Regulatory Permits		Indefinite		1,700		—		1,700
		Total Intangible Assets Not Subject to Amortization		$	1,700	$	—	$	1,700
		Intangible Assets, net		$	214,420	$	6,785	$	207,635

F-52

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7.    Intangible Assets (Continued)

        The following table summarizes, as of December 31, 2007, the amount of estimated amortization expense the Company expects to record in its statement of operations related to intangible assets for each of the next five years and thereafter.

	(Thousands)
2008	$	11,384
2009		11,335
2010		11,288
2011		11,288
2012		11,288
Thereafter		149,352
Total	$	205,935

Note 8.    Asbestos-related Bodily Injury Claims

        In connection with its formation, the Company contractually assumed and agreed to pay the first $204.4 million of liabilities for asbestos-related bodily injury claims relating to the inhalation of asbestos fiber ("Asbestos Claims") of its indirect parent, G-I Holdings. As of March 30, 1997, the Company paid all of its assumed liabilities for Asbestos Claims. G-I Holdings has agreed to indemnify the Company against any other existing or future claims related to asbestos-related liabilities if asserted against the Company. In January 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to Asbestos Claims. Most asbestos claims do not specify the amount of damages sought, and the value of the Asbestos Claims asserted against G-I Holdings is a contested issue in that bankruptcy which remains pending.

        Claimants in the G-I Holdings' bankruptcy, including judgment creditors, might seek to satisfy their claims by asking the Bankruptcy Court to require the sale of G-I Holdings' assets, including its holdings of BMCA Holdings Corporation's common stock and its indirect holdings of the Company's common stock. Such action could result in a change of control of the Company. In addition, those creditors may attempt to assert Asbestos Claims against the Company. (Approximately 1,900 Asbestos Claims were filed against the Company prior to February 2, 2001.) The Company believes that it will not sustain any liability in connection with these or any other Asbestos Claims. On February 2, 2001, the United States Bankruptcy Court for the District of New Jersey issued a temporary restraining order enjoining any existing or future claimant from bringing or prosecuting an Asbestos Claim against the Company. By oral opinion on June 22, 2001, and written order entered February 22, 2002, the Bankruptcy Court converted the temporary restraints into a preliminary injunction, prohibiting the bringing or prosecution of any such Asbestos Claims against the Company.

        On February 7, 2001, G-I Holdings filed an action in the United States Bankruptcy Court for the District of New Jersey seeking a declaratory judgment that BMCA has no successor liability for Asbestos Claims against G-I Holdings and that it is not the alter ego of G-I Holdings (the "BMCA Action"). One of the parties to this matter, the Official Committee of Asbestos Claimants (the "creditors' committee"), subsequently filed a counterclaim against the Company seeking a declaration that BMCA has successor liability for Asbestos Claims against G-I Holdings and that it is the alter ego of G-I Holdings. On May 13, 2003, the United States District Court for the District of New Jersey

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BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8.    Asbestos-related Bodily Injury Claims (Continued)

overseeing the G-I Holdings' Bankruptcy Court withdrew the reference of the BMCA Action from the Bankruptcy Court, and this matter will therefore be heard by the District Court. The Company believes it will prevail on its claim for a declaratory judgment. Although the Company believes its claims are meritorious and that it does not have asbestos-related liability, it is not possible to predict the outcome of this litigation, or, if it does not prevail, the outcome of any subsequent litigation regarding the continuation of the preliminary injunction and/or prosecution of Asbestos Claims against the Company.

        On or about February 8, 2001, the creditors' committee filed a complaint in the United States Bankruptcy Court, District of New Jersey against G-I Holdings and the Company. The complaint requests substantive consolidation of BMCA with G-I Holdings or an order directing G-I Holdings to cause BMCA to file for bankruptcy protection. The Company and G-I Holdings intend to vigorously defend the lawsuit. The plaintiffs also filed for interim relief absent the granting of their requested relief described above. On March 21, 2001, the Bankruptcy Court denied plaintiffs' application for interim relief. In November 2002, the creditors' committee, joined in by the legal representative of future demand holders, filed a motion for appointment of a trustee in the G-I Holdings' bankruptcy. In December 2002, the Bankruptcy Court denied the motion. The creditors' committee appealed the ruling to the United States District Court, which denied the appeal on June 27, 2003. The creditors' committee appealed the denial to the Third Circuit Court of Appeals, which denied the appeal on September 24, 2004. The creditors' committee filed a petition with the Third Circuit Court of Appeals for a rehearing of its denial of the creditors' committee's appeal, which was denied by the Court of Appeals on October 26, 2004.

        On July 7, 2004, the Bankruptcy Court entered an order authorizing the creditors' committee to commence an adversary proceeding against the Company and others challenging, as a fraudulent conveyance, certain transactions entered into in connection with the Company's formation in 1994, in which G-I Holdings caused to be transferred to the Company all of its roofing business and assets and in which the Company assumed certain liabilities relating to those assets, including a specified amount of asbestos liabilities (the "1994 transaction"). The Bankruptcy Court also permitted the creditors' committee to pursue a claim against holders of the Company's bank and bond debt outstanding in 2000, seeking recovery from them, based on the creditors' committee's theory that the 1994 transaction was a fraudulent conveyance. On July 20, 2004, the creditors' committee appealed certain aspects of the Bankruptcy Court's order (and a June 8, 2004 decision upon which the order was based). G-I Holdings, the holders of the Company's bank and bond debt and BMCA cross-appealed. The District Court entered an order on June 21, 2006 affirming in part and vacating in part the Bankruptcy Court's July 7, 2004 order. Among other things, the District Court vacated that aspect of the Bankruptcy Court's order authorizing the creditors' committee to pursue avoidance claims against the Company and the holders of the Company's bank and bond debt as of 2000. This issue has been remanded to the Bankruptcy Court for further proceedings consistent with the District Court's opinion. The Company believes the creditors' committee's avoidance claims are without merit and that the Bankruptcy Court should not permit the committee to pursue such claims against the Company and the holders of its bank and bond debt as of 2000.

        In March 2007, after participating in a mediation which resulted in the parties agreeing to an outline of the principal terms of a settlement of the G-I Holdings bankruptcy and all related litigations, the parties agreed to a stay of proceedings pending the completion of their negotiations. The judges presiding over the G-I Holdings bankruptcy proceeding and the related litigations, including the BMCA Action and the fraudulent conveyance action, each entered stipulated orders dated March 22, 2007,

F-54

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8.    Asbestos-related Bodily Injury Claims (Continued)

March 23, 2007 and April 4, 2007, respectively, implementing the stay. By notices dated February 1, 2008, the creditors' committee and legal representative of present and future holders of asbestos-related demands elected to terminate the stay of proceedings in the G-I Holdings bankruptcy and related litigation. The parties continue to participate in mediation; however there can be no assurance of a settlement of any claims.

        If the Company is not successful in defending against one or more of these claims, the Company may be forced to file for bankruptcy protection and/or contribute all or a substantial portion of its assets to satisfy the claims of G-I Holdings' creditors. Either of these events, or the substantive consolidation of G-I Holdings and the Company, would weaken its operations and cause it to divert a material amount of its cash flow to satisfy the asbestos claims of G-I Holdings and may render it unable to pay interest or principal on its credit obligations.

        For a further discussion with respect to the history of the foregoing litigation, and asbestos-related matters and other litigation, see Notes 2, 10, 13 and 20.

Note 9.    Property Dispositions

        In June 2005, the Company sold property in Houston, Texas for cash proceeds of approximately $4.1 million, which approximated carrying value.

Note 10.    Income Taxes

        Income tax (expense) benefit, which has been computed on a separate return basis, consists of the following:

			Year Ended December 31,
			2007			2006			2005
			(Thousands)
Federal:
	Current		$	884		$	(15,772	)	$	(17,324	)
	Deferred			76,955			(5,269	)		(15,355	)
		Total Federal		77,839			(21,041	)		(32,679	)
State and local:
	Current			(7,206	)		(6,055	)		(3,801	)
	Deferred			3,679			2,498			(877	)
		Total state and local		(3,527	)		(3,557	)		(4,678	)
Income tax (expense) benefit			$	74,312		$	(24,598	)	$	(37,357	)

F-55

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10.    Income Taxes (Continued)

        The differences between the income tax (expense) benefit computed by applying the statutory Federal income tax rate to pre-tax income (loss), and the income tax (expense) benefit reflected in the consolidated statements of income are as follows:

		Year Ended December 31,
		2007			2006			2005
		(Thousands)
Statutory (expense) benefit		$	73,093		$	(22,172	)	$	(34,421	)
Impact of:
	State and local taxes, net of Federal benefits		(2,385	)		(2,312	)		(3,041	)
	Other, net		3,604			(114	)		105
Income tax (expense) benefit		$	74,312		$	(24,598	)	$	(37,357	)

        The components of the net deferred tax liabilities are as follows:

		December 31,
		2007			2006
		(Thousands)
Deferred tax liabilities related to:
	Property, plant and equipment	$	(51,700	)	$	(50,804	)
	Intangible assets		(85,264	)		(5,755	)
	Total deferred tax liabilities		(136,964	)		(56,559	)
Deferred tax assets related to:
	Expenses not yet deducted for tax purposes		79,083			35,850
	Net operating loss carryforwards		45,664			9,603
	Valuation allowance		(10,635	)		(6,735	)
	Total deferred tax assets		114,112			38,718
Net deferred tax liabilities			(22,852	)		(17,841	)
Deferred tax assets reclassified to current assets			(38,017	)		(21,710	)
Noncurrent deferred tax liabilities		$	(60,869	)	$	(39,551	)

        Based upon the level of historical taxable income, the reversal of temporary differences and projections for future taxable income over the period in which the Company's deferred tax assets are deductible, the Company believes that it is more-likely-than-not that the Company will realize the benefits of these deductible differences at December 31, 2007 and 2006. A valuation allowance is not required with respect to the Federal net operating loss carryforward of $32.0 million. State net operating loss carryforwards of $3.1 million and $2.9 million at December 31, 2007 and December 31, 2006 are net of a valuation allowance for separate Company state filings of $10.6 million and $6.7 million, respectively.

        As of December 31, 2007 and 2006, the Company has included on its consolidated balance sheet a tax receivable from parent corporation of $10.0 and $9.1 million, respectively, representing amounts paid in excess of amounts due to G-I Holdings with respect to 2006 under the Tax Sharing Agreement

F-56

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10.    Income Taxes (Continued)

(as defined below). In addition, as of December 31, 2007, the Company has included on its consolidated balance sheet a tax receivable of $12.0 million related to the acquisition of Elk.

        The Company and its subsidiaries entered into the Tax Sharing Agreement dated January 31, 1994 and later amended on March 19, 2001, with G-I Holdings, with respect to the payment of Federal income taxes and related matters. During the term of the Tax Sharing Agreement, which is effective for the period during which the Company or any of its domestic subsidiaries is included in a consolidated Federal income tax return for the G Holdings' consolidated tax group, the Company is obligated to pay G Holdings an amount equal to those Federal income taxes it would have incurred if the Company, on behalf of itself and its domestic subsidiaries, filed its own Federal income tax return. Unused tax attributes will carry forward for use in reducing amounts payable by the Company to G Holdings in future years, but cannot be carried back. The Company's unused tax attributes currently consist of a net operating loss carryforward of $91.4 million, which will not expire until 2027. If the Company ever were to leave the G Holdings' consolidated tax group, it would be required to pay to G Holdings the value of any tax attributes to which it would succeed under the consolidated return regulations to the extent the tax attributes reduced the amounts otherwise payable by the Company under the Tax Sharing Agreement. Under limited circumstances, the provisions of the Tax Sharing Agreement could result in the Company having a greater liability under the agreement than it would have had if it and its domestic subsidiaries had each filed its own separate Federal income tax return. Under the Tax Sharing Agreement, the Company and each of its domestic subsidiaries are responsible for any taxes that would be payable by reason of any adjustment to the tax returns of G Holdings or its subsidiaries for years prior to the adoption of the Tax Sharing Agreement that relate to the Company's business or assets or the business or assets of any of its domestic subsidiaries. Although, as a member of the G Holdings' consolidated tax group, the Company is severally liable for certain Federal income tax liabilities of the G Holdings' consolidated tax group, including tax liabilities not related to its business, the Company should have no liability other than liabilities arising from the Company's operations and the operations of its domestic subsidiaries and tax liabilities for tax years pre-dating the Tax Sharing Agreement that relate to the Company's business or assets and the business or assets of any of its domestic subsidiaries. The Tax Sharing Agreement provides for analogous principles to be applied to any consolidated, combined or unitary state or local income taxes. Under the Tax Sharing Agreement, G Holdings makes all decisions with respect to all matters relating to taxes of the G Holdings' consolidated tax group. The provisions of the Tax Sharing Agreement take into account both the Federal income taxes the Company would have incurred if it filed its own separate Federal income tax return and the fact that the Company is a member of the G Holdings' consolidated tax group for Federal income tax purposes.

        On September 15, 1997, G-I Holdings received a notice from the Internal Revenue Service (the "IRS") of a deficiency in the amount of $84.4 million (after taking into account the use of net operating losses and foreign tax credits otherwise available for use in later years) in connection with the formation in 1990 of Rhône-Poulenc Surfactants and Specialties, L.P. (the "surfactants partnership"), a partnership in which G-I Holdings held an interest. On September 21, 2001, the IRS filed a proof of claim with respect to such deficiency against G-I Holdings in the G-I Holdings' bankruptcy. If such proof of claim is sustained, the Company and/or certain of the Company's subsidiaries together with G-I Holdings and several current and former subsidiaries of G-I Holdings could be severally liable for those taxes and interest. G-I Holdings has filed an objection to the proof of claim, which is the subject of an adversary proceeding pending in the United States District Court for the District of New Jersey. By opinion and order dated September 8, 2006, the District Court ruled on the parties' respective

F-57

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 10.    Income Taxes (Continued)

motions for Partial Summary Judgment, granting the government summary judgment on the issue of "adequate disclosure" for statute of limitation purposes and denying G-I Holdings summary judgment on its other statute of limitations defense (finding material issues of fact that must be tried). If the IRS were to prevail for the years in which the Company and/or certain of its subsidiaries were not part of the G-I Holdings Group, the Company nevertheless could be liable for approximately $40.0 million in taxes plus interest, although this calculation is subject to uncertainty depending upon various factors including G-I Holdings' ability to satisfy its tax liabilities and the application of tax credits and deductions. In an opinion dated June 8, 2007, the District Court decided that G-I Holdings cannot avail itself of the "binding contract" transitional relief with respect to the 1999 distribution of U.S. Treasury Bonds to G-I Holdings. The Company believes that it will not be required to pay any incremental income tax to the Federal government with respect to this matter and that its ultimate disposition will not have a material adverse effect on its business, financial position or results of operations.

        The Company adopted FIN 48 as of January 1, 2007 in a manner that is consistent with the provisions of FSP FIN 48-1, and, as a result of the adoption, the Company reviewed certain tax positions and determined that it did not need to recognize any material adjustment to its tax accruals for uncertain tax positions upon the FIN 48 adoption date. At January 1, 2007 and December 31, 2007, the Company had approximately $14.0 and $18.0 million, respectively, of unrecognized tax benefits excluding any Federal tax benefit on unrecognized state tax benefits. All of the unrecognized tax benefits would affect the Company's effective tax rate if recognized with the exception of $2.9 million associated with the acquisition of Elk, which would affect goodwill.

        A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows:

	(Thousands)
Balance at January 1, 2007	$	14,009
Additions based on tax positions related to the current year		—
Additions for tax positions of prior years		4,097
Reductions for tax positions of prior years		—
Lapses in statute of limitations		—
Settlements		(141	)
Balance at December 31, 2007	$	17,965

        It is reasonably possible that as a consequence of the settlement of certain state tax matters, the balance of unrecognized tax benefits may decrease by a range of $1.0 million to $13.0 million during the next 12-month period.

        The Company's continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of January 1, 2007 and December 31, 2007, the Company had $4.8 and $7.5 million, respectively, of accrued interest and penalties excluding any federal tax benefit thereon.

        The Company and its subsidiaries are subject to United States Federal income tax as well as the income tax of multiple state jurisdictions. The Company has substantially concluded all United States Federal income tax matters for years through 2004. The tax years 2005 through 2007 have not been examined by the IRS. Substantially all material state and local matters have been concluded for tax years through 2001. The tax years 2002 through 2007 have not been examined by the major state taxing jurisdictions to which the Company is subject.

F-58

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 11.    Inventories

        At December 31, 2007 and 2006, $59.8 and $46.3 million, respectively, of inventories were valued using the LIFO method. In 2006, the LIFO reserve reflected a decrement to one layer from a prior period in the amount of $1.2 million. Inventories as of December 31, 2007 and 2006 consist of the following, which inventories as of December 31, 2007 include Elk from the date of acquisition:

		December 31,
		2007			2006
		(Thousands)
Finished goods		$	241,511		$	173,338
Work-in process			26,291			25,930
Raw materials and supplies			72,950			64,686
	Total		340,752			263,954
Less LIFO reserve			(23,840	)		(25,245	)
Inventories		$	316,912		$	238,709

        As of January 1, 2006, the Company adopted the provisions of SFAS No. 151 "Inventory Costs", which resulted in a fourth quarter of 2006 charge to operations of $2.0 million related to the capitalization of fixed production overheads to inventory.

Note 12.    Property, Plant and Equipment

        Property, plant and equipment consists of the following, which in 2007 includes Elk from the date of acquisition:

		December 31,
		2007			2006
		(Thousands)
Land and land improvements		$	56,690		$	37,204
Buildings and building equipment			215,615			106,403
Machinery and equipment			670,171			547,956
Construction in progress			25,446			58,476
	Total		967,922			750,039
Less accumulated depreciation and amortization			(295,109	)		(338,310	)
Property, plant and equipment, net		$	672,813		$	411,729

        Included in the net book value of machinery and equipment at December 31, 2007 was $62.0 million of assets under capital leases. See Note 5 for the net write-down of property, plant and equipment included in restructuring expenses. See Note 13 regarding the Company's sale-leaseback and capital lease transactions. Depreciation expense for 2007, 2006 and 2005 was $69.0, $49.3 and $45.1 million, respectively.

F-59

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13.    Long-Term Debt

        Long-term debt consists of the following:

		December 31,
		2007			2006
		(Thousands)
8% Senior Notes due 2007		$	—		$	99,940
8% Senior Notes due 2008			4,874			154,838
73/4% Senior Notes due 2014			250,590			250,680
Borrowings under the Old Senior Secured Revolving     Credit Facility			—			60,000
Borrowings under the Senior Secured Revolving     Credit Facility			122,000			—
Term Loan			965,362			—
Junior Lien Term Loan			325,000			—
Obligations under capital leases			61,997			—
Industrial development revenue bonds with various     interest rates and maturity dates to 2029			7,710			7,795
Chester Loan			8,241			11,133
Other notes payable			8,251			2,938
	Total		1,754,025			587,324
Less current maturities			(24,630	)		(102,918	)
Long-term debt less current maturities		$	1,729,395		$	484,406

        On February 22, 2007, BMCA and the Purchasers entered into senior secured credit facilities consisting of a $975.0 million Term Loan, a $600.0 million Senior Secured Revolving Credit Facility and a $325.0 million Bridge Loan Facility (the "Bridge Loan"), which was subsequently replaced by the $325.0 million Junior Lien Term Loan.

        The initial borrowings under the Senior Secured Credit Facilities were used to (i) pay for shares tendered by Elk shareholders in an equity tender offer, (ii) repay amounts outstanding under BMCA's Old Senior Secured Revolving Credit Facility, (iii) make payments in connection with the completion by BMCA and Building Materials Manufacturing Corporation ("BMMC"), of the tender offer and consent solicitation for their 8% Senior Notes due 2007 (the "2007 Notes"), (iv) make payments in connection with the completion by BMCA of its previously announced tender offer and consent solicitation for its outstanding 8% Senior Notes due 2008 (the "2008 Notes"), (v) pay for transaction fees and expenses incurred in connection with each of the foregoing transactions and (vi) repay all of the existing Elk senior note debt.

        The Senior Secured Revolving Credit Facility, which has a maturity date of February 22, 2012, replaced the Company's $450.0 million Old Senior Secured Revolving Credit Facility, which would have expired in September 2011. All amounts outstanding under the Senior Secured Revolving Credit Facility are secured by a first priority perfected security interest in all receivables, inventory, precious metals, deposit accounts and other current assets of BMCA and its domestic subsidiaries and all proceeds thereof (the "Senior Secured Revolving Credit Facility Collateral").

F-60

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13.    Long-Term Debt (Continued)

        Credit availability under the Senior Secured Revolving Credit Facility is based upon eligible accounts receivable, inventory and precious metals used in the production of inventory, as defined, and includes a sub-limit for letters of credit of $150.0 million. Loans under the Senior Secured Revolving Credit Facility bear interest at a variable rate based upon either the Base Rate or the Eurodollar Rate as defined in the Senior Secured Revolving Credit Facility, at the borrowers' option, plus a specified margin in each case. These interest rates are recalculated periodically based on changes in the Base Rate or Eurodollar Rate and also based on an availability-based pricing grid. The Senior Secured Revolving Credit Facility requires the Company to pay unused commitment fees. For 2007, 2006 and 2005, these fees amounted to $0.7, $0.7 and $1.2 million, respectively. For 2007, the unused commitment fees related to both the Old Senior Secured Revolving Credit Facility and the new Senior Secured Revolving Credit Facility. The Senior Secured Revolving Credit Facility provides for optional reductions by the Company in the overall $600.0 million commitment, under certain conditions and provides for optional and mandatory pre-payments of borrowings outstanding under the Senior Secured Revolving Credit Facility, subject to certain conditions. The Senior Secured Revolving Credit Facility also provides the borrowers with the ability to increase the size of the facility by up to $350.0 million, depending on the ability to obtain commitments from lenders and meeting specified conditions.

        Under the terms of the Senior Secured Revolving Credit Facility, the borrowers are subject to an interest coverage ratio financial covenant when liquidity falls below a specified threshold. In addition, the borrowers are required to comply with other customary covenants and various restrictive covenants, including those with respect to incurring additional indebtedness or guarantees, creating liens or other encumbrances, making capital expenditures, making restricted payments, including dividends and distributions to BMCA's parent corporations, and making certain investments. In the event of a change of control of BMCA, as defined, the Senior Secured Revolving Credit Facility could be accelerated by the holders of that indebtedness.

        The Term Loan will mature on February 22, 2014. All amounts outstanding under the Term Loan are secured by (i) a first-priority perfected security interest in substantially all of the assets and properties of BMCA and its domestic subsidiaries, other than the Senior Secured Revolving Credit Facility Collateral (the "Term Loan Collateral"), and (ii) a second-priority perfected security interest in the Senior Secured Revolving Credit Facility Collateral.

        Amounts due under the Term Loan bear interest at a variable rate based upon either the base rate or Eurodollar rate, as defined in the Term Loan, at the borrowers' option, plus a specified margin in each case. These interest rates are recalculated periodically based on changes in the base rate and Eurodollar rate, if applicable. The Term Loan provides for optional and mandatory pre-payments under certain conditions and provides the borrowers with the ability to increase the size of the facility by up to $250.0 million (less any increase in the Senior Secured Revolving Credit Facility in excess of $100.0 million), depending on the ability to obtain commitments from lenders and meeting specified conditions.

        Under the terms of the Term Loan, the borrowers are subject to an interest coverage ratio financial covenant, as defined, and a leverage ratio financial covenant, as defined, and BMCA must comply with each of these covenants starting as of the end of BMCA's second fiscal quarter in 2008. In addition, the borrowers are also required to comply with various restrictive covenants, including with respect to incurring additional indebtedness or guarantees, creating liens or other encumbrances, making capital expenditures, making restricted payments, including dividends and distributions to

F-61

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13.    Long-Term Debt (Continued)

BMCA's parent corporations, and making certain investments. In the event of a change of control of BMCA, as defined, the maturity date of the Term Loan could be accelerated by the holders of that indebtedness.

        The Bridge Loan was amended and restated on March 15, 2007, and redesignated as the Junior Lien Term Loan. The Junior Lien Term Loan matures on September 15, 2014. All amounts outstanding under the Junior Lien Term Loan are secured by (i) a second-priority perfected security interest in the Term Loan Collateral and (ii) a third-priority perfected security interest in the Senior Secured Revolving Credit Facility Collateral. Loans under the Junior Lien Term Loan bear interest at a variable rate based upon either the base rate or Eurodollar rate, as defined in the Junior Lien Term Loan at the borrowers' option, plus a specified margin in each case. These interest rates are recalculated periodically based on changes in the base rate or Eurodollar rate, as applicable. The Junior Lien Term Loan provides for optional and mandatory prepayments under certain conditions.

        Under the terms of the Junior Lien Term Loan, the borrowers are subject to a leverage ratio financial covenant, as defined, with which BMCA must comply starting as of the end of BMCA's second fiscal quarter in 2008. The borrowers are also required to comply with various restrictive covenants, including with respect to incurring additional indebtedness or guarantees, creating liens or other encumbrances, making capital expenditures, making restricted payments, including dividends and distributions to BMCA's parent corporations and making certain investments. In the event of a change of control of BMCA, as defined, the maturity date of the Junior Lien Term Loan could be accelerated by the holders of that indebtedness.

        On February 22, 2007, BMCA repurchased approximately $97.5 million, or 97.5%, of the aggregate $100.0 million principal amount outstanding of the 2007 Notes, which were originally issued in October 1997 at 99.254% of the principal amount and $150.1 million, or 96.9%, of the aggregate $155.0 million principal amount outstanding of the 2008 Notes, which were originally issued in November 1998 at 99.457% of the principal amount. In connection with the completion of the tender offer for the 2007 Notes and the 2008 Notes in February 2007, substantially all of the covenants included in the indentures governing the 2007 Notes and 2008 Notes were eliminated. On October 15, 2007, the Company redeemed all of the remaining $2.5 million outstanding 2007 Notes, including accrued and unpaid interest on such notes through the date of redemption.

        Holders of the 2008 Notes have the right under the indentures governing such notes to require the Company to purchase these senior notes at a price of 100% of the principal amount thereof, and the Company has the right to redeem these senior notes at a price of 100% of the principal amount thereof, plus, in each case, the applicable premium, as defined, together with any accrued and unpaid interest, in the event of a change of control, as defined.

        On March 26, 2007, the Company repurchased all of Elk's then outstanding $25.0 million in aggregate principal amount of 4.69% Senior Notes due 2007, $60.0 million in aggregate principal amount of 6.99% Senior Notes due 2009, $60.0 million in aggregate principal amount of 7.49% Senior Notes due 2012 and $50.0 million in aggregate principal amount of 6.28% Senior Notes due 2014.

        In December 2007, the Company consummated a $30.0 and $15.0 million sale-leaseback, of certain machinery and equipment located at its Baltimore, Maryland and Gainesville, Texas manufacturing facilities, respectively, which were accounted for as capital leases, as according to SFAS No. 13 "Accounting for Leases" ("SFAS No. 13"). The sale of the Baltimore machinery and equipment

F-62

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13.    Long-Term Debt (Continued)

resulted in a deferred gain of $24.7 million, which will be amortized over the life of the lease term. The Baltimore and Gainesville lease terms extend through December 2015 and December 2014, respectively, with early buyout options in September 2012 and December 2013, respectively.

        In December 2007, the Company also consummated lease extensions of its original operating leases of certain machinery and equipment located at its Michigan City, Indiana and Shafter, California manufacturing facilities, respectively, which were accounted for as capital leases, as according to SFAS No. 13. The Michigan City and Shafter lease terms extend through September 2016 and December 2015, respectively, with early purchase options in September 2014 and September 2012, respectively.

        In 2006, the Company repurchased and retired $6.3 million of industrial revenue bond certificates issued by the Company in 1990 with respect to the Fontana, California Industrial Revenue Development Bond. The Company has two remaining industrial development revenue bond issues outstanding, which bear interest at floating rates. Interest rates on the foregoing obligations ranged between 3.1% and 4.3% during 2007. The Company's industrial development revenue bonds are secured by letters of credit under the Senior Secured Revolving Credit Facility.

        In July 2004, the Company issued $200.0 million in aggregate principal amount of 7³/4% Senior Notes due 2014, with an additional $50.0 million in aggregate principal amount of 7³/4% Senior Notes due 2014 issued in November 2004, collectively (the "2014 Notes"). The additional 2014 Notes were issued under an indenture dated July 2004, pursuant to which the Company previously issued its original $200.0 million of 7³/4% Senior Notes due 2014. These additional 2014 Notes rank equally with and formed a part of a single series with such original 2014 Notes and have the same terms and conditions. The net proceeds from the issuance of the 2014 Notes, after deducting the initial purchasers discounts, commission and offering expenses and including the addition of the applicable premium on the 2014 Notes issued in November 2004 were approximately $246.5 million. The premium of approximately $0.9 million is included in long-term debt and will be amortized over the life of the 2014 Notes.

        Under the terms and conditions of the 2014 Notes, the noteholders have the right under the indentures governing such notes to require us to purchase the 2014 Notes at a price of 101% of the principal amount thereof, plus any accrued and unpaid interest, in the event of a change of control, as defined in the 2014 Notes. Upon the expiration of this right, the Company would have the option to purchase the 2014 Notes at a purchase price equal to 100% of the aggregate principal amount, plus the applicable premium, as defined in the 2014 Notes, together with any accrued and unpaid interest. The Company also has the option to redeem some or all of the 2014 Notes beginning on August 1, 2009 through August 1, 2012, at specified redemption premiums, as defined in the 2014 Notes. The Company's 2008 Notes and 2014 Notes, (collectively, the "Senior Notes") are secured by a first-priority lien on the Term Loan Collateral and a second-priority lien on the Senior Secured Revolving Credit Facility Collateral, in each case, having equal priority with the lien securing our obligations under the Term Loan.

        In July 2003, the Company entered into a $19.7 million secured loan (the "Chester Loan") with the proceeds being used to repay a $19.7 million obligation associated with an early buyout option on a previously transacted capital lease on certain machinery and equipment at its Chester, South Carolina facility. The Chester Loan is secured by a sole security interest in the machinery and equipment, matures in 2010, requires monthly payments of principal and interest commencing in August 2003 and bears a fixed annual interest rate of 7.41%.

F-63

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13.    Long-Term Debt (Continued)

        As of December 31, 2007, after giving effect to the most restrictive of the aforementioned restrictions, the Company could have paid dividends or made other restricted payments to its parent corporation. In addition, at December 31, 2007, the Company could repay demand loans to its parent corporation amounting to $52.8 million, subject to certain conditions as outlined in the Senior Secured Revolving Credit Facility and the indentures governing its Senior Notes.

        As of December 31, 2007, the Company had total outstanding consolidated indebtedness of $1,806.9 million, which amount includes $52.8 million of demand loans to its parent corporation and $24.6 million that matures prior to December 31, 2008. The Company's total outstanding consolidated indebtedness also includes $122.0 million of borrowings outstanding under its Senior Secured Revolving Credit Facility. The Company anticipates funding these obligations principally from its cash and cash equivalents on hand, cash flow from operations and/or borrowings under its Senior Secured Revolving Credit Facility.

        As of December 31, 2007, the Company was in compliance with all covenants under the Senior Secured Revolving Credit Facility, the Term Loan, the Junior Lien Term Loan and the indentures governing the Senior Notes. As of December 31, 2007, the net book value of the collateral securing the Senior Secured Revolving Credit Facility Collateral and the Term Loan Collateral was $649.4 and $1,681.2 million, respectively.

        At December 31, 2007, the Company had outstanding letters of credit of approximately $56.0 million, which includes approximately $11.1 million of standby letters of credit related to certain obligations of G-I Holdings. During 2007, the Company paid $0.2 million as a distribution to our indirect parent corporation related to previously outstanding standby letters of credit.

        The fair values of the Company's Term Loan and related fixed-income interest rate swaps, Junior Lien Term Loan and Senior Notes at December 31, 2007 and 2006 are based upon quoted market prices as follows:

	December 31, 2007				December 31, 2006
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Thousands)
2007 Notes	$	—	$	—	$	99,940	$	101,488
2008 Notes		4,874		4,874		154,838		161,718
2014 Notes		250,590		191,250		250,680		226,250
Term Loan		965,362		810,904		—		—
Fixed-income interest rate swaps		29,980		29,980		—		—
Junior Lien Term Loan		325,000		221,000		—		—

F-64

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13.    Long-Term Debt (Continued)

        The aggregate maturities of long-term debt as of December 31, 2007 for the next five years and thereafter are as follows:

	(Thousands)
2008	$	24,682
2009		20,748
2010		19,558
2011		18,243
2012		145,555
Thereafter		1,525,241

        The above table of maturities, for the year 2008 include $9.7 million related to the Term Loan, $4.9 million related to the 2008 Notes, $6.0 million related to capital lease obligations and $3.1 million related to the Chester Loan. Maturities for the year 2009 include $9.6 million related to the Term Loan, $6.7 million related to capital lease obligations and $3.4 million related to the Chester Loan. Maturities for the year 2010 include $9.5 million related to the Term Loan, $7.4 million related to capital lease obligations and $1.8 million related to the Chester Loan. Maturities for the year 2011 include $9.4 million related to the Term Loan and $8.3 million related to capital lease obligations. Maturities for the year 2012 include $122.0 million related to the Senior Secured Revolving Credit Facility, $9.3 million related to the Term Loan and $8.9 million related to capital lease obligations. Thereafter maturities include $918.0 million related to the Term Loan, $325.0 million related to the Junior Lien Term Loan, $250.1 million related to the 2014 Notes, $2.4 million related to the Mount Vernon, Indiana and the Shafter, California Industrial Development Revenue Bonds and $24.6 million related to capital lease obligations.

Note 14.    Hedging Activity

        In March 2007, the Company entered into forward-starting Eurodollar rate, or LIBOR, based pay fixed income interest rate swaps related to its Term Loan, with an effective date of April 23, 2007 and a maturity date of April 23, 2012. In October 2007, the Company entered into additional interest rate swaps related to its Term Loan with an effective date of October 23, 2007 and a maturity date of October 23, 2012 under similar terms as the Company's swaps entered into in March 2007.

        In accordance with SFAS No. 133, the Company's swaps are treated as cash flow hedges. At December 31, 2007, based on changes in the closing LIBOR rate on such date, the Company recorded a fair value loss on its fixed income interest rate swaps of $30.0 million to other liabilities, while the offset was recorded as an other comprehensive loss, net of tax of $11.4 million. The Company has also recorded $2.0 million in year-to-date interest income in other income in its statement of operations as of December 31, 2007 related to its fixed income interest rate swaps. Amounts may be reclassified from other comprehensive loss to interest expense if any portion of the Company's swaps become ineffective. The Company does not anticipate any amount of swap-related interest expense to be reclassified during its fiscal year ending December 31, 2008.

        In July 2007, the Company began entering into treasury locks as additional hedging instruments against its Term Loan. The Company's treasury locks had a settlement date of October 30, 2007 and a maturity date of July 31, 2012. The Company's treasury locks fixed the U.S. treasury component, while

F-65

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 14.    Hedging Activity (Continued)

excluding the swap component of the forward benchmark LIBOR interest rate. According to SFAS No. 133, the Company's treasury locks were also cash flow hedges and were accounted for in the same manner as its swaps. On October 30, 2007, the Company settled its open treasury lock hedging positions, which resulted in a pre-tax loss and cash settlement of approximately $4.9 million, which is being amortized into its statement of operations over the life of the Term Loan pursuant to SFAS No. 133. The Company will amortize approximately $0.8 million of the loss related to its treasury locks into interest expense in its statement of operations during its fiscal year ending December 31, 2008. During 2007, the Company recorded $0 and $0.1 million of interest expense related to its swaps and treasury locks, respectively, in its statement of operations related to hedge ineffectiveness.

Note 15.    Benefit Plans

        Eligible, full-time employees of the Company are covered by various benefit plans, as described below.

Defined Contribution Plan

        The Company provides a defined contribution plan for eligible salaried employees. The Company contributes up to 7% of participants' compensation and also contributes fixed amounts, ranging from $50 to $750 per year depending on age, to the accounts of participants who are not covered by a Company-provided postretirement medical benefit plan. The aggregate contributions by the Company were $6.8, $7.0 and $6.6 million for 2007, 2006 and 2005, respectively.

        The Company provides a defined contribution plan for eligible hourly employees. The Company contributes a discretionary matching contribution ranging between 0% and 50% of each participant's eligible contributions each year up to a maximum range of either $250 to $6,600 or 3% to 6% of salary, whichever is greater, for each participant, as defined. Certain participants also receive a contribution equal to 3.5% of their annual compensation regardless of whether the participants participate in the plan. Such contributions were $1.0, $1.1 and $0.8 million for 2007, 2006 and 2005, respectively.

        In connection with the acquisition of Elk, the Company adopted the Elk 401(k) Plan. Under the Elk 401(k) Plan, the Company may contribute a percentage of each Elk participant's annual compensation into the Elk 401(k) Plan to be invested among various defined alternatives at the participants' direction. Employees are vested immediately in the Company's matching contributions. All full-time Elk employees, except those covered by plans established through collective bargaining agreements, are eligible for participation upon date of hire.

        The Company contributes a 3% basic contribution and an additional $.50 for every $1.00 of employee contributions into the Elk 401(k) Plan limited to a maximum matching Company contribution of 2% of an employee's compensation. The aggregate contributions by the Company for 2007 were $0.5 million.

Defined Benefit Plans

        The Company provides a noncontributory defined benefit retirement plan for certain hourly and salaried employees (the "Retirement Plan"). Benefits under these plans are based on stated amounts for each year of service. The Company's funding policy is consistent with the minimum funding requirements of the Employee Retirement Income Security Act of 1974.

F-66

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Benefit Plans (Continued)

        In September 2006, the FASB issued SFAS No. 158, which requires the net amount by which the defined-benefit or postretirement obligation plan is over or underfunded to be reported on a company's balance sheet. SFAS No. 158 replaced FASB Statement No. 87's requirement to report at least a minimum pension liability, measured as the excess of the accumulated benefit obligation over the fair value of the plan assets. The funded status amount to be recognized by SFAS No. 158 is measured as the difference between the fair value of plan assets and the plan's benefit obligation, with the benefit obligation including all actuarial gains and losses, prior service cost, and any remaining transition amounts. SFAS No. 158 does not change the components of net periodic benefit cost. All items previously deferred when applying FASB Statement Nos. 87 and 106 are now recognized as a component of accumulated other comprehensive income (loss), net of all applicable taxes. SFAS No. 158 also requires a fiscal year-end measurement date of plan assets and benefit obligations, eliminating the use of an earlier measurement date, however, this aspect will not become effective until fiscal years ending after December 15, 2008. All other aspects of SFAS No. 158 were effective as of December 31, 2006. The Company's adoption of SFAS No. 158 during its fourth quarter of fiscal year ending December 31, 2006 did not have a material impact on its consolidated financial statements. See tables below.

        The Company's net periodic pension cost for the Retirement Plan included the following components:

	Year Ended December 31,
	2007			2006			2005
	(Thousands)
Service cost	$	1,694		$	1,507		$	1,418
Interest cost		2,275			2,095			1,990
Expected return on plan assets		(3,302	)		(2,990	)		(2,844	)
Amortization of unrecognized prior service cost		39			39			39
Amortization of net losses from earlier periods		201			360			313
Net periodic pension cost	$	907		$	1,011		$	916

        The following tables set forth, for the years 2007 and 2006, reconciliations of the beginning and ending balances of the benefit obligation, fair value of plan assets, funded status and amounts

F-67

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Benefit Plans (Continued)

recognized in the consolidated balance sheets related to the Retirement Plan. The Company uses a December 31 measurement date for its retirement plan.

		December 31,
		2007			2006
		(Thousands)
Change in benefit obligation:
	Benefit obligation at beginning of year	$	(38,461	)	$	(37,017	)
	Service cost		(1,694	)		(1,507	)
	Interest cost		(2,275	)		(2,095	)
	Amendments		—			(10	)
	Actuarial gains		1,135			1,130
	Benefits paid		1,453			1,038
	Benefit obligation at end of year	$	(39,842	)	$	(38,461	)
Change in plan assets:
	Fair value of plan assets at beginning of year	$	35,046		$	32,149
	Actual return on plan assets		(909	)		3,935
	Employer contributions		786			—
	Benefits paid		(1,453	)		(1,038	)
	Fair value of plan assets at end of year	$	33,470		$	35,046
Reconciliation of funded status:
	Funded status		N/A		$	(3,414	)
	Unrecognized prior service cost		N/A			141
	Unrecognized actuarial losses		N/A			6,152
	Net prepaid benefit cost recognized in consolidated     balance sheets before adoption of SFAS No. 158		N/A		$	2,879
Amounts recognized in consolidated balance sheets before   adoption of SFAS No. 158:
	Prepaid benefit cost		N/A		$	—
	Accrued minimum pension liability		N/A			(3,414	)
	Intangible asset		N/A			141
	Accumulated other comprehensive loss		N/A			6,152
	Net amount recognized in consolidated balance sheets     before adoption of SFAS No. 158		N/A		$	2,879
Amounts recognized in consolidated balance sheets under   SFAS No. 158:
	Noncurrent assets	$	—		$	—
	Current liabilities		—			—
	Noncurrent liabilities		(6,372	)		(3,414	)
	Net amount recognized in consolidated balance sheets     under SFAS No. 158	$	(6,372	)	$	(3,414	)

F-68

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Benefit Plans (Continued)

		December 31,,
		2007		2006
		(Thousands)
Amounts recognized in other comprehensive loss under SFAS   No. 158:
	Net actuarial loss	$	9,029	$	6,152
	Prior service cost		102		141
	Unrecognized net initial obligation		—		—
	Total	$	9,131	$	6,293
Change in accumulated other comprehensive loss due to the     adoption of SFAS No. 158:			N/A	$	141

		December 31,
		2007			2006
		(Thousands)
Other changes in plan assets and benefit obligations     recognized in other comprehensive loss:
	Net actuarial loss	$	3,078		N/A
	Recognized actuarial loss		(201	)	N/A
	Recognized prior service cost		(39	)	N/A
	Total recognized in other comprehensive loss		2,838		N/A
	Total recognized in net periodic cost and other     comprehensive loss	$	3,745		N/A

        The accumulated benefit obligation for the Retirement Plan was $39.8 and $38.5 million at December 31, 2007 and 2006, respectively.

        Information on actual and future expected benefit payments related to the Retirement Plan follows:

		(Thousands)
Actual benefit payments
	2005	$	1,380
	2006		1,038
	2007		1,453
Future expected benefit payments
	2008	$	1,551
	2009		1,754
	2010		1,915
	2011		2,113
	2012		2,305
	2013 through 2017		14,884

F-69

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Benefit Plans (Continued)

		Year ended December 31,
		2008 Expected		2007 Actual		2006 Actual		2005 Actual
		(Thousands)
Employer contributions:
	Required	$	1.3	$	0.8	$	—	$	—
	Additional discretionary		—		—		—		—
	Total	$	1.3	$	0.8	$	—	$	—

        Weighted-average assumptions:

		December 31,
		2007		2006
Discount rate:
	As of January 1 (for determining net periodic pension cost for     years ended December 31)	6.00	%	5.75	%
	As of December 31 (for determining projected benefit     obligation at December 31)	6.25	%	6.00	%
Expected return on plan assets		9.50	%	9.50	%
Rate of compensation increase		N/A		N/A

        The following table highlights the sensitivity of the Company's pension obligations and expense to changes in assumptions related to the Retirement Plan:

		Impact on Pension Expense	Impact on Projected Benefit Obligation
		(Thousands)
Change in Assumption:
	25 basis point increase in discount rate	-160.0	-1,400.0
	25 basis point decrease in discount rate	+160.0	+1,400.0
	25 basis point increase in rate of return on assets	-90.0	N/A
	25 basis point decrease in rate of return on assets	+90.0	N/A

        The Company sets the discount rate assumption annually for its retirement-related benefit plans at the measurement dates to reflect the yield of high-quality fixed-income debt instruments. The expected long-term rate of return on assets is derived from a detailed periodic study conducted by the Company's actuaries and the Company's financial management. The study includes a review of anticipated future long-term performance of individual asset categories. While the study gives appropriate consideration to recent plan performance and historical returns, the assumption is primarily a long-term prospective rate. The Company's expected long-term rate of return on assets assumption for the Retirement Plan was 9.5% in 2007 and 2006.

F-70

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Benefit Plans (Continued)

        At December 31, 2007 and 2006, the asset allocations for the Retirement Plan, by asset category, are as follows:

		Plan Assets at December 31,
		2008 Target		2007 Actual		2006 Actual
Asset Category:
	Equity securities	25–45	%	45	%	41	%
	Fixed income securities	40–70	%	35	%	54	%
	Cash and equivalents	0–10	%	18	%	3	%
	Other	0–10	%	2	%	2	%
	Total			100	%	100	%

        With the assets in the Retirement Plan, the Company invests primarily in market-neutral absolute-return strategies which serve to minimize volatility while providing consistent positive returns and preserving capital. These investments include both equity and fixed income securities and may incorporate the use of options, futures and other financial instruments. Implementation of this policy involves investments with outside managers who have expertise in these strategies.

        The Company also provides a nonqualified defined benefit retirement plan for certain key employees. Expense for this plan was not significant for 2007, 2006 and 2005. The liability related to this plan was $1.2 and $1.2 million at December 31, 2007 and 2006, respectively, and is included within other liabilities.

Postretirement Medical and Life Insurance

        The Company generally does not provide postretirement medical and life insurance benefits, although it subsidizes such benefits for certain employees and certain retirees. Such subsidies were reduced or ended as of January 1, 1997. Effective March 1, 2005, the Company amended the plan eliminating postretirement medical benefits affecting all current and future retirees. The reduction of future retirees created a curtailment as the amendment significantly reduced the expected years of future services for active plan participants. The curtailment also required an acceleration of the prior service cost established prior to the amendment, which was treated as a curtailment gain of $0.1 million and was immediately recognized in income (see below).

        Net periodic postretirement benefit cost included the following components:

	Year Ended December 31,
	2007			2006			2005
	(Thousands)
Service cost	$	14		$	13		$	54
Interest cost		118			122			168
Amortization of unrecognized prior service cost		(570	)		(619	)		(532	)
Curtailment gain		—			—			(109	)
Amortization of net gains from earlier periods		(231	)		(237	)		(265	)
Net periodic postretirement benefit	$	(669	)	$	(721	)	$	(684	)

F-71

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Benefit Plans (Continued)

        The following table sets forth, for the years 2007 and 2006, reconciliations of the beginning and ending balances of the postretirement benefit obligation, funded status and amounts recognized in the consolidated balance sheets related to postretirement medical and life insurance benefits. The Company uses a December 31 measurement date for its postretirement medical and life insurance plan.

		December 31,
		2007			2006
		(Thousands)
Change in benefit obligation:
	Benefit obligation at beginning of year	$	(2,105	)	$	(2,165	)
	Service cost		(14	)		(13	)
	Interest cost		(118	)		(122	)
	Actuarial gains		174			34
	Benefits paid, net of participant contributions		101			161
	Benefit obligation at end of year	$	(1,962	)	$	(2,105	)
Change in plan assets:
	Fair value of plan assets at beginning of year	$	—		$	—
	Employer contributions		101			161
	Participant contributions		10			19
	Benefits paid		(111	)		(180	)
	Fair value of plan assets at end of year	$	—		$	—
Reconciliation of funded status:
	Funded status	$	(1,962	)	$	(2,105	)
	Net amount recognized in consolidated balance sheets as accrued benefit cost	$	(1,962	)	$	(2,105	)
Amounts recognized in consolidated balance sheets before   adoption of SFAS No. 158:
	Prepaid benefit cost		N/A		$	—
	Accrued benefit liability		N/A			(8,452	)
	Intangible asset		N/A			—
	Accumulated other comprehensive income (loss)		N/A			—
	Net amount recognized in consolidated balance sheets     before adoption of SFAS No. 158		N/A		$	(8,452	)

F-72

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Benefit Plans (Continued)

			December 31,
			2007			2006
			(Thousands)
Amounts recognized in consolidated balance sheets under   SFAS No. 158:
	Noncurrent assets		$	—		$	—
	Current liabilities			(203	)		(210	)
	Noncurrent liabilities			(1,759	)		(1,895	)
	Net amount recognized in consolidated balance sheets     under SFAS No. 158		$	(1,962	)	$	(2,105	)
Amounts recognized in other comprehensive income (loss)   under SFAS No. 158:
	Net actuarial gain		$	(2,808	)	$	(2,864	)
	Prior service cost			(2,912	)		(3,483	)
		Total	$	(5,720	)	$	(6,347	)
Change in accumulated other comprehensive income (loss)     due to the adoption of SFAS No. 158:				N/A		$	(6,347	)

		December 31,
		2007			2006
		(Thousands)
Other changes in plan assets and benefit obligations recognized     in other comprehensive loss
	Net actuarial gain	$	(175	)	N/A
	Recognized actuarial gain		231		N/A
	Recognized prior service credit		571		N/A
	Total recognized in other comprehensive loss		627		N/A
	Total recognized in net periodic benefit and other     comprehensive loss	$	(42	)	N/A

        The Company's postretirement medical and life insurance plan is unfunded. Benefits are paid from the Company's cash flows from operations as they are incurred. The Company expects to contribute approximately $0.2 million to the plan in 2008, which are related to postretirement life insurance

F-73

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15.    Benefit Plans (Continued)

expenses. Information on actual and future expected benefit payments related to the postretirement medical and life insurance plan follows:

		(Thousands)
Actual benefit payments
	2005	$	211
	2006		180
	2007		111
Future expected benefit payments
	2008	$	210
	2009		207
	2010		202
	2011		195
	2012		188
	2013 through 2017		806

        For purposes of calculating the accumulated postretirement benefit obligation, the following assumptions were made. Retirees as of December 31, 2004 who were formerly salaried employees (with certain exceptions) were assumed to receive a Company subsidy of $700 to $1,000 per year. For retirees over age 65, this subsidy may be replaced by participation in a managed care program. With respect to retirees who were formerly hourly employees, most such retirees are subject to a $5,000 per person lifetime maximum benefit. Effective March 1, 2005, the Company amended the plan eliminating postretirement retiree medical benefits affecting all current and future retirees.

        Weighted-average assumptions:

		December 31,
		2007		2006
Discount rate:
	As of January 1 (for determining net periodic benefit cost for     years ended December 31)	6.00	%	5.75	%
	As of December 31 (for determining postretirement benefit     obligation)	6.25	%	6.00	%

Note 16.    Stock/Loan Plan

        In connection with the Company's acquisition of Elk, the Company adopted the Elk Stock/Loan Plan, under which certain Elk employees were granted loans for the purpose of purchasing Elk's common stock, which loans were based on a percentage of their salaries, the performance of their operating units, and also as long-term incentive compensation awards. Under the Stock/Loan Plan, a ratable portion of the loans, which are unsecured, and any accrued interest are forgiven and recognized as compensation expense over five years of continuing service with the Company. If employment is terminated for any reason except death, disability or retirement, the balance of the loan becomes due and payable. No further loans will be made under this plan. Loans outstanding at December 31, 2007 were $3.0 million and are included in other noncurrent assets. The Company recognized expense related to the Elk Stock/Loan Plan of $1.3 million in 2007.

F-74

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 17.    2001 Long-Term Incentive Plan and Preferred Stock Option Plan

        On January 1, 1996, the Company established the BMCA Preferred Stock Option Plan (the "1996 Plan") to issue options to certain employees to purchase shares of redeemable convertible preferred stock ("Preferred Stock") of the Company, exercisable at a price of $100 per share. Each share of Preferred Stock was convertible, at the holder's option, into shares of common stock of the Company at a formula price based on Book Value (as defined in the option agreement) as of the date of grant. The options vested ratably over five years and expired after nine years. Dividends would accrue on the Preferred Stock from the date of issuance at the rate of 6% per annum. The Preferred Stock was redeemable, at the Company's option, for a redemption price equal to $100 per share plus accrued and unpaid dividends. The Preferred Stock, and common stock issuable upon conversion of Preferred Stock into common stock, was subject to repurchase by the Company under certain circumstances, at a price equal to current Book Value (as defined in the option agreement). The exercise price of the options to purchase Preferred Stock was equal to the estimated fair value per share of the Preferred Stock at the date of grant. As of December 31, 2007, options to purchase 400,000 shares of Preferred Stock remain available for future grant under the 1996 Plan. No options were granted in 2007, 2006 and 2005.

        Effective December 31, 2000, the Company adopted the 2001 Long-Term Incentive Plan, which allowed employees participating in the 1996 Plan to also participate in the 2001 Long-Term Incentive Plan. During 2001, all employees exchanged their preferred stock options for incentive plan units effective as of December 31, 2000. The 2001 Long-Term Incentive Plan authorizes the grant of incentive units ("Incentive Units") to eligible employees. The 2001 Long-Term Incentive Plan is administered by a Committee appointed by the Board of Directors. The number of Incentive Units granted is determined by the Committee in its sole discretion. Generally, Incentive Units vest cumulatively, in 20% increments over five years, except that Incentive Units granted in exchange for Preferred Stock Options retain the vested status and vesting schedule of the options exchanged and the Committee, in its sole discretion, may issue options with any vesting schedule, other than normally provided in the 2001 Long-Term Incentive Plan. Incentive Units generally are exercisable for a period of six years from the date of grant. The value of Incentive Units is determined at the end of each fiscal quarter based on Book Value (as defined in the plan) at that date less the Book Value as of the date of grant divided by 1,000,010 and is payable in cash upon exercise. The 2001 Long-Term Incentive Plan was to terminate five years after its effective date of December 2000; however, in December 2005, the Committee exercised its right to amend the Plan and extended the term of the Plan through December 2007. In December 2007, the Committee further extended the term of the Plan through December 2009, which could result in future additional compensation expense. If, after a change in control of the Company, as defined, an employee's employment is terminated by the Company for any reason other than Good Cause, as defined, as a result of death or permanent disability, or by the employee for Good Reason, as defined, all incentive units will become fully and immediately vested and payable in cash.

        In 2001, employees exchanged an aggregate of 198,559 stock options granted under the 1996 Plan (discussed above) for an aggregate of 81,862 Incentive Units. At December 31, 2007, 2006 and 2005, 99,120, 98,633 and 146,814 Incentive Units were outstanding, see table below. Compensation expense for such Incentive Units was $1.2, $6.4 and $9.8 million in 2007, 2006 and 2005, respectively. At December 31, 2007 and 2006, the 2001 Long-Term Incentive Plan liability amounted to $9.7 and $20.3 million respectively, and was included in accrued liabilities.

F-75

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 17.    2001 Long-Term Incentive Plan and Preferred Stock Option Plan (Continued)

        The following is a summary of activity for incentive units related to the 2001 Long-Term Incentive Plan:

	Year Ended December 31,
	2007		2006		2005
Incentive Units outstanding, January 1,	98,633		146,814		124,455
Granted	45,589		6,200		35,205
Exercised	(38,387	)	(41,087	)	(9,464	)
Forfeited	(6,715	)	(13,294	)	(3,382	)
Incentive Units outstanding, December 31,	99,120		98,633		146,814
Vested Units outstanding, December 31,	38,750		55,753		80,190

        The initial value of the 8,000 incentive units granted on July 2, 2007 and the 37,589 incentive units granted on January 1, 2007 was $589.43 and $583.08, respectively. The initial value of the 800 incentive units granted on July 1, 2006 and the 5,400 incentive units granted on January 1, 2006 was $569.74 and $534.19, respectively. The initial value of the incentive units granted on April 1, 2005 was $478.16.

Note 18.    Business Segment Information

        The Company is a leading national manufacturer and marketer of a broad line of asphalt and polymer-based roofing products and accessories for the residential and commercial roofing markets. The Company also manufactures and markets specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. The residential roofing product line consists of laminated and asphalt strip shingles. Sales of residential roofing products in 2007, 2006 and 2005 were $1,727.9, $1,451.4 and $1,459.4 million and represented approximately 75%, 74% and 75%, respectively, of the Company's net sales. Sales of residential roofing products in 2007 included $15.1 million of restructuring-related sales discounts. The Company's commercial roofing product line includes a full line of modified bitumen and asphalt built-up roofing products, thermoplastic polyolefin products, liquid applied membrane systems and roofing accessories for use in the application of commercial roofing systems. Sales of commercial roofing products and accessories in 2007, 2006 and 2005 were $445.3, $442.2 and $416.6 million and represented approximately 19%, 22% and 21%, respectively, of the Company's net sales. Sales of specialty building products and accessories products in 2007, 2006 and 2005 were $136.9, $75.6 and $79.8 million and represented approximately 6%, 4% and 4%, respectively, of the Company's net sales.

        The Company aggregates the residential and commercial product lines into one operating segment since they have similar economic characteristics and are similar in each of the following areas: (i) the nature of the products and services are similar in that they perform the same function—the protection and covering of residential and commercial roofs; (ii) the nature of the production processes are similar; (iii) the type or class of customer for their products and services is similar; (iv) the residential and commercial products have the same distribution channels, whereby the main customers are wholesalers or distributors; and (v) regulatory requirements are generally the same for both the residential and commercial product lines. The specialty building products and accessories products did not meet quantitative thresholds in 2007, 2006 and 2005 to be considered as a reportable segment.

F-76

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 19.    Related Party Transactions

        Included in the consolidated balance sheets are the following receivable (payable) balances with related parties, which arise from operating and financing transactions between the Company and its affiliates:

	December 31,
	2007			2006
	(Thousands)
Tax receivable from parent corporation	$	10,016		$	9,132
Payable to related parties	$	(16,133	)	$	(5,952	)
Loans payable to parent corporation	$	(52,840	)	$	(52,840	)
Loans receivable from parent corporation, included in Stockholders' Equity	$	56,224		$	56,031

        The Company makes loans to, and borrows from, its parent corporations from time to time at rates ranging from 7.3% to 8.3% in 2007. As of December 31, 2007 and 2006, BMCA Holdings Corporation owed the Company $56.2 and $56.0 million, including interest of $1.0 and $0.8 million, respectively, and the Company owed BMCA Holdings Corporation $52.8 and $52.8 million, respectively, with no unpaid interest. Interest income on the Company's loans to BMCA Holdings Corporation amounted to $5.0, $4.9 and $4.0 million in 2007, 2006 and 2005, respectively. Interest expense on the Company's loans from BMCA Holdings Corporation amounted to $4.8, $4.7 and $3.8 million in 2007, 2006 and 2005, respectively. Loans payable to/receivable from its parent corporations are due on demand and provide each party with the right of offset of its related obligation to the other party and are subject to limitations as outlined in the Senior Secured Revolving Credit Facility, the Term Loan, the Junior Lien Term Loan and the Senior Notes. Under the terms of the Senior Secured Revolving Credit Facility and the indentures governing the Company's Senior Notes at December 31, 2007, the Company could repay demand loans to its parent corporation amounting to $52.8 million, subject to certain conditions. The Company also makes non-interest bearing advances to affiliates, of which no balance was outstanding as of December 31, 2007 and 2006. In addition, the Company did not owe any loans or enter into any lending activities with other affiliates.

        As of December 31, 2007 and 2006, the Company has included on its consolidated balance sheet a tax receivable from parent corporation of $10.0 and $9.1 million, respectively, representing amounts paid in excess of amounts due to G-I Holdings with respect to 2006 under the Tax Sharing Agreement. See Notes 10 and 20.

        In 2007, the Company did not declare or pay a cash dividend to its parent corporation. On December 29, 2006 the Company declared and paid a cash dividend, amounting to $15.0 million to its parent corporation.

        During the years ended December 31, 2007 and December 31, 2006, the Company paid $0 and $24.1 million, respectively, in Federal income tax payments to its parent corporation pursuant to the Tax Sharing Agreement. These amounts are included in the change in net receivable from/payable to related parties/parent corporations in the consolidated statement of cash flows.

        Mineral Products:    The Company and its subsidiaries purchase a substantial portion of their headlap roofing granules, colored roofing granules and algae-resistant granules under a long-term

F-77

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 19.    Related Party Transactions (Continued)

requirements contract with ISP Minerals Inc. ("ISP Minerals"), an affiliate of BMCA and also of International Specialty Products, Inc. and its subsidiaries ("ISP"). In 2007, 2006 and 2005, the Company and its subsidiaries purchased in the aggregate approximately $106.3, $102.3 and $108.3 million, respectively, of roofing granules from ISP Minerals. The amount payable to ISP Minerals at December 31, 2007 and 2006 for such purchases was $15.1 and $5.2 million, respectively, and is included in payable to related parties in the consolidated balance sheets.

        Management Agreements:    Pursuant to a management agreement, a subsidiary of ISP provides certain general management, administrative, legal and facilities services to the Company, including the use of the Company's headquarters in Wayne, New Jersey. Charges to the Company by ISP for these services under the management agreement, inclusive of the services provided to G-I Holdings, discussed below, aggregated $6.7, $6.1 and $5.8 million for 2007, 2006 and 2005, respectively. These charges consist of management fees and other reimbursable expenses attributable to the Company, or incurred by ISP for the benefit of the Company. The amount payable to ISP for management fees as of December 31, 2007 and 2006 was $0.5 and $0.4 million, respectively, and is included in payable to related parties in the consolidated balance sheets. The management agreement also provides that the Company is responsible for providing management services to G-I Holdings and certain of its subsidiaries and that G-I Holdings pay to the Company a management fee for these services. The aggregate amount paid by G-I Holdings to the Company for services rendered under the management agreement in 2007, 2006 and 2005 was approximately $0.8, $0.9 and $0.8, respectively. The Company also allocates a portion of the management fees payable by the Company under the management agreement as lease payments for the use of the Company's headquarters.

        Tax Sharing Agreement:    See Note 10.

Note 20.    Commitments and Contingencies

        The Company's parent corporations, G-I Holdings and BMCA Holdings Corporation, are essentially holding companies without independent businesses or operations. G-I Holdings and BHC are presently dependent upon the earnings and cash flows of their subsidiaries, principally the Company, in order to satisfy their net obligations, including various tax and other claims and liabilities (net of certain insurance receivables), including tax liabilities relating to the surfactants partnership, see Note 10. G-I Holdings has advised the Company that it expects to obtain funds to satisfy G-I Holdings' operating expenses from, among other things, distributions from subsidiaries (principally the Company). See Notes 8, 10 and 19.

        On January 5, 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to Asbestos Claims. The Company is not included in such bankruptcy filing. There are restrictions under the indentures relating to the Senior Notes and the Senior Secured Revolving Credit Facility on payments by the Company to its parent corporations.

        During the twelve months ending December 31, 2008, the Company expects to make distributions and/or advances to its parent corporations to satisfy the obligations discussed above for not more than the extent permitted by the Senior Secured Revolving Credit Facility and the Senior Notes. The Company does not believe that the dependence of its parent corporations on the cash flows of their subsidiaries should have a material adverse effect on the operations, liquidity or capital resources of the Company. See Notes 8, 10, 13 and 19.

F-78

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 20.    Commitments and Contingencies (Continued)

        At December 31, 2007, the Company had outstanding letters of credit of approximately $56.0 million under the Senior Secured Revolving Credit Facility, which includes approximately $11.1 million of standby letters of credit related to certain obligations of G-I Holdings. See Note 8.

        In June 2001, the Company entered into employment security agreements with certain of its executive officers and key personnel. The agreements have no expiration date, are supported by irrevocable letters of credit and provide for a single-sum payment consisting of one to two times salary and bonus and related benefits if employment is terminated or a change in employment responsibilities occurs within a thirty-six month period following the change in control event, as defined. At December 31, 2007 the aggregate value of the employment security agreements was $6.4 million, which excludes the cost of medical benefits and any amounts due under the 2001 Long-Term Incentive Plan.

        In the ordinary course of business, the Company has several supply agreements that include minimum annual purchase requirements amounting to $142.9 million at December 31, 2007 payable over the next five years. In the event these purchase requirements are not met, the Company may be required to make payments under these supply agreements.

        The leases for certain property, plant and equipment at certain of the Company's glass mat and roofing facilities are accounted for as capital leases, see Note 13. The Company is also a lessee under operating leases principally for warehouses, production machinery and equipment, and transportation and computer equipment. Rental expense on operating leases was $52.2, $42.6 and $37.2 million for 2007, 2006 and 2005, respectively. Future minimum lease payments for properties which were held under long-term noncancellable leases as of December 31, 2007 were as follows:

	Operating Leases
	(Thousands)
2008	$	22,028
2009		18,811
2010		15,369
2011		12,051
2012		9,745
Thereafter		26,005
Total minimum payments	$	104,009

        The Company adopted the provisions of SAB No. 108 during its fourth quarter of 2006. In accordance with the transition provision of SAB No. 108, the Company recorded a $1.9 million, net of tax of $1.2 million, decrease to opening retained earnings to reflect the recognition of rent expense on a straight-line basis related to rent escalations in certain operating leases.

        Included in net sales in 2007 were net sales to two customers of 13% and 14%, respectively, in 2006, 16% and 13%, respectively, and in 2005, 17% and 12%, respectively. No other customer accounted for more than 10% of net sales in 2007, 2006 or 2005.

        The Company includes in other expense, net certain legal fees related to its business. For 2007, 2006 and 2005 the Company included $4.9, $3.8 and $6.6 million, respectively, of legal fees in other expense, net.

F-79

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21.    Guarantor Financial Information

        At December 31, 2007, all of the Company's subsidiaries, including Elk, each of which is wholly-owned by the Company, are guarantors under the Company's Senior Secured Revolving Credit Facility, the Term Loan, the Junior Lien Term Loan and the indentures governing the Senior Notes. These guarantees are full, unconditional and joint and several. In addition, Building Materials Manufacturing Corporation ("BMMC"), a wholly-owned subsidiary of the Company, was a co-obligor on the 8% Senior Notes due 2007, which were redeemed during 2007. In 2007, BMCA Acquisition Inc., the direct parent of Elk, and Elk, as a result of its merger with BMCA Acquisition Sub, were co-obligors on the Senior Secured Revolving Credit Facility, the Term Loan and the Junior Lien Term Loan.

        The Company and BMMC entered into license agreements, effective January 1, 1999, for the right to use intellectual property, including patents, trademarks, know-how, and franchise rights owned by Building Materials Investment Corporation, a wholly-owned subsidiary of the Company, for a license fee stated as a percentage of net sales. The license agreements were for a period of one year each and were subject to automatic renewal unless either party terminated with 60 days written notice. Also, effective January 1, 1999, BMMC sold all finished goods to the Company at a manufacturing profit. Such agreements and the related sale of finished goods were terminated on December 31, 2006.

        Effective January 1, 2007, BMMC and BMIC entered into a new contract manufacturing agreement allowing BMIC the right to purchase all production at the BMMC owned plant locations at a specified transfer price. In addition, effective January 1, 2007, BMCA and BMIC entered into a purchase agreement granting BMCA the right to purchase production sufficient to meet required customer demand from BMIC at a specified transfer price. Also, in connection with entering these agreements, BMCA transferred certain employees and operations of BMCA to BMIC.

        Presented below is condensed consolidating financial information for the Company, the co-obligor subsidiaries and the guarantor subsidiaries. This financial information should be read in conjunction with the consolidated financial statements and other notes related thereto. Separate financial statements for the Company and the guarantor subsidiaries are not included herein, because the guarantees are full, unconditional and joint and several.

F-80

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21.    Guarantor Financial Information (Continued)

Condensed Consolidating Statement of Operations
Year Ended December 31, 2007
(Thousands)

			Parent Company			Co-Obligor Subsidiaries			Guarantor Subsidiaries			Eliminations			Consolidated
Net sales			$	1,725,601		$	494,785		$	89,687		$	—		$	2,310,073
Intercompany net sales				—			1,319,682			1,525,007			(2,844,689	)		—
		Total net sales		1,725,601			1,814,467			1,614,694			(2,844,689	)		2,310,073
Costs and expenses:
	Cost of products sold			1,472,000			1,657,000			1,411,273			(2,844,689	)		1,695,584
	Selling, general and administrative			225,167			232,391			38,658			—			496,216
	Amortization of intangible assets			—			6,785			—			—			6,785
	Restructuring and other expenses			8,849			74,710			58,084			—			141,643
	Other income, net			(2,121	)		(561	)		(73	)		—			(2,755	)
		Total costs and expenses		1,703,895			1,970,325			1,507,942			(2,844,689	)		2,337,473
Income (loss) before equity (loss) in earnings of subsidiaries, interest expense and income taxes				21,706			(155,858	)		106,752			—			(27,400	)
Equity (loss) in earnings of subsidiaries				(71,448	)		—			—			71,448			—
Interest expense				(119,623	)		(28,818	)		(32,997	)		—			(181,438	)
Income (loss) before income taxes				(169,365	)		(184,676	)		73,755			71,448			(208,838	)
Income tax (expense) benefit				34,839			65,708			(26,235	)		—			74,312
Net income (loss)			$	(134,526	)	$	(118,968	)	$	47,520		$	71,448		$	(134,526	)

F-81

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21.    Guarantor Financial Information (Continued)

Condensed Consolidating Statement of Income
Year Ended December 31, 2006
(Thousands)

		Parent Company			Co-Obligor Subsidiary			Guarantor Subsidiaries			Eliminations			Consolidated
Net sales		$	1,859,910		$	—		$	109,260		$	—		$	1,969,170
Intercompany net sales			1,384			1,151,622			79,655			(1,232,661	)		—
	Total net sales		1,861,294			1,151,622			188,915			(1,232,661	)		1,969,170
Costs and expenses, net:
	Cost of products sold		1,438,718			1,014,447			175,872			(1,232,661	)		1,396,376
	Selling, general and administrative		333,177			82,435			32,043			—			447,655
	Other (income) expense, net		249			69			(36	)		—			282
	Intercompany licensing (income) expense, net		74,452			26,253			(100,705	)		—			—
	Transition service agreement (income) expense		100			(100	)		—			—			—
	Total costs and expenses, net		1,846,696			1,123,104			107,174			(1,232,661	)		1,844,313
Income before equity in earnings of subsidiaries, interest and income taxes			14,598			28,518			81,741			—			124,857
Equity in earnings of subsidiaries			50,878			—			—			(50,878	)		—
Interest expense			(34,412	)		(7,717	)		(19,380	)		—			(61,509	)
Income before income taxes			31,064			20,801			62,361			(50,878	)		63,348
Income tax (expense) benefit			7,686			(8,075	)		(24,209	)		—			(24,598	)
Net income		$	38,750		$	12,726		$	38,152		$	(50,878	)	$	38,750

F-82

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21.    Guarantor Financial Information (Continued)

Condensed Consolidating Statement of Income
Year Ended December 31, 2005
(Thousands)

		Parent Company			Co-Obligor Subsidiary			Guarantor Subsidiaries			Eliminations			Consolidated
Net sales		$	1,832,994		$	—		$	122,791		$	—		$	1,955,785
Intercompany net sales			2,109			1,137,579			59,148			(1,198,836	)		—
	Total net sales		1,835,103			1,137,579			181,939			(1,198,836	)		1,955,785
Costs and expenses, net:
	Cost of products sold		1,391,969			1,008,487			157,973			(1,198,836	)		1,359,593
	Selling, general and administrative		325,972			75,021			30,384			—			431,377
	Other (income) expense, net		4,417			(250	)		(3	)		—			4,164
	Intercompany licensing (income) expense, net		73,404			24,418			(97,822	)		—			—
	Transition service agreement (income) expense		100			(100	)		—			—			—
	Total costs and expenses, net		1,795,862			1,107,576			90,532			(1,198,836	)		1,795,134
Income before equity in earnings of subsidiaries, interest and income taxes			39,241			30,003			91,407			—			160,651
Equity in earnings of subsidiaries			64,548			—			—			(64,548	)		—
Interest expense			(44,978	)		(9,872	)		(7,454	)		—			(62,304	)
Income before income taxes			58,811			20,131			83,953			(64,548	)		98,347
Income tax (expense) benefit			2,179			(7,646	)		(31,890	)		—			(37,357	)
Net income		$	60,990		$	12,485		$	52,063		$	(64,548	)	$	60,990

F-83

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21.    Guarantor Financial Information (Continued)

Condensed Consolidating Balance Sheet
December 31, 2007
(Thousands)

			Parent Company			Co-Obligor Subsidiaries			Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
	Cash and cash equivalents		$	—		$	153		$	6,171		$	—		$	6,324
	Accounts receivable, trade, net			198,781			3,753			8,323			—			210,857
	Accounts receivable, other			2,229			8,415			148			—			10,792
	Income tax receivable			—			11,968			—			—			11,968
	Income tax receivable from parent corporation			10,016			—			—			—			10,016
	Inventories, net			—			271,659			45,253			—			316,912
	Deferred income tax assets			38,017			—			—			—			38,017
	Other current assets			5,644			8,005			49			—			13,698
		Total Current Assets		254,687			303,953			59,944			—			618,584
Investment in subsidiaries				1,557,024			—			—			(1,557,024	)		—
Intercompany loans including accrued interest				767,084			(194,715	)		(572,369	)		—			—
Due from/(to) subsidiaries, net				(787,818	)		(280,019	)		1,067,837			—			—
Property, plant and equipment, net				—			556,987			115,826			—			672,813
Goodwill				40,080			594,351			20,769			—			655,200
Intangible assets, net				—			207,635			—			—			207,635
Other noncurrent assets				86,604			33,518			37			—			120,159
Total Assets			$	1,917,661		$	1,221,710		$	692,044		$	(1,557,024	)	$	2,274,391
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
	Current maturities of long-term debt		$	14,530		$	8,725		$	1,375		$	—		$	24,630
	Accounts payable			21			131,357			10,872			—			142,250
	Payable to related parties			992			14,795			346			—			16,133
	Loans payable to parent corporation			52,840			—			—			—			52,840
	Accrued liabilities			63,402			69,215			3,359			—			135,976
	Product warranty claims			13,500			—			—			—			13,500
	Discontinued operations—current liabilities			—			560			—			—			560
		Total Current Liabilities		145,285			224,652			15,952			—			385,889
Long-term debt				1,653,298			64,277			11,820			—			1,729,395
Product warranty claims				25,755			5,369			100			—			31,224
Deferred income tax liabilities				60,869			—			—			—			60,869
Other liabilities				128,772			34,388			172			—			163,332
Total Liabilities				2,013,979			328,686			28,044			—			2,370,709
Total Stockholders' Equity (Deficit)				(96,318	)		893,024			664,000			(1,557,024	)		(96,318	)
Total Liabilities and Stockholders' Equity (Deficit)			$	1,917,661		$	1,221,710		$	692,044		$	(1,557,024	)	$	2,274,391

F-84

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21.    Guarantor Financial Information (Continued)

Condensed Consolidating Balance Sheet
December 31, 2006
(Thousands)

			Parent Company			Co-Obligor Subsidiary			Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
	Cash and cash equivalents		$	18		$	1,870		$	5,889		$	—		$	7,777
	Accounts receivable, trade, net			177,137			—			13,722			—			190,859
	Accounts receivable, other			4,957			537			105			—			5,599
	Tax receivable from parent coporation			9,132			—			—			—			9,132
	Inventories, net			165,538			49,318			23,853			—			238,709
	Deferred income tax assets, net			21,710			—			—			—			21,710
	Other current assets			7,753			4,235			221			—			12,209
		Total Current Assets		386,245			55,960			43,790			—			485,995
Investment in subsidiaries				626,836			—			—			(626,836	)		—
Intercompany loans including accrued interest				378,725			16,515			(395,240	)		—			—
Due from (to) subsidiaries, net				(720,388	)		(68,470	)		788,858			—			—
Property, plant and equipment, net				45,274			250,100			116,355			—			411,729
Goodwill, net				40,080			—			24,714			—			64,794
Other noncurrent assets				44,723			22,543			57			—			67,323
Total Assets			$	801,495		$	276,648		$	578,534		$	(626,836	)	$	1,029,841
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
	Current maturities of long-term debt		$	—		$	102,913		$	5		$	—		$	102,918
	Accounts payable			53,312			28,436			9,203			—			90,951
	Payable to related parties, net			1,172			4,780			—			—			5,952
	Loans payable to parent corporation			52,840			—			—			—			52,840
	Accrued liabilities			39,533			60,490			1,359			—			101,382
	Product warranty claims			9,000			—			—			—			9,000
		Total Current Liabilities		155,857			196,619			10,567			—			363,043
Long-term debt less current maturities				465,518			18,885			3			—			484,406
Product warranty claims				17,571			—			401			—			17,972
Deferred income tax liabilities				39,551			—			—			—			39,551
Other liabilities				60,793			1,694			177			—			62,664
Total Liabilities				739,290			217,198			11,148			—			967,636
Total Stockholders' Equity				62,205			59,450			567,386			(626,836	)		62,205
Total Liabilities and Stockholders' Equity			$	801,495		$	276,648		$	578,534		$	(626,836	)	$	1,029,841

F-85

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21.    Guarantor Financial Information (Continued)

Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2007
(Thousands)

			Parent Company			Co-Obligor Subsidiaries			Guarantor Subsidiaries			Consolidated
Cash and cash equivalents, beginning of year			$	18		$	1,870		$	5,889		$	7,777
Cash provided by (used in) operating activities:
	Net income (loss)			(63,078	)		(118,968	)		47,520			(134,526	)
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Gain on sale of assets		—			(4,415	)		(38	)		(4,453	)
		Depreciation		—			59,101			9,905			69,006
		Amortization of intangible and other assets		—			10,242			—			10,242
		Restructuring and other expenses		23,531			99,158			58,323			181,012
		Deferred income taxes		(80,635	)		—			—			(80,635	)
		Noncash interest charges		8,400			370			679			9,449
	Decrease in working capital items			9,949			19,235			26,179			55,363
	Increase (decrease) in product warranty claims			1,469			(291	)		(301	)		877
	(Increase) decrease in other assets			(5,863	)		394			(908	)		(6,377	)
	Increase (decrease) in other liabilities			8,983			(1,258	)		33			7,758
	Change in net receivable from/payable to related parties/parent corporations			(1,063,271	)		1,198,901			(126,333	)		9,297
	Other, net			—			530			649			1,179
Net cash provided by (used in) operating activities				(1,160,515	)		1,262,999			15,708			118,192
Cash used in investing activities:
	Acquisition of ElkCorp, net of cash acquired of $0.1 million			—			(945,295	)		—			(945,295	)
	Capital expenditures and acquisitions			—			(54,131	)		(30,380	)		(84,511	)
	Proceeds from sale of assets			—			6,755			—			6,755
Net cash used in investing activities				—			(992,671	)		(30,380	)		(1,023,051	)
Cash provided by (used in) financing activities:
	Proceeds from issuance of long-term debt			2,431,849			25,900			—			2,457,749
	Repayments of long-term debt			(1,229,608	)		(327,983	)		(8	)		(1,557,599	)
	Proceeds from sale-leasebacks			—			30,038			14,962			45,000
	Settlement of treasury lock hedges			(4,896	)		—			—			(4,896	)
	Distribution to parent corporation			(171	)		—			—			(171	)
	Loan to parent corporation			(193	)		—			—			(193	)
	Financing fees and expenses			(36,484	)		—			—			(36,484	)
Net cash provided by (used in) financing activities				1,160,497			(272,045	)		14,954			903,406
Net change in cash and cash equivalents				(18	)		(1,717	)		282			(1,453	)
Cash and cash equivalents, end of year			$	—		$	153		$	6,171		$	6,324

F-86

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21.    Guarantor Financial Information (Continued)

Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2006
(Thousands)

			Parent Company			Co-Obligor Subsidiary			Guarantor Subsidiaries			Consolidated
Cash and cash equivalents, beginning of year			$	9		$	180		$	6,693		$	6,882
Cash provided by (used in) operating activities:
Net income (loss)				(12,128	)		12,726			38,152			38,750
Adjustments to reconcile net income (loss) to net
	cash provided by (used in) operating activities:
		Depreciation		4,155			38,093			7,073			49,321
		Amortization		—			2,993			—			2,993
		Deferred income taxes		2,770			—			—			2,770
		Noncash interest charges, net		3,262			1,334			—			4,596
	(Increase) decrease in working capital items			49,088			(54,107	)		(2,129	)		(7,148	)
	Decrease in product warranty claims			(825	)		—			—			(825	)
	(Increase) decrease in other assets			(6,154	)		(5,910	)		100			(11,964	)
	Increase (decrease) in other liabilities			7,658			—			(7	)		7,651
	Change in net receivable from/payable to
		related parties/parent corporations		(59,228	)		41,871			2,894			(14,463	)
	Other, net			(42	)		(156	)		1,070			872
Net cash provided by (used in) operating activities				(11,444	)		36,844			47,153			72,553
Cash provided by (used in) investing activities:
	Capital expenditures and acquisition of a manufacturing facility			(13,612	)		(25,886	)		(47,952	)		(87,450	)
Net cash used in investing activities				(13,612	)		(25,886	)		(47,952	)		(87,450	)
Cash provided by (used in) financing activities:
	Proceeds from issuance of long-term debt			824,000			—			—			824,000
	Repurchase of industrial development revenue bond certificates			—			(6,325	)		—			(6,325	)
	Repayments of long-term debt			(781,000	)		(2,943	)		(5	)		(783,948	)
	Distributions to parent corporation			(521	)		—			—			(521	)
	Dividends to parent corporation			(15,000	)		—			—			(15,000	)
	Loan to parent corporation			(191	)		—			—			(191	)
	Financing fees and expenses			(2,223	)		—			—			(2,223	)
Net cash provided by (used in) financing activities				25,065			(9,268	)		(5	)		15,792
Net change in cash and cash equivalents				9			1,690			(804	)		895
Cash and cash equivalents, end of year			$	18		$	1,870		$	5,889		$	7,777

F-87

BUILDING MATERIALS CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21.    Guarantor Financial Information (Continued)

Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 2005
(Thousands)

			Parent Company			Co-Obligor Subsidiary			Guarantor Subsidiaries			Consolidated
Cash and cash equivalents, beginning of year			$	12		$	200		$	129,270		$	129,482
Cash provided by (used in) operating activities:
Net income (loss)				(3,558	)		12,485			52,063			60,990
Adjustments to reconcile net income (loss) to net
	cash provided by (used in) operating activities:
		Depreciation		3,621			36,375			5,114			45,110
		Amortization		—			2,687			—			2,687
		Deferred income taxes		16,232			—			—			16,232
		Noncash interest charges, net		4,168			1,317			—			5,485
	(Increase) decrease in working capital items			(48,015	)		19,972			(1,430	)		(29,473	)
	Decrease in product warranty claims			(911	)		—			—			(911	)
	Increase in other assets			(4,798	)		(3,652	)		—			(8,450	)
	Increase in other liabilities			2,215			—			90			2,305
	Change in net receivable from/payable to
		related parties/parent corporations		178,024			(37,858	)		(145,783	)		(5,617	)
	Other, net			(63	)		(482	)		1,857			1,312
Net cash provided by (used in) operating activities				146,915			30,844			(88,089	)		89,670
Cash provided by (used in) investing activities:
	Capital expenditures and acquisition of manufacturing facility			(2,025	)		(28,214	)		(34,821	)		(65,060	)
	Proceeds from sale of assets			4,132			—			585			4,717
Net cash provided by (used in) investing activities				2,107			(28,214	)		(34,236	)		(60,343	)
Cash provided by (used in) financing activities:
	Proceeds from issuance of long-term debt			553,000			—			—			553,000
	Repayments of long-term debt			(686,000	)		(2,650	)		(252	)		(688,902	)
	Distributions to parent corporation			(47	)		—			—			(47	)
	Dividends to parent corporation			(15,000	)		—			—			(15,000	)
	Loan to parent corporation			(149	)		—			—			(149	)
	Financing fees and expenses			(829	)		—			—			(829	)
Net cash used in financing activities				(149,025	)		(2,650	)		(252	)		(151,927	)
Net change in cash and cash equivalents				(3	)		(20	)		(122,577	)		(122,600	)
Cash and cash equivalents, end of year			$	9		$	180		$	6,693		$	6,882

F-88

BUILDING MATERIALS CORPORATION OF AMERICA

SUPPLEMENTARY DATA (UNAUDITED)

Quarterly Financial Data (Unaudited)

	2007 by Quarter												2006 by Quarter
	First			Second			Third			Fourth			First			Second			Third			Fourth
	(Millions)
Net sales(1)	$	530.0		$	663.3		$	680.7		$	436.1		$	505.0		$	535.9		$	530.3		$	398.0
Cost of products sold(1)		392.9			486.0			493.4			323.3			359.5			369.1			372.2			295.6
Gross profit	$	137.1		$	177.3		$	187.3		$	112.8		$	145.5		$	166.8		$	158.1		$	102.4
Income (loss) before interest and income taxes(1)	$	25.5		$	(14.7	)	$	25.7		$	(63.9	)	$	31.2		$	48.7		$	43.3		$	1.6
Interest expense(2)		(49.3	)		(45.7	)		(44.3	)		(42.1	)		(14.5	)		(16.1	)		(15.8	)		(15.1	)
Income (loss) before income taxes		(23.8	)		(60.4	)		(18.6	)		(106.0	)		16.7			32.6			27.5			(13.5	)
Income tax (expense) benefit		8.5			15.9			7.4			42.5			(6.3	)		(12.4	)		(10.4	)		4.6
Net income (loss)	$	(15.3	)	$	(44.5	)	$	(11.2	)	$	(63.5	)	$	10.4		$	20.2		$	17.1		$	(8.9	)

(1)

The operating results for 2007 include $181.0 million of restructuring and other expenses, of which $15.1 million was included as a reduction in net sales due to restructuring-related sales discounts and $24.3 million was included in cost of products sold related to the acquisition of Elk.

(2)

Interest expense for 2007 includes $23.2 million of debt restructuring costs related to the acquisition of Elk.

F-89

SCHEDULE II

BUILDING MATERIALS CORPORATION OF AMERICA
VALUATION AND QUALIFYING ACCOUNTS

Year Ended December 31, 2007

Description		Balance January 1, 2007		Charged to Sales or Expenses			Deductions			Other			Balance December 31, 2007
		(Thousands)
Valuation and Qualifying Accounts Deducted from Assets To Which They Apply:
	Allowance for doubtful accounts	$	1,319	$	1,588		$	1,948	(b)	$	2,471	(c)	$	3,430
	Allowance for customer incentives		50,942		372,174	(a)		387,394	(d)		29,110	(e)		64,832
	Reserve for inventory market valuation		2,224		40,009	(f)		21,689	(f)		572	(g)		21,116
	Product warranty claims		26,971		20,997			16,918			13,674	(h)		44,724

Year Ended December 31, 2006

Description		Balance January 1, 2006		Charged to Sales or Expenses			Deductions			Other			Balance December 31, 2006
		(Thousands)
Valuation and Qualifying Accounts
	Deducted from Assets To Which They Apply:
	Allowance for doubtful accounts	$	2,310	$	(1,017	)	$	(26)	(b)	$	—		$	1,319
	Allowance for customer incentives		74,505		270,302	(a)		293,865			—			50,942
	Reserve for inventory market valuation		4,756		135			2,667			—			2,224
	Product warranty claims		31,202		21,220			22,951			(2,500)	(i)		26,971

Year Ended December 31, 2005

Description		Balance January 1, 2005		Charged to Sales or Expenses			Deductions			Other		Balance December 31, 2005
		(Thousands)
Valuation and Qualifying Accounts
	Deducted from Assets To Which They Apply:
	Allowance for doubtful accounts	$	1,139	$	1,230		$	59	(b)	$	—	$	2,310
	Allowance for customer incentives		59,010		266,215	(a)		250,720			—		74,505
	Reserve for inventory market valuation		2,477		3,870			1,591			—		4,756
	Product warranty claims		32,113		22,880			23,791			—		31,202

Notes:

(a)

Amount charged to net sales, which includes ElkCorp ("Elk") for 2007 from February 22, 2007 ("date of acquisition").

S-1

BUILDING MATERIALS CORPORATION OF AMERICA
VALUATION AND QUALIFYING ACCOUNTS (Continued)

(b)

Represents write-offs of uncollectible accounts net of recoveries, which includes Elk for 2007 from the date of acquisition.

(c)

Represents allowance for doubtful accounts balance related to the acquisition of Elk.

(d)

Deductions include Elk for 2007 from the date of acquisition.

(e)

Represents allowance for customer incentives related to the acquisition of Elk.

(f)

Amounts include purchase accounting and restructuring activity related to the acquisition of Elk from the date of acquisition.

(g)

Represents reserve for inventory market valuation balance acquired from Elk.

(h)

Represents warranty reserve balance acquired from Elk.

(i)

Represents FTB No. 90-1 and SAB No. 108 adjustments. (See Note 2 to Consolidated Financial Statements.)

S-2

QuickLinks

ADDITIONAL REGISTRANTS
BUILDING MATERIALS CORPORATION OF AMERICA Form 10-K for the fiscal year ended December 31, 2007
TABLE OF CONTENTS
PART I

Item 1. Business.
Item 1A. Risk Factors.

Item 1B. Unresolved Staff Comments.
Item 2. Properties
Item 3. Legal Proceedings.

Item 4. Submission of Matters to a Vote of Security Holders.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Item 6. Selected Financial Data .
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Item 8. Financial Statements and Supplementary Data.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure .
Item 9A(T). Controls and Procedures.
Item 9B. Other Information

PART III

Item 10. Directors, Executive Officers and Corporate Governance.
Item 11. Executive Compensation.

Compensation Discussion and Analysis
Summary Compensation Table
Outstanding Equity Awards at December 31, 2007

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Item 13. Certain Relationships and Related Transactions and Director Independence.
Item 14. Principal Accounting Fees and Services.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

EXHIBIT INDEX
SIGNATURES
BUILDING MATERIALS CORPORATION OF AMERICA FORM 10-K INDEX TO MANAGEMENT'S DISCUSSION AND ANALYSIS, CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED RELATED TO THE ACQUISITION OF ELK FEBRUARY 22, 2007 (Thousands)
BUILDING MATERIALS CORPORATION OF AMERICA SELECTED FINANCIAL DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BUILDING MATERIALS CORPORATION OF AMERICA CONSOLIDATED STATEMENTS OF OPERATIONS
BUILDING MATERIALS CORPORATION OF AMERICA CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts)
BUILDING MATERIALS CORPORATION OF AMERICA CONSOLIDATED STATEMENTS OF CASH FLOWS
BUILDING MATERIALS CORPORATION OF AMERICA CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED RELATED TO THE ACQUISITION OF ELK FEBRUARY 22, 2007 (Thousands)
Condensed Consolidating Statement of Operations Year Ended December 31, 2007 (Thousands)
Condensed Consolidating Statement of Income Year Ended December 31, 2006 (Thousands)
Condensed Consolidating Statement of Income Year Ended December 31, 2005 (Thousands)
Condensed Consolidating Balance Sheet December 31, 2007 (Thousands)
Condensed Consolidating Balance Sheet December 31, 2006 (Thousands)
Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2007 (Thousands)
Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2006 (Thousands)
Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2005 (Thousands)
BUILDING MATERIALS CORPORATION OF AMERICA SUPPLEMENTARY DATA (UNAUDITED) Quarterly Financial Data (Unaudited)

SCHEDULE II

Year Ended December 31, 2007
Year Ended December 31, 2006
Year Ended December 31, 2005

EX-4.4

Exhibit 4.4

THIRD SUPPLEMENTAL INDENTURE

THIRD SUPPLEMENTAL INDENTURE (this “Third Supplemental Indenture”), dated as of January 4, 2007, is entered into among Building Materials Corporation of America, a Delaware corporation (the “Issuer”), the Guarantors (as defined in the indenture referred to below) and The Bank of New York, as trustee under the indenture referred to below (the “Trustee”).

W I T N E S S E T H

WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture dated as of December 3, 1998, as amended by the first supplemental indenture, dated as of January 1, 1999, as further amended by the second supplemental indenture, dated as of December 4, 2000 (as amended to date, the “Indenture”), providing for the issuance by the Issuer of an aggregate principal amount of $155,000,000 of 8% Senior Notes due 2008 (the “Notes”);

WHEREAS, capitalized terms used herein but not defined shall have the meanings ascribed to them in the Indenture;

WHEREAS, Section 9.02 of the Indenture provides, among other things, that the Issuer and the Trustee may amend or supplement the Indenture and the Notes with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer for the Notes) (the “Requisite Holders”);

WHEREAS, the Issuer desires to execute and deliver an amendment to the Indenture for the purposes of eliminating and amending certain of the restrictive covenants, events of default and other provisions contained in the Indenture and the Notes;

WHEREAS, the Issuer has caused to be delivered to the Holders of the Notes an Offer to Purchase and Consent Solicitation Statement, dated December 20, 2006 (as the same may be amended from time to time, the “Statement”), and the related Consent and Letter of Transmittal pursuant to which the Issuer has (i) offered to purchase for cash any and all of the outstanding Notes (such offer on the terms set forth in the Statement and the Consent and Letter of Transmittal, the “Offer”) and (ii) solicited consents to the adoption of amendments to the Indenture as set forth in Article I hereof (the “Amendments”);

WHEREAS, the Issuer has received the written consents of the Requisite Holders to the Amendments;

WHEREAS, the execution and delivery of this Third Supplemental Indenture has been duly authorized and all conditions and requirements necessary to

make this Third Supplemental Indenture a valid and binding agreement of the Issuer have been duly performed and complied with; and

WHEREAS, pursuant to Sections 9.02 and 9.06 of the Indenture, the Trustee is authorized to execute this Third Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, the Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Notes as follows:

ARTICLE I

AMENDMENTS TO INDENTURE

Section 1.               Amendment of Article 4.  The following sections of Article 4 of the Indenture and any corresponding provisions in the Notes are hereby deleted in their entirety and replaced with “Intentionally Omitted” (except as otherwise noted) and all references made thereto throughout the Indenture and the Notes are hereby deleted in their entirety:

(a)           Section 4.03.  Corporate Existence;

(b)          Section 4.06.  Securities and Exchange Commission Reports;

(c)           Section 4.08.  Maintenance of Properties;

(d)          Section 4.09.  Limitation on Debt and Preferred Stock of the Company and its Subsidiaries;

(e)           Section 4.10.  Limitation on Restricted Payments and Restricted Investments;

(f)           Section 4.11.  Limitation on Liens;

(g)          Section 4.12.  Limitation on Transactions with Affiliates;

(h)          Section 4.13.  Limitation on Dividend and Other Payments Restrictions Affecting Subsidiaries;

(i)            Section 4.16.  Restriction on Transfer of Certain Assets to Subsidiaries; and

(j)            Section 4.17.  Investment Company Act.

Section 2.               Amendment of Article 5.  Clauses (2), (3) and (4) of Section 5.01 of the Indenture and any corresponding provisions in the Notes are hereby

2

deleted in their entirety and all references made thereto throughout the Indenture and the Notes are hereby deleted in their entirety.

Section 3.               Amendment of Article 6.  The following clauses of Section 6.01 of the Indenture and any corresponding provisions in the Notes, are hereby deleted in their entirety and replaced with “Intentionally Omitted,” and all references made thereto throughout the Indenture are hereby deleted in their entirety:

(a)           Section 6.01(4);

(b)           Section 6.01(6); and

(c)           Section 6.01(8).

Section 4.               Definitions.  Definitions defined in Article 1 of the Indenture shall be deemed deleted when reference to such definitions would be eliminated as a result of the foregoing amendments.

Section 5.               Section and Other References.  To the extent any amendments result in the renumbering of sections or clauses, any references thereto shall be deemed amended so as to refer to the amended section or clause.

ARTICLE II

EFFECTIVENESS

Section 1.               Effectiveness. This Third Supplemental Indenture shall become effective and binding on the Issuer, the Guarantors, the Trustee and the Holders upon execution and delivery of this Third Supplemental Indenture by the parties hereto; provided that the amendments set forth in Article I of this Third Supplemental Indenture shall become operative when all Notes validly tendered pursuant to the Offer are accepted for payment by the Issuer.  In the event that the Offer is terminated or withdrawn, this Third Supplemental Indenture shall be null and void.

Section 2.               Notice of Acceptance. The Company shall provide written notice to the Trustee upon the Company’s acceptance of the Notes for payment, at which time this Third Supplemental Indenture shall become effective.

ARTICLE III

MISCELLANEOUS

Section 1.               Indenture Ratified.  Except as otherwise provided herein, the Indenture is in all respects ratified and confirmed, and all of the terms, provisions and conditions thereof shall be and remain in full force and effect.

3

Section 2.               Construction of Supplemental Indenture.  This Third Supplemental Indenture is executed as and shall constitute an indenture supplemental to the Indenture and shall be construed in connection with and as part of the Indenture.

Section 3.               Trust Indenture Act Controls.  If any provision of this Third Supplemental Indenture limits, qualifies or conflicts with any other provision of this Third Supplemental Indenture or the Indenture that is required to be included by the Trust Indenture Act of 1939, as amended, as in force at the date this Third Supplemental Indenture is executed, the provision required by said Act shall control.

Section 4.               Counterparts.  This Third Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

Section 5.               Trustee Not Responsible.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Third Supplemental Indenture or for or in respect of the recitals contained herein, all of which are made solely by the Issuer.

Section 6.               Governing Law.  THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.  EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS THIRD SUPPLEMENTAL INDENTURE.

Section 7.               Successors.  All covenants and agreements in this Third Supplemental Indenture by the Issuer or the Trustee shall bind their respective successors and assigns, whether so expressed or not.

Section 8.               Severability.  In case any provisions in this Third Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

4

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

BUILDING MATERIALS
CORPORATION OF AMERICA
By:	/s/ John Maitner
Name: John Maitner
Title: Vice President and Treasurer
BUILDING MATERIALS
MANUFACTURING CORPORATION
BCMA INSULATION PRODUCTS INC.
DUCTWORK MANUFACTURING
CORPORATION
GAF MATERIALS CORPORATION
(CANADA)
GAF PREMIUM PRODUCTS INC.
GAF REAL PROPERTIES, INC.
GAFTECH CORPORATION
LL BUILDING PRODUCTS INC.
PEQUANNOCK VALLEY CLAIM
SERVICE COMPANY, INC.
SOUTH PONCA REALTY CORP.
WIND GAP REAL PROPERTY
ACQUISITION CORP.
By:	/s/ John Maitner
Name: John Maitner
Title: Vice President and Treasurer

BMCA GAINESVILLE LLC
HBP ACQUISITION LLC
By:	/s/ John Maitner
Name: John Maitner
Title: Vice President and Treasurer

THE BANK OF NEW YORK, as Trustee
By:	/s/ Franca Ferrara
Name: Franca M. Ferrera
Title: Assistant Vice President

EX-4.6

Exhibit 4.6

FIRST SUPPLEMENTAL INDENTURE

FIRST SUPPLEMENTAL INDENTURE, dated as of December 29, 2005 between HBP Acquisition LLC, a Delaware limited liability company (the “New Guarantor”), the Company, the Existing Guarantors and Wilmington Trust Company, as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H :

WHEREAS, Building Materials Corporation of America, a Delaware corporation (the “Company”), certain guarantors named therein and the Trustee heretofore executed and delivered the Indenture, dated as of July 26, 2004 (as heretofore amended and supplemented, the “Indenture”), providing for the issuance of the 7.75% Senior Notes Due 2014 and the Series B 7.75% Senior Notes Due 2014 (collectively, the “Securities”) (capitalized terms used herein but not otherwise defined have the meanings ascribed thereto in the Indenture);

WHEREAS, as a result of the guarantee by the New Guarantor of the Credit Agreement, pursuant to Section 4.18 of the Indenture the Company is required to cause the New Guarantor to execute and deliver to the Trustee this First Supplemental Indenture pursuant to which the New Guarantor shall provide a Guarantee as set forth in Article X of the Indenture;

WHEREAS, Section 9.01(5) of the Indenture provides that the Company, the Guarantors and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities to add Subsidiary Guarantees; and

WHEREAS, this First Supplemental Indenture has been duly authorized by all necessary corporate action on the part of the New Guarantor.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the existing Guarantors, the New Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

Agreement to Guarantee

Section 1.1.  Agreement to Guarantee.  Subject to Section 10.07 of the Indenture, the New Guarantor hereby agrees, jointly and severally with all other Guarantors, irrevocably and unconditionally, to guarantee the punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of all other monetary obligations of the Company under the indenture and the Securities on the terms and subject to the conditions set forth in Article X of the Indenture, which guarantee shall

be subject to automatic release in accordance with the provisions of Section 10.09 of the Indenture.

Section 1.2.  Trustee’s Acceptance.  The Trustee hereby accepts this First Supplemental Indenture and agrees to perform the same under terms and conditions set forth in the Indenture.

ARTICLE II

Miscellaneous

Section 2.1.  Effect of First Supplemental Indenture.  Upon the execution and delivery of this First Supplemental Indenture by the Company, the existing Guarantors, the New Guarantor and the Trustee, the Indenture shall be supplemented in accordance herewith, and this First Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby.

Section 2.2.  Indenture Remains in Full Force and Effect.  Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect.

Section 2.3.  Indenture and First Supplemental Indenture Construed Together.  This First Supplemental Indenture is an indenture supplemental to and implementation of the Indenture, and the Indenture and this First Supplemental Indenture shall henceforth be read and construed together.

Section 2.4.  Confirmation and Preservation of Indenture.  The Indenture as supplemented by this First Supplemental Indenture is in all respects confirmed and preserved.

Section 2.5.  Conflict with Trust Indenture Act.  If any provision of this First Supplemental Indenture limits, qualifies or conflicts with any provision of the TIA that is required under the TIA to be part of and govern any provision of this First Supplemental Indenture, the provision of the TIA shall control.  If any provision of this First Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this First Supplemental Indenture, as the case may be.

Section 2.6.  Severability.  In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 2.7.  Benefits of First Supplemental Indenture.  Nothing in this First Supplemental Indenture or the Securities, express or implied, shall give to any

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Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this First Supplemental Indenture or the Securities.

Section 2.8.  Successors.  All agreements of the New Guarantor in this First Supplemental Indenture shall bind its successors except as provided in the Indenture.  All agreements of the Trustee in this First Supplemental Indenture shall bind its successors.

Section 2.9.  Certain Duties and Responsibilities of the Trustee.  In entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture and the Securities relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.

                                Section 2.10.  Governing Law.  This First Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York. The Trustee, the Company, the Guarantors and the Securityholders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Indenture or the Securities.

Section 2.11.  Multiple Originals.  The parties may sign any number of copies of this First Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this First Supplemental Indenture.

Section 2.12.  Headings.  The Article and Section headings herein are have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first written above.

New Guarantor
	HBP ACQUISITION LLC
By:	/s/ John M. Maitner
	Name:	John M. Maitner
	Title:	Vice President and Treasurer
Company
	BUILDING MATERIALS
	CORPORATION OF AMERICA
By:	/s/ John M. Maitner
	Name:	John M. Maitner
	Title:	Vice President and Treasurer

Existing Guarantors
BMCA INSULATION PRODUCTS INC.
BMCA QUAKERTOWN INC.
BUILDING MATERIALS INVESTMENT CORPORATION
BUILDING MATERIALS MANUFACTURING CORPORATION
DUCTWORK MANUFACTURING CORPORATION
GAF LEATHERBACK CORP.
GAF MATERIALS CORPORATION (CANADA)
GAF PREMIUM PRODUCTS INC.
GAF REAL PROPERTIES, INC.
GAFTECH CORPORATION
LL BUILDING PRODUCTS INC.
PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC.
SOUTH PONCA REALTY CORP.
WIND GAP REAL PROPERTY ACQUISITION CORP.,
By:	/s/ John M. Maitner
	Name:	John M. Maitner
	Title:	Vice President and Treasurer

Trustee
	WILMINGTON TRUST COMPANY
By:	/s/ Kristin L. Moore
	Name:	Kristin L. Moore
	Title:	Financial Services Officer

EX-4.7

Exhibit 4.7

SECOND SUPPLEMENTAL INDENTURE

SECOND SUPPLEMENTAL INDENTURE, dated as of December 29, 2006 between BMCA Newco Inc., a Delaware corporation (the “New Guarantor”), Building Materials Corporation of America, a Delaware corporation (the “Company”), the existing Guarantors signatory hereto (the “Existing Guarantors”) and Wilmington Trust Company, as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H :

WHEREAS, Indenture dated as of July 26, 2004 (as heretofore amended and supplemented, the “Indenture”), was executed and delivered by the Company, certain guarantors named therein and the Trustee, providing for the issuance of the 7.75% Senior Notes Due 2014 and the Series B 7.75% Senior Notes Due 2014 (collectively, the “Securities”) (capitalized terms used herein but not otherwise defined have the meanings ascribed thereto in the Indenture);

WHEREAS, as a result of the guarantee by the New Guarantor of the Credit Agreement, pursuant to Section 4.18 of the Indenture, the Company is required to cause the New Guarantor to execute and deliver to the Trustee this Second Supplemental Indenture pursuant to which the New Guarantor shall provide a Guarantee as set forth in Article X of the Indenture;

WHEREAS, Section 9.01(5) of the Indenture provides that the Company, the Guarantors and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities to add Subsidiary Guarantees; and

WHEREAS, this Second Supplemental Indenture has been duly authorized by all necessary corporate action on the part of the New Guarantor.

NOW, THEREFORE, in consideration of the premises set forth above and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the Existing Guarantors, the New Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

Agreement to Guarantee

Section 1.1.  Agreement to Guarantee.  Subject to Section 10.07 of the Indenture, the New Guarantor hereby agrees, jointly and severally with all other Guarantors, irrevocably and unconditionally, to guarantee the punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of all monetary obligations of the Company under the Indenture and the Securities, on the terms and subject to the conditions set forth in Article X of the Indenture, which guarantee shall be

subject to automatic release in accordance with the provisions of Section 10.09 of the Indenture.

Section 1.2.  Trustee’s Acceptance.  The Trustee hereby accepts this Second Supplemental Indenture and agrees to perform the same under terms and conditions set forth in the Indenture.

ARTICLE II

Miscellaneous

Section 2.1.  Effect of Second Supplemental Indenture.  Upon the execution and delivery of this Second Supplemental Indenture by the Company, the Existing Guarantors, the New Guarantor and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby.

Section 2.2.  Indenture Remains in Full Force and Effect.  Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect.

Section 2.3.  Indenture and Second Supplemental Indenture Construed Together.  This Second Supplemental Indenture is an indenture supplemental to in and implementation of the Indenture, and the Indenture and this Second Supplemental Indenture shall henceforth be read and construed together.

Section 2.4.  Confirmation and Preservation of Indenture.  The Indenture as supplemented by this Second Supplemental Indenture is in all respects confirmed and preserved.

Section 2.5.  Conflict with Trust Indenture Act.  If any provision of this Second Supplemental Indenture limits, qualifies or conflicts with any provision of the TIA that is required under the TIA to be part of and govern any provision of this Second Supplemental Indenture, the provision of the TIA shall control.  If any provision of this Second Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this Second Supplemental Indenture, as the case may be.

Section 2.6.  Severability.  In case any provision in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 2.7.  Benefits of Second Supplemental Indenture.  Nothing in this Second Supplemental Indenture or the Securities, express or implied, shall give to any

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Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Second Supplemental Indenture or the Securities.

Section 2.8.  Successors.  All agreements of the New Guarantor in this Second Supplemental Indenture shall bind its successors except as provided in the Indenture.  All agreements of the Trustee in this Second Supplemental Indenture shall bind its successors.

Section 2.9.  Certain Duties and Responsibilities of the Trustee.  In entering into this Second Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture and the Securities relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.

Section 2.10.  Governing Law.  This Second Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York. The Trustee, the Company, the Guarantors and the Securityholders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture, this Second Supplemental Indenture or the Securities.

Section 2.11.  Multiple Originals.  The parties may sign any number of copies of this Second Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Second Supplemental Indenture.

Section 2.12.  Headings.  The Article and Section headings herein have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first written above.

New Guarantor
	BMCA Newco Inc.
By:	/s/ John Maitner
	Name:	John Maitner
	Title:	Vice President, Treasurer
Company
	BUILDING MATERIALS
	CORPORATION OF AMERICA
By:	/s/ John Maitner
	Name:	John Maitner
	Title:	Vice President, Treasurer

Existing Guarantors
	BUILDING MATERIALS INVESTMENT CORPORATION
	BMCA INSULATION PRODUCTS INC.
	BUILDING MATERIALS MANUFACTURING CORPORATION
	DUCTWORK MANUFACTURING CORPORATION
	GAF MATERIALS CORPORATION (CANADA)
	GAF PREMIUM PRODUCTS INC.
	GAF REAL PROPERTIES, INC.
	GAFTECH CORPORATION
	LL BUILDING PRODUCTS INC.
	PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC.
	SOUTH PONCA REALTY CORP.
	BMCA QUAKERTOWN INC.
	WIND GAP REAL PROPERTY ACQUISITION CORP.
	HBP ACQUISITION LLC
By:	/s/ John Maitner
	Name:   John Maitner
	Title:     Vice President, Treasurer

Trustee
	WILMINGTON TRUST COMPANY
By:	/s/ Kristin L. Moore
	Name:   Kristin L. Moore
	Title:     Authorized Signatory

EX-4.8

Exhibit 4.8

THIRD SUPPLEMENTAL INDENTURE

THIRD SUPPLEMENTAL INDENTURE, dated as of December 29, 2006 between BMCA Acquisition Inc. and BMCA Acquisition Sub Inc., each a Delaware corporation, and BMCA Gainesville LLC, a Delaware limited liability company (collectively, the “New Guarantors”), Building Materials Corporation of America, a Delaware corporation (the “Company”), the existing Guarantors signatory hereto (the “Existing Guarantors”) and Wilmington Trust Company, as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H :

WHEREAS, Indenture dated as of July 26, 2004 (as heretofore amended and supplemented, the “Indenture”), was executed and delivered by the Company, certain guarantors named therein and the Trustee, providing for the issuance of the 7.75% Senior Notes Due 2014 and the Series B 7.75% Senior Notes Due 2014 (collectively, the “Securities”) (capitalized terms used herein but not otherwise defined have the meanings ascribed thereto in the Indenture);

WHEREAS, as a result of the guarantee by the New Guarantors of the Credit Agreement, pursuant to Section 4.18 of the Indenture, the Company is required to cause the New Guarantors to execute and deliver to the Trustee this Third Supplemental Indenture pursuant to which the New Guarantors shall provide a Guarantee as set forth in Article X of the Indenture;

WHEREAS, Section 9.01(5) of the Indenture provides that the Company, the Guarantors and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities to add Subsidiary Guarantees; and

WHEREAS, this Third Supplemental Indenture has been duly authorized by all necessary corporate action on the part of the New Guarantors.

NOW, THEREFORE, in consideration of the premises set forth above and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the Existing Guarantors, the New Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

Agreement to Guarantee

Section 1.1.  Agreement to Guarantee.  Subject to Section 10.07 of the Indenture, each New Guarantor hereby agrees, jointly and severally with all other Guarantors, irrevocably and unconditionally, to guarantee the punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of all monetary obligations of the Company under the Indenture and the Securities, on the terms and

subject to the conditions set forth in Article X of the Indenture, which guarantee shall be subject to automatic release in accordance with the provisions of Section 10.09 of the Indenture.

Section 1.2.  Trustee’s Acceptance.  The Trustee hereby accepts this Third Supplemental Indenture and agrees to perform the same under terms and conditions set forth in the Indenture.

ARTICLE II

Miscellaneous

Section 2.1.  Effect of Third Supplemental Indenture.  Upon the execution and delivery of this Third Supplemental Indenture by the Company, the Existing Guarantors, the New Guarantors and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Third Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby.

Section 2.2.  Indenture Remains in Full Force and Effect.  Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect.

Section 2.3.  Indenture and Third Supplemental Indenture Construed Together.  This Third Supplemental Indenture is an indenture supplemental to in and implementation of the Indenture, and the Indenture and this Third Supplemental Indenture shall henceforth be read and construed together.

Section 2.4.  Confirmation and Preservation of Indenture.  The Indenture as supplemented by this Third Supplemental Indenture is in all respects confirmed and preserved.

Section 2.5.  Conflict with Trust Indenture Act.  If any provision of this Third Supplemental Indenture limits, qualifies or conflicts with any provision of the TIA that is required under the TIA to be part of and govern any provision of this Third Supplemental Indenture, the provision of the TIA shall control.  If any provision of this Third Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this Third Supplemental Indenture, as the case may be.

Section 2.6.  Severability.  In case any provision in this Third Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

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Section 2.7.  Benefits of Third Supplemental Indenture.  Nothing in this Third Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Third Supplemental Indenture or the Securities.

Section 2.8.  Successors.  All agreements of the New Guarantor in this Third Supplemental Indenture shall bind its successors except as provided in the Indenture.  All agreements of the Trustee in this Third Supplemental Indenture shall bind its successors.

Section 2.9.  Certain Duties and Responsibilities of the Trustee.  In entering into this Third Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture and the Securities relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.

Section 2.10.  Governing Law.  This Third Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York. The Trustee, the Company, the Guarantors and the Securityholders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture, this Third Supplemental Indenture or the Securities.

Section 2.11.  Multiple Originals.  The parties may sign any number of copies of this Third Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Third Supplemental Indenture.

Section 2.12.  Headings.  The Article and Section headings herein have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the date first written above.

New Guarantors
	BMCA Acquisition Inc.
	BMCA Acquisition Sub Inc.
	BMCA Gainesville LLC
By:	/s/ John Maitner
	Name:    John Maitner
	Title:      Vice President, Treasurer
Company
	BUILDING MATERIALS
	CORPORATION OF AMERICA
By:	/s/ John Maitner
	Name:    John Maitner
	Title:      Vice President, Treasurer

Existing Guarantors
	BUILDING MATERIALS INVESTMENT
	CORPORATION
	BMCA INSULATION PRODUCTS INC.
	BUILDING MATERIALS
	MANUFACTURING CORPORATION
	DUCTWORK MANUFACTURING
	CORPORATION
	GAF MATERIALS CORPORATION
	(CANADA)
	GAF PREMIUM PRODUCTS INC.
	GAF REAL PROPERTIES, INC.
	GAFTECH CORPORATION
	LL BUILDING PRODUCTS INC.
	PEQUANNOCK VALLEY CLAIM
	SERVICE COMPANY, INC.
	SOUTH PONCA REALTY CORP.
	BMCA QUAKERTOWN INC.
	WIND GAP REAL PROPERTY
	ACQUISITION CORP.
	HBP ACQUISITION LLC
	BMCA NEWCO INC.
By:	/s/ John Maitner
	Name:    John Maitner
	Title:      Vice President, Treasurer

Trustee
	WILMINGTON TRUST COMPANY
By:	/s/ Kristin L. Moore
	Name:    Kristin L. Moore
	Title:      Authorized Signatory

EX-4.9

Exhibit 4.9

FOURTH SUPPLEMENTAL INDENTURE

FOURTH SUPPLEMENTAL INDENTURE, dated as of February 21, 2007 between Building Materials Corporation of America, a Delaware corporation (the “Company”), the Guarantors signatory hereto (the “Guarantors”), and Wilmington Trust Company, as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H :

WHEREAS, the Indenture dated as of July 26, 2004, as amended by the First Supplemental Indenture dated as of December 26, 2006, as further amended by the Second Supplemental Indenture dated as of December 29, 2006, and as further amended by the Third Supplemental Indenture dated as of December 29, 2006 (collectively and as further amended and supplemented, the “Indenture”), was executed and delivered by the Company, the Guarantors named therein and the Trustee, providing for the issuance of the 7.75% Senior Notes Due 2014 and the Series B 7.75% Senior Notes Due 2014 (collectively, the “Securities”);

WHEREAS, the Company desires and has requested the Trustee to join with it and the Guarantors in the execution and delivery of this Fourth Supplemental Indenture;

WHEREAS, Section 9.01(1) of the Indenture provides that the Company, the Guarantors and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities to cure any ambiguity, omission, defect or inconsistency; and

WHEREAS, this Fourth Supplemental Indenture has been duly authorized by all necessary corporate action on the part of the Company and the Guarantors.

NOW, THEREFORE, in consideration of the premises set forth above and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

Amendments to Indenture

Section 1.1.  Unless otherwise specifically defined herein, each term used herein which is defined in the Indenture shall have the meaning assigned to such term in the Indenture.

Section 1.2.  Effective as of the date hereof, Section 4.11 of the Indenture is hereby amended by adding at the end of said section the following sentence:

“For the avoidance of ambiguity, it is understood that Liens referred to in clauses (1) through (9) of this Section 4.11(b) may secure, in addition to the principal of any indebtedness referred to in such clauses, interest, fees and all other obligations on and in respect of such Debt that have been or are customarily secured together with such Debt.”

Section 1.3.  The Trustee hereby accepts this Fourth Supplemental Indenture and agrees to perform the same under terms and conditions set forth in the Indenture.

ARTICLE II

Miscellaneous

Section 2.1.  Effect of Fourth Supplemental Indenture.  Upon the execution and delivery of this Fourth Supplemental Indenture by the Company, the Guarantors and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Fourth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby.

Section 2.2.  Indenture Remains in Full Force and Effect.  Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect.

Section 2.3.  Indenture and Fourth Supplemental Indenture Construed Together.  This Fourth Supplemental Indenture is an indenture supplemental to in and implementation of the Indenture, and the Indenture and this Fourth Supplemental Indenture shall henceforth be read and construed together.

Section 2.4.  Confirmation and Preservation of Indenture.  The Indenture as supplemented by this Fourth Supplemental Indenture is in all respects confirmed and preserved.

Section 2.5.  Conflict with Trust Indenture Act.  If any provision of this Fourth Supplemental Indenture limits, qualifies or conflicts with any provision of the TIA that is required under the TIA to be part of and govern any provision of this Fourth Supplemental Indenture, the provision of the TIA shall control.  If any provision of this Fourth Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this Fourth Supplemental Indenture, as the case may be.

Section 2.6.  Severability.  In case any provision in this Fourth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

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Section 2.7.  Benefits of Fourth Supplemental Indenture.  Nothing in this Fourth Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Fourth Supplemental Indenture or the Securities.

Section 2.8.  Successors.  All agreements of the Company and the Guarantors in this Fourth Supplemental Indenture shall bind its successors except as provided in the Indenture.  All agreements of the Trustee in this Fourth Supplemental Indenture shall bind its successors.

Section 2.9.  Certain Duties and Responsibilities of the Trustee.  In entering into this Fourth Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture and the Securities relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.

Section 2.10.  Governing Law.  This Fourth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York. The Trustee, the Company, the Guarantors and the Securityholders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture, this Fourth Supplemental Indenture or the Securities.

Section 2.11.  Multiple Originals.  The parties may sign any number of copies of this Fourth Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Fourth Supplemental Indenture.

Section 2.12.  Headings.  The Article and Section headings herein have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed as of the date first written above.

Company
	BUILDING MATERIALS
	CORPORATION OF AMERICA
By:	/s/ John Maitner
	Name:  John Maitner
	Title:    Vice President, Treasurer
Guarantors
	BMCA ACQUISITION INC.
	BMCA ACQUISITION SUB. INC.
	BMCA GAINESVILLE LLC
	BMCA INSULATION PRODUCTS INC.
	BMCA QUAKERTOWN INC.
	BUILDING MATERIALS INVESTMENT
	CORPORATION
	BUILDING MATERIALS
	MANUFACTURING CORPORATION
	DUCTWORK MANUFACTURING
	CORPORATION
	GAF LEATHERBACK CORP.
	GAF MATERIALS CORPORATION
	(CANADA)
	GAF PREMIUM PRODUCTS INC.
	GAF REAL PROPERTIES, INC.
	GAFTECH CORPORATION
	HBP ACQUISITION LLC
	LL BUILDING PRODUCTS INC.
	PEQUANNOCK VALLEY CLAIM
	SERVICE COMPANY, INC.
	SOUTH PONCA REALTY CORP.
	WIND GAP REAL PROPERTY
	ACQUISITION CORP.
By:	/s/ John Maitner
	Name:  John Maitner
	Title:    Vice President, Treasurer

Trustee
	WILMINGTON TRUST COMPANY
By:	/s/ Kristin L. Moore
	Name:  Kristin L. Moore
	Title:    Senior Financial Services Officer

EX-4.10

Exhibit 4.10

FIFTH SUPPLEMENTAL INDENTURE

FIFTH SUPPLEMENTAL INDENTURE, dated as of February 22, 2007 between BMCA Fresno LLC and BMCA Fresno II LLC, each a Delaware limited liability company (collectively, the “New Guarantors”), Building Materials Corporation of America, a Delaware corporation (the “Company”), the existing Guarantors signatory hereto (the “Existing Guarantors”) and Wilmington Trust Company, as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H :

WHEREAS, Indenture dated as of July 26, 2004 (as heretofore amended and supplemented, the “Indenture”), was executed and delivered by the Company, certain guarantors named therein and the Trustee, providing for the issuance of the 7.75% Senior Notes Due 2014 and the Series B 7.75% Senior Notes Due 2014 (collectively, the “Securities”) (capitalized terms used herein but not otherwise defined have the meanings ascribed thereto in the Indenture);

WHEREAS, as a result of the guarantees by the New Guarantors of the Credit Agreement, pursuant to Section 4.18 of the Indenture, the Company is required to cause the New Guarantors to execute and deliver to the Trustee this Fifth Supplemental Indenture pursuant to which the New Guarantors shall provide Guarantees as set forth in Article X of the Indenture;

WHEREAS, Section 9.01(5) of the Indenture provides that the Company, the Guarantors and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities to add Subsidiary Guarantees; and

WHEREAS, this Fifth Supplemental Indenture has been duly authorized by all necessary limited liability company action on the part of the New Guarantors.

NOW, THEREFORE, in consideration of the premises set forth above and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the Existing Guarantors, the New Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

Agreement to Guarantee

Section 1.1.  Agreement to Guarantee.  Subject to Section 10.07 of the Indenture, the New Guarantors hereby agree, jointly and severally with all other Guarantors, irrevocably and unconditionally, to guarantee the punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of all monetary obligations of the Company under the Indenture and the Securities, on the terms and subject to the conditions set forth in Article X of the Indenture, which guarantees shall be

subject to automatic release in accordance with the provisions of Section 10.09 of the Indenture.

Section 1.2.  Trustee’s Acceptance.  The Trustee hereby accepts this Fifth Supplemental Indenture and agrees to perform the same under terms and conditions set forth in the Indenture.

ARTICLE II

Miscellaneous

Section 2.1.  Effect of Fifth Supplemental Indenture.  Upon the execution and delivery of this Fifth Supplemental Indenture by the Company, the Existing Guarantors, the New Guarantors and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Fifth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby.

Section 2.2.  Indenture Remains in Full Force and Effect.  Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect.

Section 2.3.  Indenture and Fifth Supplemental Indenture Construed Together.  This Fifth Supplemental Indenture is an indenture supplemental to in and implementation of the Indenture, and the Indenture and this Fifth Supplemental Indenture shall henceforth be read and construed together.

Section 2.4.  Confirmation and Preservation of Indenture.  The Indenture as supplemented by this Fifth Supplemental Indenture is in all respects confirmed and preserved.

Section 2.5.  Conflict with Trust Indenture Act.  If any provision of this Fifth Supplemental Indenture limits, qualifies or conflicts with any provision of the TIA that is required under the TIA to be part of and govern any provision of this Fifth Supplemental Indenture, the provision of the TIA shall control.  If any provision of this Fifth Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this Fifth Supplemental Indenture, as the case may be.

Section 2.6.  Severability.  In case any provision in this Fifth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 2.7.  Benefits of Fifth Supplemental Indenture.  Nothing in this Fifth Supplemental Indenture or the Securities, express or implied, shall give to any

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Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Fifth Supplemental Indenture or the Securities.

Section 2.8.  Successors.  All agreements of the New Guarantor in this Fifth Supplemental Indenture shall bind its successors except as provided in the Indenture.  All agreements of the Trustee in this Fifth Supplemental Indenture shall bind its successors.

Section 2.9.  Certain Duties and Responsibilities of the Trustee.  In entering into this Fifth Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture and the Securities relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.

Section 2.10.  Governing Law.  This Fifth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York. The Trustee, the Company, the Guarantors and the Securityholders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture, this Fifth Supplemental Indenture or the Securities.

Section 2.11.  Multiple Originals.  The parties may sign any number of copies of this Fifth Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Fifth Supplemental Indenture.

Section 2.12.  Headings.  The Article and Section headings herein have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed as of the date first written above.

New Guarantors
	BMCA FRESNO LLC
	BMCA FRESNO II LLC
By:	/s/ John Maitner
	Name:   John Maitner
	Title:     Vice President, Treasurer
Company
	BUILDING MATERIALS
	CORPORATION OF AMERICA
By:	/s/ John Maitner
	Name:   John Maitner
	Title:     Vice President, Treasurer

Existing Guarantors
	BUILDING MATERIALS INVESTMENT
	CORPORATION
	BMCA ACQUISITION INC.
	BMCA ACQUISITION SUB. INC.
	BMCA GAINESVILLE LLC
	BMCA INSULATION PRODUCTS INC.
	BUILDING MATERIALS
	MANUFACTURING CORPORATION
	DUCTWORK MANUFACTURING CORPORATION
	GAF LEATHERBACK CORP.
	GAF MATERIALS CORPORATION (CANADA)
	GAF PREMIUM PRODUCTS INC.
	GAF REAL PROPERTIES, INC.
	GAFTECH CORPORATION
	LL BUILDING PRODUCTS INC.
	PEQUANNOCK VALLEY CLAIM
	SERVICE COMPANY, INC.
	SOUTH PONCA REALTY CORP.
	BMCA QUAKERTOWN INC.
	WIND GAP REAL PROPERTY ACQUISITION CORP.
	HBP ACQUISITION LLC
By:	/s/ John Maitner
	Name:    John Maitner
	Title:      Vice President, Treasurer

Trustee
	WILMINGTON TRUST COMPANY
By:	/s/ Kristin L. Moore
	Name:   Kristin L. Moore
	Title:     Authorized Signatory

EX-4.11

Exhibit 4.11

SIXTH SUPPLEMENTAL INDENTURE

SIXTH SUPPLEMENTAL INDENTURE, dated as of March 26, 2007 between the companies listed on Schedule A hereto (collectively, the “New Guarantors”), Building Materials Corporation of America, a Delaware corporation (the “Company”), the existing Guarantors signatory hereto (the “Existing Guarantors”) and Wilmington Trust Company, as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H :

WHEREAS, Indenture dated as of July 26, 2004 (as heretofore amended and supplemented, the “Indenture”), was executed and delivered by the Company, certain guarantors named therein and the Trustee, providing for the issuance of the 7.75% Senior Notes Due 2014 and the Series B 7.75% Senior Notes Due 2014 (collectively, the “Securities”) (capitalized terms used herein but not otherwise defined have the meanings ascribed thereto in the Indenture);

WHEREAS, as a result of the guarantees by the New Guarantors of the Credit Agreement, pursuant to Section 4.18 of the Indenture, the Company is required to cause the New Guarantors to execute and deliver to the Trustee this Sixth Supplemental Indenture pursuant to which the New Guarantors shall provide Guarantees as set forth in Article X of the Indenture;

WHEREAS, Section 9.01(5) of the Indenture provides that the Company, the Guarantors and the Trustee may amend the Indenture and the Securities without notice to or consent of any Holders of the Securities to add Subsidiary Guarantees; and

WHEREAS, this Sixth Supplemental Indenture has been duly authorized by all necessary corporate, limited liability company or similar action on the part of the New Guarantors.

NOW, THEREFORE, in consideration of the premises set forth above and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the Existing Guarantors, the New Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

Agreement to Guarantee

Section 1.1.  Agreement to Guarantee.  Subject to Section 10.07 of the Indenture, the New Guarantors hereby agree, jointly and severally with all other Guarantors, irrevocably and unconditionally, to guarantee the punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of all monetary obligations of the Company under the Indenture and the Securities, on the terms and subject to the conditions set forth in Article X of the Indenture, which guarantees shall be

subject to automatic release in accordance with the provisions of Section 10.09 of the Indenture.

Section 1.2.  Trustee’s Acceptance.  The Trustee hereby accepts this Sixth Supplemental Indenture and agrees to perform the same under terms and conditions set forth in the Indenture.

ARTICLE II

Miscellaneous

Section 2.1.  Effect of Sixth Supplemental Indenture.  Upon the execution and delivery of this Sixth Supplemental Indenture by the Company, the Existing Guarantors, the New Guarantors and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Sixth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby.

Section 2.2.  Indenture Remains in Full Force and Effect.  Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect.

Section 2.3.  Indenture and Sixth Supplemental Indenture Construed Together.  This Sixth Supplemental Indenture is an indenture supplemental to in and implementation of the Indenture, and the Indenture and this Sixth Supplemental Indenture shall henceforth be read and construed together.

Section 2.4.  Confirmation and Preservation of Indenture.  The Indenture as supplemented by this Sixth Supplemental Indenture is in all respects confirmed and preserved.

Section 2.5.  Conflict with Trust Indenture Act.  If any provision of this Sixth Supplemental Indenture limits, qualifies or conflicts with any provision of the TIA that is required under the TIA to be part of and govern any provision of this Sixth Supplemental Indenture, the provision of the TIA shall control.  If any provision of this Sixth Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or to be excluded by this Sixth Supplemental Indenture, as the case may be.

Section 2.6.  Severability.  In case any provision in this Sixth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 2.7.  Benefits of Sixth Supplemental Indenture.  Nothing in this Sixth Supplemental Indenture or the Securities, express or implied, shall give to any

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Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this Sixth Supplemental Indenture or the Securities.

Section 2.8.  Successors.  All agreements of the New Guarantor in this Sixth Supplemental Indenture shall bind its successors except as provided in the Indenture.  All agreements of the Trustee in this Sixth Supplemental Indenture shall bind its successors.

Section 2.9.  Certain Duties and Responsibilities of the Trustee.  In entering into this Sixth Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture and the Securities relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.

Section 2.10.  Governing Law.  This Sixth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York. The Trustee, the Company, the Guarantors and the Securityholders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture, this Sixth Supplemental Indenture or the Securities.

Section 2.11.  Multiple Originals.  The parties may sign any number of copies of this Sixth Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Sixth Supplemental Indenture.

Section 2.12.  Headings.  The Article and Section headings herein have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Sixth Supplemental Indenture to be duly executed as of the date first written above.

New Guarantors
	ELKCORP
	ELK PREMIUM BUILDING PRODUCTS, INC.
	ELK CORPORATION OF AMERICA
	ELK CORPORATION OF ALABAMA
	ELK CORPORATION OF TEXAS
	ELK CORPORATION OF ARKANSAS
	ELK PERFORMANCE NONWOVEN FABRICS,INC.
	ELK COMPOSITE BUILDING PRODUCTS, INC.
	RGM PRODUCTS, INC.
	RIDGEMATE MANUFACTURING CO. INC.
	ELK SLATE PRODUCTS, INC.
	ELK VERSASHIELD BUILDING SOLUTIONS, INC.
	ELK TECHNOLOGY GROUP, INC.
	CHROMIUM CORPORATION
	ELK TECHNOLOGIES, INC.
	MIDLAND PATH FORWARD, INC.
	LUFKIN PATH FORWARD, INC.
	ELK GROUP, INC.
	ELK GROUP, L.P.
	NELPA, INC.
By:	/s/
Company
	BUILDING MATERIALS CORPORATION OF AMERICA
By:	/s/ John Maitner
	Name:    John Maitner
	Title:      Vice President, Treasurer

Existing Guarantors
	BUILDING MATERIALS INVESTMENT CORPORATION
	BMCA ACQUISITION INC.
	BMCA ACQUISITION SUB. INC.
	BMCA FRESNO LLC
	BMCA FRESNO II LLC
	BMCA GAINESVILLE LLC
	BMCA INSULATION PRODUCTS INC.
	BUILDING MATERIALS
	MANUFACTURING CORPORATION
	DUCTWORK MANUFACTURING CORPORATION
	GAF LEATHERBACK CORP.
	GAF MATERIALS CORPORATION (CANADA)
	GAF PREMIUM PRODUCTS INC.
	GAF REAL PROPERTIES, INC.
	GAFTECH CORPORATION
	LL BUILDING PRODUCTS INC.
	PEQUANNOCK VALLEY CLAIM
	SERVICE COMPANY, INC.
	SOUTH PONCA REALTY CORP.
	BMCA QUAKERTOWN INC.
	WIND GAP REAL PROPERTY ACQUISITION CORP.
	HBP ACQUISITION LLC
By:	/s/ John Maitner
	Name:    John Maitner
	Title:      Vice President, Treasurer

Trustee
	WILMINGTON TRUST COMPANY
By:	/s/ Kristin L. Moore
	Name:   Kristin L. Moore
	Title:     Authorized Signatory

Schedule A

New Guarantors:

Elkcorp

Elk Premium Building Products, Inc.

Elk Corporation Of America

Elk Corporation Of Alabama

Elk Corporation Of Texas

Elk Corporation Of Arkansas

Elk Performance Nonwoven Fabrics, Inc.

Elk Composite Building Products, Inc.

RGM Products, Inc.

Ridgemate Manufacturing Co. Inc.

Elk Slate Products, Inc.

Elk VersaShield Building Solutions, Inc.

Elk Technology Group, Inc.

Chromium Corporation

Elk Technologies, Inc.

Midland Path Forward, Inc.

Lufkin Path Forward, Inc.

Elk Group, Inc.

Elk Group, L.P.

NELPA, Inc.

EX-10.38

Exhibit 10.38

EXECUTION VERSION

COLLATERAL AGENCY AGREEMENT

by and among

BUILDING MATERIALS CORPORATION OF AMERICA

AND EACH OTHER GRANTOR A PARTY HERETO,

DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative Agent,

THE BANK OF NEW YORK, as Trustee,

WILMINGTON TRUST COMPANY, as Trustee,

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS COLLATERAL AGENT

Dated as of February 22, 2007

TABLE OF CONTENTS

			PAGE
SECTION 1.  DEFINITIONS AND OTHER MATTERS.			3
	Section 1.1	Definitions	3
	Section 1.2	Interpretation	6
SECTION 2.  CERTAIN OBLIGATIONS AND DUTIES OF THE COLLATERAL AGENT AND THE GRANTORS; POWERS OF ATTORNEY			7
	Section 2.1	Authorization to Execute Security Documents	7
	Section 2.2	Certain Representations and Warranties of the Collateral Agent	7
	Section 2.3	Actions	8
	Section 2.4	Additional Security Documents	8
	Section 2.5	Powers of Attorney to the Collateral Agent and to BMCA	9
	Section 2.6	Copies of Letters and Documents	9
	Section 2.7	Intercreditor Agreements	10
SECTION 3.  EVENT OF DEFAULT; REMEDIES			10
	Section 3.1	Event of Default	10
	Section 3.2	Remedies	10
	Section 3.3	Right to Initiate Judicial Proceedings, etc.	11
	Section 3.4	Appointment of a Receiver	12
	Section 3.5	Exercise of Powers	12
	Section 3.6	Remedies Not Exclusive	12
	Section 3.7	Limitation on Collateral Agent’s Duties in Respect of Collateral	13
	Section 3.8	Limitation by Law	13
	Section 3.9	Absolute Rights of the Beneficiaries	13
SECTION 4.  COLLATERAL ACCOUNT; APPLICATION OF MONEYS			13
	Section 4.1	The Collateral Account	13

	Section 4.2	Application of Moneys	14
SECTION 5.  AGREEMENTS WITH THE COLLATERAL AGENT			14
	Section 5.1	Delivery of Documents	14
	Section 5.2	Information as to Secured Parties	14
	Section 5.3	Compensation and Expenses	15
	Section 5.4	Stamp and Other Similar Taxes	15
	Section 5.5	Filing Fees, Excise Taxes, etc.	15
	Section 5.6	Indemnification	16
	Section 5.7	Further Assurances	16
SECTION 6.  COLLATERAL AGENT			16
	Section 6.1	Acceptance of Duties	16
	Section 6.2	Exculpatory Provisions	17
	Section 6.3	Delegation of Duties; Appointment of Administrative Agent as Sub-Agent	18
	Section 6.4	Reliance by Collateral Agent	18
	Section 6.5	Limitations on Duties of the Collateral Agent	20
	Section 6.6	Moneys Held By Collateral Agent	21
	Section 6.7	Resignation and Removal of the Collateral Agent	21
	Section 6.8	Status of Successors to the Collateral Agent	22
	Section 6.9	Merger of the Collateral Agent	22
	Section 6.10	Additional Co-Collateral Agents; Separate Collateral Agents	22
SECTION 7.  RELEASE OF COLLATERAL			24
	Section 7.1	Conditions to Release of Collateral	24
	Section 7.2	Actions Following Release of the Collateral	25
SECTION 8.  AGREEMENTS AMONG SECURED PARTIES			26
	Section 8.1	Other Agreements Among Secured Party	26

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	Section 8.2	Payment of Collateral Agent’s Fees	26
	Section 8.3	Invalidation of Payments	26
SECTION 9.  OTHER PROVISIONS			26
	Section 9.1	Amendments, Supplements and Waivers	26
	Section 9.2	Notices	27
	Section 9.3	Severability	27
	Section 9.4	Dealings with the Grantors	27
	Section 9.5	Claims Against the Collateral Agent	28
	Section 9.6	Binding Effect	28
	Section 9.7	Conflict with Other Agreements	28
	Section 9.8	Governing Law	28
	Section 9.9	Counterparts	28
	Section 9.10	Consent To Jurisdiction	28
	SECTION 9.11	Waiver of Jury Trial	29
	SECTION 9.12	USA PATRIOT Act	29

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COLLATERAL AGENCY AGREEMENT

COLLATERAL AGENCY AGREEMENT (this “Agreement”), dated as of February 22, 2007 by and among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (“BMCA” or the “Company”), each Subsidiary of BMCA a party hereto, DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative Agent under the Credit Agreement (as hereinafter defined), THE BANK OF NEW YORK, as trustee under the 2007 Notes Indenture and the 2008 Notes Indenture (each as hereinafter defined), WILMINGTON TRUST COMPANY, as trustee under the 2014 Notes Indenture (as hereinafter defined) and DEUTSCHE BANK TRUST COMPANY AMERICAS (“DBTCA”), as collateral agent for the Secured Parties (as hereinafter defined) and in such capacity, together with any successors and assigns (the “Collateral Agent”).

(1) The Company and certain of its Subsidiaries have entered into a Term Loan Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived or otherwise modified, refinanced or replaced from time to time, the “Credit Agreement”) with the Lenders and the Agents (each as defined therein).

(2) The Company is a party to the Revolving Credit Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived, or otherwise modified, refinanced or replaced from time to time, the “Revolving Credit Agreement”), among the Company and certain of its Subsidiaries, the lender parties party thereto from time to time, Deutsche Bank AG New York Branch, as collateral monitoring agent and administrative agent, swingline lender and letter of credit issuer, Bear Stearns & Co. Inc., as syndication agent, J.P. Morgan Securities Inc., as documentation agent, and Deutsche Bank Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers.  Proceeds from the Revolving Credit Agreement are being used, among other things, to Refinance indebtedness outstanding under the Amended and Restated Credit Agreement (the “Existing Credit Agreement”) dated as of September 28, 2006 among BMCA, the banks, financial institutions and other institutional lenders party thereto, Citicorp USA, Inc., as administrative agent and collateral monitoring agent.

(3) The Company is party to (i) an indenture dated as of October 20, 1997 (as amended, restated, supplemented, waived or otherwise modified, refinanced or replaced from time to time, the “2007 Notes Indenture”), among the Company, the guarantors identified therein and The Bank of New York, as trustee, pursuant to which certain 8% senior notes due 2007 (the “2007 Notes”) were issued; (ii) an indenture dated as of December 3, 1998 (as amended, restated, supplemented, waived or otherwise modified, refinanced or replaced from time to time, the “2008 Notes Indenture”), among the Company, the guarantors identified therein and the Bank of New York, as trustee, pursuant to which certain 8% senior notes due 2008 (the “2008 Notes”) were issued; and (iii) an indenture dated as of July 26, 2004 (as amended, restated, supplemented, waived, or otherwise modified, refinanced or replaced from time to time,  the “2014 Notes Indenture” and together with the 2007 Notes Indenture and the 2008 Notes Indenture, the “Existing Indentures”) among the Company, the guarantors identified therein and Wilmington Trust Company, as trustee, pursuant to which certain 7.75% senior notes (the “2014 Notes” and together with the 2007 Notes and the 2008 Notes, the “Existing Notes”) were issued.

(4) The administrative agent under the Existing Credit Agreement together with the Notes Trustees (as defined herein), BMCA and certain of its subsidiaries, Citibank N.A., as collateral agent, and the Note Trustees (as defined below) were party to an Amended and Restated Collateral Agent Agreement dated July 9, 2003 (as amended), which governed the rights of the parties thereto with respect to certain of the Collateral.  In connection with the refinancing of the Existing Credit Agreement, the parties hereto enter into this Agreement.

(5) Terms defined in the Credit Agreement and not otherwise defined in this Agreement are used in this Agreement as defined in the Credit Agreement.  Further, unless otherwise defined in this Agreement or in the Credit Agreement, terms defined in Article 8 or 9 of the UCC (as defined below) are used in this Agreement as such terms are defined in such Article 8 or 9.  “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York.

COLLATERAL AGENCY:

To secure the payment, observance and performance of the Secured Debt (as hereinafter defined) and in consideration of the premises and the mutual agreements set forth herein, the Collateral Agent does hereby acknowledge and accept that it holds on behalf of and for the Secured Parties, to the extent actually received as Collateral Agent, all of the following (and each Grantor does hereby consent thereto):

(A)          the Security Agreement and the Mortgages and the Liens granted to the Collateral Agent thereunder;

(B)           the UCC financing statements required to be delivered pursuant to the Credit Agreement and the Security Agreement;

(C)           the Intercreditor Agreements;

(D)          each agreement entered into and delivered, from time to time, pursuant to Sections 2.4, 5.7 or 9.1(b) and the collateral granted to the Collateral Agent thereunder; and

(E)           the Proceeds (as hereinafter defined) of each of the foregoing.

The Collateral Agent hereby holds the Collateral under and subject to the terms and conditions set forth herein and in the Security Documents for the benefit of the Beneficiaries (as hereinafter defined) and for the enforcement of the payment of all Secured Debt, and for the performance of and compliance with the covenants and conditions of this Agreement, the Existing Indentures, the Credit Agreement, each other Credit Document (as hereinafter defined) and each of the Security Documents.

If the Grantors, or their successors or assigns, shall satisfy all of the conditions set forth in Section 7 with respect to all or any part of the Collateral, as the case may be, then (i) if with respect to all of the Collateral, this Agreement, and the rights assigned in the Security Documents, shall cease and be void or (ii) if with respect to part of the Collateral, this Agreement, and the rights assigned in the Security Documents, shall cease and be void with respect to such part of the Collateral; otherwise they shall remain and be in full force and effect.

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SECTION 1.  DEFINITIONS AND OTHER MATTERS.

Section 1.1             Definitions.  As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Agreement” has the meaning set forth in the recitals.

“Bankruptcy Code” means the federal Bankruptcy Code.

“BMCA” has the meaning set forth in the recitals.

“Business Day” means (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such State are required or authorized by law or other governmental action to close, and (ii) a day of the year on which the Collateral Agent is not required or authorized to close.

“Collateral” has the meaning set forth in the Security Agreement.

“Collateral Account” has the meaning set forth in Section 4.1 and shall include any sub-accounts created thereunder.

“Collateral Agent” means Deutsche Bank Trust Company Americas, a New York banking corporation, and its successors and assigns as provided herein, in its capacity as collateral agent for the benefit of the Secured Parties.

“Collateral Agent’s Fees” means all fees, costs and expenses of the Collateral Agent of the types described in Sections 5.3, 5.4, 5.5 and 5.6.

“Collateral Agent’s Liens” means all liens and security interests against the Collateral which result from (i) claims against the Collateral Agent unrelated to the transactions contemplated by this Agreement and the Security Documents or (ii) affirmative acts by the Collateral Agent creating a lien or security interest other than as contemplated by this Agreement.

“Company” has the meaning set forth in the recitals.

“Credit Agreement” has the meaning set forth in the recitals.

“Credit Document” means the Credit Agreement, the Notes, the other Loan Documents, each Existing Indenture and all other agreements, instruments and documents executed or delivered in connection therewith.

“DBTCA” has the meaning set forth in the recitals.

“Debt Instrument” means any promissory note or other instrument, document or agreement evidencing any Secured Debt.

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“Deposit Accounts” means all “deposit accounts” as defined in the UCC.

“Deposit Account Control Agreement” has the meaning set forth in the Security Agreement.

“Event of Default” means an “Event of Default” under any of the Credit Agreement and the Existing Indentures.

“Existing Credit Agreement” has the meaning set forth in the recitals.

“Existing Indentures” has the meaning set forth in the recitals.

“Existing Notes” has the meaning set forth in the recitals.

“General Intercreditor Agreement” means the General Intercreditor Agreement dated as of the date hereof between DBTCA in its capacity as collateral agent for the First Lien Obligations (as defined therein) and Deutsche Bank Cayman Islands Branch, in its capacity as collateral agent for the Junior Lien Obligations (as defined therein), as amended, restated, supplemented or otherwise modified or replaced.

“Governmental Authority” means any foreign, federal, state, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof, or any court or arbitrator.

“Grantors” has the meaning set forth in the Security Agreement.

“Intercreditor Agreements” means the General Intercreditor Agreement and the Revolver Intercreditor Agreement.

“Lender Representatives” means the Administrative Agent under the Credit Agreement and each Note Trustee under the Existing Indenture, as the case may be.

“Moody’s” means Moody’s Investors Service, Inc.  and any successor thereto that is a nationally recognized rating agency or, if neither Moody’s Investors Service, Inc.  nor any such successor shall be in the business of rating senior unsecured long-term debt, a nationally recognized rating agency in the United States selected by the Collateral Agent.

“Note Trustees” means The Bank of New York, as Trustee under the 2007 Notes Indenture and the 2008 Notes Indenture and Wilmington Trust Company, as Trustee under the 2014 Notes Indenture, and their successors and assigns.

“Notice of Default” means a notice of an Event of Default.

“Obligations” means “Secured Obligations” as such term is defined in the Security Agreement.

“Proceeds” means (i) all “proceeds” as defined in the UCC, (ii) payments or distributions made with respect to the Collateral and (iii) whatever is receivable or received when

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Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.

“Refinancing” has the meaning set forth in the Existing Indentures.

“Required Lender Representative” means the Lender Representative of not less than the majority of holders of the Obligations, which constitute Debt for Borrowed Money.  For purposes of this definition, the Required Lender Representative shall be assumed to be the Administrative Agent under the Credit Agreement; provided, however, that if the Obligations, which constitute Debt for Borrowed Money, under and as defined in the Credit Agreement, shall be less than $300.0 million, and the same shall be provided in a notice delivered to the Collateral Agent by the Company with a copy sent to each Lender Representative, then the Required Lender Representative shall be deemed to be the Administrative Agent and the trustee under the 2014 Notes Indenture jointly acting together until such time the Required Lender Representatives notify the Collateral Agent that all Obligations, which constitute Debt for Borrowed Money, under and as defined in the Credit Agreement and all Obligations under and as defined in the 2014 Notes Indenture are paid in full, at which time the Required Lender Representatives shall be the remaining Lender Representatives acting jointly.

“Responsible Officer” means with respect to any Person, the Chairman of the Board, the President, the Chief Financial Officer, the Chief Executive Officer or the Treasurer of such Person.

“Revolver Collateral” shall have the meaning set forth in the General Intercreditor Agreement.

“Revolver Intercreditor Agreement” means the Revolver Intercreditor Agreement dated as of the date hereof between Deutsche Bank AG, New York Branch, in its capacity as First Lien Collateral Agent (as defined therein), DBTCA, in its capacity as Second Lien Collateral Agent (as defined therein) and Deutsche Bank AG Cayman Islands Branch, in its capacity as Third Lien Collateral Agent (as defined therein), as amended, restated, supplemented or otherwise modified or replaced.

“Revolving Credit Agreement” has the meaning set forth in the recitals.

“Secured Debt” means all Obligations of the Loan Parties under the Loan Documents and the Existing Indentures.

“Security Agreement” means the Security Agreement executed by and among the Grantors and the Collateral Agent, dated as of the date hereof (as such agreement may be amended, restated, supplemented or otherwise modified, or replaced).

“Security Documents” means this Agreement, the Mortgages, the Deposit Account Control Agreements, the Security Agreement and the other security agreements, instruments and documents, any additional documents executed to reflect the grant to the Collateral Agent of a Lien upon or security interest in any Collateral to secure the Obligations.

“Secured Parties” has the meaning set forth in the Security Agreement.

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“Standard & Poor’s” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency or, if neither such division nor any such successor shall be in the business of rating senior unsecured long-term debt, a nationally recognized rating agency in the United States selected by the Collateral Agent.

“2007 Notes” has the meaning set forth in the recitals.

“2007 Notes Indenture” has the meaning set forth in the recitals.

“2008 Notes” has the meaning set forth in the recitals.

“2008 Notes Indenture” has the meaning set forth in the recitals.

“2014 Notes” has the meaning set forth in the recitals.

“2014 Notes Indenture” has the meaning set forth in the recitals.

Section 1.2       Interpretation.  Capitalized terms used herein (including the preamble and recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto in the Security Agreement.  The definitions of terms used herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise, (i) any definition of or reference herein to any agreement (including this Agreement), instrument or other document, and to any exhibit or schedule thereto, shall be construed as referring to such agreement, instrument or other document, and any exhibit or schedule thereto (including any Exhibit or Schedule hereto), as from time to time amended, supplemented or otherwise modified, (ii) any definition of or reference to any law shall be construed as referring to such law as from time to time amended and any successor thereto and the rules and regulations promulgated from time to time thereunder, (iii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iv) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (v) all references herein to Articles, Sections, Exhibits and Schedules, Recitals and paragraphs shall be construed to refer to Articles, Sections, and Exhibits and Schedules, Recitals and paragraphs of or to, this Agreement and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.  All references herein to provisions of the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC.

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SECTION 2.  CERTAIN OBLIGATIONS AND DUTIES OF THE COLLATERAL AGENT AND THE GRANTORS; POWERS OF ATTORNEY.

Section 2.1    Authorization to Execute Security Documents.  The Collateral Agent is hereby authorized and directed to execute and deliver each of the Security Documents delivered to it by the Administrative Agent requiring execution and delivery by it and shall accept delivery from each Grantor of those Security Documents which do not require the Collateral Agent’s execution.

Section 2.2    Certain Representations and Warranties of the Collateral Agent.  The Collateral Agent, in its capacity as Collateral Agent hereunder, and DBTCA, in its individual capacity, each represent and warrant to the Beneficiaries as follows:

(a)           DBTCA, is a banking corporation duly formed, validly existing and in good standing under the laws of the State of New York and has all requisite power and authority to enter into and perform its obligations under this Agreement and the Security Documents to which it is a party.

(b)           The execution, delivery and performance by the Collateral Agent of this Agreement and the Security Documents to which it is a party have been duly authorized by all necessary corporate action on the part of DBTCA.

(c)           There are no Collateral Agent’s Liens and DBTCA, in its individual capacity, has no liens or security interests against the Collateral.

(d)           To its knowledge, there are no actions or proceedings pending or threatened against it before any Governmental Authority (i) which question the validity or enforceability of this Agreement or any Security Documents to which it is a party; or (ii) which relate to the banking or trust powers of DBTCA and which, if determined adversely to the position of DBTCA, would materially and adversely affect the ability of DBTCA or the Collateral Agent to perform their respective obligations under this Agreement or any of the Security Documents to which any one or more of them is a party.

(e)           This Agreement and each of the Security Documents to which the Collateral Agent is a party have been duly executed and delivered by the Collateral Agent (assuming, with respect to the Security Documents, that this Agreement has been duly authorized, executed and delivered by the other parties hereto) and are the legal, valid and binding obligations of the Collateral Agent enforceable in accordance with their terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting the enforcement of creditors’ rights generally and by the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(f)            No UCC financing statements or other filings or recordations have been or will be filed by or against DBTCA in its individual capacity with respect to any of the Collateral.

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Section 2.3    Actions.  Control of the Collateral Agent.

(a)           Subject to Sections 2.3(b) and 2.3(c) and except as otherwise provided in Section 2.3(d) and in the Security Agreement, the Collateral Agent shall take such action with respect to the Collateral and the Security Documents (including exercising the rights and remedies provided in Section 3) as is requested in writing by and only by the Required Lender Representative.  Notwithstanding the foregoing, the Collateral Agent shall not be obligated to take any action which is in conflict with any provisions of law or of this Agreement or the Security Documents or with respect to which the Collateral Agent has not received adequate security or indemnity as provided in Section 6.4(d).  Following the receipt by the Collateral Agent of a Notice of Default from the Required Lender Representative, and so long as such Notice of Default has not been withdrawn by the Required Lender Representative, the Collateral Agent shall not take any action to enforce the security interest in the Collateral or foreclose on any Lien thereon unless the Collateral Agent has received instructions to do so in the manner provided in this Section 2.3.

(b)           The Collateral Agent shall not be obligated to follow any written directions received pursuant to Section 2.3(a) to the extent the Collateral Agent has received an opinion of independent counsel to the Collateral Agent to the effect that such written directions are in conflict with any provisions of law or this Agreement, provided, however, that under no circumstances shall the Collateral Agent be liable for following the written instructions of the Required Lender Representative at such times as such parties have the authority to act as herein provided.

(c)           Nothing in this Section 2.3 shall impair the right of the Collateral Agent to take or omit to take any action not inconsistent with any direction of the Required Lender Representative.

(d)           The Collateral Agent shall have no duty to inquire into, investigate or ascertain the performance by any Grantor of any of the covenants or agreements of any Grantor contained herein or in any other agreement or document, including, without limitation, any of the agreements and covenants contained in the Security Agreement.

(e)           It is agreed among the parties hereto that a party, which fails to respond to a written request for action for thirty-days, after its actual receipt of same, shall be deemed to have given its consent to such action.

Section 2.4    Additional Security Documents.  In the event that a Grantor acquires any interest in any Collateral which is not covered by a Security Document in a manner which will perfect the Collateral Agent’s lien upon and security interest in such Collateral without further act or deed of the Collateral Agent, at the time such interest in such Collateral is acquired, to the extent that such security interest may be perfected by the execution and/or filing of a Security Document, then such Grantor shall prepare, execute and deliver to the Collateral Agent such Security Documents within the timeframe provided under the Credit Agreement, in form and substance similar to the Security Documents heretofore executed and delivered by the Grantors, as are necessary to perfect the Collateral Agent’s lien upon and security interest in such

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Collateral.  If the signature of the Collateral Agent is required on any such Security Document, such Grantor shall present such Security Document to the Required Lender Representative and if acceptable to the Required Lender Representative, the Required Lender Representative shall forward such Security Document to, and authorize and direct, the Collateral Agent to execute same, and the Collateral Agent shall execute such Security Document and endeavor, at the sole expense of the Company, to cause such Security Document to be filed or recorded with the public filing and/or recording offices designated by the Required Lender Representative as required or advisable to perfect or protect the Collateral Agent’s lien upon and security interest in such Collateral.

Section 2.5    Powers of Attorney to the Collateral Agent and to BMCA.

(a)           Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the name of such Grantor or the name of such attorney-in-fact for the purpose of signing documents and taking other action to perfect, promote and protect the liens and security interests of the Collateral Agent in the Collateral, all as may be directed by the Required Lender Representative.  Such power of attorney is a power coupled with an interest, shall be irrevocable and shall not first require the Collateral Agent to have received a Notice of Default.

(b)           Each other Grantor hereby irrevocably constitutes and appoints BMCA and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the name of such Grantor or in its own name, from time to time in BMCA’s discretion, to take or omit taking any and all actions hereunder for the purpose of carrying out the terms of this Agreement and any of the Security Documents, to receive and give all notices to be given by or received by such Grantor, to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes hereof and, without limiting the generality of the foregoing, hereby grants to BMCA the power and right on behalf of such Grantor, without assent by such Grantor, to bind such Grantor in all respects hereunder and under any of the Security Documents, with the intent that all action taken by BMCA on behalf of such Grantor shall be binding upon and inure to the benefit of such Grantor as effectively as if such action were taken directly by such Grantor.  Each such power of attorney is a power coupled with an interest and shall be irrevocable until all of the Obligations are paid in full in cash.

Section 2.6    Copies of Letters and Documents.  The Collateral Agent shall promptly provide the Required Lender Representative copies of any letters or documents it receives in connection with any Deposit Account, including letters and documents related to the termination or opening of any Deposit Account.  In addition, the Collateral Agent shall provide to any Lender Representative, upon such Lender Representative’s request, copies of any letters or documents the Collateral Agent receives from any Grantor or any other Person in connection with this Agreement, including additional Security Documents.  A copy of each notice provided by a Lender Representative to the Collateral Agent under the Security Documents shall be promptly delivered by the sender to the Required Lender Representative.

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Section 2.7    Intercreditor Agreements.  The Lender Representatives expressly acknowledge and agree that notwithstanding anything herein to the contrary, the Liens and security interests granted to the Collateral Agent pursuant to this agreement in any Collateral and the exercise of any right or remedy by the Collateral Agent with respect to any Collateral hereunder are subject to the limitations and provisions of (i) the Revolver Intercreditor Agreement and (ii) the General Intercreditor Agreement.  In the event of any conflict between the terms of any Intercreditor Agreement and this agreement, the terms of the Intercreditor Agreements shall govern and control.

SECTION 3.  EVENT OF DEFAULT; REMEDIES.

Section 3.1      Event of Default.

(a)           Upon actual receipt by an officer of the Collateral Agent’s corporate trust department of a Notice of Default from the Required Lender Representative, the Collateral Agent shall, within five Business Days thereafter, send a copy thereof to each Lender Representative and shall notify each Lender Representative, in the manner provided in Section 9.2, that a Notice of Default has been received by the Collateral Agent.  Upon receipt of any written directions pursuant to Section 2.3(a), the Collateral Agent shall, within five Business Days thereafter, send a copy thereof to each Lender Representative.

(b)           The Required Lender Representative giving a Notice of Default shall be entitled to withdraw it by delivering written notice of withdrawal to the Collateral Agent (i) before the Collateral Agent takes any action to exercise any remedy with respect to the Collateral or (ii) thereafter, if BMCA otherwise indemnifies the Collateral Agent and the Beneficiaries (in a manner reasonably satisfactory to the Collateral Agent and the Lender Representatives in their sole discretion) with respect to all costs and expenses incurred by the Collateral Agent and the Beneficiaries in connection with reversing all actions the Collateral Agent has taken to exercise any remedy or remedies with respect to the Collateral.  The Collateral Agent shall immediately notify BMCA as to the receipt and contents of any such notice of withdrawal and shall promptly notify each Lender Representative, in the manner provided in Section 9.2, of the withdrawal of any Notice of Default and shall promptly send a copy of any such notice of withdrawal to each Lender Representative.

(c)           Notwithstanding anything to the contrary contained in this Agreement, the Required Lender Representative shall not be deemed to have knowledge of any Event of Default under any Credit Document to which it is not a party until it has received notice from the Company and/or the respective Lender Representative regarding such Event of Default.  The Required Lender Representative shall not be obligated to give a Notice of Default until such notice of an Event of Default is given to the Required Lender Representative.

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Section 3.2    Remedies.

(a)Upon actual receipt of a Notice of Default from the Required Lender Representative pursuant to Section 3.1(a), and irrespective of whether the Collateral Agent has delivered notices to the Lender Representatives pursuant to Section 3.1(a), the Collateral Agent shall exercise the rights and remedies provided in this Section 3 and the rights and remedies provided in any of the Security Documents in accordance with instructions of the Required Lender Representative.

(b)Each Grantor hereby waives presentment, demand, protest or any notice (to the extent permitted by applicable law and except as otherwise expressly provided in this Agreement) of any kind in connection with this Agreement, any Collateral or any Security Document.

(c)Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the name of such Grantor or in its own name, from time to time in the Collateral Agent’s discretion, during the continuation of any Event of Default, for the purpose of carrying out the terms of this Agreement and any of the Security Documents and hereby gives the Collateral Agent the power and right on behalf of such Grantor, without assent by such Grantor, to the extent permitted by applicable law, to do the following:

(i)            to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due with respect to the Collateral,

(ii)           to receive, take, indorse, assign and deliver any and all checks, notes, drafts, acceptances, documents and other negotiable and nonnegotiable instruments, documents and chattel paper taken or received by the Collateral Agent in connection herewith and therewith,

(iii)          to commence, file, prosecute, defend, settle, compromise or adjust any claim, suit, action or proceeding with respect to the Collateral, and

(iv)          to sell, transfer, assign or otherwise deal in or with the Collateral or any part thereof pursuant to the terms and conditions hereunder and thereunder.

Section 3.3    Right to Initiate Judicial Proceedings, etc.

(a)Even if the Collateral Agent has not received a Notice of Default from the Required Lender Representative, the Collateral Agent shall nevertheless have the right and power to institute and maintain such suits and proceedings as it may deem appropriate to protect and enforce the rights vested in it by this Agreement and each Security Document; provided, however, that as set forth in Section 2.3(a), foreclosure of the liens and security interests in the Collateral may not be commenced prior to the Collateral Agent’s receipt of a Notice of Default and instructions from the Required Lender Representative.

(b)If and only if the Collateral Agent shall have received a Notice of Default and an authorization and direction to act, from the Required Lender Representative and

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during such time as such Notice of Default shall not have been withdrawn, the Collateral Agent may, either after entry or without entry, proceed by suit or suits at law or in equity to foreclose upon the Collateral and to sell all or, from time to time, any of the Collateral under the judgment or decree of a court of competent jurisdiction.

Section 3.4    Appointment of a Receiver.  If a receiver of the Collateral shall be required to be appointed in any judicial proceeding, the Collateral Agent may be appointed as such receiver.  Notwithstanding the appointment of a receiver, the Collateral Agent shall be entitled to retain possession and control of all cash held by or deposited with it or its agents pursuant to any provision of this Agreement or any Security Document.

Section 3.5    Exercise of Powers.  All of the powers, remedies and rights of the Collateral Agent as set forth in this Agreement may be exercised by the Collateral Agent in respect of any Security Document as though set forth therein and all the powers, remedies and rights of the Collateral Agent as set forth in any Security Document may be exercised from time to time as herein and therein provided.

Section 3.6    Remedies Not Exclusive.

(a)           No remedy conferred upon or reserved to the Collateral Agent herein or in the Security Documents is intended to be exclusive of any other remedy or remedies, but every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or in any of the Security Documents or now or hereafter existing at law or in equity or by statute.

(b)           No delay or omission of the Collateral Agent to exercise any right, remedy or power accruing upon any Event of Default shall impair any such right, remedy or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and every right, power and remedy given by this Agreement or any Security Document to the Collateral Agent may be exercised from time to time.

(c)           In case the Collateral Agent shall have proceeded to enforce any right, remedy or power under this Agreement or any Security Document and the proceeding for the enforcement thereof shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case the Grantors, the Collateral Agent and the Beneficiaries shall, subject to any effect of or determination in such proceeding, severally and respectively be restored to their former positions and rights hereunder and under such Security Document with respect to the Collateral and in all other respects, and thereafter all rights, remedies and powers of the Collateral Agent shall continue as though no such proceeding had been taken.

(d)           All rights of action and rights to assert claims upon or under this Agreement and the Security Documents may be enforced by the Collateral Agent without the possession of any Debt Instrument or the production thereof in any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Collateral Agent shall be brought in its name as Collateral Agent and any recovery of judgment shall be held as part of the Collateral.

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Section 3.7    Limitation on Collateral Agent’s Duties in Respect of Collateral.  Beyond its duties set forth in this Agreement as to the custody thereof and the accounting to the Grantors and the Required Lender Representative for moneys received by it hereunder, the Collateral Agent shall not have any duty to the Grantors or the Beneficiaries as to any Collateral in its possession or control or in the possession or control of any agent or nominee of it or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.  To the extent, however, that the Collateral Agent or an agent or nominee of the Collateral Agent maintains possession or control of any of the Collateral or the Security Documents at any office of a Grantor, the Collateral Agent shall, or shall instruct such agent or nominee to, grant such Grantor the access to such Collateral or Security Documents which such Grantor requires for the conduct of its business, as permitted by the Credit Documents, so long as the Collateral Agent shall not have received a Notice of Default from the Required Lender Representative.

Section 3.8    Limitation by Law.  All the provisions of this Section 3 and the Security Agreement insofar as they relate to the exercise of power by the Collateral Agent are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Agreement invalid or unenforceable in whole or in part.

Section 3.9    Absolute Rights of the Beneficiaries.  Notwithstanding any other provision of this Agreement or any provision of any Security Document, neither the right of each Secured Party, which is absolute and unconditional, to receive payments of the Secured Debt held by such Secured Party on or after the due date thereof as therein expressed, to institute suit for the enforcement of such payment on or after such due date, or to assert its position and views as a secured or unsecured creditor in, and to otherwise exercise any right (other than the right to enforce the security interest in the Collateral, which shall in all circumstances be exercisable only by the Collateral Agent and only as provided in this Agreement and the Security Documents) which such Secured Party may have in connection with, a case under the Bankruptcy Code in which a Grantor is a debtor, nor the obligation of each Grantor, which is also absolute and unconditional, to pay the Secured Debt owing by such Grantor to each Secured Party at the time and place expressed therein shall be impaired or affected without the consent of such Secured Party.

SECTION 4.  COLLATERAL ACCOUNT; APPLICATION OF MONEYS.

Section 4.1    The Collateral Account.  The Collateral Agent shall establish as necessary an account which shall be entitled the “Collateral Account” (the “Collateral Account”).  All moneys which are received by the Collateral Agent with respect to the Collateral at any time after a Notice of Default shall have been given to the Collateral Agent by the Required Lender Representative and shall not have been withdrawn shall be deposited in the Collateral Account and thereafter shall be held, applied and/or disbursed by the Collateral Agent in accordance with the terms of this Agreement.  Any interest or other income received on such investment and reinvestment of the moneys on deposit the Collateral Account after a Notice of Default shall have been given to the Collateral Agent by the Required Lender Representative and shall not have been withdrawn shall become part of the moneys on deposit in the Collateral Account and be allocated pursuant to the Security Agreement.

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Section 4.2    Application of Moneys.  Any cash held by or on behalf of the Collateral Agent and all cash proceeds received by or on behalf of the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, at the instruction of the Required Lender Representative, be held by the Collateral Agent as collateral for, and/or then or at any time thereafter applied in whole or in part by the Collateral Agent for the ratable benefit of the Secured Parties against, all or any part of the Secured Obligations, in the following manner:

(a)           first, paid to the Collateral Agent for any amounts then owing to the Collateral Agent hereunder;

(b)           second, paid to the Agents for any amounts then owing to the Agents pursuant to Section 8.04 of the Credit Agreement or otherwise under the Loan Documents and the Note Trustees for any amounts owing to the trustees under the Existing Indentures, respectively, ratably in accordance with the amounts then owing to the Agents and the trustees; and

(c)           third, ratably paid to the Lenders, the holders of the Existing Notes and the Hedge Banks, for any amounts then owing to them, in their capacities as such, under the Loan Documents and the Existing Indentures, respectively ratably, in accordance with the amounts then owing to the Lenders, the holders of the Existing Notes and the Hedge Banks.

The Lender Representatives agree on behalf of their respective Secured Parties that they will provide the Collateral Agent with tax forms which the Collateral Agent may reasonably require prior to any distribution of funds.

SECTION 5.  AGREEMENTS WITH THE COLLATERAL AGENT.

Section 5.1    Delivery of Documents.  On or promptly after the date hereof, BMCA will deliver to the Collateral Agent true and complete copies of each Credit Document, Debt Instrument and Security Document; provided, however, that the failure to provide the Collateral Agent with copies of such documents shall not affect the rights of the Beneficiaries or the validity of the Collateral Agent’s actions taken hereunder.  BMCA further agrees that, promptly upon the execution thereof, BMCA will deliver to the Collateral Agent a true and complete copy of any other Credit Documents, Debt Instruments and Security Documents entered into by any Grantor subsequent to the date hereof, and a true and complete copy of any and all amendments, modifications or supplements to any Credit Document, Debt Instrument or Security Document entered into by any Grantor subsequent to the date hereof.

Section 5.2    Information as to Secured Parties.

(a)           BMCA agrees to deliver to the Collateral Agent by December 1 in each year, commencing December 1, 2007, and at any other time or times upon request of the Collateral Agent, a list setting forth each Lender Representative and the information required pursuant to Section 9.2 to send notices to each such Lender Representative.

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(b)           At any time after the Collateral Agent has received a Notice of Default from the Required Lender Representative, and so long as such Notice of Default has not been withdrawn, upon the request of the Collateral Agent, each Lender Representative agrees that it shall deliver to the Collateral Agent, within five Business Days following the receipt of such request, a schedule setting forth the aggregate principal amount of Secured Debt owing to each Secured Party of such Lender Representative, the interest rate or rates and the letter of credit fee or fees then in effect with respect to such Secured Debt and such other information as the Collateral Agent may request to make distributions pursuant to Section 4.2.

Section 5.3    Compensation and Expenses.  The Grantors jointly and severally agree to pay to the Collateral Agent as compensation for the Collateral Agent’s services hereunder and under the Security Documents and for administering the Secured Debt Collateral, (a) such fees as shall be agreed to in writing from time to time between BMCA and the Collateral Agent and (b) from time to time, upon demand, all of the reasonable and documented fees, costs and expenses of the Collateral Agent (including the reasonable fees and disbursements of its counsel and such special counsel as the Collateral Agent elects to retain) (x) arising in connection with the preparation, execution, delivery, modification, restatement, amendment or termination of this Agreement and each Security Document or the enforcement (whether in the context of a civil action, adversary proceeding, workout or otherwise) of any of the provisions hereof or thereof, or (y) incurred or required or otherwise advanced in connection with the administration of the Collateral, the sale or other disposition of Collateral and the preservation, protection or defense of the Collateral Agent’s rights under this Agreement and in and to the Collateral.  As security for such payment, the Collateral Agent shall have a lien prior to the Secured Debt upon all Collateral and other property and funds held or collected by the Collateral Agent as part of the Collateral.  The obligation of the Grantors to pay any and all fees, expenses, indemnities and other amounts due hereunder shall be joint and several and shall survive termination of this Agreement and resignation or removal of the Collateral Agent.

Section 5.4    Stamp and Other Similar Taxes.  The Grantors jointly and severally agree to indemnify and hold harmless the Collateral Agent and each Secured Party from, and shall reimburse the Collateral Agent and each Secured Party for, any present or future claim for liability for any stamp or other similar tax and any penalties or interest with respect thereto, which may be assessed, levied or collected by any jurisdiction in connection with this Agreement, any Security Document, the Collateral, or the attachment or perfection of the security interest granted to the Collateral Agent in any Collateral.  The obligations of the Grantors under this Section 5.4 shall survive the termination of the other provisions of this Agreement.

Section 5.5    Filing Fees, Excise Taxes, etc.  The Grantors jointly and severally agree to pay or to reimburse the Collateral Agent for any and all reasonable amounts in respect of all search, filing, recording and registration fees, taxes, excise taxes and other similar imposts which may be payable or determined to be payable in respect of the execution, delivery, performance and enforcement of this Agreement and each Security Document and agrees to save the Collateral Agent harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees.  The obligations of the Grantors

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under this Section 5.5 shall survive the termination of the other provisions of this Agreement and resignation or removal of the Collateral Agent.

Section 5.6    Indemnification.

(a)           The Grantors jointly and severally agree to pay, indemnify and hold the Collateral Agent and its officers, employees, directors, agents and representatives and each of its agents harmless from and against any and all liabilities, claims, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement and the Security Documents, except to the extent the same constitute direct money damages arising from the gross negligence or willful misconduct of the Collateral Agent, or if the agent is seeking indemnification, from the agent’s gross negligence or willful misconduct.  As security for such payment, the Collateral Agent shall have a lien prior to the Secured Debt upon all Collateral and other property and funds held or collected by the Collateral Agent as part of the Collateral.

(b)           In any suit, proceeding or action brought by the Collateral Agent under or with respect to the Collateral for any sum owing thereunder, or to enforce any provisions thereof, or of any of the Security Documents or this Agreement, the Grantors will save, indemnify and keep the Collateral Agent and the Secured Parties harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the obligee thereunder, arising out of a breach by any Grantor of any of its obligations hereunder or thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such obligee or its successors from such Grantor, and all such obligations of the Grantors shall be and remain enforceable against and only against the Grantors and shall not be enforceable against the Collateral Agent or any Secured Party.

(c)           The agreements and obligations of the Grantors in this Section 5.6 shall survive resignation or removal of the Collateral Agent and the termination of the other provisions of this Agreement.

Section 5.7    Further Assurances.  At any time and from time to time and at the sole expense of the Grantors, each Grantor will promptly execute and deliver any and all such further instruments and documents and take such further action as the Required Lender Representative reasonably determines is necessary or desirable for the Secured Parties to obtain the full benefits of this Agreement.

SECTION 6.  COLLATERAL AGENT.

Section 6.1    Acceptance of Duties.  The Collateral Agent, for itself and its successors, accepts the duties and obligations required by this Agreement upon the terms and conditions hereof, including those contained in this Section 6.

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Section 6.2Exculpatory Provisions.

(a)The Collateral Agent shall not be responsible in any manner whatsoever for the correctness of any recitals, statements, representations or warranties contained herein or in any Notice of Default or in any instructions purported to be from the Required Lender Representative, except for those made by the Collateral Agent.  The Collateral Agent makes no representations as to the value or condition of the Secured Debt Collateral or any part thereof, or as to the title of any Grantor thereto or as to the security afforded by the Security Documents or this Agreement or, except as set forth in Section 2.2, as to the validity, execution, enforceability, legality or sufficiency of this Agreement, any Credit Document, any Security Document or of the Secured Debt secured hereby and thereby, and the Collateral Agent shall incur no liability or responsibility in respect of any such matters.  The Collateral Agent shall not be responsible for insuring the Collateral or for the payment of taxes, charges, assessments or liens upon the Collateral or otherwise as to the maintenance of the Collateral, except that (i) in the event the Collateral Agent enters into possession of a part or all of the Collateral, the Collateral Agent shall preserve the part in its possession, and (ii) the Collateral Agent will promptly, and at its own expense, take such action as may be necessary duly to remove and discharge (by bonding or otherwise) any Collateral Agent’s Lien on any part of the Collateral or any other lien on any part of the Collateral resulting from claims against it not related to the administration of the Collateral or (if so related) resulting from gross negligence or willful misconduct on its part.

(b)The Collateral Agent shall not be required to ascertain or inquire as to the performance by any Grantor of any of the covenants or agreements contained herein, in any Credit Document, Security Document or in any Debt Instrument.  Whenever it is necessary, or in the opinion of the Collateral Agent advisable, for the Collateral Agent to ascertain the amount of Secured Debt then held by a Secured Party, the Collateral Agent may rely on a certificate of such Secured Party’s Lender Representative as to such amount.

(c)DBTCA shall, in its individual capacity and at its own cost and expense, promptly take all action as may be necessary to discharge any Collateral Agent’s Liens or any other lien resulting from claims against it not related to the administration of the Collateral or (if so related) resulting from gross negligence or willful misconduct on its part.

(d)The Collateral Agent shall not be personally liable for any acts, omissions, errors of judgment or mistakes of fact or law made, taken or omitted to be made or taken by it in accordance with this Agreement or any Security Document (including, without limitation, acts, omissions, errors or mistakes with respect to the Collateral), except for those arising out of or in connection with the Collateral Agent’s gross negligence or willful misconduct.  In no event shall the Collateral Agent be liable for incidental, indirect, special or consequential damages, regardless of the form of action and even if the same were foreseeable.  Notwithstanding anything set forth herein to the contrary, the Collateral Agent shall have a duty of reasonable care with respect to any Collateral which

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is delivered to the Collateral Agent or its designated representatives and is in the Collateral Agent’s or its designated representatives’ possession and control.

(e)The Collateral Agent shall not be liable for any claims, losses, liabilities, damages, costs, expenses and judgments (including reasonable attorneys’ fees and expenses) due to forces beyond the reasonable control of the Collateral Agent, including, without limitation, strikes, work stoppages, act of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.

Section 6.3Delegation of Duties; Appointment of Administrative Agent as Sub-Agent.

(a)The Collateral Agent may execute any of the powers hereof and perform any duty hereunder either directly or by or through agents, nominees or attorneys-in-fact.  The Collateral Agent may act and rely, and shall be protected in acting and relying on, the opinion or advice or, or information obtained from, any counsel, accountant, appraiser or other expert or adviser, whether retained or employed by the Collateral Agent or the Required Lender Representative, in relation to any matter in connection with this Agreement, the Security Agreement or any other document, instrument or writing.  The Collateral Agent shall be entitled to advice of counsel concerning all matters pertaining to such powers and duties.  The Collateral Agent shall not be responsible for any acts or omissions, including any negligence or misconduct, of any agents, designated representatives, nominees or attorneys-in-fact selected by it without gross negligence or willful misconduct.

(b)The Collateral Agent hereby appoints the Administrative Agent to act as its sub-agent hereunder, and in connection with each of the other Loan Documents.  The Administrative Agent, for itself and its successors, accepts the duties and obligations required by this Agreement and the other Loan Documents upon the terms and conditions hereof and thereof.

Section 6.4Reliance by Collateral Agent.

(a)Whenever in the administration of this Agreement the Collateral Agent shall deem it necessary or desirable that a matter be proved or established with respect to any Grantor in connection with the taking, suffering or omitting of any action hereunder by the Collateral Agent, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be proved or established by a certificate of a Responsible Officer of such Grantor delivered to the Collateral Agent, and such certificate shall be full warranty to the Collateral Agent for any action taken, suffered or omitted in reliance thereon without gross negligence or willful misconduct, subject, however, to the provisions of Section 6.5.

(b)The Collateral Agent may consult with counsel, accountants and other experts, and any opinion of independent counsel, any such accountant, and any such other expert shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in accordance therewith.  The Collateral Agent shall

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have the right at any time to seek instructions concerning the administration of the Collateral from any court of competent jurisdiction.

(c)The Collateral Agent may rely, and shall be fully protected in acting, upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document which it has no reason to believe to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of telecopies, to have been sent by the proper party or parties, including the information provided by BMCA to the Collateral Agent pursuant to Section 5.2.  In the absence of its gross negligence or willful misconduct, the Collateral Agent may rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Collateral Agent and conforming to the requirements of this Agreement or any Security Document.

(d)If the Collateral Agent has been requested to take action pursuant to Section 2.3, the Collateral Agent shall not be under any obligation to exercise any of the rights or powers vested in the Collateral Agent by this Agreement or any Security Document unless the Collateral Agent shall have been provided adequate security and indemnity against the costs, expenses and liabilities which may be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Collateral Agent.

(e)The Collateral Agent shall not be required to inquire or investigate a Notice of Default or whether any instruction purported to be given by the Required Lender Representative was in fact so given, or whether any such instruction is consistent with the Security Agreement or this Agreement, and the Collateral Agent may assume the foregoing and shall be protected in relying thereon.

(f)The Collateral Agent shall have no duty as to any Collateral in its possession or control, other than those duties specifically set forth herein, or the possession or control of any agent or bailee or any income thereon or as to the preservation or rights against prior parties or any other rights pertaining thereto.  The Collateral Agent or its agent or designee shall endeavor to file such financing and continuation statements and record such documents or instruments in such places and at such times as shall be directed by the Required Lender Representative.  The Collateral Agent shall not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason or the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent in good faith.

(g)The Collateral Agent shall not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability or any liens on any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes gross negligence or willful misconduct on the part of the Collateral Agent, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, or for the validity of any title to the Collateral or otherwise as to the maintenance of the Collateral.  The Collateral Agent shall have no duty to

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ascertain or inquire into the performance or observance by any other party of the terms of this Agreement, the Security Agreement or any other agreement or document.

(h)None of the provisions of this Agreement shall require the Collateral Agent to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.

Section 6.5Limitations on Duties of the Collateral Agent.

(a)The Collateral Agent shall be obliged to perform such duties and only such duties as are specifically set forth in this Agreement or in any Security Document, and no implied covenants or obligations shall be read into this Agreement or any Security Document against the Collateral Agent.  The Collateral Agent shall, upon receipt of a Notice of Default from the Required Lender Representative and during such time as such Notice of Default shall not have been withdrawn, exercise the rights and powers vested in it by this Agreement or by any Security Document, and the Collateral Agent shall not be liable with respect to any action taken or omitted by it in accordance with the direction of the Required Lender Representative pursuant to Section 2.3.

(b)Except as herein otherwise expressly provided, including, without limitation, upon the written request of the Required Lender Representative pursuant to Section 2.3, the Collateral Agent shall not be under any obligation to take any action which is discretionary under the provisions hereof or under any Security Document.  Whenever reference is made in this Agreement or in the Security Agreement, the Credit Documents, the Intercreditor Agreements (as such term is defined in the Credit Agreement) or the Security Documents to any action by, consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Collateral Agent to any amendment, waiver or other modification of this Agreement or in the Security Agreement or the Security Documents to be executed (or not to be executed) by the Collateral Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Collateral Agent, it is understood that in all cases the Collateral Agent shall be acting, giving, withholding, suffering, omitting, making or otherwise undertaking and exercising the same (or shall not be undertaking and exercising the same) as directed by the Required Lender Representative in accordance with this Section 6.5(b).  This provision is intended solely for the benefit of the Collateral Agent and its successors and permitted assigns and is not intended to and will not entitle the other parties hereto to any defense, claim or counterclaim under or in relation to any Security Document, or confer any rights or benefits on any party hereto.  The Collateral Agent shall furnish to each Lender Representative promptly upon receipt thereof, a copy of each certificate or other paper furnished to the Collateral Agent by a Grantor under or in respect of this Agreement, any Security Document or any of the Collateral.

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Section 6.6Moneys Held By Collateral Agent.  All moneys received by the Collateral Agent under or pursuant to any provision of this Agreement or any Security Document shall be held as Collateral for the purposes for which they were paid or are held.

Section 6.7Resignation and Removal of the Collateral Agent.

(a)The Collateral Agent may at any time, by giving thirty days’ prior written notice to BMCA and each Lender Representative resign and be discharged of the responsibilities hereby created, such resignation to become effective upon the appointment of a successor collateral agent or collateral agents by the Required Lender Representative, and the acceptance of such appointment by such successor collateral agent or collateral agents.  The Collateral Agent may be removed at any time without cause and a successor collateral agent appointed by the affirmative vote of the Required Lender Representative and written notice thereof delivered to the Collateral Agent; provided that the Collateral Agent shall be entitled to its fees and expenses to the date of removal.  If no successor collateral agent or collateral agents shall be appointed and approved within thirty days from the date of the giving of the aforesaid notice of resignation or within thirty days from the date of such removal, the Collateral Agent shall, or any Lender Representative may, apply to any court of competent jurisdiction to appoint a successor collateral agent or collateral agents (which may be an individual or individuals) to act until such time, if any, as a successor collateral agent or collateral agents shall have been appointed as above provided.  Any successor collateral agent or collateral agents so appointed by such court shall immediately and without further act be superseded by any successor collateral agent or collateral agents appointed by the Required Lender Representative.

(b)If at any time the Collateral Agent shall resign, be removed or otherwise become incapable of acting, or if at any time a vacancy shall occur in the office of the Collateral Agent for any other cause, a successor collateral agent or collateral agents may be appointed by the Required Lender Representative, and the powers, duties, authority and title of the predecessor collateral agent or collateral agents terminated and canceled without procuring the resignation of such predecessor collateral agent or collateral agents, and without any other formality (except as may be required by applicable law) than the appointment and designation of a successor collateral agent or collateral agents in writing, duly acknowledged, delivered to the predecessor collateral agent or collateral agents and BMCA, and filed for record in each public office, if any, in which this Agreement is required to be filed.

(c)The appointment and designation referred to in Section 6.7(b) shall, after any required filing, be full evidence of the right and authority to make the same and of all the facts therein recited, and this Agreement shall vest in such successor collateral agent or collateral agents, without any further act, deed or conveyance, all of the estate and title of its predecessor or their predecessors, and upon such filing for record the successor collateral agent or collateral agents shall become fully vested with all the estates, properties, rights, powers, trusts, duties, authority and title of its predecessor or their predecessors; but such predecessor or predecessors shall, nevertheless, on the written request of any Lender Representative, BMCA, or its or their successor collateral agent or

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collateral agents, execute and deliver an instrument transferring to such successor or successors all the estates, properties, rights, powers, duties, authority and title of such predecessor or predecessors hereunder and shall deliver all securities and moneys held by it or them to such successor collateral agent or collateral agents.  Should any deed, conveyance or other instrument in writing from BMCA be required by any successor collateral agent or collateral agents for more fully and certainly vesting in such successor collateral agent or collateral agents the estates, properties, rights, powers, duties, authority and title vested or intended to be vested in the predecessor collateral agent or collateral agents, any and all such deeds, conveyances and other instruments in writing shall, on request of such successor collateral agent or collateral agents, be so executed, acknowledged and delivered.

(d)Any required filing for record of the instrument appointing a successor collateral agent or collateral agents as hereinabove provided shall be at the expense of the Grantors.  The resignation of any collateral agent or collateral agents and the instrument or instruments removing any collateral agent or collateral agents, together with all other instruments, deeds and conveyances provided for in this Section 6 shall, if required by law, be forthwith recorded, registered and filed by and at the expense of the Grantors, wherever this Agreement is recorded, registered and filed.

Section 6.8Status of Successors to the Collateral Agent.  Every successor to DBTCA, as Collateral Agent, appointed pursuant to Section 6.7 and every corporation resulting from a merger or consolidation pursuant to Section 6.9 shall be a bank or trust company in good standing and having power so to act, incorporated under the laws of the United States or any State thereof or the District of Columbia, and having its principal corporate trust office within the forty-eight contiguous States, and shall also have capital, surplus and undivided profits of not less than $250,000,000 and a rating from Standard & Poor’s or Moody’s of A or better.

Section 6.9Merger of the Collateral Agent.  Any corporation or association into which the Collateral Agent shall be merged, or with which it shall be consolidated, or any corporation or association resulting from any merger or consolidation to which the Collateral Agent shall be a party, or any corporation or association which shall purchase all or substantially all of the corporate trust business of the Collateral Agent shall be the Collateral Agent under this Agreement without the execution or filing of any paper or any further act on the part of the parties hereto.

Section 6.10Additional Co-Collateral Agents; Separate Collateral Agents.

(a)If at any time or times it shall be necessary or prudent in order to conform to any law of any jurisdiction in which any of the Collateral shall be located, or the Collateral Agent shall be advised by counsel satisfactory to it that it is so necessary, or prudent in the interest of the Beneficiaries, or the Required Lender Representative shall in writing so request, or the Collateral Agent shall deem it desirable for its own protection in the performance of its duties hereunder, the Collateral Agent shall execute and deliver all instruments and agreements necessary or proper to constitute another bank or trust company, or one or more persons approved by the Collateral Agent either to act as co-collateral agent or co-collateral agents of all or any of the Collateral, jointly with the

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Collateral Agent originally named herein or any successor or successors, or to act as separate collateral agent or collateral agents of any such property.  In the event BMCA shall not have joined in the execution of such instruments and agreements within five days after the receipt of a written request from the Collateral Agent so to do, or in case an Event of Default shall have occurred and be continuing, the Collateral Agent may act under the foregoing provisions of this Section 6.10 without the concurrence of BMCA, and BMCA hereby irrevocably appoints the Collateral Agent as its agent and attorney to act for it under the foregoing provisions of this Section 6.10 in either of such contingencies.

(b)Every separate collateral agent and every co-collateral agent, other than any collateral agent which may be appointed as successor to DBTCA shall, to the extent permitted by law, be appointed and act and be such, subject to the following provisions and conditions, namely:

(i)all rights, powers, duties and obligations conferred upon the Collateral Agent in respect of the custody, control and management of moneys, papers or securities shall be exercised solely by DBTCA or its successors and assigns as Collateral Agent hereunder;

(ii)all rights, powers, duties and obligations conferred or imposed upon the Collateral Agent hereunder shall be conferred or imposed and exercised or performed by the Collateral Agent and such separate collateral agent or separate collateral agents or co-collateral agent or co-collateral agents, jointly, as shall be provided in the instrument appointing such separate collateral agent or separate collateral agents or co-collateral agent or co-collateral agents, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Collateral Agent shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate collateral agent or separate collateral agents or co-collateral agent or co-collateral agents;

(iii)no power given hereby to, or which it is provided hereby may be exercised by, any such co-collateral agent or co-collateral agents or separate collateral agent or separate collateral agents, shall be exercised hereunder by such co-collateral agent or co-collateral agents or separate collateral agent or separate collateral agents, except jointly with, or with the consent in writing of, the Collateral Agent, anything herein contained to the contrary notwithstanding;

(iv)no collateral agent hereunder shall be personally liable by reason of any act or omission of any other collateral agent hereunder; and

(v)the Collateral Agent, at any time by an instrument in writing, may accept the resignation of or remove any such separate collateral agent or co-collateral agent with or without cause, and in that case may by an instrument in writing executed by the Collateral Agent appoint a successor to such separate collateral agent or co-collateral agent, as the case may be, anything herein

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contained to the contrary, notwithstanding.  In the event that BMCA shall not have joined in the execution of any such instrument within five days after the receipt of a written request from the Collateral Agent so to do, or in case an Event of Default shall have occurred and be continuing, the Collateral Agent shall have the power to accept the resignation of or remove any such separate collateral agent or co-collateral agent and to appoint a successor without the concurrence of BMCA; BMCA hereby irrevocably appointing the Collateral Agent its agent and attorney to act for it in such connection in either of such contingencies.  In the event that the Collateral Agent shall have appointed a separate collateral agent or separate collateral agents or co-collateral agent or co-collateral agents as above provided, it may at any time, by an instrument in writing, accept the resignation of or remove any such separate collateral agent or co-collateral agent, the successor to any such separate collateral agent or co-collateral agent to be appointed by the Collateral Agent as hereinabove provided in this Section 6.10.

SECTION 7.RELEASE OF COLLATERAL.

Section 7.1Conditions to Release of Collateral.

(a)The Collateral Agent shall release its security interest in the Collateral (other than the Revolver Collateral) on such date as is reasonably practicable after the date on which the Collateral Agent shall have received written notice from the Administrative Agent (as defined in the Credit Agreement) that the Obligations under and as defined in the Credit Agreement (other than contingent obligations) shall have become unsecured or shall have been paid in full with the proceeds of unsecured indebtedness and the unfunded commitments, if any, of the Lenders under the Credit Agreement shall have been terminated; provided, however, that the Collateral Agent shall not release its security interest in such Collateral unless it (i) shall have received a written certificate of a Responsible Officer of the Company (together with a copy to each Lender Representative) stating that no Event of Default, or event which could reasonably become an Event of Default, under the Existing Indentures has occurred and is continuing, and (ii) shall not have received a Notice of Default from the Required Lender Representative with respect to a then existing Event of Default under any of the Existing Indentures (including if BMCA is the subject of any bankruptcy proceeding);

(b)The Collateral Agent shall release its security interest in the Revolver Collateral on such date as is reasonably practicable after the date on which the Collateral Agent shall have received written notice from BMCA to the effect that (A) the Obligations (other than contingent obligations) under and as defined in the Revolving Credit Agreement (the “Revolver Obligations”) shall have been paid in full and the unfunded commitments, if any, of the lenders under the Revolving Credit Agreement shall have been terminated with one or more of the following:  (x) the proceeds of unsecured indebtedness (including any Refinancing of the Revolver Obligations) of BMCA or any of its Subsidiaries permitted under the Existing Indentures, (y) the proceeds of secured indebtedness (including any Refinancing of the Revolver Obligations) permitted under the Existing Indentures, provided that the Obligations under the Existing Notes shall be secured by the same collateral as shall secure such secured

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indebtedness on terms and conditions, including priority, no more onerous to the Secured Parties than those contained in the Security Agreement and this Agreement or (z) cash on hand of BMCA and its Subsidiaries that is not prohibited by the terms of the Existing Indentures from being applied to the repayment of the Revolver Obligations, and (B) accrued and unpaid Collateral Agent’s Fees shall have been paid in full; provided, however, that the Collateral Agent shall not release its security interest in the Collateral if (I) the repayment of the Revolver Obligations was not permitted under the Existing Indentures, (II) an event of default under the Credit Documents or under the Revolving Credit Agreement shall exist at the time of such repayment (including if BMCA is the subject of any bankruptcy proceedings) or (III) the cash for such repayment was obtained through the concurrent sale of assets of BMCA or its Subsidiaries; or

(c)The Collateral Agent shall release its security interest in all of the Collateral on the earlier of:

(i)the date on which (A) all the Secured Debt shall have been paid in full in cash and the unfunded commitments, if any, of each Secured Party shall have been terminated and notice of same shall have been given to the Collateral Agent by the Required Lender Representative and (B) accrued and unpaid Collateral Agent’s Fees shall have been paid in full; or

(ii)the date which is 3 days after the date on which (A) the Collateral Agent shall have received written instructions from all Lender Representatives instructing the Collateral Agent to release its security interest in all of the Collateral, and (B) accrued and unpaid Collateral Agent’s Fees shall have been paid in full.

(d)Subject to this Section 7.1(d) and Section 7.2, the Collateral Agent shall release its security interest in specific items or portions of the Collateral in accordance with the terms of Sections 24(a) or 24(b) of the Security Agreement.

Section 7.2Actions Following Release of the Collateral.  To the extent that the Collateral Agent is required or permitted to release Collateral in accordance with Section 7.1 or the terms of the Security Agreement, or the security interest in any Collateral granted pursuant to any of the Security Documents is otherwise terminated or released in accordance with the terms thereof, all right, title and interest of the Collateral Agent in, to and under such Collateral and the security interest of the Collateral Agent therein shall terminate and shall revert to the applicable Grantor or its successors and assigns, and the estate, right, title and interest of the Collateral Agent therein shall thereupon cease, terminate and become void.  Following such request, instructions or other termination or release, the Collateral Agent shall, upon the written request of applicable Grantor or its successors or assigns and at the cost and expense of the Grantors, or their successors or assigns, execute such instruments and take such other actions as are necessary or desirable to terminate any such security interest and otherwise to effectuate the release of the specified portions of the Collateral from the lien of such security interest.  Such termination and release shall be without prejudice to the rights of the Collateral Agent or any successor collateral agent to charge and be reimbursed for any expenditures which it may thereafter incur in connection therewith.

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SECTION 8.AGREEMENTS AMONG SECURED PARTIES.

Section 8.1Other Agreements Among Secured Party.

Each Secured Party by its acceptance of the benefits of this Agreement and any Security Documents and the Collateral shall be deemed to have:

(a)agreed that should it obtain, receive or take any Collateral (by means of set-off, recoupment or otherwise), or recover any amounts under any Security Document, at any time after the Collateral Agent has received a Notice of Default from the Required Lender Representative, then the received Collateral or the amount recovered shall be delivered to the Collateral Agent for distribution in accordance with the Security Agreement; and

(b)agreed that any recovery of Collateral by any Secured Party with respect to the Obligations as a result of enforcement of any consensual or non-consensual lien or security interest on any Collateral shall be remitted to the Collateral Agent for distribution in accordance with the Security Agreement.

Section 8.2Payment of Collateral Agent’s Fees.  In the event the Grantors do not pay the Collateral Agent’s Fees, each Secured Party (other than the Collateral Agent) by its acceptance of the benefits of this Agreement and any Security Documents and the Collateral shall be deemed to have agreed that any Proceeds of Collateral to which it shall be entitled shall be available to pay the Collateral Agent’s Fees ratably in accordance with the proportion of the Secured Debt held by such Secured Party or, if there has been any recovery of the Secured Debt, in accordance with the proportion of (a) the Secured Debt recovered by such Secured Party to (b) the aggregate amount of Secured Debt recovered by all Beneficiaries.  In the event that such Proceeds of Collateral are not sufficient to pay all such Collateral Agent’s Fees, each Secured Party (other than the Note Trustees) agrees to pay the amount of such shortfall in the same proportions as described above with respect to the allocation of Proceeds of Collateral.

Section 8.3Invalidation of Payments.  To the extent that any of the Beneficiaries receives payments on the Secured Debt or receives Proceeds of Collateral which are subsequently invalidated, declared to be fraudulent or preferential, or are required to be repaid to a collateral agent, receiver or any other Person under the Bankruptcy Code or under state, federal or common law, then, to the extent the payments or Proceeds are so repaid, the Secured Debt or part thereof which was intended to be satisfied shall be revived and will continue to be in full force and effect as if those payments or Proceeds had never been received by such Secured Party.

SECTION 9.OTHER PROVISIONS.

Section 9.1Amendments, Supplements and Waivers.

(a)Except as set forth in Section 9.1(b), this Agreement may not be amended, revised, restated or supplemented without the prior written consent of each Required Lender Representative, BMCA and the Collateral Agent; provided, further, that Section 4.2

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shall not be amended, revised, restated or supplemented in a manner which adversely affects any Hedge Bank without the prior written consent of such Hedge Bank.

(b)The parties hereto, at any time and from time to time, may enter into additional Security Documents or one or more agreements supplemental hereto or to any Security Document, in form satisfactory to the Collateral Agent:

(i)to mortgage, pledge or grant a security interest in personal property of a type or category which is set forth in Section 1 of the Security Agreement or in any real property in favor of the Collateral Agent as additional security for the Secured Debt pursuant to any Security Document, or

(ii)to cure any ambiguity, to correct or supplement any provision herein or in any Security Document which may be defective or inconsistent with any other provision herein or therein or make any other amendment or modification of any Security Document.

Section 9.2Notices.  All notices, requests, demands and other communications provided for or permitted hereunder shall be in writing (including telecopy), shall be sent by mail, telecopy or hand delivery and, except as otherwise provided in this Agreement, the cost thereof shall be for the sole account of the Grantors and shall be added to the Obligations,

(a)If to any signatory hereto, to the address of such signatory set forth on Schedule A.

(b)If to any other Secured Party, to such Secured Party’s Lender Representative set forth on

Schedule A.

All such notices, requests, demands and communications shall, to be effective hereunder, be in writing or by a telecopy device capable of creating a written record, and shall be deemed to have been given or made when delivered by hand or five days after its deposit in the mail, first class or air postage prepaid, or in the case of notice by such a telecopy device, when properly transmitted if on the same day the sender sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid); provided, however, that any notice, request, demand or other communication to the Collateral Agent shall not be effective until received.

Section 9.3Severability.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction; provided that this Agreement shall be construed so as to give effect to the intention expressed in Section 3.9.

Section 9.4Dealings with the Grantors.  Upon any application or demand by BMCA to the Collateral Agent to take or permit any action under any of the provisions of this Agreement or any Security Document BMCA shall furnish to the Collateral Agent, with copies to each Lender Representative, a certificate signed by a Responsible Officer of BMCA stating that all conditions precedent, if any, provided for in this Agreement or any Security Document relating to the proposed action have been complied with, except that in the case of any such

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application or demand as to which the furnishing of such documents is specifically required by any provision of this Agreement or any Security Document, relating to such particular application or demand, no additional certificate or opinion need be furnished.

Section 9.5Claims Against the Collateral Agent.  Any claims or causes of action which a Secured Party or a Grantor shall have against the Collateral Agent shall survive the termination of this Agreement and the release of the Collateral hereunder.

Section 9.6Binding Effect.

(a)This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and shall inure to the benefit of the Beneficiaries and their respective successors and assigns, and nothing herein or in any Security Document is intended or shall be construed to give any other Person any right, remedy or claim under, to or in respect of this Agreement, any Security Document or the Collateral.

(b)The Grantors have jointly and severally agreed in Sections 5.3, 5.4, 5.5 and 5.6 to pay on demand the Collateral Agent’s Fees.  In the event the Grantors fail to pay the Collateral Agent’s Fees, each Secured Party (other than the Collateral Agent) has agreed in Section 8.2 to pay the Collateral Agent’s Fees, ratably in accordance with the proportion of the Secured Debt held by such Secured Party or, if there has been any recovery of the Secured Debt, in accordance with the proportion of (i) the Secured Debt recovered by such Secured Party to (ii) the aggregate amount of Secured Debt recovered by all Beneficiaries, all as set forth in this Agreement.

Section 9.7Conflict with Other Agreements.  The parties agree that in the event of any conflict between the provisions of this Agreement and the provisions of any of the Security Documents, the provisions of this Agreement shall control.  Notwithstanding anything to the contrary contained in this Agreement, the Lender Representatives shall have all rights and protections afforded to them in their respective Credit Documents.

Section 9.8Governing Law.  This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.

Section 9.9Counterparts.  This Agreement may be executed in separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Agreement.

Section 9.10Consent To Jurisdiction.  EACH OF THE GRANTORS HEREBY IRREVOCABLY SUBMITS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY SECURITY DOCUMENTS AND EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES, FOR ITSELF AND IN RESPECT

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OF ITS PROPERTY, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.  NOTHING IN THIS SECTION SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION.  ANY JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE COLLATERAL AGENT OR ANY SECURED PARTY OR ANY AFFILIATE OF THE COLLATERAL AGENT OR ANY SECURED PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH ANY COLLATERAL DOCUMENT SHALL BE BROUGHT ONLY IN A FEDERAL OR STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY.

EACH GRANTOR AGREES THAT SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING TO SUCH GRANTOR AT ITS ADDRESS FOR NOTICES HEREUNDER.  EACH GRANTOR 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.

SECTION 9.11Waiver of Jury Trial.  EACH GRANTOR, LENDER REPRESENTATIVE AND BY ITS ACCEPTANCE OF THE BENEFITS THEREOF, EACH BENEFICIARY AND THE COLLATERAL AGENT HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH ANY COLLATERAL DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

SECTION 9.12USA PATRIOT Act.  The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (as amended, modified or supplemented from time to time, the “USA PATRIOT Act”), the Collateral Agent, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with Deutsche Bank Trust Company Americas.  The parties to this Agreement agree that they will provide the Collateral Agent with such information as it may request in order for the Collateral Agent to satisfy the requirements of the USA PATRIOT Act.

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IN EVIDENCE OF THE FOREGOING, the parties hereto have executed this Agreement or caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

BUILDING MATERIALS CORPORATION OF AMERICA

BMCA ACQUISITION INC.

BMCA ACQUISITION SUB INC.

BMCA FRESNO LLC

BMCA FRESNO II LLC

BMCA GAINESVILLE LLC

BMCA INSULATION PRODUCTS INC.

BMCA QUAKERTOWN INC.

BUILDING MATERIALS INVESTMENT CORPORATION

BUILDING MATERIALS MANUFACTURING CORPORATION

DUCTWORK MANUFACTURING CORPORATION

GAF LEATHERBACK CORP.

GAF MATERIALS CORPORATION (CANADA)

GAF PREMIUM PRODUCTS INC.

GAF REAL PROPERTIES, INC.

GAFTECH CORPORATION

HBP ACQUISITION LLC

LL BUILDING PRODUCTS INC.

PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC.

SOUTH PONCA REALTY CORP.

WIND GAP REAL PROPERTY ACQUISITION CORP.

By:	/John M. Maitner/
Name:  John M. Maitner
Title:  Vice President and Treasurer

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Collateral Agent
By:	/Kerry Warwicker/
Name:  Kerry Warwicker
Title:  Vice President
By:	/Randy Kahn/
Name:  Randy Kahn
Title:  Vice President

DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative Agent under the Credit Agreement
By:	/Marguerite Sutton/
Name: Marguerite Sutton
Title: Director
By:	/Carin Keegan/
Name: Carin Keegan
Title: Vice President

THE BANK OF NEW YORK, as Trustee under the 2007 Notes Indenture
By:	/Franca M. Ferrara/
Name: Franca M. Ferrara
Title: Assistant Vice President
THE BANK OF NEW YORK, as Trustee under the 2008 Notes Indenture
By:	/Franca M. Ferrara/
Name: Franca M. Ferrara
Title: Assistant Vice President

WILMINGTON TRUST COMPANY, as Trustee under the 2014 Notes Indenture
By:	/Kristin L. Moore/
Name: Kristin L. Moore
Title: Senior Financial Services Officer

EX-10.39

Exhibit 10.39

EXECUTION VERSION

SECURITY AGREEMENT

Dated February 22, 2007

From

The Grantors referred to herein

as Grantors

to

Deutsche Bank Trust Company Americas

as Collateral Agent

T A B L E  O F  C O N T E N T S
Section	Page
Section 1. Grant of Security	2
Section 2. Security for Obligations	7
Section 3. Grantors Remain Liable	7
Section 4. Delivery and Control of Security Collateral	8
Section 5. Maintaining the Account Collateral	9
Section 6. Representations and Warranties	9
Section 7. Further Assurances	14
Section 8. As to Equipment and Inventory	15
Section 9. Insurance	15
Section 10. Post-Closing Changes; Collections on Receivables and Related Contracts	16
Section 11. As to Intellectual Property Collateral	17
Section 12. Voting Rights; Dividends; Etc.	19
Section 13. As to Letter-of-Credit Rights	20
Section 14. Commercial Tort Claims	20
Section 15. Transfers and Other Liens; Additional Shares	20
Section 16. Collateral Agent Appointed Attorney in Fact	21
Section 17. Collateral Agent May Perform	21
Section 18. The Collateral Agent’s Duties	21
Section 19. Remedies	22
Section 20. Indemnity and Expenses	24
Section 21. Amendments; Waivers; Additional Grantors; Etc.	25
Section 22. Notices, Etc.	25
Section 23. Continuing Security Interest	26
Section 24. Release; Termination	26
Section 25. Intercreditor	26

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Section 26. Execution in Counterparts	27
Section 27. Governing Law	27
Section 28. Jurisdiction, Etc.	27
Section 29. Waiver of Jury Trial	27

Schedules
Schedule I	-	Investment Property
Schedule II	-	Pledged Deposit Accounts
Schedule III	-	Intellectual Property
Schedule IV	-	Commercial Tort Claims
Schedule V	-	Location, Chief Executive Office, Type of Organization, Jurisdiction of Organization and Organizational Identification Number
Schedule VI	-	Locations of Equipment and Inventory
Schedule VII	-	Letters of Credit
Schedule VIII	-	Post-Closing Matters
Exhibits
Exhibit A	-	Form of Intellectual Property Security Agreement
Exhibit B	-	Form of Intellectual Property Security Agreement Supplement
Exhibit C	-	Form of Security Agreement Supplement

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SECURITY AGREEMENT

SECURITY AGREEMENT dated February 22, 2007 made by BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the “Company”), and the other Persons listed on the signature pages hereof (the Company and the Persons so listed being, collectively, the “Grantors”), to DEUTSCHE BANK TRUST COMPANY AMERICAS (“DBTCA”), as collateral agent for the Secured Parties (as hereinafter defined) and DBTCA in such capacity, and together with any successor collateral agent appointed pursuant to the Collateral Agency Agreement (as hereinafter defined), the “Collateral Agent”).

PRELIMINARY STATEMENTS.

(1) The Company and certain of its Subsidiaries have entered into a Term Loan Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived or otherwise modified, refinanced or replaced from time to time, being the “Credit Agreement”) with the Lenders and the Agents (each as defined therein).

(2) The Company is a party to the Revolving Credit Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived, or otherwise modified, refinanced or replaced from time to time, the “Revolving Credit Agreement”), among the Company and certain of its Subsidiaries, the lender parties party thereto from time to time, Deutsche Bank AG New York Branch, as collateral monitoring agent and administrative agent, swingline lender and letter of credit issuer, Bear Stearns & Co. Inc., as syndication agent, J.P. Morgan Securities Inc., as documentation agent, and Deutsche Bank Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers.

(3) The Company is party to (i) an indenture dated as of October 20, 1997 (as amended, restated, supplemented, waived, or otherwise modified, refinanced or replaced from time to time, the “2007 Notes Indenture”), among the Company, the Guarantors identified therein and The Bank of New York, as trustee pursuant to which certain 8% senior notes due 2007 (the “2007 Notes”) were issued; (ii) an indenture dated as of December 3, 1998 (as amended, restated, supplemented, waived or otherwise modified, refinanced or replaced from time to time, the “2008 Notes Indenture”), among the Company, the Guarantors identified therein and the Bank of New York, as Trustee pursuant to which certain 8% senior notes due 2008 (the “2008 Notes”) were issued; and (iii) an indenture dated as of July 26, 2004 (as amended, restated, supplemented, waived, or otherwise modified, refinanced or replaced from time to time, the “2014 Notes Indenture” and together with the 2007 Notes Indenture and the 2014 Notes Indenture, the “Existing Indentures”) among the Company, the Guarantors identified therein and Wilmington Trust Company, as Trustee, pursuant to which certain 7.75% senior notes (the “2014 Notes” and together with the 2007 Notes and the 2008 Notes, the “Existing Notes”) were issued.

(4) The holders of the Existing Notes were party to a certain Amended and Restated Security Agreement dated July 9, 2003 (as amended, amended and restated and supplemented or otherwise modified from time to time) among the Company and certain of the Grantors and Citibank, N.A. as collateral agent pursuant to which the obligations under the Existing Notes were secured by certain assets constituting Collateral (as hereinafter defined). 

The holders of the 2007 Notes, the holders of the 2008 Notes and the holders of the 2014 Notes along with the trustees under the Existing Indentures, together with the Lenders and Agents party to the Credit Agreement and the Hedge Banks shall be the “Secured Parties” hereunder.

(5) Deutsche Bank AG New York Branch, as Administrative Agent for the Lenders and Agents party to the Credit Agreement from time to time, The Bank of New York, as Trustee under the 2007 Notes Indenture and the 2008 Notes Indenture, and Wilmington Trust Company, as Trustee under the 2014 Notes Indenture, the Company and the other Grantors are party to the Collateral Agency Agreement dated February 22, 2007 (as amended, restated, supplemented, waived or otherwise modified or replaced from time to time, the “Collateral Agency Agreement”) in which, among other things, the parties thereto have appointed DBTCA to act as Collateral Agent on behalf of the Secured Parties for purposes of this Agreement, the Revolver Intercreditor Agreement (as hereinafter defined) and the General Intercreditor Agreement (as hereinafter defined).

(6) Each Grantor is the owner of the shares of stock or other Equity Interests (the “Initial Pledged Equity”) set forth opposite such Grantor’s name on and as otherwise described in Part I of Schedule I hereto and issued by the Persons named therein and of the indebtedness (the “Initial Pledged Debt”) set forth opposite such Grantor’s name on and as otherwise described in Part II of Schedule I hereto and issued by the obligors named therein.

(7) Each Grantor is the owner of the deposit accounts (the “Pledged Deposit Accounts”) set forth opposite such Grantor’s name on Schedule II hereto.

(8) It is a condition precedent to the making of Term Loan Advances under the Credit Agreement that the Grantors shall have granted the security interest contemplated by this Agreement.  Each Grantor will derive substantial direct and indirect benefit from the transactions contemplated by the Loan Documents.

(9) Terms defined in the Credit Agreement and not otherwise defined in this Agreement are used in this Agreement as defined in the Credit Agreement.  Further, unless otherwise defined in this Agreement or in the Credit Agreement, terms defined in Article 8 or 9 of the UCC (as defined below) are used in this Agreement as such terms are defined in such Article 8 or 9.  “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection or the effect of perfection or non perfection or the priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non perfection or priority.

NOW, THEREFORE, in consideration of the premises, and in order to induce the Lenders to make the Term Loan Advances under the Credit Agreement and to induce the Hedge Banks to enter into Secured Hedge Agreements from time to time each Grantor hereby agrees with the Collateral Agent for the ratable benefit of the Secured Parties as follows:

Section 1. Grant of Security.  Each Grantor hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in such Grantor’s right, title and

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interest in and to the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising (collectively, the “Collateral”):

(a) all equipment in all of its forms, including, without limitation, all machinery, tools, motor vehicles, furniture and fixtures, and all parts thereof and all accessions thereto, including, without limitation, computer programs and supporting information that constitute equipment within the meaning of the UCC (any and all such property being the “Equipment”);

(b) all inventory in all of its forms, including, without limitation, (i) all raw materials, work in process, finished goods and materials used or consumed in the manufacture, production, preparation or shipping thereof, (ii) goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including, without limitation, goods in which such Grantor has an interest or right as consignee) and (iii) goods that are returned to or repossessed or stopped in transit by such Grantor), and all accessions thereto and products thereof and documents therefor, including, without limitation, computer programs and supporting information that constitute inventory within the meaning of the UCC (any and all such property being the “Inventory”);

(c) all accounts, chattel paper (including, without limitation, tangible chattel paper and electronic chattel paper), instruments (including, without limitation, promissory notes), deposit accounts, letter-of-credit rights, general intangibles (including, without limitation, payment intangibles) and other obligations of any kind, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services and whether or not earned by performance, and all rights now or hereafter existing in and to all supporting obligations and in and to all security agreements, mortgages, Liens, leases, letters of credit and other contracts securing or otherwise relating to the foregoing property (any and all of such accounts, chattel paper, instruments, deposit accounts, letter-of-credit rights, general intangibles and other obligations, to the extent not referred to in clause (d), (e) or (f) below, being the “Receivables,” and any and all such supporting obligations, security agreements, mortgages, Liens, leases, letters of credit and other contracts being the “Related Contracts”);

(d) all precious metals, including without limitation, platinum and rhodium, (any and all such Property being the “Precious Metals”) used in the production of Inventory;

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

(i)            the Initial Pledged Equity and the certificates, if any, representing the Initial Pledged Equity, and all dividends, distributions, return of capital, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Initial

3

Pledged Equity and all warrants, rights or options issued thereon or with respect thereto;

(ii)           the Initial Pledged Debt and the instruments, if any, evidencing the Initial Pledged Debt, and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Initial Pledged Debt;

(iii)          all additional shares of stock and other Equity Interests from time to time acquired by such Grantor in any manner (such shares and other Equity Interests, together with the Initial Pledged Equity, being the “Pledged Equity”), and the certificates, if any, representing such additional shares or other Equity Interests, and all dividends, distributions, return of capital, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares or other Equity Interests and all warrants, rights or options issued thereon or with respect thereto;

(iv)          all additional indebtedness from time to time owed to such Grantor  (such indebtedness, together with the Initial Pledged Debt, being the “Pledged Debt”) and the instruments, if any, evidencing such indebtedness, and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness;

(v)           any securities account (the “Securities Account”), any collateral account (the “Collateral Account”), all security entitlements with respect to all financial assets from time to time credited to the Securities Account or the Collateral Account, and all financial assets, and all dividends, distributions, return of capital, interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such security entitlements or financial assets and all warrants, rights or options issued thereon or with respect thereto; and

(vi)          all other investment property (including, without limitation, all (A) securities, whether certificated or uncertificated, (B) security entitlements, (C) securities accounts, (D) commodity contracts and (E) commodity accounts) in which such Grantor has now, or acquires from time to time hereafter, any right, title or interest in any manner, and the certificates or instruments, if any, representing or evidencing such investment property, and all dividends, distributions, return of capital, interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such investment property and all warrants, rights or options issued thereon or with respect thereto;

(f) the following (collectively, the “Account Collateral”):

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(i)            the Pledged Deposit Accounts, the Collateral Account and all funds and financial assets from time to time credited thereto (including, without limitation, all Cash Equivalents), and all certificates and instruments, if any, from time to time representing or evidencing the Pledged Deposit Accounts or the Collateral Account;

(ii)           all promissory notes, certificates of deposit, checks and other instruments from time to time delivered to or otherwise possessed by the Collateral Agent for or on behalf of such Grantor in substitution for or in addition to any or all of the then existing Account Collateral; and

(iii)          all interest, dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral; and

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

(i)            all patents, patent applications, utility models and statutory invention registrations, all inventions claimed or disclosed therein and all improvements thereto (“Patents”);

(ii)           all trademarks, service marks, domain names, trade dress, logos, designs, slogans, trade names, business names, corporate names and other source identifiers, whether registered or unregistered (provided that no security interest shall be granted in United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law), together, in each case, with the goodwill symbolized thereby (“Trademarks”);

(iii)          all copyrights, including, without limitation, copyrights in Computer Software (as hereinafter defined), internet web sites and the content thereof, whether registered or unregistered (“Copyrights”);

(iv)          all computer software, programs and databases (including, without limitation, source code, object code and all related applications and data files), firmware and documentation and materials relating thereto, together with any and all maintenance rights, service rights, programming rights, hosting rights, test rights, improvement rights, renewal rights and indemnification rights and any substitutions, replacements, improvements, error corrections, updates and new versions of any of the foregoing (“Computer Software”);

(v)           all confidential and proprietary information, including, without limitation, know-how, trade secrets, manufacturing and production processes and techniques, inventions, research and development information, databases and data, including, without limitation, technical data, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information (collectively, “Trade Secrets”), and

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

(vi)          all registrations and applications for registration for any of the foregoing, including, without limitation, those registrations and applications for registration set forth in Schedule III hereto, together with all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations thereof ((i)-(vi) collectively, “IP Rights”);

(vii)         all tangible embodiments of the foregoing, all rights in the foregoing provided by international treaties or conventions, all rights corresponding thereto throughout the world and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto;

(viii)        all agreements, permits, consents, orders and franchises relating to the license, development, use or disclosure of any of the foregoing to which such Grantor, now or hereafter, is a party or a beneficiary, including, without limitation, the agreements set forth in Schedule III hereto (“IP Agreements”); and

(ix)           any and all claims for damages and injunctive relief for past, present and future infringement, dilution, misappropriation, violation, misuse or breach with respect to any of the foregoing, with the right, but not the obligation, to sue for and collect, or otherwise recover, such damages;

(h) the commercial tort claims described in Schedule IV hereto (together with any commercial tort claims as to which the Grantors have complied with the requirements of Section 15, the “Commercial Tort Claims Collateral”);

(i) all books and records (including, without limitation, customer lists, credit files, printouts and other computer output materials and records) of such Grantor pertaining to any of the Collateral; and

(j) all proceeds of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to, and supporting obligations relating to, any and all of the Collateral (including, without limitation, proceeds, collateral and supporting obligations that constitute property of the types described in clauses (a) through (i) of this Section 1) and, to the extent not otherwise included, all (A) payments under insurance (whether or not the Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral, and (B) cash (any and all such property being the “Proceeds”).

Notwithstanding anything herein to the contrary, in no event shall the Collateral include, and no Grantor shall be deemed to have granted a security interest in, (a) any Intellectual Property Collateral, if the grant of such security interest shall constitute or result in the abandonment, invalidation or rendering unenforceable any right, title or interest of such Grantor therein; (b) in any license, contract or agreement to which such Grantor is a party or any of its rights or

6

interests thereunder, including, without limitation, with respect to any pledged partnership interests or any pledged limited liability company interests, to the extent, but only to the extent, that such a grant would, under the terms of such license, contract or agreement (including, without limitation, any partnership agreements or any limited liability company agreements), or otherwise, is prohibited by or result in a breach or termination of the terms of, or constitute a default under or termination of any such license, contract or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-406 of the UCC (or any successor provision) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity) or would otherwise constitute a violation of law, regulation or policy; provided, however, that immediately upon the ineffectiveness, lapse or termination of any such provision, the Collateral shall include, and each Grantor shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect; (c) in any of the outstanding capital stock of a “controlled foreign corporation” as defined in the Internal Revenue Code of 1986, as amended from time to time (each, a “Controlled Foreign Corporation”), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporation entitled to vote; (d) the Chester Equipment; or (e) all equipment and other property to the extent, but only to the extent, that such a grant would, under the terms of any contract or agreement to which such Grantor is a party in connection with certain industrial revenue obligations, be prohibited by or would otherwise result in a breach or termination of the terms of, or constitute a default under or termination of any such contract or agreement or would otherwise constitute a violation of law, regulation or policy; provided, however, that immediately upon the ineffectiveness, lapse or termination of any such provision precluding the grant of security interest on such property, the Collateral shall include, and each Grantor shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect.

Section 2. Security for Obligations.  This Agreement secures, in the case of each Grantor, the payment of all Obligations of such Grantor now or hereafter existing under the Loan Documents and the Existing Indentures, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement obligations, interest, fees, premiums, penalties, indemnifications, contract causes of action, costs, expenses or otherwise (all such Obligations being the “Secured Obligations”).  Without limiting the generality of the foregoing, this Agreement secures, as to each Grantor, the payment of all amounts that constitute part of the Secured Obligations and would be owed by such Grantor to any Secured Party under the Loan Documents or the Existing Indentures but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving a Loan Party.

Section 3. Grantors Remain Liable.  Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in such Grantor’s Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Collateral Agent of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral and (c) no Secured Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or any other Loan Document or the Existing Indentures, nor shall any Secured Party be obligated to perform any of the obligations or

7

duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

Section 4. Delivery and Control of Security Collateral.  (a) All certificates or instruments representing or evidencing Security Collateral shall be delivered to and held by or on behalf of the Collateral Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Collateral Agent.  The Collateral Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Security Collateral for certificates or instruments of smaller or larger denominations.

(b) With respect to any Security Collateral that constitutes an uncertificated security, if requested by the Collateral Agent, the relevant Grantor will cause the issuer thereof either (i) to register the Collateral Agent as the registered owner of such security or (ii) to agree with such Grantor and the Collateral Agent that such issuer will comply with instructions with respect to such security originated by the Collateral Agent without further consent of such Grantor, such agreement to be in form and substance reasonably satisfactory to the Collateral Agent (such agreement being an “Uncertificated Security Control Agreement”).

(c) With respect to the Securities Account, the Collateral Account and any Security Collateral that constitutes a security entitlement as to which the financial institution acting as Collateral Agent hereunder is not the securities intermediary, if reasonably requested by the Collateral Agent, the relevant Grantor will cause the securities intermediary with respect to such Account or security entitlement either (i) to identify in its records the Collateral Agent as the entitlement holder thereof or (ii) to agree with such Grantor and the Collateral Agent that such securities intermediary will comply with entitlement orders originated by the Collateral Agent without further consent of such Grantor, such agreement to be in form and substance reasonably satisfactory to the Collateral Agent (a “Securities Account Control Agreement” or “Securities/Deposit Account Control Agreement,” respectively).

(d) During the continuance of an Event of Default, the Collateral Agent shall have the right, at any time and without notice to any Grantor, to transfer to or to register in the name of the Collateral Agent or any of its nominees any or all of the Security Collateral, subject only to the revocable rights specified in Section 12(a).  In addition, during the continuance of an Event of Default, the Collateral Agent shall have the right at any time to convert Security Collateral consisting of financial assets credited to the Securities Account or the Collateral Account to Security Collateral consisting of financial assets held directly by the Collateral Agent, and to convert Security Collateral consisting of financial assets held directly by the Collateral Agent to Security Collateral consisting of financial assets credited to the Securities Account or the Collateral Account.

(e) Upon the reasonable request of the Collateral Agent following the occurrence and during the continuance of an Event of Default, each Grantor will notify each issuer of Security Collateral granted by it hereunder that such Security Collateral is subject to the security interest granted hereunder.  For purposes hereof, an “Event of Default” means an “Event of Default” as defined in the Credit Agreement or the Existing Indentures.

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Section 5. Maintaining the Account Collateral.  Subject to the rights of the Collateral Monitoring Agent under the Revolving Credit Agreement, the Security Agreement (as defined in the Revolving Credit Agreement, the “Revolver Security Agreement”) and the Revolver Intercreditor Agreement (as hereinafter defined), so long as any Term Loan Advance or any other Obligation (other than contingent obligations) of any Loan Party under any Loan Document or any Existing Indenture shall remain unpaid or any Lender shall have any Term Loan Commitment:

(a) Each Grantor will maintain deposit accounts only with the financial institution acting as Collateral Agent hereunder or with a bank (a “Pledged Account Bank”) that has agreed with such Grantor and the Collateral Agent to comply with instructions originated by the Collateral Agent directing the disposition of funds in such deposit account without the further consent of such Grantor, such agreement to be in form and substance satisfactory to the Collateral Agent (a “Deposit Account Control Agreement”); provided, however, this Section 5(a) shall not apply to deposit accounts (i) in which all funds therein are swept on a daily basis and only to another deposit account over which there is in effect a Deposit Account Control Agreement or (ii) operated solely as a payroll account, provided, that no funds or investments in excess of $10,000,000 shall at any time be on deposit in the payroll accounts in the aggregate; provided, further, however, the Company shall have forty-five days (unless otherwise agreed by the Administrative Agent) from the Closing Date to comply with this requirements of this Section 5.

(b) Subject to Section 5(a), each Grantor shall instruct all of its account debtors to remit all payments to (i) the applicable “P.O. Boxes” or “Lockbox Addresses” of the applicable Pledged Account Banks with respect to all accounts of such account debtor, which remittances shall be collected by the applicable Pledged Account Banks and deposited into the applicable Pledged Deposit Account or (ii) any other deposits accounts in which all funds therein are swept on a daily basis and only to another deposit account over which there is in effect a Deposit Account Control Agreement.

(c) During the continuance of an Event of Default, upon notice from the Administrative Agent or the respective trustee under the respective Existing Indenture, upon the terms and subject to the conditions set forth in the Deposit Account Control Agreement, all amounts held in all of the Pledged Deposit Accounts by the Grantors shall be wired by the close of business on each Business Day into an account with the Collateral Agent (the “Concentration Account”) and all collected amounts held in the Concentration Account shall be applied as provided in Section 19.

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

(a) Such Grantor’s exact legal name, location, chief executive office, type of organization, jurisdiction of organization and organizational

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identification number is set forth in Schedule V hereto.  Such Grantor has no trade names other than as listed on Schedule III hereto.

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

(c) All of the Equipment and Inventory of such Grantor are located at the places specified therefor in Schedule VI hereto.

(d) None of the Receivables is evidenced by a promissory note or other instrument that has not been delivered to the Collateral Agent or the Collateral Monitoring Agent under the Revolving Security Agreement.

(e) If such Grantor is an issuer of Security Collateral, such Grantor confirms that it has received notice of the security interest granted hereunder.

(f) The Pledged Equity pledged by such Grantor and issued by a Grantor hereunder has been duly authorized and validly issued and is fully paid and non assessable.  To the best knowledge of such Grantor, the Pledged Equity pledge by such Grantor issued by a non-Grantor has been duly authorized and validly issued and is fully paid or non-assessable.  The Pledged Debt pledged by such Grantor hereunder and issued by a Grantor has been duly authorized, authenticated or issued and delivered, is the legal, valid and binding obligation of the issuer thereof, is evidenced by one or more promissory notes (which promissory notes have been delivered to the Collateral Agent) and such issuer is not in default under the terms of such Pledged Debt.  To the best knowledge of such Grantor, the Pledged Debt pledged by such Grantor issued by a non-Grantor has been duly authorized, authenticated or issued and delivered, is the legal, valid and binding obligation of the issuers thereof, is evidenced by one or more promissory notes (which promissory notes have been delivered to the Collateral Agent) and such issuer is not in default under the terms of such Pledged Debt.

(g) The Initial Pledged Equity pledged by such Grantor constitutes the percentage of the issued and outstanding Equity Interests of the issuers thereof indicated on Schedule I hereto.  The Initial Pledged Debt constitutes all of the outstanding indebtedness owed to such Grantor by the issuers thereof and is outstanding in the principal amount indicated on Schedule I hereto.

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(h) Such Grantor has no investment property, other than the investment property listed on Schedule I hereto and additional investment property as to which such Grantor has complied with the requirements of Section 4.

(i) Such Grantor has no deposit accounts, other than the Pledged Deposit Accounts listed on Schedule II hereto and additional Pledged Deposit Accounts as to which such Grantor has complied with the applicable requirements of Section 5.

(j) Such Grantor is not a beneficiary or assignee under any letter of credit, other than the letters of credit described in Schedule VII hereto and additional letters of credit as to which such Grantor has complied with the requirements of Section 13.

(k) This Agreement creates in favor of the Collateral Agent for the benefit of the Secured Parties a valid security interest in the Collateral granted by such Grantor, securing the payment of the Secured Obligations; except for the filing of financing statements under the UCC or the other filings referred to in paragraph (l) below, all filings and other actions necessary to perfect the security interest in the Collateral granted by such Grantor have been duly made or taken and are in full force and effect; and such security interest is first priority with the exception of the security interest in the Revolver Collateral (as defined under the General Intercreditor Agreement (as hereinafter defined)), which is second priority.

(l) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the grant by such Grantor of the security interest granted hereunder or for the execution, delivery or performance of this Agreement by such Grantor, (ii) the perfection or maintenance of the security interest created hereunder (including the first priority nature of such security interest), except for the filing of financing and continuation statements under the UCC, which financing statements have been duly filed and are in full force and effect, actions necessary to obtain control of Collateral as provided in Sections 9-104, 9-106 and 9-107 of the UCC but excluding actions necessary to perfect the Collateral Agent’s security interest with respect to Collateral evidenced by a certificate of title, and the recordation of the Intellectual Property Security Agreements referred to in Section 11(f) with the U.S. Patent and Trademark Office and the U.S. Copyright Office, which Agreements have been duly recorded and are in full force and effect, and the actions described in Section 4 with respect to the Security Collateral, which actions have been taken and are in full force and effect, or (iii) the exercise by the Collateral Agent of its voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with the disposition of any portion of the Security Collateral by laws affecting the offering and sale of securities generally.

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(m) The Inventory that has been produced or distributed by such Grantor has been produced in compliance with all requirements of applicable law, including, without limitation, the Fair Labor Standards Act.

(n) As to itself and its Intellectual Property Collateral:

(i)            The operation of such Grantor’s business as currently conducted or as now contemplated to be conducted and the use of the Intellectual Property Collateral in connection therewith do not, to such Grantor’s knowledge, conflict with, infringe, misappropriate, dilute, misuse or otherwise violate the intellectual property rights of any third party.

(ii)           Such Grantor is the exclusive owner of all right, title and interest in and to the Intellectual Property Collateral, except as set forth on Schedule III(a) hereto, and is entitled to use all Intellectual Property Collateral subject only to the terms of the IP Agreements.

(iii)          The Intellectual Property Collateral set forth on Schedule III hereto includes all of the patents, patent applications, domain names, trademark registrations and applications, and copyright registrations and applications owned by such Grantor and all IP Agreements to which such Grantor is a party or beneficiary as of the date hereof.

(iv)          The Intellectual Property Collateral material to the business of the Grantors is subsisting and has not been adjudged invalid or unenforceable in whole or part, and to the best of such Grantor’s knowledge, is valid and enforceable.  Such Grantor is not aware of any uses of any item of Intellectual Property Collateral that could be expected to lead to such item becoming invalid or unenforceable.

(v)           As to each item of Intellectual Property Collateral material to the business of the Grantors, such Grantor has made or performed all filings, recordings and other acts and has paid all required fees and taxes to maintain and protect its interest in each such item of Intellectual Property Collateral in full force and effect throughout the world, including, without limitation, recordations of any of its interests in the Patents and Trademarks with the U.S. Patent and Trademark Office and in corresponding national and international patent offices, and recordation of any of its interests in the Copyrights with the U.S. Copyright Office and in corresponding national and international copyright offices.  Such Grantor has used proper statutory notice in connection with its use of each patent, trademark and copyright in the Intellectual Property Collateral material to the business of the Grantors.

(vi)          No claim, action, suit, investigation, litigation or proceeding has been asserted or is pending or, to such Grantor’s knowledge, threatened against such Grantor (A) based upon or challenging or seeking to deny or restrict the Grantor’s rights in or use of any of the Intellectual Property Collateral material to

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the business of the Grantors, (B) to such Grantor’s knowledge, alleging that the Grantor’s rights in or use of the Intellectual Property Collateral or that any services provided by, processes used by, or products manufactured or sold by, such Grantor infringe, misappropriate, dilute, misuse or otherwise violate any patent, trademark, copyright or any other proprietary right of any third party, or (C) alleging that the Intellectual Property Collateral is being licensed or sublicensed in violation or contravention of the terms of any license or other agreement.  To such Grantor’s knowledge, no Person is engaging in any activity that infringes, misappropriates, dilutes, misuses or otherwise violates the Intellectual Property Collateral or the Grantor’s rights in or use thereof.  Except as set forth on Schedule III hereto, such Grantor has not granted any license, release, covenant not to sue, non-assertion assurance, or other right to any Person with respect to any part of the Intellectual Property Collateral.  The consummation of the transactions contemplated by the Transaction Documents will not result in the termination or impairment of any of the Intellectual Property Collateral.

(vii)         With respect to each IP Agreement, to such Grantor’s knowledge: (A) such IP Agreement is valid and binding and in full force and effect and represents the entire agreement between the respective parties thereto with respect to the subject matter thereof; (B) such IP Agreement will not cease to be valid and binding and in full force and effect on terms identical to those currently in effect as a result of the rights and interest granted herein, nor will the grant of such rights and interest constitute a breach or default under such IP Agreement or otherwise give any party thereto a right to terminate such IP Agreement; (C) such Grantor has not received any notice of termination or cancellation under such IP Agreement; (D) such Grantor has not received any notice of a breach or default under such IP Agreement, which breach or default has not been cured; (E) such Grantor has not granted to any other third party any rights, adverse or otherwise, under such IP Agreement; and (F) neither such Grantor nor any other party to such IP Agreement is in breach or default thereof in any material respect, and no event has occurred that, with notice or lapse of time or both, would constitute such a breach or default or permit termination, modification or acceleration under such IP Agreement.

(viii)        To the best of such Grantor’s knowledge, (A) none of the Trade Secrets of such Grantor has been used, divulged, disclosed or appropriated to the detriment of such Grantor for the benefit of any other Person other than such Grantor; (B) no employee, independent contractor or agent of such Grantor has misappropriated any trade secrets of any other Person in the course of the performance of his or her duties as an employee, independent contractor or agent of such Grantor; and (C) no employee, independent contractor or agent of such Grantor is in default or material breach of any term of any employment agreement, non-disclosure agreement, assignment of inventions agreement or similar agreement or contract relating in any way to the protection, ownership, development, use or transfer of such Grantor’s Intellectual Property Collateral.

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(ix)           No Grantor or Intellectual Property Collateral is subject to any outstanding consent, settlement, decree, order, injunction, judgment or ruling restricting the use of any Intellectual Property Collateral that is material to the business of the Grantors or that would impair the validity or enforceability of such material Intellectual Property Collateral.

(x)            Such Grantor owns, or possesses the valid right to use, all Intellectual Property Collateral used in or otherwise necessary to carry on such Grantor’s business as currently conducted or as now contemplated to be conducted, all of which rights shall survive unchanged the consummation of the transactions contemplated by this Agreement.  There are no other IP Rights that are material to or necessary for the operation of the Grantors’ business or for the continued operation of the Grantors’ business immediately after the date hereof in substantially the same manner as operated prior to the date hereof.

(o) Such Grantor has no commercial tort claims as of the date hereof other than those listed in Schedule IV hereto and additional commercial tort claims as to which such Grantor has complied with the requirements of Section 14.

Section 7. Further Assurances.  (a)  Each Grantor agrees that from time to time, at the expense of such Grantor, such Grantor will promptly execute and deliver, or otherwise authenticate, all further instruments and documents, and take all further action that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to perfect and protect any pledge or security interest granted or purported to be granted by such Grantor hereunder or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral of such Grantor.  Without limiting the generality of the foregoing, each Grantor will promptly with respect to Collateral of such Grantor, at the reasonable request of the Collateral Agent:  (i) mark conspicuously each document included in Inventory, each chattel paper included in Receivables, each Related Contract, and, at the reasonable request of the Collateral Agent, each of its records pertaining to such Collateral with a legend, in form and substance reasonably satisfactory to the Collateral Agent, indicating that such document, chattel paper, Related Contract, or Collateral is subject to the security interest granted hereby; (ii) if any such Collateral shall be evidenced by a promissory note or other instrument, deliver and pledge to the Collateral Agent hereunder such note or instrument duly indorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent; (iii) 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 reasonably request, in order to perfect and preserve the security interest granted or purported to be granted by such Grantor hereunder; and (iv) deliver to the Collateral Agent evidence that all other actions that the Collateral Agent may deem reasonably necessary or desirable in order to perfect and protect the security interest granted or purported to be granted by such Grantor under this Agreement have been taken.

(b) Each Grantor hereby authorizes the Collateral Agent or its agent, sub-agent or designee to file one or more financing or continuation statements, and amendments thereto, including, without limitation, one or more financing statements indicating that such financing

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statements cover all assets or all personal property (or words of similar effect) of such Grantor, regardless of whether any particular asset described in such financing statements falls within the scope of the UCC or the granting clause of this Agreement.  A photocopy or other reproduction of this Agreement shall be sufficient as a financing statement where permitted by law.  Each Grantor ratifies its authorization for the Collateral Agent or its agent, sub-agent or designee to have filed such financing statements, continuation statements or amendments filed prior to the date hereof.

(c) Each Grantor will furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral of such Grantor and such other reports in connection with such Collateral as the Collateral Agent may reasonably request, all in reasonable detail.

Section 8. As to Equipment and Inventory.  (a)  Each Grantor will cause its Equipment to be maintained and preserved in the same condition, repair and working order as when new, ordinary wear and tear excepted, and will forthwith, or in the case of any loss or damage to any of such Equipment as soon as practicable after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith that are necessary or desirable to such end.

(b) Each Grantor will pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including, without limitation, claims for labor, materials and supplies) against, its Equipment and Inventory, except to the extent payment thereof is not required by Section 5.01(b) of the Credit Agreement or Section 4.04 of each of the Existing Indentures.  In producing its Inventory, each Grantor will comply with the requirements of the Fair Labor Standards Act.

(c) The Collateral Agent acknowledges that each Grantor has granted to the Revolver Collateral Agent (as defined in the General Intercreditor Agreement), for use upon the occurrence and during the continuance of an Event of Default (as defined in the Revolving Credit Agreement), the irrevocable, non-exclusive right and license to use all present and future trademarks, trade names, copyrights, patents or technical processes owned or used by such Grantor that relate to the Revolver Collateral (as defined in the General Intercreditor Agreement) and any other Collateral granted by such Grantor as security for the Secured Obligations (as defined in the Revolver Security Agreement), together with any goodwill associated therewith, all to the extent necessary to enable the Revolver Collateral Agent to realize on, and exercise all rights of the Revolver Collateral Agent and the Lender Parties under the Revolving Credit Agreement in relation to, the Revolver Collateral.  This right shall inure to the benefit of all successors, assigns and transferees of the Revolver Collateral Agent.  Such right and license shall be granted free of charge, without requirement that any monetary payment whatsoever be made to such Grantor.

Section 9. Insurance.  (a)  Each Grantor will, at its own expense, maintain insurance with respect to its Equipment and Inventory in such amounts, against such risks, in such form and with such insurers consistent with industry standards.  Subject to the rights of the Revolver Collateral Agent under the Revolver Security Agreement and the Revolver Intercreditor Agreement, each policy of each Grantor for liability insurance shall provide for all

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losses to be paid on behalf of the Collateral Agent and such Grantor as their interests may appear.  Subject to the rights of the Revolver Collateral Agent under the Revolver Security Agreement and the Revolver Intercreditor Agreement, each such policy shall in addition (i) name such Grantor and the Collateral Agent as insured parties thereunder (without any representation or warranty by or obligation upon the Collateral Agent) as their interests may appear, (ii) contain the agreement by the insurer that any loss thereunder shall be payable to the Collateral Agent notwithstanding any action, inaction or breach of representation or warranty by such Grantor, (iii) provide that there shall be no recourse against the Collateral Agent for payment of premiums or other amounts with respect thereto and (iv) provide that at least 10 days’ prior written notice of cancellation or of lapse shall be given to the Collateral Agent by the insurer.  Further, each Grantor will, at the request of the Collateral Agent, duly execute and deliver instruments of assignment of such insurance policies to comply with the requirements of Section 9 and cause the insurers to acknowledge notice of such assignment.

(b) Reimbursement under any liability insurance maintained by any Grantor pursuant to this Section 9 may be paid directly to the Person who shall have incurred liability covered by such insurance.  In case of any loss involving damage to Equipment or Inventory when subsection (c) of this Section 9 is not applicable, the applicable Grantor will make or cause to be made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance properly received by or released to such Grantor shall be used by such Grantor, except as otherwise permitted by the Credit Agreement, to pay or as reimbursement for the costs of such repairs or replacements.

(c) So long as no Event of Default shall have occurred and be continuing, all insurance payments received by the Collateral Agent in connection with any loss, damage or destruction of any Inventory or Equipment will be released by the Collateral Agent to the applicable Grantor.

Section 10. Post-Closing Changes; Collections on Receivables and Related Contracts.  (a)  No Grantor will change its name, type of organization, jurisdiction of organization or organizational identification number from those set forth in Section 6(a) of this Agreement without first giving at least 15 days’ prior written notice to the Collateral Agent and taking all action required by the Collateral Agent for the purpose of perfecting or protecting the security interest granted by this Agreement.  Each Grantor will hold and preserve its records relating to the Collateral, including, without limitation, Related Contracts, and will permit representatives of the Collateral Agent at any time during normal business hours to inspect and make abstracts from such records and other documents.  If any Grantor does not have an organizational identification number and later obtains one, it will forthwith notify the Collateral Agent of such organizational identification number.

(b) Except as otherwise provided in this subsection (b), each Grantor will continue to collect, at its own expense, all amounts due or to become due such Grantor under the Receivables and Related Contracts.  In connection with such collections, subject in the case of Receivables and Related Contracts to the rights of the Collateral Monitoring Agent under the Revolver Security Agreement, such Grantor may take (and, at the Collateral Agent’s direction during the continuance of an Event of Default, will take) such action as such Grantor or the Collateral Agent may deem necessary or advisable to enforce collection of Receivables and

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Related Contracts; provided, however, that the Collateral Agent shall have the right at any time, upon written instructions of the Required Lender Representatives (as defined in the Collateral Agency Agreement) upon the occurrence and during the continuance of an Event of Default and upon written notice to such Grantor of its intention to do so, to notify the Obligors under any Receivables and Related Contracts of the assignment of such Receivables and Related Contracts to the Collateral Agent and to direct such Obligors to make payment of all amounts due or to become due to such Grantor thereunder directly to the Collateral Agent and, upon such notification and at the expense of such Grantor, to enforce collection of any such Receivables and Related Contracts, to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done, and to otherwise exercise all rights with respect to such Receivables and Related Contracts, including, without limitation, those set forth set forth in Section 9-607 of the UCC.  After receipt by any Grantor of the notice from the Collateral Agent referred to in the proviso to the preceding sentence, (i) all amounts and proceeds (including, without limitation, instruments) received by such Grantor in respect of the Receivables and Related Contracts of such Grantor shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary indorsement) to be deposited in the Collateral Account and either (A) released to such Grantor so long as no Event of Default shall have occurred and be continuing or (B) if any Event of Default shall have occurred and be continuing, applied as provided in Section 20(b) and (ii) such Grantor will not adjust, settle or compromise the amount or payment of any Receivable or amount due on any or Related Contract, release wholly or partly any Obligor thereof or allow any credit or discount thereon.  No Grantor will permit or consent to the subordination of its right to payment under any of the Receivables and Related Contracts to any other indebtedness or obligations of the Obligor thereof.

Section 11. As to Intellectual Property Collateral.  (a)  With respect to each item of its Intellectual Property Collateral material to the business of the Grantors, each Grantor agrees to take, at its expense, all reasonable steps, and shall not knowingly omit to do any act, including, without limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authority, to (i) maintain the validity and enforceability of such Intellectual Property Collateral and maintain such Intellectual Property Collateral in full force and effect, and (ii) pursue the registration and maintenance of each patent, trademark, or copyright registration or application, now or hereafter included in such Intellectual Property Collateral of such Grantor, including, without limitation, the payment of required fees and taxes, the filing of responses to office actions issued by the U.S. Patent and Trademark Office, the U.S. Copyright Office or other governmental authorities, the filing of applications for renewal or extension, the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional, continuation, continuation-in-part, reissue and renewal applications or extensions, the payment of maintenance fees and the participation in interference, reexamination, opposition, cancellation, infringement and misappropriation proceedings.  No Grantor shall, without the written consent of the Collateral Agent, discontinue use of or otherwise abandon any Intellectual Property Collateral material to the business of the Grantors, or abandon any right to file an application for patent, trademark, or copyright, unless such Grantor shall have previously determined that such use or the pursuit or maintenance of such Intellectual Property Collateral is no longer desirable in the conduct of such Grantor’s business and that the loss thereof would not be reasonably likely to have a Material Adverse Effect.

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(b) Each Grantor agrees promptly to notify the Collateral Agent if such Grantor becomes aware (i) that any item of the Intellectual Property Collateral material to the business of the Grantors may have become abandoned, placed in the public domain, invalid or unenforceable, or of any adverse determination or development regarding such Grantor’s ownership or use of any such Intellectual Property Collateral or its right to register the same or to keep and maintain and enforce the same, or (ii) of any adverse determination or the institution of any proceeding (including, without limitation, the institution of any proceeding in the U.S. Patent and Trademark Office or any court) regarding any item of the Intellectual Property Collateral material to the business of the Grantors.

(c) In the event that any Grantor becomes aware that any item of the Intellectual Property Collateral material to the business of the Grantors is being infringed or misappropriated by a third party, such Grantor shall promptly notify the Collateral Agent and shall take all reasonable actions, at its expense, to protect or enforce such Intellectual Property Collateral, including, without limitation, suing for infringement or misappropriation and for an injunction against such infringement or misappropriation.

(d) Each Grantor shall use proper statutory notice in connection with its use of each item of its Intellectual Property Collateral.

(e) Each Grantor shall take all steps which it or the Collateral Agent deems reasonable and appropriate under the circumstances to preserve and protect each item of its Intellectual Property Collateral material to the business of the Grantors, including, without limitation, maintaining the quality of any and all products or services used or provided in connection with any of the material Trademarks, consistent with the quality of the products and services as of the date hereof, and taking all steps necessary to ensure that all licensed users of any of the material Trademarks use such consistent standards of quality.

(f) With respect to its Intellectual Property Collateral, each Grantor agrees to execute or otherwise authenticate an agreement, in substantially the form set forth in Exhibit A hereto or otherwise in form and substance satisfactory to the Collateral Agent (an “Intellectual Property Security Agreement”), for recording the security interest granted hereunder to the Collateral Agent in such Intellectual Property Collateral with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authorities necessary to perfect the security interest hereunder in such Intellectual Property Collateral.

(g) Each Grantor agrees that should it obtain an ownership interest in or license to any item of the type set forth in Section 1(g) that is not on the date hereof a part of the Intellectual Property Collateral (“After-Acquired Intellectual Property”) (i) the provisions of this Agreement shall automatically apply thereto, and (ii) any such After-Acquired Intellectual Property and, in the case of trademarks, the goodwill symbolized thereby, shall automatically become part of the Intellectual Property Collateral subject to the terms and conditions of this Agreement with respect thereto.  At the end of each fiscal quarter of the Company, each Grantor shall give prompt written notice to the Collateral Agent identifying the After-Acquired Intellectual Property acquired during such fiscal quarter, and such Grantor shall execute and deliver to the Collateral Agent with such written notice, or otherwise authenticate, an agreement substantially in the form of Exhibit B hereto or otherwise in form and substance satisfactory to

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the Collateral Agent (an “IP Security Agreement Supplement”) covering such After-Acquired Intellectual Property, which IP Security Agreement Supplement shall be recorded with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authorities necessary to perfect the security interest hereunder in such After-Acquired Intellectual Property.

(h) On or prior to a date that is 60 days after the Closing Date, or such later date as the Administrative Agent may determine, which determination shall not be unreasonably withheld after any request for extension by the Company, the Administrative Agent shall receive a certificate from a Responsible Officer of the Company confirming that all actions set forth on Schedule VIII have been completed; provided, that, with respect to any actions to be taken that have not been completed by such date, the Administrative Agent may determine in its sole reasonable judgment to waive such actions if it reasonably determines that the cost of completing such action is excessive in relation to the benefits afforded to the Secured Parties thereby.  In addition, such Grantor shall take all commercially reasonable actions to complete the actions set forth on Schedule VIII as soon as reasonably practical after the Closing Date.

Section 12. Voting Rights; Dividends; Etc.  (a)  So long as no Event of Default shall have occurred and be continuing:

(i)            Each Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Security Collateral of such Grantor or any part thereof for any purpose.

(ii)           Each Grantor shall be entitled to receive and retain any and all dividends, interest and other distributions paid in respect of the Security Collateral of such Grantor if and to the extent that the payment thereof is not otherwise prohibited by the terms of the Loan Documents and the Existing Indentures; provided, however, that any and all instruments received, receivable or otherwise distributed in respect of, or in exchange for, any Security Collateral, shall be, and shall be forthwith delivered to the Collateral Agent to hold as, Security Collateral and shall, if received by such Grantor, be received in trust for the benefit of the Collateral Agent, be segregated from the other property or funds of such Grantor and be forthwith delivered to the Collateral Agent as Security Collateral in the same form as so received (with any necessary indorsement).

(iii)          The Collateral Agent will execute and deliver (or cause to be executed and delivered) to each Grantor all such proxies and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and other rights that it is entitled to exercise pursuant to paragraph (i) above and to receive the dividends or interest payments that it is authorized to receive and retain pursuant to paragraph (ii) above.

(b) Upon the occurrence and during the continuance of an Event of Default:

(i)            All rights of each Grantor (x) to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to Section 12(a)(i) shall, upon notice to such Grantor by the Collateral Agent, cease and (y) to receive the dividends, interest and other distributions that it would otherwise be

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authorized to receive and retain pursuant to Section 12(a)(ii) shall automatically cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights and to receive and hold as Security Collateral such dividends, interest and other distributions.

(ii)           All dividends, interest and other distributions that are received by any Grantor contrary to the provisions of paragraph (i) of this Section 12(b) shall be received in trust for the benefit of the Collateral Agent, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Collateral Agent as Security Collateral in the same form as so received (with any necessary indorsement).

Section 13. As to Letter-of-Credit Rights.  (a)  Each Grantor, by granting a security interest in its Receivables consisting of letter-of-credit rights to the Collateral Agent, intends to (and hereby does) assign to the Collateral Agent its rights (including its contingent rights) to the proceeds of all Related Contracts consisting of letters of credit of which it is or hereafter becomes a beneficiary or assignee.

(b) Upon the occurrence of an Event of Default, each Grantor will, promptly upon request by the Collateral Agent, (i) notify (and such Grantor hereby authorizes the Collateral Agent to notify) the issuer and each nominated person with respect to each of the Related Contracts consisting of letters of credit that the proceeds thereof have been assigned to the Collateral Agent hereunder and any payments due or to become due in respect thereof are to be made directly to the Collateral Agent or its designee and (ii) arrange for the Collateral Agent to become the transferee beneficiary of letter of credit.

Section 14. Commercial Tort Claims.  Each Grantor will promptly give notice to the Collateral Agent of any commercial tort claim in excess of $500,000 that may arise after the date hereof and will immediately execute or otherwise authenticate a supplement to this Agreement, and otherwise take all necessary action, to subject such commercial tort claim to the first priority security interest created under this Agreement.

Section 15. Transfers and Other Liens; Additional Shares.  (a)  Each Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or grant any option with respect to, any of the Collateral, other than sales, assignments and other dispositions of Collateral, and options relating to Collateral, permitted under the terms of the Credit Agreement, or (ii) create or suffer to exist any Lien upon or with respect to any of the Collateral of such Grantor except for the pledge, assignment and security interest created under this Agreement and Liens permitted under the Credit Agreement.

(b) Each Grantor agrees that it will (i) cause each issuer of the Pledged Equity pledged by such Grantor not to issue any Equity Interests or other securities in respect of or in substitution for the Pledged Equity issued by such issuer, except to such Grantor; provided that in respect of any issuer not directly or indirectly under the control of a Grantor, such Grantor will use its commercially reasonable efforts to cause such issuer to adhere to the requirements of clause (i) above and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional Equity Interests or other securities.

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Section 16. Collateral Agent Appointed Attorney in Fact.  Each Grantor hereby irrevocably appoints the Collateral Agent such Grantor’s attorney in fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time, upon the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:

(a) to obtain and adjust insurance required to be paid to the Collateral Agent pursuant to Section 9,

(b) to ask for, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral,

(c) to receive, indorse and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) or (b) above, and

(d) to file any claims or take any action or institute any proceedings that the Collateral Agent may reasonably deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral.

Section 17. Collateral Agent May Perform.  If any Grantor fails during the continuance of an Event of Default to perform any agreement contained herein, the Collateral Agent may, but without any obligation to do so and without notice, itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by such Grantor under Section 20.

Section 18. The Collateral Agent’s Duties.  (a)  The powers conferred on the Collateral Agent hereunder are solely to protect the Secured Parties’ interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not any Secured Party has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral.  The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which it accords its own property.

(b) Anything contained herein to the contrary notwithstanding, the Collateral Agent may from time to time, when the Collateral Agent deems it to be necessary, appoint one or more subagents (each a “Subagent”) for the Collateral Agent hereunder with respect to all or any part of the Collateral.  In the event that the Collateral Agent so appoints any Subagent with respect to any Collateral, (i) the assignment and pledge of such Collateral and the security interest granted in such Collateral by each Grantor hereunder shall be deemed for purposes of this Security Agreement to have been made to such Subagent, in addition to the Collateral Agent,

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for the ratable benefit of the Secured Parties, as security for the Secured Obligations of such Grantor, (ii) such Subagent shall automatically be vested, in addition to the Collateral Agent, with all rights, powers, privileges, interests and remedies of the Collateral Agent hereunder with respect to such Collateral, and (iii) the term “Collateral Agent,” when used herein in relation to any rights, powers, privileges, interests and remedies of the Collateral Agent with respect to such Collateral, shall include such Subagent; provided, however, that no such Subagent shall be authorized to take any action with respect to any such Collateral unless and except to the extent expressly authorized in writing by the Collateral Agent.

Section 19. Remedies.  If any Event of Default shall have occurred and be continuing:

(a) The Collateral Agent upon written instructions of the Required Lender Representatives (as defined in the Collateral Agency Agreement) may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to the affected Collateral) and also may:  (i) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Collateral Agent forthwith, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place and time to be designated by the Collateral Agent that is reasonably convenient to both parties; (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable; (iii) occupy any premises owned or leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation; and (iv) exercise any and all rights and remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect of the Collateral, including, without limitation, (A) any and all rights of such Grantor to demand or otherwise require payment of any amount under, or performance of any provision of the Receivables, the Related Contracts and the other Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds with respect to the Account Collateral and (C) exercise all other rights and remedies with respect to the Receivables, the Related Contracts and the other Collateral, including, without limitation, those set forth in Section 9-607 of the UCC.  Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

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(b) Any cash held by or on behalf of the Collateral Agent and all cash proceeds received by or on behalf of the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Collateral Agent, be held by the Collateral Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Collateral Agent pursuant to Section 20) in whole or in part by the Collateral Agent for the ratable benefit of the Secured Parties against, all or any part of the Secured Obligations, as set forth in the Collateral Agency Agreement.

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

(d) The Collateral Agent may, without notice to any Grantor except as required by law and at any time or from time to time, charge, set off and otherwise apply all or any part of the Secured Obligations against any funds held with respect to the Account Collateral or in any other deposit account.

(e) The Collateral Agent may send to each bank, securities intermediary or issuer party to any Deposit Account Control Agreement, Securities/Deposit Account Control Agreement, Securities Account Control Agreement or Uncertificated Security Control Agreement a notice of exclusive control.

(f) In the event of any sale or other disposition of any of the Intellectual Property Collateral of any Grantor, the goodwill symbolized by any Trademarks subject to such sale or other disposition shall be included therein, and such Grantor shall supply to the Collateral Agent or its designee such Grantor’s know-how and expertise, and documents and things relating to any Intellectual Property Collateral subject to such sale or other disposition, and such Grantor’s customer lists and other records and documents relating to such Intellectual Property Collateral and to the manufacture, distribution, advertising and sale of products and services of such Grantor.

(g) If the Collateral Agent shall determine to exercise its right to sell all or any of the Security Collateral of any Grantor pursuant to this Section 19, each Grantor agrees that, upon request of the Collateral Agent, such Grantor will, at its own expense:

(i)            execute and deliver, and cause each issuer of such Security Collateral contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the reasonable opinion of the Collateral Agent, advisable to register such Security Collateral under the provisions of the Securities Act of 1933 (as amended from time to time,

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the “Securities Act”), to use commercially reasonable efforts to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished and to make all amendments and supplements thereto and 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 the Securities and Exchange Commission applicable thereto;

(ii)           use its commercially reasonable efforts to qualify the Security Collateral under the state securities or “Blue Sky” laws and to obtain all necessary governmental approvals for the sale of such Security Collateral, as requested by the Collateral Agent;

(iii)          use commercially reasonable efforts to cause each such issuer of such Security Collateral to make available to its security holders, as soon as practicable, an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act;

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

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

(h) The Collateral Agent is authorized, in connection with any sale of the Security Collateral pursuant to this Section 20, to deliver or otherwise disclose to any prospective purchaser of the Security Collateral:  (i) any registration statement or prospectus, and all supplements and amendments thereto, prepared pursuant to subsection (f)(i) above; (ii) any information and projections provided to it pursuant to subsection (f)(iv) above; and (iii) any other information in its possession relating to such Security Collateral.

Section 20. Indemnity and Expenses.  (a)  Each Grantor agrees to indemnify, defend and save and hold harmless each Secured Party and each of their Affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

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(b) Each Grantor will upon demand pay to the Collateral Agent the amount of any and all reasonable expenses, including, without limitation, the reasonable fees and expenses of its counsel and of any experts and agents, that 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 of such Grantor, (iii) the exercise or enforcement of any of the rights of the Collateral Agent or the other Secured Parties hereunder or (iv) the failure by such Grantor to perform or observe any of the provisions hereof.

(c) The obligations of the Grantors under this Section 20 shall survive the termination of the other provisions of this Agreement and the resignation or removal of the Collateral Agent.

Section 21. Amendments; Waivers; Additional Grantors; Etc.  (a)  No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Grantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  No failure on the part of the Collateral Agent or any other Secured Party to exercise, and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

(b) Upon the execution and delivery by any Person of a security agreement supplement in substantially the form of Exhibit D hereto (each a “Security Agreement Supplement”) or such other form as may be reasonably acceptable to the Administrative Agent, such Person shall be referred to as an “Additional Grantor” and shall be and become a Grantor hereunder, and each reference in this Agreement and the other Loan Documents to “Grantor” shall also mean and be a reference to such Additional Grantor, each reference in this Agreement and the other Loan Documents to the “Collateral” shall also mean and be a reference to the Collateral granted by such Additional Grantor and each reference in this Agreement to a Schedule shall also mean and be a reference to the schedules attached to such Security Agreement Supplement.

Section 22. Notices, Etc.  All notices and other communications provided for hereunder shall be either (i) in writing (including telecopier communication) and mailed, telecopied or otherwise delivered or (ii) by electronic mail (if electronic mail addresses are designated as provided below) confirmed immediately in writing, in the case of the Company or the Collateral Agent, addressed to it at its address specified in the Collateral Agency Agreement and, in the case of each Grantor other than the Company, addressed to it at its address set forth opposite such Grantor’s name on the signature pages hereto or on the signature page to the Security Agreement Supplement pursuant to which it became a party hereto; or, as to any party, at such other address as shall be designated by such party in a written notice to the other parties.  All such notices and other communications shall, when mailed, telecopied, sent by electronic mail or otherwise, be effective when deposited in the mails, delivered to the telegraph company, telecopied, sent by electronic mail and confirmed in writing, or otherwise delivered (or confirmed by a signed receipt), respectively, addressed as aforesaid; except that notices and other communications to the Collateral Agent shall not be effective until received by the Collateral Agent.  Delivery by telecopier of an executed counterpart of any amendment or waiver of any

25

provision of this Agreement or of any Security Agreement Supplement or Schedule hereto shall be effective as delivery of an original executed counterpart thereof.

Section 23. Continuing Security Interest.  This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the latest payment in full in cash of the Secured Obligations (other than contingent obligations), (b) be binding upon each Grantor, its successors and assigns and (c) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Secured Parties and their respective successors, transferees and assigns.

Section 24. Release; Termination.  (a)  Upon any sale, lease, transfer or other disposition of any item of Collateral of any Grantor in accordance with the terms of the Loan Documents (other than sales of Inventory in the ordinary course of business), the security interest in such Collateral shall automatically terminate and as promptly as practicable, the Collateral Agent will, at such Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted hereby; provided, however, that (i) at the time of such request and such release no Event of Default shall have occurred and be continuing, (ii) such Grantor shall have delivered to the Collateral Agent, at least five Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral, together with a form of release for execution by the Collateral Agent and a certificate of such Grantor to the effect that the transaction is in compliance with the Loan Documents and the Existing Indentures and as to such other matters as the Collateral Agent may reasonably request.

(b) Upon the payment in full in cash of the Secured Obligations (other than contingent obligations), the pledge and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the applicable Grantor and the Collateral Agent will, at the applicable Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

(c) The Collateral Agent shall release the Collateral as otherwise provided for under the Collateral Agency Agreement.

Section 25. Intercreditor.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIENS AND SECURITY INTERESTS GRANTED TO THE COLLATERAL AGENT PURSUANT TO THIS AGREEMENT IN ANY COLLATERAL AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE COLLATERAL AGENT WITH RESPECT TO ANY COLLATERAL HEREUNDER ARE SUBJECT TO THE LIMITATIONS AND PROVISIONS OF (i) THE REVOLVER INTERCREDITOR AGREEMENT, DATED AS OF FEBRUARY 22, 2007 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “REVOLVER INTERCREDITOR AGREEMENT”, AMONG THE COLLATERAL AGENT, DEUTSCHE BANK AG NEW YORK BRANCH, AS THE FIRST LIEN COLLATERAL AGENT (AS DEFINED THEREIN), AND DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, AS THE THIRD LIEN COLLATERAL AGENT (AS DEFINED THEREIN) AND CERTAIN OTHER PERSONS THAT MAY BECOME PARTY THERETO FROM TIME TO TIME AND CONSENTED TO BY BUILDING MATERIALS CORPORATION OF

26

AMERICA AND THE GRANTORS IDENTIFIED THEREIN AND (ii) THE GENERAL INTERCREDITOR AGREEMENT, DATED AS OF FEBRUARY 22, 2007 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “GENERAL INTERCREDITOR AGREEMENT” AND TOGETHER WITH THE REVOLVER INTERCREDITOR AGREEMENT, THE “INTERCREDITOR AGREEMENTS”, AMONG THE COLLATERAL AGENT AND DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, AS THE JUNIOR LIEN COLLATERAL AGENT AND CERTAIN OTHER PERSONS THAT MAY BECOME PARTY THERETO FROM TIME TO TIME AND CONSENTED TO BY BUILDING MATERIALS CORPORATION OF AMERICA AND THE GRANTORS IDENTIFIED THEREIN.  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENTS AND THIS AGREEMENT, THE TERMS OF THE INTERCREDITOR AGREEMENTS SHALL GOVERN AND CONTROL.

Section 26. Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement.

Section 27. Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 28. Jurisdiction, Etc.  (a)  Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the fullest extent permitted by law, in such Federal court.  Each of the parties hereto 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 in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

(b)           Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement to which it is a party in any New York State or Federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

Section 29. Waiver of Jury Trial.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT.

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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

Address for Notices: c/o Building Materials Corp of America 1361 Alps RoadWayne, NJ 07470	BUILDING MATERIALS CORPORATION OF AMERICA BMCA ACQUISITION INC. BMCA ACQUISITION SUB INC. BMCA FRESNO LLC BMCA FRESNO II LLC BMCA GAINESVILLE LLC BMCA INSULATION PRODUCTS INC. BMCA QUAKERTOWN INC. BUILDING MATERIALS INVESTMENT CORPORATION BUILDING MATERIALS MANUFACTURING CORPORATION DUCTWORK MANUFACTURING CORPORATION GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION HBP ACQUISITION LLC LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. SOUTH PONCA REALTY CORP. WIND GAP REAL PROPERTY ACQUISITION CORP.
	By	/John M. Maitner/
		Name: John M. Maitner
		Title: Vice President and Treasurer

ACCEPTED & ACKNOWLEDGED
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Collateral Agent
By	/Kerry Warwicker/
		Name: Kerry Warwicker
		Title: Vice President
By	/Randy Kahn/
		Name: Randy Kahn
		Title: Vice President

EX-10.40

Exhibit 10.40

EXECUTION VERSION

SECURITY AGREEMENT

Dated February 22, 2007

From

The Grantors referred to herein

as Grantors

to

Deutsche Bank AG New York Branch

as Collateral Agent

T A B L E  O F  C O N T E N T S

Section	Page
Section 1. Grant of Security	2
Section 2. Security for Obligations	3
Section 3. Grantors Remain Liable	3
Section 4. Maintaining the Account Collateral	3
Section 5. Representations and Warranties	5
Section 6. Further Assurances	6
Section 7. As to Inventory	6
Section 8. Insurance	7
Section 9. Post-Closing Changes; Collections on Receivables and Related Contracts	7
Section 10. Transfers and Other Liens	8
Section 11. Collateral Agent Appointed Attorney in Fact	8
Section 12. Collateral Agent May Perform	9
Section 13. The Collateral Agent’s Duties	9
Section 14. Remedies	10
Section 15. Indemnity and Expenses	11
Section 16. Amendments; Waivers; Additional Grantors; Etc.	11
Section 17. Notices, Etc.	12
Section 18. Continuing Security Interest; Assignments under the Credit Agreement	12
Section 19. Release; Termination	13
Section 20. Intercreditor	13
Section 21. Execution in Counterparts	13
Section 22. Governing Law	14
Section 23. Jurisdiction, Etc	14
Section 24. Waiver of Jury Trial	14

Schedules

i

Schedule I	-	Pledged Deposit Accounts
Schedule II	-	Location, Chief Executive Office, Type of Organization, Jurisdiction of Organization and Organizational Identification Number
Schedule III	-	Locations of Inventory
Exhibits
Exhibit A	-	Form of Security Agreement Supplement

ii

SECURITY AGREEMENT

SECURITY AGREEMENT dated February 22, 2007 made by BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the “Company”), and the other Persons listed on the signature pages hereof (the Company and the Persons so listed being, collectively, the “Grantors”) to DEUTSCHE BANK AG NEW YORK BRANCH (“DBNY”), as Collateral Monitoring Agent (as defined in the Credit Agreement referred to below) and DBNY in such capacity together with any successor collateral monitoring agent appointed pursuant to Article VII of the Credit Agreement (the “Collateral Agent”).

PRELIMINARY STATEMENTS.

(1) The Company along with certain of its Subsidiaries has entered into a Revolving Credit Agreement dated as of February 22, 2007 (said Agreement, as it may hereafter be amended, restated, supplemented or otherwise modified, refinanced or replaced from time to time, being the “Credit Agreement”) with the Lender Parties and the Agents (each as defined therein).

(2) Each Grantor is the owner of the deposit accounts (the “Pledged Deposit Accounts”) set forth opposite such Grantor’s name on Schedule I hereto.

(3) It is a condition precedent to the making of Advances and the issuance of Letters of Credit by the Lender Parties under the Credit Agreement that the Grantors shall have granted the security interest contemplated by this Agreement.  Each Grantor will derive substantial direct and indirect benefit from the transactions contemplated by the Loan Documents.

(4) Terms defined in the Credit Agreement and not otherwise defined in this Agreement are used in this Agreement as defined in the Credit Agreement.  Further, unless otherwise defined in this Agreement or in the Credit Agreement, terms defined in Article 8 or 9 of the UCC (as defined below) are used in this Agreement as such terms are defined in such Article 8 or 9.  “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection or the effect of perfection or non perfection or the priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non perfection or priority.

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

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Section 1. Grant of Security.  Each Grantor hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in such Grantor’s right, title and interest in and to the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising (collectively, the “Collateral”):

(a) all inventory in all of its forms, including, without limitation, (i) all raw materials, work in process, finished goods and materials used or consumed in the manufacture, production, preparation or shipping thereof, (ii) goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including, without limitation, goods in which such Grantor has an interest or right as consignee) and (iii) goods that are returned to or repossessed or stopped in transit by such Grantor), and all accessions thereto and products thereof and documents of title therefor, including, without limitation, computer programs and supporting information that constitute inventory within the meaning of the UCC (any and all such property being the “Inventory”);

(b) all accounts, chattel paper (including, without limitation, tangible chattel paper and electronic chattel paper), instruments (including, without limitation, promissory notes), deposit accounts, letter-of-credit rights, general intangibles (including, without limitation, payment intangibles) and other obligations of any kind, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services and whether or not earned by performance, and all rights now or hereafter existing in and to all supporting obligations and in and to all security agreements, mortgages, Liens, leases, letters of credit and other contracts securing or otherwise relating to the foregoing property (any and all of such accounts, chattel paper, instruments, deposit accounts, letter-of-credit rights, general intangibles and other obligations, to the extent not referred to in clause (c), below, being the “Receivables,” and any and all such supporting obligations, security agreements, mortgages, Liens, leases, letters of credit and other contracts being the “Related Contracts”);

(c) the following (collectively, the “Account Collateral”):

(i)            the Pledged Deposit Accounts and all funds and financial assets from time to time credited thereto (including, without limitation, all Cash Equivalents), and all certificates and instruments, if any, from time to time representing or evidencing the Pledged Deposit Accounts;

(ii)           all promissory notes, certificates of deposit, checks and other instruments from time to time delivered to or otherwise possessed by the Collateral Agent for or on behalf of such Grantor in substitution for or in addition to any or all of the then existing Account Collateral;

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(iii)          all interest, dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral; and

(d)       all precious metals, including without limitation, platinum and rhodium, used in the production of Inventory (any and all such property being the “Precious Metals”); and

(e)       all proceeds of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to, and supporting obligations relating to, any and all of the Collateral (including, without limitation, proceeds, collateral and supporting obligations that constitute property of the types described in clauses (a) through (d) of this Section 1) and, to the extent not otherwise included, all (A) payments under insurance (whether or not the Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral, and (B) cash (any and all such property being, the “Proceeds”).

Section 2. Security for Obligations.  This Agreement secures, in the case of each Grantor, the payment of all Obligations of such Grantor now or hereafter existing under the Loan Documents, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement obligations, interest, fees, premiums, penalties, indemnifications, contract causes of action, costs, expenses or otherwise (all such Obligations being the “Secured Obligations”).  Without limiting the generality of the foregoing, this Agreement secures, as to each Grantor, the payment of all amounts that constitute part of the Secured Obligations and would be owed by such Grantor to any Secured Party under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving a Loan Party.

Section 3. Grantors Remain Liable.  Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in such Grantor’s Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Collateral Agent of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral and (c) no Secured Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or any other Loan Document, nor shall any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

Section 4. Maintaining the Account Collateral.  So long as any Advance or any other Obligation (other than contingent obligations) of any Loan Party under any Loan Document shall remain unpaid or any Letter of Credit shall be outstanding unless cash collateralized or otherwise supported in a manner reasonably acceptable to the Collateral Agent or any Lender Party shall have any Commitment:

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(a) Each Grantor will maintain deposit accounts only with the financial institution acting as Collateral Agent hereunder or with banks (“Pledged Account Banks”) that have agreed with such Grantor and the Collateral Agent to comply with instructions originated by the Collateral Agent directing the disposition of funds in such deposit account without the further consent of such Grantor, such agreement to be in form and substance satisfactory to the Collateral Agent (a “Deposit Account Control Agreement”); provided, however, this Section 4(a) shall not apply to deposit accounts (i) in which all funds therein are swept on a daily basis and only to another deposit account over which there is in effect a Deposit Account Control Agreement or (ii) operated solely as a payroll account, provided, that no funds or investments in excess of $10,000,000 shall at any time be on deposit in the payroll accounts in the aggregate; provided, further however, the Company shall have forty-five (45) days (unless otherwise agreed by the Administrative Agent) from the Closing Date to comply with the requirements of this Section 4.

(b) Subject to Section 4(a), each Grantor shall instruct all of its account debtors to remit all payments to (i) the applicable “P.O. Boxes” or “Lockbox Addresses” of the applicable Pledged Account Banks with respect to all accounts of such account debtor, which remittances shall be collected by the applicable Pledged Account Banks and deposited into the applicable Pledged Deposit Account or (ii) any other deposits accounts in which all funds therein are swept on a daily basis and only to another deposit account over which there is in effect a Deposit Account Control Agreement.

(c) During the continuance of a Dominion Event, upon notice from the Administrative Agent or the Required Lenders to the Company, upon the terms and subject to the conditions set forth in the Deposit Account Control Agreement, all amounts held in all of the Pledged Deposit Accounts by the Grantors shall be wired by the close of business on each Business Day into an account with the Collateral Agent (the “Concentration Account”) and all collected amounts held in the Concentration Account shall be applied as provided in Section 14.  For purposes hereof a “Dominion Event” shall mean any period (i) commencing on the date on which either (x) an Event of Default has occurred and is continuing or (y) the Specified Liquidity Amount (based on the Borrowing Base Certificate last delivered) is less than the greater of (x) $60,000,000 and (y) 10% of the aggregate Revolving Credit Commitments and (ii) ending on the first date thereafter on which (x) no Event of Default exists and (y) the Specified Liquidity Amount (based on the Borrowing Base Certificate last delivered) has been equal to or greater than the greater of (m) $60,000,000 and (n) 10% of the aggregate Revolving Credit Commitments for 30 consecutive days (the “Liquidity Cure”); provided, however, that a Liquidity Cure may be used as the basis for the termination of a Dominion Event no more than two times in any Fiscal Year; provided further, however, that no Dominion Event shall be deemed to have occurred for the period from the Closing Date to the date which is 30 days after the Closing Date.

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Section 5. Representations and Warranties.  Each Grantor represents and warrants as follows:

(a) Such Grantor’s exact legal name, location, chief executive office, type of organization, jurisdiction of organization and organizational identification number is set forth in Schedule II hereto.

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

(c) All of the Inventory of such Grantor are located at the places specified therefor in Schedule III hereto.

(d) None of the Receivables is evidenced by a promissory note or other instrument that has not been delivered to the Collateral Agent.

(e) Such Grantor has no deposit accounts, other than the Pledged Deposit Accounts listed on Schedule I hereto.

(f) This Agreement creates in favor of the Collateral Agent for the benefit of the Secured Parties a valid security interest in the Collateral granted by such Grantor, securing the payment of the Secured Obligations; upon the filing of financing statements, all filings and other actions necessary to perfect the security interest in the Collateral granted by such Grantor will have been duly made or taken and are in full force and effect; and such security interest is first priority.

(g) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the grant by such Grantor of the security interest granted hereunder or for the execution, delivery or performance of this Agreement by such Grantor, (ii) the perfection or maintenance of the security interest created hereunder (including the first priority nature of such security interest), except for the filing of financing and continuation statements under the UCC, the actions necessary for the Collateral Agent to obtain control of Collateral as provided in Sections 9-104, 9-106 and 9-107 of the UCC and actions necessary to perfect the Collateral Agent’s security interest with respect to Collateral evidenced by a certificate of title or (iii) the exercise by the Collateral Agent of its voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement.

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(h) The Inventory that has been produced or distributed by such Grantor has been produced in compliance with all requirements of applicable law, including, without limitation, the Fair Labor Standards Act.

Section 6. Further Assurances.  (a)  Each Grantor agrees that from time to time, at the expense of such Grantor, such Grantor will promptly execute and deliver, or otherwise authenticate, all further instruments and documents, and take all further action that may be necessary or desirable, or that the Collateral Agent may request, in order to perfect and protect any pledge or security interest granted or purported to be granted by such Grantor hereunder or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral of such Grantor.  Without limiting the generality of the foregoing, each Grantor will promptly with respect to Collateral of such Grantor at the reasonable request of the Collateral Agent:  (i) mark conspicuously each document included in Inventory, each chattel paper included in Receivables, and, at the request of the Collateral Agent, each of its records pertaining to such Collateral with a legend, in form and substance satisfactory to the Collateral Agent, indicating that such document, chattel paper, or Collateral is subject to the security interest granted hereby; (ii) if any such Collateral shall be evidenced by a promissory note or other instrument, deliver and pledge to the Collateral Agent hereunder such note or instrument duly indorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent; (iii) 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 reasonably request, in order to perfect and preserve the security interest granted or purported to be granted by such Grantor hereunder; and (iv) deliver to the Collateral Agent evidence that all other actions that the Collateral Agent may deem reasonably necessary or desirable in order to perfect and protect the security interest granted or purported to be granted by such Grantor under this Agreement has been taken.

(b) Each Grantor hereby authorizes the Collateral Agent to file one or more financing or continuation statements, and amendments thereto, including, without limitation, one or more financing statements indicating that such financing statements cover all Inventory, Receivables, Precious Metals and Proceeds (or words of similar effect) of such Grantor, regardless of whether any particular asset described in such financing statements falls within the scope of the UCC or the granting clause of this Agreement.  A photocopy or other reproduction of this Agreement shall be sufficient as a financing statement where permitted by law.  Each Grantor ratifies its authorization for the Collateral Agent to have filed such financing statements, continuation statements or amendments filed prior to the date hereof.

(c) Each Grantor will furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral of such Grantor and such other reports in connection with such Collateral as the Collateral Agent may reasonably request, all in reasonable detail.

Section 7. As to Inventory.  (a)  Each Grantor will pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including, without limitation, claims for labor, materials and supplies) against, its Inventory, except to the extent payment thereof is not required by Section 5.01(b) of the Credit

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Agreement.  In producing its Inventory, each Grantor will comply with all requirements of applicable law, including, without limitation, the Fair Labor Standards Act.

(b) Each Grantor hereby grants to the Collateral Agent, for use upon the occurrence and during the continuance of an Event of Default, the irrevocable, non-exclusive right and license to use all present and future trademarks, trade names, copyrights, patents or technical processes owned or used by such Grantor that relate to the Collateral and any other Collateral granted by such Grantor as security for the Secured Obligations, together with any goodwill associated therewith, all to the extent necessary to enable the Collateral Agent to realize on, and exercise all rights of the Collateral Agent and the Secured Parties in relation to, the Collateral in accordance with this Agreement.  This right shall inure to the benefit of all successors, assigns and transferees of the Collateral Agent.  Such right and license shall be granted free of charge, without requirement that any monetary payment whatsoever be made to such Grantor.

Section 8. Insurance.  (a)  Each Grantor will, at its own expense, maintain insurance with respect to its Inventory in such amounts, against such risks, in such form and with such insurers consistent with industry standards.  Each policy of each Grantor for liability insurance shall provide for all losses to be paid on behalf of the Collateral Agent and such Grantor as their interests may appear.  Each such policy shall in addition (i) name such Grantor and the Collateral Agent as insured parties thereunder (without any representation or warranty by or obligation upon the Collateral Agent) as their interests may appear, (ii) contain the agreement by the insurer that any loss thereunder shall be payable to the Collateral Agent notwithstanding any action, inaction or breach of representation or warranty by such Grantor, (iii) provide that there shall be no recourse against the Collateral Agent for payment of premiums or other amounts with respect thereto and (iv) provide that at least 10 days’ prior written notice of cancellation or of lapse shall be given to the Collateral Agent by the insurer.

(b) Reimbursement under any liability insurance maintained by any Grantor pursuant to this Section 8 may be paid directly to the Person who shall have incurred liability covered by such insurance.  In case of any loss involving damage to Inventory when subsection (c) of this Section 8 is not applicable, the applicable Grantor will make or cause to be made the necessary repairs to or replacements of such Inventory, and any proceeds of insurance properly received by or released to such Grantor shall be used by such Grantor, except as otherwise permitted by the Credit Agreement, to pay or as reimbursement for the costs of such repairs or replacements.

(c) So long as no Event of Default shall have occurred and be continuing, all insurance payments received by the Collateral Agent in connection with any loss, damage or destruction of any Inventory will be released by the Collateral Agent to the applicable Grantor.

Section 9. Post-Closing Changes; Collections on Receivables and Related Contracts.  (a)  No Grantor will change its name, type of organization, jurisdiction of organization or organizational identification number from those set forth in Section 5(a) of this Agreement without first giving at least 15 days’ prior written notice to the Collateral Agent and taking all action required by the Collateral Agent for the purpose of perfecting or protecting the security interest granted by this Agreement.  Each Grantor will hold and preserve its records

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relating to the Collateral, including, without limitation, the Related Contracts, and will permit representatives of the Collateral Agent at any time during normal business hours to inspect and make abstracts from such records and other documents as the Collateral Agent may reasonably request.  If any Grantor does not have an organizational identification number and later obtains one, it will forthwith notify the Collateral Agent of such organizational identification number.

(b) Except as otherwise provided in this subsection (b), each Grantor will continue to collect, at its own expense, all amounts due or to become due such Grantor under the Receivables.  In connection with such collections, such Grantor may take (and, at the Collateral Agent’s direction during the continuance of an Event of Default, will take) such action as such Grantor or the Collateral Agent may deem necessary or advisable to enforce collection of the Receivables; provided, however, that the Collateral Agent shall have the right at any time, upon the occurrence and during the continuance of an Event of Default and upon written notice to such Grantor of its intention to do so, to notify the Obligors under any Receivables of the assignment of such Receivables to the Collateral Agent and to direct such Obligors to make payment of all amounts due or to become due to such Grantor thereunder directly to the Collateral Agent and, upon such notification and at the expense of such Grantor, to enforce collection of any such Receivables, to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done, and to otherwise exercise all rights with respect to such Receivables, including, without limitation, those set forth set forth in Section 9-607 of the UCC.  After receipt by any Grantor of the notice from the Collateral Agent referred to in the proviso to the preceding sentence, (i) all amounts and proceeds (including, without limitation, instruments) received by such Grantor in respect of the Receivables of such Grantor shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary indorsement) to be deposited in the Concentration Account and either (A) released to such Grantor so long as no Event of Default shall have occurred and be continuing or (B) if any Event of Default shall have occurred and be continuing, applied as provided in Section 14(b) and (ii) such Grantor will not adjust, settle or compromise the amount or payment of any Receivable, release wholly or partly any Obligor thereof or allow any credit or discount thereon.  No Grantor will permit or consent to the subordination of its right to payment under any of the Receivables to any other indebtedness or obligations of the Obligor thereof.

Section 10. Transfers and Other Liens.  Each Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or grant any option with respect to, any of the Collateral, other than sales, assignments and other dispositions of Collateral, and options relating to Collateral, permitted under the terms of the Credit Agreement, or (ii) create or suffer to exist any Lien upon or with respect to any of the Collateral of such Grantor except for the pledge, assignment and security interest created under this Agreement and Liens permitted under the Credit Agreement.

Section 11. Collateral Agent Appointed Attorney in Fact.  Each Grantor hereby irrevocably appoints the Collateral Agent such Grantor’s attorney in fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time, upon the occurrence and during the continuance of an Event of Default, in the Collateral Agent’s discretion, to take any action and to execute any instrument that the Collateral Agent

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may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:

(a) to obtain and adjust insurance required to be paid to the Collateral Agent pursuant to Section 8,

(b) to ask for, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral,

(c) to receive, indorse and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) or (b) above, and

(d) to file any claims or take any action or institute any proceedings that the Collateral Agent may reasonably deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral.

Section 12. Collateral Agent May Perform.  If any Grantor during the continuance of an Event of Default fails to perform any agreement contained herein, the Collateral Agent may, but without any obligation to do so and without notice, itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by such Grantor under Section 15.

Section 13. The Collateral Agent’s Duties.  (a)  The powers conferred on the Collateral Agent hereunder are solely to protect the Secured Parties’ interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not any Secured Party has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral.  The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which it accords its own property.

(b) Anything contained herein to the contrary notwithstanding, the Collateral Agent may from time to time, when the Collateral Agent deems it to be necessary, appoint one or more subagents (each a “Subagent”) for the Collateral Agent hereunder with respect to all or any part of the Collateral.  In the event that the Collateral Agent so appoints any Subagent with respect to any Collateral, (i) the assignment and pledge of such Collateral and the security interest granted in such Collateral by each Grantor hereunder shall be deemed for purposes of this Security Agreement to have been made to such Subagent, in addition to the Collateral Agent, for the ratable benefit of the Secured Parties, as security for the Secured Obligations of such Grantor, (ii) such Subagent shall automatically be vested, in addition to the Collateral Agent, with all rights, powers, privileges, interests and remedies of the Collateral Agent hereunder with respect to such Collateral, and (iii) the term “Collateral Agent,” when used herein in relation to

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any rights, powers, privileges, interests and remedies of the Collateral Agent with respect to such Collateral, shall include such Subagent; provided, however, that no such Subagent shall be authorized to take any action with respect to any such Collateral unless and except to the extent expressly authorized in writing by the Collateral Agent.

Section 14. Remedies.  If any Event of Default shall have occurred and be continuing:

(a) The Collateral Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to the affected Collateral) and also may:  (i) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Collateral Agent forthwith, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place and time to be designated by the Collateral Agent that is reasonably convenient to both parties; (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable; (iii) occupy any premises owned or leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation; and (iv) exercise any and all rights and remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect of the Collateral, including, without limitation, (A) any and all rights of such Grantor to demand or otherwise require payment of any amount under, or performance of any provision of, the Receivables and the other Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds with respect to the Account Collateral and (C) exercise all other rights and remedies with respect to the Receivables and the other Collateral, including, without limitation, those set forth in Section 9-607 of the UCC.  Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) Any cash held by or on behalf of the Collateral Agent and all cash proceeds received by or on behalf of the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Collateral Agent, be held by the Collateral Agent as collateral for, and/or then or at any time thereafter applied (after payment of any

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amounts payable to the Collateral Agent pursuant to Section 15) in whole or in part by the Collateral Agent for the ratable benefit of the Secured Parties against, all or any part of the Secured Obligations, by payment thereof to the Administrative Agent for payment in accordance with Section 2.11(f) of the Credit Agreement and any surplus of such cash or cash proceeds held by or on the behalf of the Collateral Agent and remaining after payment in full of all the Secured Obligations shall be paid over to the applicable Grantor or to whomsoever may be lawfully entitled to receive such surplus.

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

(d) The Collateral Agent may, without notice to any Grantor except as required by law and at any time or from time to time, charge, set off and otherwise apply all or any part of the Secured Obligations against any funds held with respect to the Account Collateral or in any other deposit account.

(e) The Collateral Agent may send to each bank, securities intermediary or issuer party to any Deposit Account Control Agreement, a “Notice of Exclusive Control” as defined in and under such Agreement.

Section 15. Indemnity and Expenses.  (a)  Each Grantor agrees to indemnify, defend and save and hold harmless each Secured Party and each of their Affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

(b) Each Grantor will upon demand pay to the Collateral Agent the amount of any and all reasonable expenses, including, without limitation, the reasonable fees and expenses of its counsel and of any experts and agents, that 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 of such Grantor, (iii) the exercise or enforcement of any of the rights of the Collateral Agent or the other Secured Parties hereunder or (iv) the failure by such Grantor to perform or observe any of the provisions hereof.

Section 16. Amendments; Waivers; Additional Grantors; Etc.  (a)  No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Grantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance

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and for the specific purpose for which given.  No failure on the part of the Collateral Agent or any other Secured Party to exercise, and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

(b) Upon the execution and delivery by any Person of a security agreement supplement in substantially the form of Exhibit A hereto (each a “Security Agreement Supplement”) or such other form as may be reasonably acceptable to the Administrative Agent, such Person shall be referred to as an “Additional Grantor” and shall be and become a Grantor hereunder, and each reference in this Agreement and the other Loan Documents to “Grantor” shall also mean and be a reference to such Additional Grantor, each reference in this Agreement and the other Loan Documents to the “Collateral” shall also mean and be a reference to the Collateral granted by such Additional Grantor and each reference in this Agreement to a Schedule shall also mean and be a reference to the schedules attached to such Security Agreement Supplement.

Section 17. Notices, Etc.  All notices and other communications provided for hereunder shall be either (i) in writing (including telecopier communication) and mailed, telecopied or otherwise delivered or (ii) by electronic mail (if electronic mail addresses are designated as provided below) confirmed immediately in writing, in the case of the Company or the Collateral Agent, addressed to it at its address specified in the Credit Agreement and, in the case of each Grantor other than the Company, addressed to it at its address set forth opposite such Grantor’s name on the signature pages hereto or on the signature page to the Security Agreement Supplement pursuant to which it became a party hereto; or, as to any party, at such other address as shall be designated by such party in a written notice to the other parties.  All such notices and other communications shall, when mailed, telecopied, sent by electronic mail or otherwise, be effective when deposited in the mails, telecopied, sent by electronic mail and confirmed in writing, or otherwise delivered (or confirmed by a signed receipt), respectively, addressed as aforesaid; except that notices and other communications to the Collateral Agent shall not be effective until received by the Collateral Agent.  Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or of any Security Agreement Supplement or Schedule hereto shall be effective as delivery of an original executed counterpart thereof.

Section 18. Continuing Security Interest; Assignments under the Credit Agreement.  This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the later of (i) the payment in full in cash of the Secured Obligations under the Credit Agreement (other than contingent obligations) and the termination of all letters of credit (or cash collateralization or otherwise supported in a manner satisfactory to the Collateral Agent), or (ii) the Termination Date, (b) be binding upon each Grantor, its successors and assigns and (c) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Secured Parties and their respective successors, transferees and assigns.  Without limiting the generality of the foregoing clause (c), any Lender Party may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitment, the Advances owing to it and the Note or Notes, if any, held by it) to any other Person, and such other Person

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shall thereupon become vested with all the benefits in respect thereof granted to such Lender Party herein or otherwise, in each case as provided in Section 8.07 of the Credit Agreement.

Section 19. Release; Termination.  (a)  Upon any sale, lease, transfer or other disposition of any item of Collateral of any Grantor in accordance with the terms of the Loan Documents (other than sales of Inventory in the ordinary course of business), the security interest in such Collateral shall automatically terminate and, as promptly as practicable, the Collateral Agent will, at such Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted hereby; provided, however, that (i) at the time of such request and such release no Default shall have occurred and be continuing, (ii) such Grantor shall have delivered to the Collateral Agent, at least five Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral, together with a form of release for execution by the Collateral Agent and a certificate of such Grantor to the effect that the transaction is in compliance with the Loan Documents and as to such other matters as the Collateral Agent may reasonably request.

(b) Upon the latest of (i) the payment in full in cash of the Secured Obligations under the Credit Agreement (other than contingent obligations), (ii) the Termination Date and (iii) the termination, expiration, cash collateralization or provision of other credit support satisfactory to the Issuing Bank of all Letters of Credit, the pledge and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the applicable Grantor.  Upon any such termination, the Collateral Agent will, at the applicable Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

Section 20. Intercreditor.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIENS AND SECURITY INTERESTS GRANTED TO THE COLLATERAL AGENT PURSUANT TO THIS AGREEMENT IN ANY COLLATERAL AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE COLLATERAL AGENT WITH RESPECT TO ANY COLLATERAL HEREUNDER ARE SUBJECT TO THE LIMITATION AND PROVISIONS OF THE REVOLVER INTERCREDITOR AGREEMENT, DATED AS OF FEBRUARY 22, 2007 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “INTERCREDITOR AGREEMENT”, AMONG THE COMPANY, EACH OTHER LOAN PARTY PARTY THERETO, THE COLLATERAL AGENT, DEUTSCHE BANK TRUST COMPANY AMERICAS, AS SECOND LIEN COLLATERAL AGENT (AS DEFINED THEREIN) AND DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, AS THIRD LIEN COLLATERAL AGENT (AS DEFINED THEREIN), AND CERTAIN OTHER PERSONS THAT MAY BECOME PARTY THERETO FROM TIME TO TIME AND CONSENTED TO BY BUILDING MATERIALS CORPORATION OF AMERICA AND THE GRANTORS IDENTIFIED THEREIN.  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE TERMS OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.

Section 21. Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and

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all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement.

Section 22. Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 23. Jurisdiction, Etc.  (a)  Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the fullest extent permitted by law, in such Federal court.  Each of the parties hereto 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 in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

(b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement to which it is a party in any New York State or Federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

Section 24. Waiver of Jury Trial.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT.

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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

Address for Notices: c/o Building Materials Corp of America 1361 Alps Road, Wayne, NJ 07470	BUILDING MATERIALS CORPORATION OF AMERICA BMCA ACQUISITION INC. BMCA ACQUISITION SUB INC. BMCA FRESNO LLC BMCA FRESNO II LLC BMCA GAINESVILLE LLC BMCA INSULATION PRODUCTS INC. BMCA QUAKERTOWN INC. BUILDING MATERIALS INVESTMENT CORPORATION BUILDING MATERIALS MANUFACTURING CORPORATION DUCTWORK MANUFACTURING CORPORATION GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION HBP ACQUISITION LLC LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. SOUTH PONCA REALTY CORP. WIND GAP REAL PROPERTY ACQUISITION CORP.
	By	/John M. Maitner/
		Name: John M. Maitner
		Title: Vice President and Treasurer

ACKNOWLEDGED & AGREED
DEUTSCHE BANK AG NEW YORK BRANCH, as Collateral Agent
By	/Marguerite Sutton/
		Name: Marguerite Sutton
		Title: Director
By	/Enrique Landaeta/
		Name: Enrique Landaeta
		Title: Vice President

EX-10.41

Exhibit 10.41

EXECUTED DOCUMENT

AMENDED AND RESTATED SECURITY AGREEMENT

Dated March 15, 2007

From

The Grantors referred to herein

as Grantors

to

Deutsche Bank AG New York Branch

as Collateral Agent

T A B L E  O F  C O N T E N T S

Section	Page
Section 1. Grant of Security	3
Section 2. Security for Obligations	7
Section 3. Grantors Remain Liable	7
Section 4. Delivery and Control of Security Collateral	8
Section 5. Maintaining the Account Collateral	9
Section 6. Representations and Warranties	9
Section 7. Further Assurances	14
Section 8. As to Equipment and Inventory	15
Section 9. Insurance	15
Section 10. Post-Closing Changes; Collections on Receivables and Related Contracts	16
Section 11. As to Intellectual Property Collateral	17
Section 12. Voting Rights; Dividends; Etc.	19
Section 13. As to Letter-of-Credit Rights	20
Section 14. Commercial Tort Claims	20
Section 15. Transfers and Other Liens; Additional Shares	20
Section 16. Collateral Agent Appointed Attorney in Fact	21
Section 17. Collateral Agent May Perform	21
Section 18. The Collateral Agent’s Duties	21
Section 19. Remedies	22
Section 20. Indemnity and Expenses	25
Section 21. Amendments; Waivers; Additional Grantors; Etc.	25
Section 22. Notices, Etc.	26
Section 23. Continuing Security Interest	26
Section 24. Release; Termination	26
Section 25. Intercreditor	27

Section 26. Execution in Counterparts	28
Section 27. Governing Law	28
Section 28. Jurisdiction, Etc	28
Section 29. Waiver of Jury Trial	29

Schedules

Schedule I	-	Investment Property
Schedule II	-	Pledged Deposit Accounts
Schedule III	-	Intellectual Property
Schedule IV	-	Commercial Tort Claims
Schedule V	-	Location, Chief Executive Office, Type of Organization, Jurisdiction of Organization and Organizational Identification Number
Schedule VI	-	Locations of Equipment and Inventory
Schedule VII	-	Letters of Credit
Schedule VIII	-	Post-Closing Matters
Exhibits
Exhibit A	-	Form of Intellectual Property Security Agreement
Exhibit B	-	Form of Intellectual Property Security Agreement Supplement
Exhibit C	-	Form of Security Agreement Supplement

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AMENDED AND RESTATED SECURITY AGREEMENT

AMENDED AND RESTATED SECURITY AGREEMENT dated March 15, 2007 made by BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the “Company”), and the other Persons listed on the signature pages hereof (the Company and the Persons so listed being, collectively, the “Grantors”), to DEUTSCHE BANK AG NEW YORK BRANCH (“DBNY”), as collateral agent for the Secured Parties (as hereinafter defined) and in such capacity, and together with any successor collateral agent appointed pursuant to Article VII of the Loan Agreement as hereinafter defined, the “Collateral Agent”.

PRELIMINARY STATEMENTS.

(1) The Company and certain of its Subsidiaries are parties to a Junior Lien Term Loan Agreement (amending and restating in its entirety the Bridge Loan Agreement dated as of February 22, 2007, the “Existing Bridge Loan”) dated as of March 15, 2007 (the “Loan Agreement”), with the lenders party thereto from time to time, and DBNY as collateral agent.  The Loan Agreement amends and restates in its entirety the Existing Bridge Loan, including reflecting that DBNY has replaced Deutsche Bank AG Cayman Islands Branch as the Collateral Agent.  The Lenders and the Agents party to the Loan Agreement shall be the “Secured Parties” hereunder.

(2) The Company and certain of its Subsidiaries have entered into a Term Loan Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived or otherwise modified, refinanced or replaced from time to time, the “Term Loan Agreement”) with the lenders party thereto and DBNY, as administrative agent, Deutsche Bank Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers, Bear Stearns & Co. Inc., as syndication agent, and J.P. Morgan Securities Inc., as documentation agent for the lenders.

(3) The Company is a party to the Revolving Credit Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived, or otherwise modified, refinanced or replaced from time to time, the “Revolving Credit Agreement”), among the Company and certain of its Subsidiaries, the lender parties party thereto from time to time, DBNY, as collateral monitoring agent and administrative agent, swingline lender and letter of credit issuer, Bear Stearns & Co. Inc., as syndication agent, J.P. Morgan Securities Inc., as documentation agent, and Deutsche Bank Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers.

(4) The Company is party to (i) an indenture dated as of October 20, 1997 (as amended, restated, supplemented, waived, or otherwise modified, refinanced or replaced from time to time, the “2007 Notes Indenture”), among the Company, the Guarantors identified therein and The Bank of New York, as trustee pursuant to which certain 8% senior notes due 2007 were issued; (ii) an indenture dated as of December 3, 1998 (as amended, restated, supplemented, waived or otherwise modified, refinanced or replaced from time to time, the “2008 Notes Indenture”), among the Company, the Guarantors identified therein and The Bank of New York, as trustee pursuant to which certain 8% senior notes due 2008 were issued; and

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(iii) an indenture dated as of July 26, 2004 (as amended, restated, supplemented, waived, or otherwise modified, refinanced or replaced from time to time, the “2014 Notes Indenture”) among the Company, the Guarantors identified therein and Wilmington Trust Company, as trustee, pursuant to which certain 7.75% senior notes were issued.

(5) DBNY, as administrative agent for the lenders and agents party to the Term Loan Agreement from time to time, The Bank of New York, as trustee under the 2007 Notes Indenture and the 2008 Notes Indenture, and Wilmington Trust Company, as trustee under the 2014 Notes Indenture, the Company and the other Grantors are party to the Collateral Agency Agreement dated February 22, 2007 (as amended, restated, supplemented, waived or otherwise modified or replaced from time to time) in which, among other things, the parties thereto have appointed Deutsche Bank Trust Company Americas to act as collateral agent (the “Term Collateral Agent”) for purposes of the Security Agreement (as defined in such Collateral Agency Agreement, the “Term Security Agreement”) and the Intercreditor Agreements (as hereinafter defined).

(6) Each Grantor is the owner of the shares of stock or other Equity Interests (the “Initial Pledged Equity”) set forth opposite such Grantor’s name on and as otherwise described in Part I of Schedule I hereto and issued by the Persons named therein and of the indebtedness (the “Initial Pledged Debt”) set forth opposite such Grantor’s name on and as otherwise described in Part II of Schedule I hereto and issued by the obligors named therein.

(7) Each Grantor is the owner of the deposit accounts (the “Pledged Deposit Accounts”) set forth opposite such Grantor’s name on Schedule II hereto.

(8)  In connection with the Existing Bridge Loan, the Grantors entered into a Security Agreement, dated February 22, 2007 (the “Existing Security Agreement”), and the security interests created thereunder were perfected by the filing of UCC (as hereinafter defined) financing statements.  It is a condition precedent to the entering into of the Loan Agreement that the Existing Security Agreement be amended and restated as provided herein and that the security interests created thereunder continue under this Agreement.

(9) Terms defined in the Loan Agreement and not otherwise defined in this Agreement are used in this Agreement as defined in the Loan Agreement.  Further, unless otherwise defined in this Agreement or in the Loan Agreement, terms defined in Article 8 or 9 of the UCC (as defined below) are used in this Agreement as such terms are defined in such Article 8 or 9.  “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection or the effect of perfection or non perfection or the priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non perfection or priority.

NOW, THEREFORE, in consideration of the premises, each Grantor hereby agrees with the Collateral Agent for the ratable benefit of the Secured Parties as follows:

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Section 1. Grant of Security.  Each Grantor hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, and confirms its prior grant to the Collateral Agent for the ratable benefit of the Secured Parties of, a security interest in such Grantor’s right, title and interest in and to the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising (collectively, the “Collateral”):

(a) all equipment in all of its forms, including, without limitation, all machinery, tools, motor vehicles, furniture and fixtures, and all parts thereof and all accessions thereto, including, without limitation, computer programs and supporting information that constitute equipment within the meaning of the UCC (any and all such property being the “Equipment”);

(b) all inventory in all of its forms, including, without limitation, (i) all raw materials, work in process, finished goods and materials used or consumed in the manufacture, production, preparation or shipping thereof, (ii) goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including, without limitation, goods in which such Grantor has an interest or right as consignee) and (iii) goods that are returned to or repossessed or stopped in transit by such Grantor), and all accessions thereto and products thereof and documents therefor, including, without limitation, computer programs and supporting information that constitute inventory within the meaning of the UCC (any and all such property being the “Inventory”);

(c) all accounts, chattel paper (including, without limitation, tangible chattel paper and electronic chattel paper), instruments (including, without limitation, promissory notes), deposit accounts, letter-of-credit rights, general intangibles (including, without limitation, payment intangibles) and other obligations of any kind, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services and whether or not earned by performance, and all rights now or hereafter existing in and to all supporting obligations and in and to all security agreements, mortgages, Liens, leases, letters of credit and other contracts securing or otherwise relating to the foregoing property (any and all of such accounts, chattel paper, instruments, deposit accounts, letter-of-credit rights, general intangibles and other obligations, to the extent not referred to in clause (d), (e) or (f) below, being the “Receivables,” and any and all such supporting obligations, security agreements, mortgages, Liens, leases, letters of credit and other contracts being the “Related Contracts”);

(d) all precious metals, including without limitation, platinum and rhodium, (any and all such Property being the “Precious Metals”) used in the production of Inventory;

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

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(i)            the Initial Pledged Equity and the certificates, if any, representing the Initial Pledged Equity, and all dividends, distributions, return of capital, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Initial Pledged Equity and all warrants, rights or options issued thereon or with respect thereto;

(ii)           the Initial Pledged Debt and the instruments, if any, evidencing the Initial Pledged Debt, and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Initial Pledged Debt;

(iii)          all additional shares of stock and other Equity Interests from time to time acquired by such Grantor in any manner (such shares and other Equity Interests, together with the Initial Pledged Equity, being the “Pledged Equity”), and the certificates, if any, representing such additional shares or other Equity Interests, and all dividends, distributions, return of capital, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares or other Equity Interests and all warrants, rights or options issued thereon or with respect thereto;

(iv)          all additional indebtedness from time to time owed to such Grantor  (such indebtedness, together with the Initial Pledged Debt, being the “Pledged Debt”) and the instruments, if any, evidencing such indebtedness, and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness;

(v)           any securities account (the “Securities Account”), any collateral account (the “Collateral Account”), all security entitlements with respect to all financial assets from time to time credited to the Securities Account or the Collateral Account, and all financial assets, and all dividends, distributions, return of capital, interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such security entitlements or financial assets and all warrants, rights or options issued thereon or with respect thereto; and

(vi)          all other investment property (including, without limitation, all (A) securities, whether certificated or uncertificated, (B) security entitlements, (C) securities accounts, (D) commodity contracts and (E) commodity accounts) in which such Grantor has now, or acquires from time to time hereafter, any right, title or interest in any manner, and the certificates or instruments, if any, representing or evidencing such investment property, and all dividends, distributions, return of capital, interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such investment property and all warrants, rights or options issued thereon or with respect thereto;

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(f) the following (collectively, the “Account Collateral”):

(i)            the Pledged Deposit Accounts, the Collateral Account and all funds and financial assets from time to time credited thereto (including, without limitation, all Cash Equivalents), and all certificates and instruments, if any, from time to time representing or evidencing the Pledged Deposit Accounts or the Collateral Account;

(ii)           all promissory notes, certificates of deposit, checks and other instruments from time to time delivered to or otherwise possessed by the Collateral Agent for or on behalf of such Grantor in substitution for or in addition to any or all of the then existing Account Collateral; and

(iii)          all interest, dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral; and

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

(i)            all patents, patent applications, utility models and statutory invention registrations, all inventions claimed or disclosed therein and all improvements thereto (“Patents”);

(ii)           all trademarks, service marks, domain names, trade dress, logos, designs, slogans, trade names, business names, corporate names and other source identifiers, whether registered or unregistered (provided that no security interest shall be granted in United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law), together, in each case, with the goodwill symbolized thereby (“Trademarks”);

(iii)          all copyrights, including, without limitation, copyrights in Computer Software (as hereinafter defined), internet web sites and the content thereof, whether registered or unregistered (“Copyrights”);

(iv)          all computer software, programs and databases (including, without limitation, source code, object code and all related applications and data files), firmware and documentation and materials relating thereto, together with any and all maintenance rights, service rights, programming rights, hosting rights, test rights, improvement rights, renewal rights and indemnification rights and any substitutions, replacements, improvements, error corrections, updates and new versions of any of the foregoing (“Computer Software”);

(v)           all confidential and proprietary information, including, without limitation, know-how, trade secrets, manufacturing and production processes and techniques, inventions, research and development information, databases and data, including, without limitation, technical data, financial, marketing and

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business data, pricing and cost information, business and marketing plans and customer and supplier lists and information (collectively, “Trade Secrets”), and all other intellectual, industrial and intangible property of any type, including, without limitation, industrial designs and mask works;

(vi)          all registrations and applications for registration for any of the foregoing, including, without limitation, those registrations and applications for registration set forth in Schedule III hereto, together with all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations thereof ((i)-(vi) collectively, “IP Rights”);

(vii)         all tangible embodiments of the foregoing, all rights in the foregoing provided by international treaties or conventions, all rights corresponding thereto throughout the world and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto;

(viii)        all agreements, permits, consents, orders and franchises relating to the license, development, use or disclosure of any of the foregoing to which such Grantor, now or hereafter, is a party or a beneficiary, including, without limitation, the agreements set forth in Schedule III hereto (“IP Agreements”); and

(ix)           any and all claims for damages and injunctive relief for past, present and future infringement, dilution, misappropriation, violation, misuse or breach with respect to any of the foregoing, with the right, but not the obligation, to sue for and collect, or otherwise recover, such damages;

(h) the commercial tort claims described in Schedule IV hereto (together with any commercial tort claims as to which the Grantors have complied with the requirements of Section 15, the “Commercial Tort Claims Collateral”);

(i) all books and records (including, without limitation, customer lists, credit files, printouts and other computer output materials and records) of such Grantor pertaining to any of the Collateral; and

(j) all proceeds of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to, and supporting obligations relating to, any and all of the Collateral (including, without limitation, proceeds, collateral and supporting obligations that constitute property of the types described in clauses (a) through (i) of this Section 1) and, to the extent not otherwise included, all (A) payments under insurance (whether or not the Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral, and (B) cash (any and all such property being the “Proceeds”).

Notwithstanding anything herein to the contrary, in no event shall the Collateral include, and no Grantor shall be deemed to have granted a security interest in, (a) any Intellectual Property Collateral, if the grant of such security interest shall constitute or result in the abandonment,

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invalidation or rendering unenforceable any right, title or interest of such Grantor therein; (b) in any license, contract or agreement to which such Grantor is a party or any of its rights or interests thereunder, including, without limitation, with respect to any pledged partnership interests or any pledged limited liability company interests, to the extent, but only to the extent, that such a grant would, under the terms of such license, contract or agreement (including, without limitation, any partnership agreements or any limited liability company agreements), or otherwise, is prohibited by or result in a breach or termination of the terms of, or constitute a default under or termination of any such license, contract or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-406 of the UCC (or any successor provision) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity) or would otherwise constitute a violation of law, regulation or policy; provided, however, that immediately upon the ineffectiveness, lapse or termination of any such provision, the Collateral shall include, and each Grantor shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect; (c) in any of the outstanding capital stock of a “controlled foreign corporation” as defined in the Internal Revenue Code of 1986, as amended from time to time (each, a “Controlled Foreign Corporation”), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporation entitled to vote; (d) the Chester Equipment; or (e) all equipment and other property to the extent, but only to the extent, that such a grant would, under the terms of any contract or agreement to which such Grantor is a party in connection with certain industrial revenue obligations, be prohibited by or would otherwise result in a breach or termination of the terms of, or constitute a default under or termination of any such contract or agreement or would otherwise constitute a violation of law, regulation or policy; provided, however, that immediately upon the ineffectiveness, lapse or termination of any such provision precluding the grant of security interest on such property, the Collateral shall include, and each Grantor shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect.

Section 2. Security for Obligations.  This Agreement secures, in the case of each Grantor, the payment of all Obligations of such Grantor now or hereafter existing under the Loan Documents, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement obligations, interest, fees, premiums, penalties, indemnifications, contract causes of action, costs, expenses or otherwise (all such Obligations being the “Secured Obligations”).  Without limiting the generality of the foregoing, this Agreement secures, as to each Grantor, the payment of all amounts that constitute part of the Secured Obligations and would be owed by such Grantor to any Secured Party under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving a Loan Party.

Section 3. Grantors Remain Liable.  Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in such Grantor’s Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Collateral Agent of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral and (c) no Secured Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or any other Loan Document, nor shall

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any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

Section 4. Delivery and Control of Security Collateral.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement:

(a) all certificates or instruments representing or evidencing Security Collateral shall be delivered to and held by or on behalf of the Collateral Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Collateral Agent.  The Collateral Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Security Collateral for certificates or instruments of smaller or larger denominations.

(b) with respect to any Security Collateral that constitutes an uncertificated security, if requested by the Collateral Agent, the relevant Grantor will cause the issuer thereof either (i) to register the Collateral Agent as the registered owner of such security or (ii) to agree with such Grantor and the Collateral Agent that such issuer will comply with instructions with respect to such security originated by the Collateral Agent without further consent of such Grantor, such agreement to be in form and substance reasonably satisfactory to the Collateral Agent (such agreement being an “Uncertificated Security Control Agreement”).

(c) with respect to the Securities Account, the Collateral Account and any Security Collateral that constitutes a security entitlement as to which the financial institution acting as Collateral Agent hereunder is not the securities intermediary, if reasonably requested by the Collateral Agent, the relevant Grantor will cause the securities intermediary with respect to such Account or security entitlement either (i) to identify in its records the Collateral Agent as the entitlement holder thereof or (ii) to agree with such Grantor and the Collateral Agent that such securities intermediary will comply with entitlement orders originated by the Collateral Agent without further consent of such Grantor, such agreement to be in form and substance reasonably satisfactory to the Collateral Agent (a “Securities Account Control Agreement” or “Securities/Deposit Account Control Agreement,” respectively).

(d) during the continuance of an Event of Default, the Collateral Agent shall have the right, at any time and without notice to any Grantor, to transfer to or to register in the name of the Collateral Agent or any of its nominees any or all of the Security Collateral, subject only to the revocable rights specified in Section 12(a).  In addition, during the continuance of an Event of Default, the Collateral Agent shall have the right at any time to convert Security Collateral consisting of financial assets credited to the Securities Account or the Collateral Account to Security Collateral consisting of financial assets held directly by the Collateral Agent, and to convert Security Collateral consisting of financial assets held directly by the Collateral Agent to Security Collateral consisting of financial assets credited to the Securities Account or the Collateral Account.

(e) upon the reasonable request of the Collateral Agent following the occurrence and during the continuance of an Event of Default, each Grantor will notify each issuer of

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Security Collateral granted by it hereunder that such Security Collateral is subject to the security interest granted hereunder.

Section 5. Maintaining the Account Collateral.  Subject to (i) the rights of the Collateral Monitoring Agent under the Revolving Credit Agreement, the Security Agreement (as defined in the Revolving Credit Agreement, the “Revolver Security Agreement”) and the Revolver Intercreditor Agreement (as hereinafter defined) and (ii) the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement (as hereinafter defined), so long as any Loan or any other Obligation (other than contingent obligations) of any Grantor under any Loan Document shall remain unpaid:

(a) Each Grantor will maintain deposit accounts only with the financial institution acting as Collateral Agent hereunder or with a bank (a “Pledged Account Bank”) that has agreed with such Grantor and the Collateral Agent to comply with instructions originated by the Collateral Agent directing the disposition of funds in such deposit account without the further consent of such Grantor, such agreement to be in form and substance satisfactory to the Collateral Agent (a “Deposit Account Control Agreement”); provided, however, this Section 5(a) shall not apply to deposit accounts (i) in which all funds therein are swept on a daily basis and only to another deposit account over which there is in effect a Deposit Account Control Agreement or (ii) operated solely as a payroll account, provided, that no funds or investments in excess of $10,000,000 shall at any time be on deposit in the payroll accounts in the aggregate; provided, further, however, the Company shall have forty-five days (unless otherwise agreed by the Administrative Agent) from the Closing Date (as defined in the Existing Bridge Loan) to comply with this requirements of this Section 5.

(b) Subject to Section 5(a), each Grantor shall instruct all of its account debtors to remit all payments to (i) the applicable “P.O. Boxes” or “Lockbox Addresses” of the applicable Pledged Account Banks with respect to all accounts of such account debtor, which remittances shall be collected by the applicable Pledged Account Banks and deposited into the applicable Pledged Deposit Account or (ii) any other deposit account in which all funds therein are swept on a daily basis and only to another deposit account over which there is in effect a Deposit Account Control Agreement.

(c) During the continuance of an Event of Default, upon notice from the Collateral Agent, upon the terms and subject to the conditions set forth in the Deposit Account Control Agreement, all amounts held in all of the Pledged Deposit Accounts by the Grantors shall be wired by the close of business on each Business Day into an account with the Collateral Agent (the “Concentration Account”) and all collected amounts held in the Concentration Account shall be applied as provided in Section 19.

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

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(a) Such Grantor’s exact legal name, location, chief executive office, type of organization, jurisdiction of organization and organizational identification number is set forth in Schedule V hereto.  Such Grantor has no trade names other than as listed on Schedule III hereto.

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

(c) All of the Equipment and Inventory of such Grantor are located at the places specified therefor in Schedule VI hereto.

(d) None of the Receivables is evidenced by a promissory note or other instrument that has not been delivered to the Term Collateral Agent or the Collateral Monitoring Agent under the Revolving Security Agreement.

(e) If such Grantor is an issuer of Security Collateral, such Grantor confirms that it has received notice of the security interest granted hereunder.

(f) The Pledged Equity pledged by such Grantor and issued by a Grantor hereunder has been duly authorized and validly issued and is fully paid and non assessable.  To the best knowledge of such Grantor, the Pledged Equity pledged by such Grantor issued by a non-Grantor has been duly authorized and validly issued and is fully paid or non-assessable.  The Pledged Debt pledged by such Grantor hereunder and issued by a Grantor has been duly authorized, authenticated or issued and delivered, is the legal, valid and binding obligation of the issuer thereof, is evidenced by one or more promissory notes (which promissory notes have been delivered to the Collateral Agent) and such issuer is not in default under the terms of such Pledged Debt.  To the best knowledge of such Grantor, the Pledged Debt pledged by such Grantor issued by a non-Grantor has been duly authorized, authenticated or issued and delivered, is the legal, valid and binding obligation of the issuers thereof, is evidenced by one or more promissory notes (which promissory notes have been delivered to the Collateral Agent) and such issuer is not in default under the terms of such Pledged Debt.

(g) The Initial Pledged Equity pledged by such Grantor constitutes the percentage of the issued and outstanding Equity Interests of the issuers thereof indicated on Schedule I hereto.  The Initial Pledged Debt constitutes all of the outstanding indebtedness owed to such Grantor by the issuers thereof and is outstanding in the principal amount indicated on Schedule I hereto.

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(h) Such Grantor has no investment property, other than the investment property listed on Schedule I hereto and additional investment property as to which such Grantor has complied with the requirements of Section 4.

(i) Such Grantor has no deposit accounts, other than the Pledged Deposit Accounts listed on Schedule II hereto and additional Pledged Deposit Accounts as to which such Grantor has complied with the applicable requirements of Section 5.

(j) Such Grantor is not a beneficiary or assignee under any letter of credit, other than the letters of credit described in Schedule VII hereto and additional letters of credit as to which such Grantor has complied with the requirements of Section 13.

(k) This Agreement creates in favor of the Collateral Agent for the benefit of the Secured Parties a valid security interest in the Collateral granted by such Grantor, securing the payment of the Secured Obligations; except for the filing of financing statements under the UCC or the other filings referred to in paragraph (l) below, all filings and other actions necessary to perfect the security interest in the Collateral granted by such Grantor have been duly made or taken and are in full force and effect; and such security interest is second priority with the exception of the security interest in the Revolver Collateral (as defined under the General Intercreditor Agreement (as hereinafter defined)), which is third priority.

(l) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the grant by such Grantor of the security interest granted hereunder or for the execution, delivery or performance of this Agreement by such Grantor, (ii) the perfection or maintenance of the security interest created hereunder (including the first priority nature of such security interest), except for the filing of financing and continuation statements under the UCC, which financing statements have been duly filed and are in full force and effect, actions necessary to obtain control of Collateral as provided in Sections 9-104, 9-106 and 9-107 of the UCC but excluding actions necessary to perfect the Collateral Agent’s security interest with respect to Collateral evidenced by a certificate of title, and the recordation of the Intellectual Property Security Agreements referred to in Section 11(f) with the U.S. Patent and Trademark Office and the U.S. Copyright Office, which Agreements will be duly recorded and following the filing thereof shall be in full force and effect, and the actions described in Section 4 with respect to the Security Collateral, which actions will be taken and after the completion thereof shall be in full force and effect, or (iii) the exercise by the Collateral Agent of its voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with the disposition of any portion of the Security Collateral by laws affecting the offering and sale of securities generally.

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(m) The Inventory that has been produced or distributed by such Grantor has been produced in compliance with all requirements of applicable law, including, without limitation, the Fair Labor Standards Act.

(n) As to itself and its Intellectual Property Collateral:

(i)            The operation of such Grantor’s business as currently conducted or as now contemplated to be conducted and the use of the Intellectual Property Collateral in connection therewith do not, to such Grantor’s knowledge, conflict with, infringe, misappropriate, dilute, misuse or otherwise violate the intellectual property rights of any third party.

(ii)           Such Grantor is the exclusive owner of all right, title and interest in and to the Intellectual Property Collateral, except as set forth on Schedule III(a) hereto, and is entitled to use all Intellectual Property Collateral subject only to the terms of the IP Agreements.

(iii)          The Intellectual Property Collateral set forth on Schedule III hereto includes all of the patents, patent applications, domain names, trademark registrations and applications, and copyright registrations and applications owned by such Grantor and all IP Agreements to which such Grantor is a party or beneficiary as of the date hereof.

(iv)          The Intellectual Property Collateral material to the business of the Grantors is subsisting and has not been adjudged invalid or unenforceable in whole or part, and to the best of such Grantor’s knowledge, is valid and enforceable.  Such Grantor is not aware of any uses of any item of Intellectual Property Collateral that could be expected to lead to such item becoming invalid or unenforceable.

(v)           As to each item of Intellectual Property Collateral material to the business of the Grantors, such Grantor has made or performed all filings, recordings and other acts and has paid all required fees and taxes to maintain and protect its interest in each such item of Intellectual Property Collateral in full force and effect throughout the world, including, without limitation, recordations of any of its interests in the Patents and Trademarks with the U.S. Patent and Trademark Office and in corresponding national and international patent offices, and recordation of any of its interests in the Copyrights with the U.S. Copyright Office and in corresponding national and international copyright offices.  Such Grantor has used proper statutory notice in connection with its use of each patent, trademark and copyright in the Intellectual Property Collateral material to the business of the Grantors.

(vi)          No claim, action, suit, investigation, litigation or proceeding has been asserted or is pending or, to such Grantor’s knowledge, threatened against such Grantor (A) based upon or challenging or seeking to deny or restrict the Grantor’s rights in or use of any of the Intellectual Property Collateral material to

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the business of the Grantors, (B) to such Grantor’s knowledge, alleging that the Grantor’s rights in or use of the Intellectual Property Collateral or that any services provided by, processes used by, or products manufactured or sold by, such Grantor infringe, misappropriate, dilute, misuse or otherwise violate any patent, trademark, copyright or any other proprietary right of any third party, or (C) alleging that the Intellectual Property Collateral is being licensed or sublicensed in violation or contravention of the terms of any license or other agreement.  To such Grantor’s knowledge, no Person is engaging in any activity that infringes, misappropriates, dilutes, misuses or otherwise violates the Intellectual Property Collateral or the Grantor’s rights in or use thereof.  Except as set forth on Schedule III hereto, such Grantor has not granted any license, release, covenant not to sue, non-assertion assurance, or other right to any Person with respect to any part of the Intellectual Property Collateral.  The consummation of the transactions contemplated by the Transaction Documents will not result in the termination or impairment of any of the Intellectual Property Collateral.

(vii)         With respect to each IP Agreement, to such Grantor’s knowledge: (A) such IP Agreement is valid and binding and in full force and effect and represents the entire agreement between the respective parties thereto with respect to the subject matter thereof; (B) such IP Agreement will not cease to be valid and binding and in full force and effect on terms identical to those currently in effect as a result of the rights and interest granted herein, nor will the grant of such rights and interest constitute a breach or default under such IP Agreement or otherwise give any party thereto a right to terminate such IP Agreement; (C) such Grantor has not received any notice of termination or cancellation under such IP Agreement; (D) such Grantor has not received any notice of a breach or default under such IP Agreement, which breach or default has not been cured; (E) such Grantor has not granted to any other third party any rights, adverse or otherwise, under such IP Agreement; and (F) neither such Grantor nor any other party to such IP Agreement is in breach or default thereof in any material respect, and no event has occurred that, with notice or lapse of time or both, would constitute such a breach or default or permit termination, modification or acceleration under such IP Agreement.

(viii)        To the best of such Grantor’s knowledge, (A) none of the Trade Secrets of such Grantor has been used, divulged, disclosed or appropriated to the detriment of such Grantor for the benefit of any other Person other than such Grantor; (B) no employee, independent contractor or agent of such Grantor has misappropriated any trade secrets of any other Person in the course of the performance of his or her duties as an employee, independent contractor or agent of such Grantor; and (C) no employee, independent contractor or agent of such Grantor is in default or material breach of any term of any employment agreement, non-disclosure agreement, assignment of inventions agreement or similar agreement or contract relating in any way to the protection, ownership, development, use or transfer of such Grantor’s Intellectual Property Collateral.

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(ix)           No Grantor or Intellectual Property Collateral is subject to any outstanding consent, settlement, decree, order, injunction, judgment or ruling restricting the use of any Intellectual Property Collateral that is material to the business of the Grantors or that would impair the validity or enforceability of such material Intellectual Property Collateral.

(x)            Such Grantor owns, or possesses the valid right to use, all Intellectual Property Collateral used in or otherwise necessary to carry on such Grantor’s business as currently conducted or as now contemplated to be conducted, all of which rights shall survive unchanged the consummation of the transactions contemplated by this Agreement.  There are no other IP Rights that are material to or necessary for the operation of the Grantors’ business or for the continued operation of the Grantors’ business immediately after the date hereof in substantially the same manner as operated prior to the date hereof.

(o)           Such Grantor has no commercial tort claims as of the date hereof other than those listed in Schedule IV hereto and additional commercial tort claims as to which such Grantor has complied with the requirements of Section 14.

Section 7. Further Assurances.  (a)  Each Grantor agrees that from time to time, at the expense of such Grantor, such Grantor will promptly execute and deliver, or otherwise authenticate, all further instruments and documents, and take all further action that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to perfect and protect any pledge or security interest granted or purported to be granted by such Grantor hereunder or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral of such Grantor.  Without limiting the generality of the foregoing, each Grantor will promptly with respect to Collateral of such Grantor, at the reasonable request of the Collateral Agent:  (i) mark conspicuously each document included in Inventory, each chattel paper included in Receivables, each Related Contract, and, at the reasonable request of the Collateral Agent, each of its records pertaining to such Collateral with a legend, in form and substance reasonably satisfactory to the Collateral Agent, indicating that such document, chattel paper, Related Contract, or Collateral is subject to the security interest granted hereby; (ii) if any such Collateral shall be evidenced by a promissory note or other instrument, deliver and pledge to the Collateral Agent hereunder such note or instrument duly indorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent; (iii) 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 reasonably request, in order to perfect and preserve the security interest granted or purported to be granted by such Grantor hereunder; and (iv) deliver to the Collateral Agent evidence that all other actions that the Collateral Agent may deem reasonably necessary or desirable in order to perfect and protect the security interest granted or purported to be granted by such Grantor under this Agreement have been taken.

(b) Each Grantor hereby authorizes the Collateral Agent or its agent, sub-agent or designee to file one or more financing or continuation statements, and amendments thereto, including, without limitation, one or more financing statements indicating that such financing

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statements cover all assets or all personal property (or words of similar effect) of such Grantor, regardless of whether any particular asset described in such financing statements falls within the scope of the UCC or the granting clause of this Agreement.  A photocopy or other reproduction of this Agreement shall be sufficient as a financing statement where permitted by law.  Each Grantor ratifies its authorization for the Collateral Agent or its agent, sub-agent or designee to have filed such financing statements, continuation statements or amendments filed prior to the date hereof.

(c) Each Grantor will furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral of such Grantor and such other reports in connection with such Collateral as the Collateral Agent may reasonably request, all in reasonable detail.

Section 8. As to Equipment and Inventory.  (a)  Each Grantor will cause its Equipment to be maintained and preserved in the same condition, repair and working order as when new, ordinary wear and tear excepted, and will forthwith, or in the case of any loss or damage to any of such Equipment as soon as practicable after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith that are necessary or desirable to such end.

(b) Each Grantor will pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including, without limitation, claims for labor, materials and supplies) against, its Equipment and Inventory, except to the extent payment thereof is not required by Section 5.01(b) of the Loan Agreement.  In producing its Inventory, each Grantor will comply with the requirements of the Fair Labor Standards Act.

(c) The Collateral Agent acknowledges that each Grantor has granted to the Revolver Collateral Agent (as defined in the General Intercreditor Agreement), for use upon the occurrence and during the continuance of an Event of Default (as defined in the Revolving Credit Agreement), the irrevocable, non-exclusive right and license to use all present and future trademarks, trade names, copyrights, patents or technical processes owned or used by such Grantor that relate to the Revolver Collateral (as defined in the General Intercreditor Agreement) and any other Collateral granted by such Grantor as security for the Secured Obligations (as defined in the Revolver Security Agreement), together with any goodwill associated therewith, all to the extent necessary to enable the Revolver Collateral Agent to realize on, and exercise all rights of the Revolver Collateral Agent and the Lender Parties under the Revolving Credit Agreement in relation to, the Revolver Collateral.  This right shall inure to the benefit of all successors, assigns and transferees of the Revolver Collateral Agent.  Such right and license shall be granted free of charge, without requirement that any monetary payment whatsoever be made to such Grantor.

Section 9. Insurance.  (a)  Each Grantor will, at its own expense, maintain insurance with respect to its Equipment and Inventory in such amounts, against such risks, in such form and with such insurers consistent with industry standards.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement, each policy of each Grantor for liability insurance shall provide for all losses to be

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paid on behalf of the Collateral Agent and such Grantor as their interests may appear.  Each such policy shall in addition, subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement (i) name such Grantor and the Collateral Agent as insured parties thereunder (without any representation or warranty by or obligation upon the Collateral Agent) as their interests may appear, (ii) contain the agreement by the insurer that any loss thereunder shall be payable to the Collateral Agent notwithstanding any action, inaction or breach of representation or warranty by such Grantor, (iii) provide that there shall be no recourse against the Collateral Agent for payment of premiums or other amounts with respect thereto and (iv) provide that at least 10 days’ prior written notice of cancellation or of lapse shall be given to the Collateral Agent by the insurer.  Further, each Grantor will, at the request of the Collateral Agent, duly execute and deliver instruments of assignment of such insurance policies to comply with the requirements of this Section 9 and cause the insurers to acknowledge notice of such assignment.

(b) Reimbursement under any liability insurance maintained by any Grantor pursuant to this Section 9 may be paid directly to the Person who shall have incurred liability covered by such insurance.  In case of any loss involving damage to Equipment or Inventory when subsection (c) of this Section 9 is not applicable, the applicable Grantor will make or cause to be made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance properly received by or released to such Grantor shall be used by such Grantor, except as otherwise permitted by the Loan Agreement, to pay or as reimbursement for the costs of such repairs or replacements.

(c) So long as no Event of Default shall have occurred and be continuing, all insurance payments received by the Collateral Agent in connection with any loss, damage or destruction of any Inventory or Equipment will be released by the Collateral Agent to the applicable Grantor.

Section 10. Post-Closing Changes; Collections on Receivables and Related Contracts.  (a)  No Grantor will change its name, type of organization, jurisdiction of organization or organizational identification number from those set forth in Section 6(a) of this Agreement without first giving at least 15 days’ prior written notice to the Collateral Agent and taking all action required by the Collateral Agent for the purpose of perfecting or protecting the security interest granted by this Agreement.  Each Grantor will hold and preserve its records relating to the Collateral, including, without limitation, Related Contracts, and will permit representatives of the Collateral Agent at any time during normal business hours to inspect and make abstracts from such records and other documents.  If any Grantor does not have an organizational identification number and later obtains one, it will forthwith notify the Collateral Agent of such organizational identification number.

(b) Except as otherwise provided in this subsection (b), each Grantor will continue to collect, at its own expense, all amounts due or to become due such Grantor under the Receivables and Related Contracts.  In connection with such collections, subject in the case of Receivables and Related Contracts to the rights of the Collateral Monitoring Agent under the Revolver Security Agreement, and the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement, such Grantor may take (and, at the Collateral Agent’s direction during the continuance of an Event of Default, will take) such action

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as such Grantor or the Collateral Agent may deem necessary or advisable to enforce collection of Receivables and Related Contracts; provided, however, that the Collateral Agent shall have the right at any time, subject to the rights of the Collateral Monitoring Agent under the Revolver Security Agreement and the Revolver Intercreditor Agreement and the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement, upon the occurrence and during the continuance of an Event of Default and upon written notice to such Grantor of its intention to do so, to notify the Obligors under any Receivables and Related Contracts of the assignment of such Receivables and Related Contracts to the Collateral Agent and to direct such Obligors to make payment of all amounts due or to become due to such Grantor thereunder directly to the Collateral Agent and, upon such notification and at the expense of such Grantor, to enforce collection of any such Receivables and Related Contracts, to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done, and to otherwise exercise all rights with respect to such Receivables and Related Contracts, including, without limitation, those set forth set forth in Section 9-607 of the UCC.  After receipt by any Grantor of the notice from the Collateral Agent referred to in the proviso to the preceding sentence, (i) all amounts and proceeds (including, without limitation, instruments) received by such Grantor in respect of the Receivables and Related Contracts of such Grantor shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary indorsement) to be deposited in the Collateral Account and either (A) released to such Grantor so long as no Event of Default shall have occurred and be continuing or (B) if any Event of Default shall have occurred and be continuing, applied as provided in Section 20(b) and (ii) such Grantor will not adjust, settle or compromise the amount or payment of any Receivable or amount due on any or Related Contract, release wholly or partly any Obligor thereof or allow any credit or discount thereon.  No Grantor will permit or consent to the subordination of its right to payment under any of the Receivables and Related Contracts to any other indebtedness or obligations of the Obligor thereof.

Section 11. As to Intellectual Property Collateral.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement:

(a) with respect to each item of its Intellectual Property Collateral material to the business of the Grantors, each Grantor agrees to take, at its expense, all reasonable steps, and shall not knowingly omit to do any act, including, without limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authority, to (i) maintain the validity and enforceability of such Intellectual Property Collateral and maintain such Intellectual Property Collateral in full force and effect, and (ii) pursue the registration and maintenance of each patent, trademark, or copyright registration or application, now or hereafter included in such Intellectual Property Collateral of such Grantor, including, without limitation, the payment of required fees and taxes, the filing of responses to office actions issued by the U.S. Patent and Trademark Office, the U.S. Copyright Office or other governmental authorities, the filing of applications for renewal or extension, the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional, continuation, continuation-in-part, reissue and renewal applications or extensions, the payment of maintenance fees and the participation in interference, reexamination, opposition, cancellation, infringement and misappropriation

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proceedings.  No Grantor shall, without the written consent of the Collateral Agent, discontinue use of or otherwise abandon any Intellectual Property Collateral material to the business of the Grantors, or abandon any right to file an application for patent, trademark, or copyright, unless such Grantor shall have previously determined that such use or the pursuit or maintenance of such Intellectual Property Collateral is no longer desirable in the conduct of such Grantor’s business and that the loss thereof would not be reasonably likely to have a Material Adverse Effect.

(b) each Grantor agrees promptly to notify the Collateral Agent if such Grantor becomes aware (i) that any item of the Intellectual Property Collateral material to the business of the Grantors may have become abandoned, placed in the public domain, invalid or unenforceable, or of any adverse determination or development regarding such Grantor’s ownership or use of any such Intellectual Property Collateral or its right to register the same or to keep and maintain and enforce the same, or (ii) of any adverse determination or the institution of any proceeding (including, without limitation, the institution of any proceeding in the U.S. Patent and Trademark Office or any court) regarding any item of the Intellectual Property Collateral material to the business of the Grantors.

(c) in the event that any Grantor becomes aware that any item of the Intellectual Property Collateral material to the business of the Grantors is being infringed or misappropriated by a third party, such Grantor shall promptly notify the Collateral Agent and shall take all reasonable actions, at its expense, to protect or enforce such Intellectual Property Collateral, including, without limitation, suing for infringement or misappropriation and for an injunction against such infringement or misappropriation.

(d) each Grantor shall use proper statutory notice in connection with its use of each item of its Intellectual Property Collateral.

(e) each Grantor shall take all steps which it or the Collateral Agent deems reasonable and appropriate under the circumstances to preserve and protect each item of its Intellectual Property Collateral material to the business of the Grantors, including, without limitation, maintaining the quality of any and all products or services used or provided in connection with any of the material Trademarks, consistent with the quality of the products and services as of the date hereof, and taking all steps necessary to ensure that all licensed users of any of the material Trademarks use such consistent standards of quality.

(f) with respect to its Intellectual Property Collateral, each Grantor agrees to execute or otherwise authenticate an agreement, in substantially the form set forth in Exhibit A hereto or otherwise in form and substance satisfactory to the Collateral Agent (an “Intellectual Property Security Agreement”), for recording the security interest granted hereunder to the Term Collateral Agent in such Intellectual Property Collateral with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authorities necessary to perfect the security interest hereunder in such Intellectual Property Collateral.

(g) each Grantor agrees that should it obtain an ownership interest in or license to any item of the type set forth in Section 1(g) that is not on the date hereof a part of the Intellectual Property Collateral (“After-Acquired Intellectual Property”) (i) the provisions of

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this Agreement shall automatically apply thereto, and (ii) any such After-Acquired Intellectual Property and, in the case of trademarks, the goodwill symbolized thereby, shall automatically become part of the Intellectual Property Collateral subject to the terms and conditions of this Agreement with respect thereto.  At the end of each fiscal quarter of the Company, each Grantor shall give prompt written notice to the Collateral Agent identifying the After-Acquired Intellectual Property acquired during such fiscal quarter, and such Grantor shall execute and deliver to the Collateral Agent with such written notice, or otherwise authenticate, an agreement substantially in the form of Exhibit B hereto or otherwise in form and substance satisfactory to the Collateral Agent (an “IP Security Agreement Supplement”) covering such After-Acquired Intellectual Property, which IP Security Agreement Supplement shall be recorded with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authorities necessary to perfect the security interest hereunder in such After-Acquired Intellectual Property.

(h) on or prior to a date that is 60 days after the Closing Date (as defined in the Existing Bridge Loan), or such later date as the Administrative Agent may determine, which determination shall not be unreasonably withheld after any request for extension by the Company, the Administrative Agent shall receive a certificate from a Responsible Officer of the Company confirming that all actions set forth on Schedule VIII have been completed; provided, that, with respect to any actions to be taken that have not been completed by such date, the Administrative Agent may determine in its sole reasonable judgment to waive such actions if it reasonably determines that the cost of completing such action is excessive in relation to the benefits afforded to the Secured Parties thereby.  In addition, such Grantor shall take all commercially reasonable actions to complete the actions set forth on Schedule VIII as soon as reasonably practical after the Closing Date (as defined in the Existing Bridge Loan).

Section 12. Voting Rights; Dividends; Etc.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement:

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

(i)            each Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Security Collateral of such Grantor or any part thereof for any purpose.

(ii)           each Grantor shall be entitled to receive and retain any and all dividends, interest and other distributions paid in respect of the Security Collateral of such Grantor if and to the extent that the payment thereof is not otherwise prohibited by the terms of the Loan Documents; provided, however, that any and all instruments received, receivable or otherwise distributed in respect of, or in exchange for, any Security Collateral, shall be, and shall be forthwith delivered to the Collateral Agent to hold as, Security Collateral and shall, if received by such Grantor, be received in trust for the benefit of the Collateral Agent, be segregated from the other property or funds of such Grantor and be forthwith delivered to the Collateral Agent as Security Collateral in the same form as so received (with any necessary indorsement).

(iii)          the Collateral Agent will execute and deliver (or cause to be executed and delivered) to each Grantor all such proxies and other instruments as such Grantor may

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reasonably request for the purpose of enabling such Grantor to exercise the voting and other rights that it is entitled to exercise pursuant to paragraph (i) above and to receive the dividends or interest payments that it is authorized to receive and retain pursuant to paragraph (ii) above.

(b) Upon the occurrence and during the continuance of an Event of Default:

(i)            All rights of each Grantor (x) to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to Section 12(a)(i) shall, upon notice to such Grantor by the Collateral Agent, cease and (y) to receive the dividends, interest and other distributions that it would otherwise be authorized to receive and retain pursuant to Section 12(a)(ii) shall automatically cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights and to receive and hold as Security Collateral such dividends, interest and other distributions.

(ii)           All dividends, interest and other distributions that are received by any Grantor contrary to the provisions of paragraph (i) of this Section 12(b) shall be received in trust for the benefit of the Collateral Agent, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Term Collateral Agent as Security Collateral in the same form as so received (with any necessary indorsement).

Section 13. As to Letter-of-Credit Rights.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement:

(a) each Grantor, by granting a security interest in its Receivables consisting of letter-of-credit rights to the Collateral Agent, intends to (and hereby does) assign to the Collateral Agent its rights (including its contingent rights) to the proceeds of all Related Contracts consisting of letters of credit of which it is or hereafter becomes a beneficiary or assignee.

(b) upon the occurrence of an Event of Default, each Grantor will, promptly upon request by the Collateral Agent, (i) notify (and such Grantor hereby authorizes the Collateral Agent to notify) the issuer and each nominated person with respect to each of the Related Contracts consisting of letters of credit that the proceeds thereof have been assigned to the Collateral Agent hereunder and any payments due or to become due in respect thereof are to be made directly to the Collateral Agent or its designee and (ii) arrange for the Collateral Agent to become the transferee beneficiary of letter of credit.

Section 14. Commercial Tort Claims.  Each Grantor will promptly give notice to the Collateral Agent of any commercial tort claim in excess of $500,000 that may arise after the date hereof and will immediately execute or otherwise authenticate a supplement to this Agreement, and otherwise take all necessary action, to subject such commercial tort claim to the second priority security interest created under this Agreement.

Section 15. Transfers and Other Liens; Additional Shares.  (a)  Each Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or grant any option with respect to,

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any of the Collateral, other than sales, assignments and other dispositions of Collateral, and options relating to Collateral, permitted under the terms of the Loan Agreement, or (ii) create or suffer to exist any Lien upon or with respect to any of the Collateral of such Grantor except for the pledge, assignment and security interest created under this Agreement and Liens permitted under the Loan Agreement.

(b) Each Grantor agrees that it will (i) cause each issuer of the Pledged Equity pledged by such Grantor not to issue any Equity Interests or other securities in respect of or in substitution for the Pledged Equity issued by such issuer, except to such Grantor; provided that in respect of any issuer not directly or indirectly under the control of a Grantor, such Grantor will use its commercially reasonable efforts to cause such issuer to adhere to the requirements of clause (i) above and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional Equity Interests or other securities.

Section 16. Collateral Agent Appointed Attorney in Fact.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement, each Grantor hereby irrevocably appoints the Collateral Agent such Grantor’s attorney in fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time, upon the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:

(a) to obtain and adjust insurance required to be paid to the Collateral Agent pursuant to Section 9,

(b) to ask for, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral,

(c) to receive, indorse and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) or (b) above, and

(d) to file any claims or take any action or institute any proceedings that the Collateral Agent may reasonably deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral.

Section 17. Collateral Agent May Perform.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement, if any Grantor fails during the continuance of an Event of Default to perform any agreement contained herein, the Collateral Agent may, but without any obligation to do so and without notice, itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by such Grantor under Section 20.

Section 18. The Collateral Agent’s Duties.  (a)  The powers conferred on the Collateral Agent hereunder are solely to protect the Secured Parties’ interest in the Collateral and

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shall not impose any duty upon it to exercise any such powers.  Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not any Secured Party has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral.  The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which it accords its own property.

(b) Anything contained herein to the contrary notwithstanding, the Collateral Agent may from time to time, when the Collateral Agent deems it to be necessary, appoint one or more subagents (each a “Subagent”) for the Collateral Agent hereunder with respect to all or any part of the Collateral.  In the event that the Collateral Agent so appoints any Subagent with respect to any Collateral, (i) the assignment and pledge of such Collateral and the security interest granted in such Collateral by each Grantor hereunder shall be deemed for purposes of this Security Agreement to have been made to such Subagent, in addition to the Collateral Agent, for the ratable benefit of the Secured Parties, as security for the Secured Obligations of such Grantor, (ii) such Subagent shall automatically be vested, in addition to the Collateral Agent, with all rights, powers, privileges, interests and remedies of the Collateral Agent hereunder with respect to such Collateral, and (iii) the term “Collateral Agent,” when used herein in relation to any rights, powers, privileges, interests and remedies of the Collateral Agent with respect to such Collateral, shall include such Subagent; provided, however, that no such Subagent shall be authorized to take any action with respect to any such Collateral unless and except to the extent expressly authorized in writing by the Collateral Agent.

Section 19. Remedies.  Subject to the rights of the Term Collateral Agent under the Term Security Agreement and the General Intercreditor Agreement, if any Event of Default shall have occurred and be continuing:

(a) The Collateral Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to the affected Collateral) and also may:  (i) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Collateral Agent forthwith, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place and time to be designated by the Collateral Agent that is reasonably convenient to both parties; (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable; (iii) occupy any premises owned or leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation; and (iv) exercise any and all rights and remedies of

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any of the Grantors under or in connection with the Collateral, or otherwise in respect of the Collateral, including, without limitation, (A) any and all rights of such Grantor to demand or otherwise require payment of any amount under, or performance of any provision of the Receivables, the Related Contracts and the other Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds with respect to the Account Collateral and (C) exercise all other rights and remedies with respect to the Receivables, the Related Contracts and the other Collateral, including, without limitation, those set forth in Section 9-607 of the UCC.  Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) Any cash held by or on behalf of the Collateral Agent and all cash proceeds received by or on behalf of the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Collateral Agent, be held by the Collateral Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Collateral Agent pursuant to Section 20) in whole or in part by the Collateral Agent for the ratable benefit of the Secured Parties against, all or any part of the Secured Obligations, by payment thereof to the Administrative Agent for payment in accordance with Section 2.09(f) of the Loan Agreement and any surplus of such cash or cash proceeds held by or on the behalf of the Collateral Agent and remaining after payment in full of all the Secured Obligations shall be paid over to the applicable Grantor or to whomsoever may be lawfully entitled to receive such surplus.

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

(d) The Collateral Agent may, without notice to any Grantor except as required by law and at any time or from time to time, charge, set off and otherwise apply all or any part of the Secured Obligations against any funds held with respect to the Account Collateral or in any other deposit account.

(e) The Collateral Agent may send to each bank, securities intermediary or issuer party to any Deposit Account Control Agreement, Securities/Deposit Account Control Agreement, Securities Account Control Agreement or Uncertificated Security Control Agreement a notice of exclusive control.

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(f) In the event of any sale or other disposition of any of the Intellectual Property Collateral of any Grantor, the goodwill symbolized by any Trademarks subject to such sale or other disposition shall be included therein, and such Grantor shall supply to the Collateral Agent or its designee such Grantor’s know-how and expertise, and documents and things relating to any Intellectual Property Collateral subject to such sale or other disposition, and such Grantor’s customer lists and other records and documents relating to such Intellectual Property Collateral and to the manufacture, distribution, advertising and sale of products and services of such Grantor.

(g) If the Collateral Agent shall determine to exercise its right to sell all or any of the Security Collateral of any Grantor pursuant to this Section 19, each Grantor agrees that, upon request of the Collateral Agent, such Grantor will, at its own expense:

(i)            execute and deliver, and cause each issuer of such Security Collateral contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the reasonable opinion of the Collateral Agent, advisable to register such Security Collateral under the provisions of the Securities Act of 1933 (as amended from time to time, the “Securities Act”), to use commercially reasonable efforts to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished and to make all amendments and supplements thereto and 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 the Securities and Exchange Commission applicable thereto;

(ii)           use its commercially reasonable efforts to qualify the Security Collateral under the state securities or “Blue Sky” laws and to obtain all necessary governmental approvals for the sale of such Security Collateral, as requested by the Collateral Agent;

(iii)          use commercially reasonable efforts to cause each such issuer of such Security Collateral to make available to its security holders, as soon as practicable, an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act;

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

(v)           do or use commercially reasonable efforts to cause to be done all such other acts and things as may be necessary to make such sale of such Security

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Collateral or any part thereof valid and binding and in compliance with applicable law.

(h) The Collateral Agent is authorized, in connection with any sale of the Security Collateral pursuant to this Section 20, to deliver or otherwise disclose to any prospective purchaser of the Security Collateral:  (i) any registration statement or prospectus, and all supplements and amendments thereto, prepared pursuant to subsection (f)(i) above; (ii) any information and projections provided to it pursuant to subsection (f)(iv) above; and (iii) any other information in its possession relating to such Security Collateral.

Section 20. Indemnity and Expenses.  (a)  Each Grantor agrees to indemnify, defend and save and hold harmless each Secured Party and each of their Affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

(b) Each Grantor will upon demand pay to the Collateral Agent the amount of any and all reasonable expenses, including, without limitation, the reasonable fees and expenses of its counsel and of any experts and agents, that 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 of such Grantor, (iii) the exercise or enforcement of any of the rights of the Collateral Agent or the other Secured Parties hereunder or (iv) the failure by such Grantor to perform or observe any of the provisions hereof.

(c) The obligations of the Grantors under this Section 20 shall survive the termination of the other provisions of this Agreement and the resignation or removal of the Collateral Agent.

Section 21. Amendments; Waivers; Additional Grantors; Etc.  (a)  No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Grantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  No failure on the part of the Collateral Agent or any other Secured Party to exercise, and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

(b) Upon the execution and delivery by any Person of a security agreement supplement in substantially the form of Exhibit D hereto (each a “Security Agreement Supplement”) or such other form as may be reasonably acceptable to the Administrative Agent, such Person shall be referred to as an “Additional Grantor” and shall be and become a Grantor

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hereunder, and each reference in this Agreement and the other Loan Documents to “Grantor” shall also mean and be a reference to such Additional Grantor, each reference in this Agreement and the other Loan Documents to the “Collateral” shall also mean and be a reference to the Collateral granted by such Additional Grantor and each reference in this Agreement to a Schedule shall also mean and be a reference to the schedules attached to such Security Agreement Supplement.

Section 22. Notices, Etc.  All notices and other communications provided for hereunder shall be either (i) in writing (including telecopier communication) and mailed, telecopied or otherwise delivered or (ii) by electronic mail (if electronic mail addresses are designated as provided below) confirmed immediately in writing, in the case of the Company or the Collateral Agent, addressed to it at its address specified in the Loan Agreement and, in the case of each Grantor other than the Company, addressed to it at its address set forth opposite such Grantor’s name on the signature pages hereto or on the signature page to the Security Agreement Supplement pursuant to which it became a party hereto; or, as to any party, at such other address as shall be designated by such party in a written notice to the other parties.  All such notices and other communications shall, when mailed, telecopied, sent by electronic mail or otherwise, be effective when deposited in the mails, telecopied, sent by electronic mail and confirmed in writing, or otherwise delivered (or confirmed by a signed receipt), respectively, addressed as aforesaid; except that notices and other communications to the Collateral Agent shall not be effective until received by the Collateral Agent.  Delivery by telecopier or other electronic communication of an executed counterpart of any amendment or waiver of any provision of this Agreement or of any Security Agreement Supplement or Schedule hereto shall be effective as delivery of an original executed counterpart thereof.

Section 23. Continuing Security Interest.  This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the latest payment in full in cash of the Secured Obligations (other than contingent obligations), (b) be binding upon each Grantor, its successors and assigns and (c) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Secured Parties and their respective successors, transferees and assigns.

Section 24. Release; Termination.  (a)  Upon any sale, lease, transfer or other disposition of any item of Collateral of any Grantor in accordance with the terms of the Loan Documents (other than sales of Inventory in the ordinary course of business), the security interest in such Collateral shall automatically terminate and as promptly as practicable, the Collateral Agent will, at such Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted hereby; provided, however, that (i) at the time of such request and such release no Event of Default shall have occurred and be continuing, (ii) such Grantor shall have delivered to the Collateral Agent, at least five Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral, together with a form of release for execution by the Collateral Agent and a certificate of such Grantor to the effect that the transaction is in compliance with the Loan Documents and as to such other matters as the Collateral Agent may reasonably request.

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(b) In the case of Collateral other than the Revolver Collateral (as defined in the General Intercreditor Agreement), the security interest in such Collateral shall terminate on the date on which the Collateral Agent shall have received written notice as provided for in the Loan Agreement that the Obligations under the Term Loan Agreement (other than contingent obligations) shall have become unsecured or shall have been paid in full with the proceeds of unsecured indebtedness, the unfunded commitments, if any, of the lenders under the Term Loan Agreement shall have been terminated and the Liens securing such Obligations shall have been released, and as promptly as practicable thereafter, the Collateral Agent will, at the Grantors’ expense, execute and deliver to the Grantors such documents as the Grantors shall reasonably request to evidence the release of such Collateral from the assignment and security interest granted hereby; provided, however, that the security interest in such Collateral shall not terminate and the Collateral Agent shall not release its security interest in such Collateral if at the time thereof any Event of Default is then continuing.

(c) In the case of the Revolver Collateral, the security interest in such Collateral shall terminate on the date on which the Collateral Agent shall have received written notice as provided for in the Loan Agreement that (i) the Obligations under the Term Loan Agreement (other than contingent obligations) shall have become unsecured or shall have been paid in full with the proceeds of unsecured indebtedness, the unfunded commitments, if any, of the lenders under the Revolving Credit Agreement shall have been terminated and the Liens securing such Obligations shall have been released, and (ii) the Obligations under and as defined in the Revolving Credit Agreement (other than contingent obligations) shall have become unsecured or shall have been paid in full with the proceeds of unsecured indebtedness, the unfunded commitments, if any, of the lenders under the Revolving Credit Agreement shall have been terminated and the liens securing such Obligations shall have been released, and as promptly as practicable thereafter, the Collateral Agent will, at the Grantors’ expense, execute and deliver to the Grantors such documents as the Grantors shall reasonably request to evidence the release of such Collateral from the assignment and security interest granted hereby; provided, however, that the security interest in such Collateral shall not terminate and the Collateral Agent shall not release its security interest in such Collateral if at the time thereof any Event of Default is then continuing.

(d) Upon the payment in full in cash of the Secured Obligations (other than contingent obligations), the pledge and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the applicable Grantor and the Collateral Agent will, at the applicable Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

(e) The Collateral Agent shall release the Collateral as otherwise provided for under the Intercreditor Agreements.

Section 25. Intercreditor.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIENS AND SECURITY INTERESTS GRANTED TO THE COLLATERAL AGENT PURSUANT TO THIS AGREEMENT IN ANY COLLATERAL AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE COLLATERAL AGENT WITH RESPECT TO ANY COLLATERAL HEREUNDER ARE SUBJECT TO THE LIMITATIONS AND PROVISIONS OF (i) THE REVOLVER INTERCREDITOR

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AGREEMENT, DATED AS OF FEBRUARY 22, 2007 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “REVOLVER INTERCREDITOR AGREEMENT”), AMONG DBNY, AS FIRST LIEN COLLATERAL AGENT (AS DEFINED THEREIN), DEUTSCHE BANK TRUST COMPANY AMERICAS, AS SECOND LIEN COLLATERAL AGENT (AS DEFINED THEREIN), AND DBNY (AS SUCCESSOR TO DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH), AS THIRD LIEN COLLATERAL AGENT (AS DEFINED THEREIN) AND CERTAIN OTHER PERSONS THAT MAY BECOME PARTY THERETO FROM TIME TO TIME AND CONSENTED TO BY BUILDING MATERIALS CORPORATION OF AMERICA AND THE GRANTORS IDENTIFIED THEREIN AND (ii) THE GENERAL INTERCREDITOR AGREEMENT, DATED AS OF FEBRUARY 22, 2007 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “GENERAL INTERCREDITOR AGREEMENT” AND TOGETHER WITH THE REVOLVER INTERCREDITOR AGREEMENT, THE “INTERCREDITOR AGREEMENTS”), AMONG DEUTSCHE BANK TRUST COMPANY AMERICAS, AS FIRST LIEN COLLATERAL AGENT AND DBNY (AS SUCCESSOR TO DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH), AS JUNIOR LIEN COLLATERAL AGENT AND CERTAIN OTHER PERSONS THAT MAY BECOME PARTY THERETO FROM TIME TO TIME AND CONSENTED TO BY BUILDING MATERIALS CORPORATION OF AMERICA AND THE GRANTORS IDENTIFIED THEREIN.  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENTS AND THIS AGREEMENT, THE TERMS OF THE INTERCREDITOR AGREEMENTS SHALL GOVERN AND CONTROL.

Section 26. Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement.

Section 27. Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 28. Jurisdiction, Etc.  (a)  Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the fullest extent permitted by law, in such Federal court.  Each of the parties hereto 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 in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

(b)           Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have

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to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement to which it is a party in any New York State or Federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

Section 29. Waiver of Jury Trial.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT.

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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

Address for Notices:
c/o Building Materials Corp of America
1361 Alps Road, Wayne, NJ 07470 BUILDING MATERIALS CORPORATION OF AMERICA
BMCA ACQUISITION INC.
BMCA ACQUISITION SUB INC.
BMCA FRESNO LLC
BMCA FRESNO II LLC
BMCA GAINESVILLE LLC
BMCA INSULATION PRODUCTS INC.
BMCA QUAKERTOWN INC.
BUILDING MATERIALS INVESTMENT CORPORATION
BUILDING MATERIALS MANUFACTURING CORPORATION
DUCTWORK MANUFACTURING CORPORATION
GAF LEATHERBACK CORP.
GAF MATERIALS CORPORATION (CANADA)
GAF PREMIUM PRODUCTS INC.
GAF REAL PROPERTIES, INC.
GAFTECH CORPORATION
HBP ACQUISITION LLC
LL BUILDING PRODUCTS INC.
PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC.
SOUTH PONCA REALTY CORP.
WIND GAP REAL PROPERTY ACQUISITION CORP.

By		/John M. Maitner/
	Name: John M. Maitner
	Title: Vice President and Treasurer

ACCEPTED & ACKNOWLEDGED

DEUTSCHE BANK AG NEW YORK BRANCH, as Collateral Agent

By	/Marguerite Sutton/
		Name: Marguerite Sutton
		Title: Director
By	/Evelyn Thierry/
		Name: Evelyn Thierry
		Title: Vice President

EX-10.42

Exhibit 10.42

SECURITY AGREEMENT SUPPLEMENT

March 26, 2007

Deutsche Bank AG New York Branch, as the Collateral Agent for
the Secured Parties referred to in the
Credit Agreement referred to below

60 Wall Street, MS – NYC 60-0208

New York, New York  10005
Attn: Marguerite Sutton

Reference is made to (i) the Junior Lien Term Loan Agreement dated as of March 15, 2007 (as amended, restated, supplemented, waived or otherwise modified, refinanced or replaced from time to time, the “Loan Agreement”), among Building Materials Corporation of America, a Delaware corporation, and certain of its Subsidiaries, as the Borrowers, the Lenders party thereto, Deutsche Bank AG New York Branch (“DBNY”), as administrative agent for the Lenders, and (ii) the Amended and Restated Security Agreement dated March 15, 2007 (as amended, restated, supplemented, waived or otherwise modified, refinanced or replaced from time to time, the “Security Agreement”) made by the Grantors from time to time party thereto in favor of DBNY (together with any successor collateral agent appointed pursuant to the Collateral Agency Agreement, the “Collateral Agent”) for the Secured Parties. Terms defined in the Credit Agreement or the Security Agreement and not otherwise defined herein are used herein as defined in the Loan Agreement or the Security Agreement.

SECTION 1.  Grant of Security. Each of the undersigned (each an “Additional Grantor”) hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in all of its right, title and interest in and to the Collateral owned by such Additional Grantor.

SECTION 2.  Security for Obligations. The grant of a security interest in, the Collateral by each Additional Grantor under this Security Agreement Supplement secures the payment of all Secured Obligations of such Additional Grantor now or hereafter existing under or in respect of the Loan Documents, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement obligations, interest, premiums, penalties, fees, indemnifications, contract causes of action, costs, expenses or otherwise. Without limiting the generality of the foregoing, this Security Agreement Supplement and the Security Agreement secures the payment of all amounts that constitute part of the Secured Obligations and that would be owed by such Additional Grantor to any Secured Party under the Loan Documents but for the fact that such Secured Obligations are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving a Loan Party.

SECTION 3.  Representations and Warranties. Each Additional Grantor’s exact legal name, location, chief executive office, type of organization, jurisdiction of organization and organizational identification number is set forth in Schedule I hereto.

SECTION 4.   Covenants.   Within 30 days after the date hereof (or as otherwise agreed by the Collateral Agent) (i), each Additional Grantor shall provide to the Collateral Agent the following, as of such date:

(A)  A schedule setting forth the Equity Interests of such Additional Grantor and the Initial Pledged Debt of such Additional Grantor.

(B)  A schedule setting forth the Intellectual Property of such Additional Grantor, if any.

(C)  A schedule setting forth all deposit accounts of such Additional Grantor.

(D)  A schedule setting forth all of the commercial tort claims of such Additional Grantor.

(E)  A schedule setting forth all of the Equipment and Inventory of such Additional Grantor.

(F)  A schedule setting forth any letter of credit for which such Additional Grantor is a beneficiary or assignee.

(ii)  Each Additional Grantor shall make each other representation and warranty set forth in Section 6 of the Security Agreement with respect to itself and the Collateral granted by it.

SECTION 5.  Obligations Under the Security Agreement. Except as otherwise set forth herein, each Additional Grantor hereby agrees, as of the date first above written, to be bound as a Grantor by all of the terms and provisions of the Security Agreement to the same extent as each of the other Grantors. Each Grantor further agrees, as of the date first above written, that each reference in the Security Agreement to an “Additional Grantor” or a “Grantor” shall also mean and be a reference to such Additional Grantor, that each reference to the “Collateral” or any part thereof shall also mean and be a reference to such Additional Grantor’s Collateral or part thereof, as the case may be, and that each reference in the Security Agreement to a Schedule shall also mean and be a reference to the schedules attached hereto.

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SECTION 6.  Governing Law. This Security Agreement Supplement shall be governed by, and construed in accordance with, the laws of the State of New York.

Very truly yours,
Elkcorp
Elk Premium Building Products, Inc.
Elk Corporation of America
Elk Corporation of Alabama
Elk Corporation of Texas
Elk Corporation of Arkansas
Elk Performance Nonwoven Fabrics, Inc.
Elk Composite Building Products, Inc.
RGM Products, Inc.
Ridgemate Manufacturing Co. Inc.
Elk Slate Products, Inc.
Elk VersaShield Building Solutions, Inc.
Elk Technology Group, Inc.
Chromium Corporation
Elk Technologies, Inc.
Midland Path Forward, Inc.
Lufkin Path Forward, Inc.
Elk Group, Inc.
Elk Group, L.P.
NELPA, Inc.
By	/s/ John F. Rebele/
	Title:	Senior Vice President, Cheif Financial Officer and Cheif Administrative Officer
	Address for notices:
		1361 Alps Road
		Wayne, NJ 07470
Copy to:
		Ronald Daitz
		Weil, Gotshal & Manges LLP
		767 Fifth Avenue
		New York, NY 10153-0019

Acknowledged and Accepted by:

Deutsche Bank AG New York Branch, as Collateral
Agent

By:	/Marguerite Sutton/
	Name: Marguerite Sutton
	Title: Director
By:	/Enrique Landaeta/
	Name: Enrique Landaeta
	Title: Vice President

EX-10.43

Exhibit 10.43

EXECUTION VERSION

GENERAL INTERCREDITOR AGREEMENT

GENERAL INTERCREDITOR AGREEMENT dated as of February 22, 2007, among DEUTSCHE BANK TRUST COMPANY AMERICAS (“DBTCA”), in its capacity as collateral agent for the First Lien Obligations (as defined below), including its successors and assigns in such capacity from time to time, and DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH (“Deutsche Bank Cayman”), in its capacity as collateral agent for the Junior Lien Obligations (as defined below), including its successors and assigns in such capacity from time to time. Capitalized terms used herein but not otherwise defined herein have the meanings set forth in Section 1 below.

A.            BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the “Company”), is party to the Term Loan Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived, Refinanced or otherwise modified from time to time (including to add new loans or other extensions of credit thereunder or increase the amount of loans or other obligations thereunder), the “Credit Agreement”), among the Company and certain of its Subsidiaries, the Lenders party thereto from time to time, Deutsche Bank AG New York Branch (“Deutsche Bank New York”), as administrative agent, Bear Stearns & Co., Inc., as syndication agent and J.P. Morgan Securities, Inc., as documentation agent, and Deutsche Bank Securities Inc., Bear Stearns & Co., Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers.

B.            The Company is a party to the Revolving Credit Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived, Refinanced or otherwise modified from time to time (including to add new loans or other extensions of credit thereunder or to increase the amount of loans or other obligations thereunder), the “Revolving Credit Agreement”), among the Company and certain of its Subsidiaries, the Lender Parties party thereto from time to time, Deutsche Bank New York, as Administrative Agent, Swingline Lender and Letter of Credit Issuer, Bear Stearns & Co. Inc., as Syndication Agent, J.P. Morgan Securities Inc., as Documentation Agent, and Deutsche Bank Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities Inc., as Joint Lead Arrangers and Joint Book Managers.

C.            The Company is party to (i) an indenture dated as of October 20, 1997 (as amended, restated, supplemented, waived, Refinanced or otherwise modified from time to time, the “2007 Notes Indenture”), among the Company, the guarantors identified therein and The Bank of New York, as trustee pursuant to which certain 8% senior notes due 2007 (the “2007 Notes”) were issued; (ii) an indenture dated as of December 3, 1998 (as amended, restated, supplemented, waived, Refinanced or otherwise modified from time to time, the “2008 Notes Indenture”), among the Company, the guarantors identified therein and The Bank of New York, as trustee pursuant to which certain 8% senior notes due 2008 (the “2008 Notes”) were issued; and (iii) an indenture dated as of July 26, 2004 (as amended, restated, supplemented, waived,  Refinanced or otherwise modified from time to time, the “2014 Notes Indenture” and together with the 2007 Notes Indenture and the 2008 Notes Indenture, the “Existing Indentures”) among the Company, the Guarantors identified therein and Wilmington Trust Company, as Trustee, pursuant to which certain 7.75% senior notes (the “2014 Notes” and together with the 2007 Notes and the 2008 Notes, collectively, the “Existing Notes”) were issued.

D.            The Company is a party to a Bridge Loan Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived, Refinanced or otherwise modified from time to time, the “Bridge Loan Agreement”), among the Company and certain of its Subsidiaries, the Lenders party thereto from time to time, Deutsche Bank Cayman, as Administrative Agent, Deutsche Bank Cayman and Bear Stearns Corporate Lending Inc., as Joint Lead Arrangers and Deutsche Bank Cayman, Bear Stearns Corporate Lending Inc. and JPMorgan Chase Bank, N.A. as Joint Book Managers pursuant to which the Company and certain of its Subsidiaries will borrow a senior secured bridge loan (the “Bridge Loan”). It is contemplated that the Bridge Loan will be refinanced with the issuance of Senior Notes (as defined in the Credit Agreement).

E.             Deutsche Bank New York, as administrative agent for the lenders and agents party to the Credit Agreement from time to time, The Bank of New York, as Trustee under the 2007 Notes Indenture and the 2008 Notes Indenture, and Wilmington Trust Company, as Trustee under the 2014 Notes Indenture, DBTCA, the Company and the other Grantors are party to the Collateral Agency Agreement dated February 22, 2007 (as amended, restated, supplemented, waived, replaced or otherwise modified from time to time, the “Collateral Agency Agreement”) in which the parties thereto have appointed DBTCA to act as collateral agent on behalf of the parties thereto.

Accordingly, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

SECTION 1.   Definitions.

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

“Agreement” shall mean this Agreement, as amended, renewed, extended, supplemented or otherwise modified or replaced from time to time in accordance with the terms hereof.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“Bankruptcy Law” shall mean the Bankruptcy Code and any similar Federal, state or foreign law for the relief of debtors.

“Bridge Documents” means the loan, guarantee and security documents governing the Bridge Obligations, including the Bridge Loan Agreement and the Bridge Security Documents.

“Bridge Loan” shall have the meaning set forth in the recitals.

“Bridge Loan Agreement” shall have the meaning set forth in the recitals.

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“Bridge Obligations” means “Secured Obligations” as defined in the Security Agreement (as defined in the Bridge Loan Agreement).

“Bridge Secured Parties” means, at any relevant time, the holders of Bridge Obligations at such time, including the lenders and agents under the Bridge Loan Agreement and any holders of the Senior Notes.

“Bridge Security Documents” means the Security Agreement (as defined in the Bridge Loan Agreement) and any other agreement, document or instrument pursuant to which Liens are granted or purported to be granted securing Bridge Obligations or under which rights or remedies with respect to such Liens are governed.

“Collateral Agency Agreement” shall have the meaning set forth in the recitals.

“Common Collateral” shall mean all of the assets of any Grantor, whether real, personal or mixed, constituting both First Lien Collateral and Junior Lien Collateral including without limitation any assets in which the First Lien Collateral Agent is automatically deemed to have a Lien pursuant to the provisions of Section 2.3.

“Company” shall have the meaning set forth in the recitals.

“Comparable Junior Lien Security Document” shall mean, in relation to any Common Collateral subject to any Lien created under any First Lien Document, those Junior Lien Security Documents that create a Lien on the same Common Collateral, granted by the same Grantor.

“Credit Agreement” shall have the meaning set forth in the recitals.

“DBTCA” shall have the meaning set forth in the recitals.

“Deutsche Bank New York” shall have the meaning set forth in the recitals.

“Deutsche Bank Cayman” shall have the meaning set forth in the recitals.

“DIP Financing” shall have the meaning set forth in Section 6.1.

“Discharge of First Lien Obligations” shall mean, except to the extent otherwise provided in Section 5.6, payment in full in cash (except for contingent obligations) of all First Lien Obligations and the termination of all commitments of First Lien Secured Parties under First Lien Documents and written notice of the same shall have been provided by the Company to DBTCA; provided, however, that the Discharge of First Lien Obligations shall not be deemed to have occurred if such payments are made with the proceeds of other First Lien Obligations that constitute an exchange or replacement for or a Refinancing of such First Lien Obligations. In the event the First Lien Obligations are modified and the First Lien Obligations are paid over time or otherwise modified pursuant to Section 1129 of the Bankruptcy Code, the First Lien Obligations shall be deemed to be discharged when the final payment is made, in cash, in respect of such indebtedness and any obligations pursuant to such new indebtedness shall have been satisfied.

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“Disposition” shall have the meaning set forth in Section 5.1.

“Existing Indentures” shall have the meaning set forth in the recitals.

“First Lien Collateral” shall mean all of the assets of any Grantor, whether real, personal or mixed, with respect to which a Lien is granted or purported to be granted as security for any First Lien Obligations pursuant to a First Lien Security Document.

“First Lien Collateral Agent” shall mean DBTCA, in its capacity as collateral agent for the lenders and other secured parties under the First Lien Documents and the holders of the Existing Notes pursuant to the Collateral Agency Agreement, together with its successors and permitted assigns in such capacity under the Collateral Agency Agreement exercising substantially the same rights and powers; and in each case provided that if such First Lien Collateral Agent is not DBTCA, such First Lien Collateral Agent shall have become a party to this Agreement and the other applicable First Lien Security Documents.

“First Lien Documents” means the loan, debt, guarantee and security documents governing the First Lien Obligations, including, without limitation, the Credit Agreement, the Existing Indentures, Secured Hedge Agreements (as defined in the Credit Agreement) and the First Lien Security Documents.

“First Lien Obligations” shall mean all “Secured Obligations” as defined in the First Lien Security Agreement.

“First Lien Secured Parties” means, at any relevant time, the holders of First Lien Obligations at such time the lenders and agents under the Credit Agreement, the noteholders and trustees under the Existing Indentures, hedge banks providing the Secured Hedge Agreements (as defined in the Credit Agreement) and the First Lien Collateral Agent.

“First Lien Security Agreement” means the Security Agreement dated February 22, 2007 made by the Company and each other Grantor identified therein to DBTCA for the Secured Parties (as defined therein).

“First Lien Security Documents” means the First Lien Security Agreement and any other agreement, document or instrument pursuant to which a Lien is granted or purported to be granted securing First Lien Obligations or under which rights or remedies with respect to such Liens are governed.

“First Priority Liens” means Liens securing the First Lien Obligations, which Liens are superior and prior in priority to the Liens securing the Junior Lien Obligations.

“Grantors” shall mean the Company and each of the Subsidiaries that has executed and delivered a First Lien Document or a Junior Lien Document.

“Indebtedness” shall mean and include all obligations that constitute “Indebtedness” or “Debt”, as the case may be, within the meaning of the Credit Agreement, the Existing Indentures or the Bridge Loan Agreement.

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“Insolvency or Liquidation Proceeding” means:

(1)           any case commenced by or against the Company or any other Grantor under any Bankruptcy Law, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of the Company or any other Grantor, any receivership or assignment for the benefit of creditors relating to the Company or any other Grantor or any similar case or proceeding relative to the Company or any other Grantor or its creditors, as such, in each case whether or not voluntary;

(2)           any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to the Company or any other Grantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency; or

(3)           any other proceeding of any type or nature in which substantially all claims of creditors of the Company or any other Grantor are determined and any payment or distribution is or may be made on account of such claims.

“Junior Lien Collateral” shall mean all of the assets of any Grantor, whether real, personal or mixed, with respect to which a Lien is granted or purported to be granted as security for any Junior Lien Obligations pursuant to a Junior Lien Security Document.

“Junior Lien Collateral Agent” shall mean (i) so long as the Bridge Obligations are outstanding, Deutsche Bank Cayman, in its capacity as collateral agent for the Secured Parties (as defined in the Bridge Loan Agreement), and (ii) at any time thereafter, such agent or trustee as is designated “Junior Lien Collateral Agent” by Junior Lien Secured Parties holding a majority in principal amount of the Junior Lien Obligations then outstanding or pursuant to such other arrangements as agreed to among the holders of the Junior Lien Obligations.

“Junior Lien Documents” means the credit and security documents governing the Junior Lien Obligations, including, without limitation, the Bridge Documents and the related Junior Lien Security Documents.

“Junior Lien Obligations” means Bridge Obligations, obligations with respect to any Indebtedness that Refinances the Bridge Obligations and obligations with respect to other Indebtedness permitted to be incurred under the First Lien Documents and the Bridge Loan Agreement which is by its terms intended to be secured equally and ratably with the Bridge Loan or on a basis junior to the Liens securing the Bridge Loan (provided that such Lien is permitted to be incurred under the First Lien Documents and the Bridge Loan Agreement); provided, however, that the holders of such Indebtedness or their Junior Lien Representative is a party to the Junior Lien Security Documents in accordance with the terms thereof and has appointed the Junior Lien Collateral Agent as collateral agent for such holders of Junior Lien Obligations with respect to all or a portion of the Common Collateral.

“Junior Lien Representative” means any duly authorized representative of any holders of Junior Lien Obligations which representative is a party to the Junior Lien Security Documents.

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“Junior Lien Secured Parties” means (i) Bridge Secured Parties, (ii) the Junior Lien Collateral Agent and (iii) the holders from time to time of any other Junior Lien Obligations, and each Junior Lien Representative.

“Junior Lien Security Documents” means (a) so long as the Bridge Obligations are outstanding, the Bridge Security Documents and (b) thereafter any agreement, document or instrument pursuant to which a Lien is granted or purported to be granted securing Junior Lien Obligations or under which rights or remedies with respect to such Liens are governed, which in each case may include intercreditor and/or subordination agreements or arrangements among various Junior Lien Secured Parties.

“Junior Liens” means the Liens securing the Junior Lien Obligations.

“Lien” shall mean, with respect to any asset, any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset.

“New Agent” shall have the meaning set forth in Section 5.6.

“Non-Conforming Plan of Reorganization” any Plan of Reorganization which grants the Junior Lien Collateral Agent or any Junior Lien Secured Party any right or benefit, directly or indirectly, which right or benefit is expressly prohibited at such time by the provisions of this Agreement.

“Officers’ Certificate” shall have the meaning set forth in the Existing Indentures.

“Payment Discharge” shall have the meaning set forth in Section 5.1(a).

“Person” shall mean any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, entity or other party, including any government and any political subdivision, agency or instrumentality thereof.

“Plan of Reorganization” means any plan of reorganization, plan of liquidation, agreement for composition, or other type of plan of arrangement proposed in or in connection with any Insolvency or Liquidation Proceeding.

“Pledged Collateral” shall mean the Common Collateral in the possession or control of the First Lien Collateral Agent (or its agents or bailees), to the extent that possession or control thereof perfects a Lien thereon under the UCC.

“Recovery” shall have the meaning set forth in Section 6.3.

“Refinance” means, in respect of any indebtedness, to refinance, extend, renew, defease, amend, increase, modify, supplement, restructure, refund, replace or repay, or to issue other indebtedness or enter alternative financing arrangements, in exchange or replacement for such indebtedness, in whole or in part, including by adding or replacing lenders, creditors, agents, borrowers and/or guarantors, and including in each case, but not limited to, after the

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original instrument giving rise to such indebtedness has been terminated. “Refinanced” and “Refinancing” have correlative meanings.

“Reinstatement” shall have the meaning set forth in Section 5.6.

“Revolver Collateral” means “Collateral” as defined in the Revolver Security Agreement, as in effect on the date hereof.

“Revolver Collateral Agent” means the Collateral Monitoring Agent as defined in the Revolving Credit Agreement.

“Revolver Intercreditor Agreement” means that certain Revolver Intercreditor Agreement dated the date hereof among the Revolver Collateral Agent and the First Lien Collateral Agent, as the same may be amended, restated, modified or waived from time to time.

“Revolver Obligations” shall mean all “Secured Obligations” as defined in the Revolver Security Agreement.

“Revolver Security Agreement” means the Security Agreement (as defined in the Revolving Credit Agreement).

“Revolving Credit Agreement” shall have the meaning set forth in the recitals.

“Subsidiary” shall mean any “Subsidiary” of the Company as defined in the Credit Agreement or the Indenture.

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

“2007 Notes” shall have the meaning set forth in the recitals.

“2007 Notes Indenture” shall have the meaning set forth in the recitals.

“2008 Notes” shall have the meaning set forth in the recitals.

“2008 Notes Indenture” shall have the meaning set forth in the recitals.

“2014 Notes” shall have the meaning set forth in the recitals.

“2014 Notes Indenture” shall have the meaning set forth in the recitals.

1.2           Terms Generally.   The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word  “shall.”  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or

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otherwise modified in accordance with this Agreement, (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Sections shall be construed to refer to Sections of this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 2.   Lien Priorities.

2.1           Subordination of Liens.   Notwithstanding (i) the date, time, manner or order of filing or recordation of any document or instrument or grant, attachment or perfection (including any defect or deficiency or alleged defect or deficiency in any of the foregoing) of any Liens granted to the Junior Lien Collateral Agent or the Junior Lien Secured Parties on the Common Collateral or of any Liens granted to the First Lien Collateral Agent or the First Lien Secured Parties on the Common Collateral, (ii) any provision of the UCC, the Bankruptcy Code, any applicable law, the Junior Lien Documents or the First Lien Documents, (iii) whether the First Lien Collateral Agent, either directly or through agents, holds possession of, or has control over, all or any part of the Common Collateral, (iv) the fact that any such Liens may be subordinated, voided, avoided, invalidated or lapsed or (v) any other circumstance of any kind or nature whatsoever, the Junior Lien Collateral Agent and each Junior Lien Representative, on behalf of itself and each applicable Junior Lien Secured Party, hereby agrees that: (a) any Lien on the Common Collateral securing any First Lien Obligations now or hereafter held by or on behalf of the First Lien Collateral Agent or any First Lien Secured Parties or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall have priority over and be senior in all respects and prior to any Lien on the Common Collateral securing any Junior Lien Obligations, (b) any Lien on the Common Collateral securing any Junior Lien Obligations now or hereafter held by or on behalf of the Junior Lien Collateral Agent or any Junior Lien Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Common Collateral securing any First Lien Obligations and (c) with respect to any Junior Lien Obligations other than the Bridge Obligations or any Refinancings thereof (and as between the Junior Lien Collateral Agent, the other Junior Lien Representatives, the Bridge Secured Parties and the other Junior Lien Secured Parties), the Liens on the Common Collateral securing any Junior Lien Obligations now or hereafter held by or on behalf of the Junior Lien Collateral Agent, any Junior Lien Representatives, any Bridge Secured Party or any Junior Lien Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall rank in all respects equally and ratably to or junior to the Liens securing the Bridge Obligations or any Refinancings thereof. All Liens on the Common Collateral securing any First Lien Obligations shall be and remain senior in all respects and prior to all Liens on the Common Collateral securing any Junior Lien Obligations for all purposes, whether or not such Liens securing any First Lien Obligations are subordinated to any Lien securing any other obligation of the Company, any other Grantor or any other Person. The Junior Lien Collateral Agent and each Junior Lien Representative, for itself and on behalf of the Junior Lien Secured Parties, expressly agree that any Lien purported to be granted on any

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Common Collateral as security for the First Lien Obligations shall be deemed to be and shall be deemed to remain senior in all respects and prior to all Liens on the Common Collateral securing any Junior Lien Obligations for all purposes regardless of whether the Lien purported to be granted is found to be improperly granted, improperly perfected, preferential, a fraudulent conveyance or legally or otherwise deficient in any manner.

2.2           Prohibition on Contesting Liens.   The Junior Lien Collateral Agent and each other Junior Lien Representative, for itself and on behalf of each applicable Junior Lien Secured Party, agrees that (a) it shall not (and hereby waives any right to) take any action to challenge, contest or support any other Person in contesting or challenging, directly or indirectly, in any proceeding (including any Insolvency or Liquidation Proceeding), the validity, perfection, priority or enforceability of a Lien securing any First Lien Obligations held (or purported to be held) by or on behalf of the First Lien Collateral Agent or any of the First Lien Secured Parties or any agent or trustee therefor in any First Lien Collateral or Common Collateral and (b) none of them will oppose or otherwise contest (or support any Person contesting) any other request for judicial relief made in any court by the First Lien Collateral Agent or any First Lien Secured Parties relating to the lawful enforcement of any First Priority Lien on Common Collateral or First Lien Collateral. The First Lien Collateral Agent, for itself and on behalf of each First Lien Secured Party, agrees that it shall not (and hereby waives any right to) take any action to challenge, contest or support any other Person in contesting or challenging, directly or indirectly, in any proceeding (including any Insolvency or Liquidation Proceeding), the validity, perfection, priority or enforceability of a Lien securing any Junior Lien Obligations held (or purported to be held) by or on behalf of the Junior Lien Collateral Agent or any Junior Lien Secured Party in the Common Collateral; provided, however, that nothing in this Agreement shall be construed to prevent or impair the rights of the First Lien Collateral Agent or any First Lien Secured Parties to enforce this Agreement (including the priority of the Liens securing the First Lien Obligations as provided in Section 2.1) or any of the First Lien Documents.

2.3           No New Liens.  So long as the Discharge of First Lien Obligations has not occurred, the parties hereto agree that, after the date hereof, neither the Junior Lien Collateral Agent nor any Junior Lien Representative shall acquire or hold any Lien on any assets of the Company or any other Subsidiary (and neither the Company nor any Subsidiary shall grant such Lien) securing any Junior Lien Obligations that are not also subject to the First Priority Lien in respect of the First Lien Obligations under the First Lien Documents. If the Junior Lien Collateral Agent or any Junior Lien Representative shall (nonetheless and in breach hereof) acquire or hold any Lien on any assets of the Company or any other Subsidiary that is not also subject to the First Priority Lien in respect of the First Lien Obligations under the First Lien Documents, then such Junior Lien Collateral Agent or other Junior Lien Representative shall, without the need for any further consent of any party and notwithstanding anything to the contrary in any other document, be deemed to also hold and have held such Lien for the benefit of the First Lien Collateral Agent as security for the First Lien Obligations (subject to the lien priority and other terms hereof) and shall use its best efforts to promptly notify the First Lien Collateral Agent in writing of such Lien and in any event take such actions as may be requested by the First Lien Collateral Agent to assign or release such Lien to the First Lien Collateral Agent (and/or its designee) as security for the applicable First Lien Obligations.

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2.4Perfection of Liens.   Except as expressly set forth in Section 5.5 hereof, neither the First Lien Collateral Agent nor any First Lien Secured Party shall be responsible for perfecting and maintaining the perfection of Liens with respect to the Common Collateral for the benefit of the Junior Lien Collateral Agent, the other Junior Lien Representatives or any other Junior Lien Secured Parties. Neither the Junior Lien Collateral Agent, any Junior Lien Representative nor any Junior Lien Secured Party shall be responsible for perfecting and maintaining the perfection of Liens with respect to the Common Collateral for the benefit of the First Lien Collateral Agent or any other First Lien Secured Parties. The provisions of this Agreement are intended solely to govern the respective Lien priorities as between the First Lien Secured Parties and the Junior Lien Secured Parties and shall not impose on the First Lien Collateral Agent, the Junior Lien Collateral Agent, any other Junior Lien Representative, the Junior Lien Secured Parties or the First Lien Secured Parties or any agent or trustee therefor or on the Company or any of its Subsidiaries any obligations in respect of the disposition of proceeds of any Common Collateral which would conflict with prior perfected claims therein in favor of any other Person or any order or decree of any court or governmental authority or any applicable law.

SECTION 3.   Enforcement.

3.1Exercise of Remedies.

(a)           So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, (i) neither the Junior Lien Collateral Agent, any Junior Lien Representative nor any Junior Lien Secured Party will (x) exercise or seek to exercise any rights or remedies (including setoff and the right to credit bid debt (except as set forth in Section 3.1(f) below)) with respect to any Common Collateral in respect of any applicable Junior Lien Obligations, or institute any action or proceeding with respect to such rights or remedies (including any action of foreclosure), (y) contest, protest or otherwise object to any foreclosure or enforcement proceeding or action brought with respect to the Common Collateral or any other collateral by the First Lien Collateral Agent or any First Lien Secured Party in respect of the First Lien Obligations, the exercise of any right by the First Lien Collateral Agent or any First Lien Secured Party (or any agent or sub-agent on their behalf) in respect of the First Lien Obligations under any control agreement, lockbox agreement, landlord waiver or bailee’s letter or similar agreement or arrangement to which the Junior Lien Collateral Agent, any Junior Lien Representative or any Junior Lien Secured Party either is a party or may have rights as a third party beneficiary, or any other exercise by any such party, of any rights and remedies as a secured party relating to the Common Collateral or any other collateral under the First Lien Documents or otherwise in respect of First Lien Obligations, or (z) object to any waiver or forbearance by the First Lien Secured Parties from or in respect of bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to the Common Collateral or any other collateral in respect of First Lien Obligations and (ii) except as otherwise provided herein, the First Lien Collateral Agent and the First Lien Secured Parties shall have the sole and exclusive right to enforce rights, exercise remedies (including setoff and the right to credit bid their debt), marshal, process and make determinations regarding the release, disposition or restrictions, or waiver or forbearance of rights or remedies with respect to the Common Collateral without any consultation with or the consent of the Junior

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Lien Collateral Agent, any Junior Lien Representative or any Junior Lien Secured Party; provided, however, that (A) in any Insolvency or Liquidation Proceeding commenced by or against the Company or any other Grantor, the Junior Lien Collateral Agent may file a proof of claim or statement of interest with respect to the Junior Lien Obligations and (B) the Junior Lien Collateral Agent may take any action (not adverse to the prior Liens on the Common Collateral securing the First Lien Obligations, or the rights of the First Lien Collateral Agent or the First Lien Secured Parties to exercise remedies in respect thereof) in order to prove, preserve or protect (but not enforce) its rights in, and perfection and priority of its Lien on, the Common Collateral. In exercising rights and remedies with respect to the First Lien Collateral or Common Collateral, the First Lien Collateral Agent and the First Lien Secured Parties may enforce the provisions of the First Lien Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Common Collateral or other collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured lender under the UCC of any applicable jurisdiction and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

(b)           So long as the Discharge of First Lien Obligations has not occurred, the Junior Lien Collateral Agent and each Junior Lien Representative, on behalf of itself and each applicable Junior Lien Secured Party, agrees that it will not, in the context of its role as secured lender, take or receive any Common Collateral or any proceeds of Common Collateral in connection with the exercise of any right or remedy or otherwise in an Insolvency or Liquidation Proceeding (including set off or the right to credit bid debt (except as set forth in Section 3.1(f) below)) with respect to any Common Collateral in respect of the applicable Junior Lien Obligations. Without limiting the generality of the foregoing, unless and until the Discharge of First Lien Obligations has occurred, except as expressly provided in the proviso in clause (ii) of Section 3.1(a), the sole right of the Junior Lien Collateral Agent, the Junior Lien Representatives and the Junior Lien Secured Parties with respect to the Common Collateral is to hold a Lien on the Common Collateral in respect of the applicable Junior Lien Obligations pursuant to the Junior Lien Documents, as applicable, for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of First Lien Obligations has occurred.

(c)           Subject to the proviso in clause (ii) of Section 3.1(a), (i) the Junior Lien Collateral Agent, for itself and on behalf of each Junior Lien Secured Party, agrees that neither the Junior Lien Collateral Agent, any Junior Lien Representative nor any Junior Lien Secured Party will take any action that would hinder any exercise of remedies undertaken by the First Lien Collateral Agent or the First Lien Secured Parties with respect to the Common Collateral, the First Lien Collateral or any other collateral under the First Lien Documents, including any sale, lease, exchange, transfer or other disposition of the Common Collateral, the First Lien Collateral or such other collateral, whether by foreclosure or otherwise, and (ii) the Junior Lien Collateral Agent and each Junior Lien Representative, for itself and on behalf of each applicable Junior Lien Secured Party, hereby waives any and all rights it or any Junior Lien  Secured Party may have as a junior lien creditor or otherwise to object to the manner in which the First Lien Collateral Agent or the First Lien Secured Parties seek to enforce or collect the First Lien Obligations or the Liens granted in any of the First Lien Collateral or Common

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Collateral, regardless of whether any action or failure to act by or on behalf of the First Lien Collateral Agent or First Lien Secured Parties is adverse to the interests of the Junior Lien Secured Parties.

(d)           The Junior Lien Collateral Agent and each Junior Lien Representative for itself and on behalf of Junior Lien Secured Party hereby acknowledges and agrees that no covenant, agreement or restriction contained in any applicable Junior Lien Document shall be deemed to restrict in any way the rights and remedies of the First Lien Collateral Agent or the First Lien Secured Parties with respect to the First Lien Collateral or Common Collateral as set forth in this Agreement and the First Lien Documents.

(e)           So long as the Discharge of First Lien Obligations has not occurred, neither the Junior Lien Collateral Agent, any other Junior Lien Representative nor any other Junior Lien Secured Party may assert or enforce any right of marshalling accorded to a junior lienholder, as against the First Lien Collateral Agent or any First Lien Secured Party (in their capacity as priority lienholders).

(f)            Section 3.1 hereof shall not be construed to in any way limit or impair the right of any Junior Lien Secured Party from exercising a credit bid with respect to the Junior Lien Obligations in a sale or other disposition of Common Collateral under Section 363 of the Bankruptcy Code, provided, however, that in connection with and immediately after giving effect to such sale and credit bid there occurs a Discharge of First Lien Obligations.

3.2           Cooperation. Subject to the proviso in clause (ii) of Section 3.1(a), the Junior Lien Collateral Agent and each Junior Lien Representative, on behalf of itself and each applicable Junior Lien Secured Party, agrees that, unless and until the Discharge of First Lien Obligations has occurred, it will not commence, or join with any Person (other than the First Lien Secured Parties and the First Lien Collateral Agent upon the request thereof) in commencing, any enforcement, collection, execution, levy or foreclosure action or proceeding with respect to any Lien held by it in the Common Collateral or any other collateral under any of the applicable Junior Lien Documents or otherwise in respect of the applicable Junior Lien Obligations.

SECTION 4. Payments.

4.1           Application of Proceeds. So long as the Discharge of First Lien Obligations has not occurred, the Common Collateral or proceeds thereof received in connection with the sale or other disposition of, or collection on, such Common Collateral upon the exercise of remedies as a secured party, shall be applied by the First Lien Collateral Agent to the First Lien Obligations in such order as specified in the relevant First Lien Documents until the Discharge of First Lien Obligations has occurred. Upon the Discharge of First Lien Obligations, subject to the proviso of Section 5.1(a)(y) and subject to Section 5.6 hereof, the First Lien Collateral Agent shall deliver promptly to the Junior Lien Collateral Agent any Common Collateral or proceeds thereof held by it in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct.

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4.2           Payments Over.   Any Common Collateral or First Lien Collateral or proceeds thereof received by the Junior Lien Collateral Agent or any Junior Lien Secured Party in connection with the exercise of any right or remedy (including set off or credit bid) or in any Insolvency or Liquidation Proceeding relating to the Common Collateral not expressly permitted by this Agreement or prior to the Discharge of First Lien Obligations shall be segregated and held in trust for the benefit of and forthwith paid over to the First Lien Collateral Agent (and/or its designees) for the benefit of the First Lien Secured Parties in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The First Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the Junior Lien Collateral Agent or any such Junior Lien Secured Party. This authorization is coupled with an interest and is irrevocable.

SECTION 5. Other Agreements.

5.1          Releases.

(a)           (x) If, at any time any Grantor or any First Lien Secured Party delivers notice to the Junior Lien Collateral Agent with respect to any specified Common Collateral (including for such purpose, in the case of the sale or other disposition of all or substantially all of the equity interests in any Subsidiary, any Common Collateral held by such Subsidiary or any direct or indirect Subsidiary thereof) that:

(A)          such specified Common Collateral is sold, transferred or otherwise disposed of (a “Disposition”) by the owner of such Common Collateral in a transaction permitted under the First Lien Documents and the Junior Lien Documents; or

(B)           the First Priority Liens thereon are released in connection with a Subsidiary that is released from its guarantee under the First Lien Documents and the Junior Lien Documents; or

(C)           the First Priority Liens thereon are otherwise released as required by the Revolver Intercreditor Agreement (and the Revolver Collateral Agent does not have a Lien in respect thereof) or as permitted by the First Lien Documents or by the First Lien Collateral Agent on behalf of the First Lien Secured Parties (unless, in the case of clause (B) or (C) of this Section 5.1(a)(x) such release occurs in connection with, and after giving effect to, a Discharge of First Lien Obligations which discharge is not in connection with a foreclosure of, or other exercise of remedies with respect to, Common Collateral by the First Lien Secured Parties (such discharge not in connection with any such foreclosure or exercise of remedies, a “Payment Discharge”)),

then the Junior Liens upon such Common Collateral (and any other Common Collateral where notice of a Disposition is not required) will automatically be released and discharged as and when, but only to the extent, such Liens on such Common Collateral securing First Lien Obligations are released and discharged (provided, however, that in the case of a Payment Discharge, the Liens on any Common Collateral disposed of in connection with the satisfaction in whole or in part of First Lien Obligations shall be automatically released but any proceeds thereof not used for purposes of the Discharge of First Lien Obligations or otherwise in

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accordance with the Junior Lien Documents shall be subject to Junior Liens and shall be applied pursuant to Section 4.1). Upon delivery to the Junior Lien Collateral Agent of a notice from the First Lien Collateral Agent stating that any such release of Liens securing or supporting the First Lien Obligations has become effective (or shall become effective upon the Junior Lien Collateral Agent’s release), the Junior Lien Collateral Agent will promptly, at the Company’s expense, execute and deliver such instruments, releases, termination statements or other documents confirming such release on customary terms, which instruments, releases and termination statements shall be substantially identical to the comparable instruments, releases and termination statements executed by the First Lien Collateral Agent in connection with such release. In the case of the sale of capital stock of a Subsidiary or any other transaction resulting in the release of such Subsidiary’s guarantee under the Credit Agreement in accordance with the Credit Agreement, the guarantee in favor of the Junior Lien Secured Parties, if any, made by such Subsidiary will automatically be released and discharged as and when, but only to the extent, the guarantee by such Subsidiary of First Lien Obligations is released and discharged.

(y)           In the event of a Payment Discharge, the Junior Liens on Common Collateral owned by the Company or a Grantor immediately after giving effect to such Payment Discharge shall become first-priority security interests (subject to any intercreditor agreements or arrangements among Junior Lien Secured Parties pursuant to Section 8.21 and subject to Liens permitted by the Bridge Loan Agreement or any Refinancing thereof and, with respect to the Revolver Collateral, subject to the Revolver Intercreditor Agreement); provided, however, that if the Company or the Grantors incur at any time thereafter any new or replacement First Lien Obligations permitted under the Junior Lien Documents, then the provisions of Section 5.6 shall apply as if a Refinancing of First Lien Obligations had occurred.

(b)           The Junior Lien Collateral Agent, for itself and on behalf of each Junior Lien Secured Party, hereby irrevocably constitute and appoint the First Lien Collateral Agent and any officer or agent of the First Lien Collateral Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Junior Lien Collateral Agent or in the First Lien Collateral Agent’s own name, from time to time in the First Lien Collateral Agent’s discretion, for the purpose of carrying out the terms of this Section 5.1, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the purposes of this Section 5.1, including any termination statements, endorsements or other instruments of transfer or release.

(c)           Unless and until the Discharge of First Lien Obligations has occurred, the Junior Lien Collateral Agent and each Junior Lien Representative, for itself and on behalf of each applicable Junior Lien Secured Party, hereby consents to the application, after an  Event of Default, of proceeds of Common Collateral or other collateral to the repayment of First Lien Obligations pursuant to the Credit Agreement.

5.2           Insurance. Subject to the rights of the Revolver Collateral Agent under the Revolver Intercreditor Agreement, unless and until the Discharge of First Lien Obligations has occurred, the First Lien Collateral Agent and the First Lien Secured Parties shall have the sole and exclusive right, to the extent permitted by the First Lien Documents and subject to the

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rights of the Grantors thereunder, to agree settlement at the written direction of the Required Lender Representatives (as defined in the Collateral Agency Agreement) for any insurance policy covering the Common Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the Common Collateral. Unless and until the Discharge of First Lien Obligations has occurred, all proceeds of any such policy and any such award if in respect of the Common Collateral shall be paid (a) first, prior to the occurrence of the Discharge of First Lien Obligations, to the First Lien Collateral Agent for the benefit of First Lien Secured Parties pursuant to the terms of the First Lien Documents, (b) second, after the occurrence of the Discharge of First Lien Obligations, to the Junior Lien Collateral Agent for the benefit of the Junior Lien Secured Parties pursuant to the terms of the applicable Junior Lien Documents and (c) third, if no Junior Lien Obligations are outstanding, to the owner of the subject property, such other person as may be entitled thereto or as a court of competent jurisdiction may otherwise direct. If the Junior Lien Collateral Agent or any Junior Lien Secured Party shall, at any time, receive any proceeds of any such insurance policy or any such award in contravention of this Agreement, such proceeds shall be segregated and held in trust for the benefit of the First Lien Collateral Agent and it shall forthwith pay such proceeds over to the First Lien Collateral Agent in accordance with the terms of Section 4.2.

5.3           Amendments to Junior Lien Security Documents.

(a)           So long as the Discharge of First Lien Obligations has not occurred, without the prior written consent of the First Lien Collateral Agent, no Junior Lien Security Document may be amended, supplemented or otherwise modified or entered into to the extent such amendment, supplement or modification, or the terms of any new Junior Lien Security Document, would be prohibited by or inconsistent with any of the terms of this Agreement. The Junior Lien Collateral Agent and each Junior Lien Representative agree that each applicable Junior Lien Security Document shall include the following language (or language to similar effect approved by the First Lien Collateral Agent):

“Notwithstanding anything herein to the contrary, the liens and security interests granted to the [Junior Lien Collateral Agent] pursuant to this Agreement and the exercise of any right or remedy by the [Junior Lien Collateral Agent] hereunder are subject to the limitations and provisions of the General Intercreditor Agreement, dated as of February 22, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), Deutsche Bank Trust Company Americas, as First Lien Collateral Agent, and Deutsche Bank AG Cayman Island Branch, as Junior Lien Collateral Agent, and certain other persons party or that may become party thereto from time to time, and consented to by Building Materials Corporation of America and the Grantors identified therein. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern and control.”

In addition, the Junior Lien Collateral Agent and each Junior Lien Representative, on behalf of the Junior Lien Secured Parties, agree that each mortgage covering any Common Collateral shall contain such other language as the First Lien Collateral Agent may reasonably request to reflect

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the subordination of such mortgage to the First Lien Document covering such Common Collateral.

(b)           In the event that the First Lien Collateral Agent or the First Lien Secured Parties enter into any amendment, waiver or consent in respect of or replace any of the First Lien Security Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any First Lien Security Document or changing in any manner the rights of the First Lien Collateral Agent, the First Lien Secured Parties, the Company or any other Grantor thereunder (including the release of any Liens in Common Collateral in accordance with Section 5.1), then such amendment, waiver or consent shall apply automatically to any comparable provision of each Comparable Junior Lien Security Document without the consent of the Junior Lien Collateral Agent, any Junior Lien Representative or any Junior Lien Secured Party and without any action by the Junior Lien Collateral Agent, any Junior Lien Representative, the Company or any other Grantor; provided that such amendment, waiver or consent does not materially adversely affect the rights of the Junior Lien Secured Parties or the interests of the Junior Lien Secured Parties in the Common Collateral in a manner materially different from that affecting the rights of the First Lien Secured Parties thereunder or therein. The First Lien Collateral Agent shall give written notice of such amendment, waiver or consent (along with a copy thereof) to the Junior Lien Collateral Agent; provided that the failure to give such notice shall not affect the effectiveness of such amendment with respect to the provisions of any Junior Lien Security Document as set forth in this Section 5.3(b).

5.4           Rights as Unsecured Creditors. Except as otherwise expressly set forth in this Agreement, the Junior Lien Collateral Agent and the Junior Lien Secured Parties may exercise rights and remedies as an unsecured creditor against the Company or any Subsidiary that has guaranteed the Junior Lien Obligations in accordance with the terms of the applicable Junior Lien Documents and applicable law. Nothing in this Agreement shall prohibit the receipt by the Junior Lien Collateral Agent or any Junior Lien Secured Party of the required payments of interest and principal so long as such receipt is not the direct or indirect result of the exercise by the Junior Lien Collateral Agent, any Junior Lien Representative or any Junior Lien Secured Party of rights or remedies as a secured creditor in respect of Common Collateral or other collateral or enforcement in contravention of this Agreement of any Lien in respect of Junior Lien Obligations held by any of them or in any Insolvency or Liquidation Proceeding. In the event the Junior Lien Collateral Agent, any Junior Lien Representative or any Junior Lien Secured Party becomes a judgment lien creditor or other secured creditor in respect of Common Collateral, First Lien Collateral or other collateral as a result of its enforcement of its rights as an unsecured creditor in respect of Junior Lien Obligations or otherwise, such judgment or other lien shall be subordinated to the Liens securing First Lien Obligations on the same basis as the other Liens securing the Junior Lien Obligations are so subordinated to such Liens securing First Lien Obligations under this Agreement.

5.5           First Lien Collateral Agent as Gratuitous Bailee for Perfection.

(a)           The First Lien Collateral Agent agrees to hold the Pledged Collateral that is part of the Common Collateral in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the benefit and on behalf of the Junior

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 Lien Collateral Agent and each Junior Lien Secured Party and any assignee thereof solely for the purpose of perfecting the security interest granted in such Pledged Collateral pursuant to the Junior Lien Security Documents, subject to the terms and conditions of this Section 5.5.

(b)           In the event that the First Lien Collateral Agent (or its agent or bailees) has Lien filings against intellectual property that is part of the Common Collateral that are necessary for the perfection of Liens in such Common Collateral, the First Lien Collateral Agent agrees to act under such filings and hold such Liens as gratuitous bailee for the Junior Lien Collateral Agent and each Junior Lien Secured Party and any assignee solely for the purpose of perfecting the security interest granted in such Liens pursuant to the Junior Lien Security Documents, subject to the terms and conditions of this Section 5.5.

(c)           Except as otherwise specifically provided herein (including Sections 3.1 and 4.1), until the Discharge of First Lien Obligations has occurred, the First Lien Collateral Agent shall be entitled to deal with the Pledged Collateral in accordance with the terms of the First Lien Documents as if the Liens under the Junior Lien Documents did not exist. The rights of the Junior Lien Collateral Agent and the Junior Lien Secured Parties with respect to such Pledged Collateral shall at all times be subject to the terms of this Agreement.

(d)           The First Lien Collateral Agent shall have no obligation whatsoever to any Junior Lien Representative or any Junior Lien Secured Party to assure that the Pledged Collateral is genuine or owned by the Grantors or to protect or preserve rights or benefits of any Person or any rights pertaining to the Common Collateral except as expressly set forth in this Section 5.5. The duties or responsibilities of the First Lien Collateral Agent under this Section 5.5 shall be limited solely to holding the Pledged Collateral as gratuitous bailee for the benefit and on behalf of the Junior Lien Collateral Agent and each Junior Lien Secured Party for purposes of perfecting the Lien held by the Junior Lien Secured Parties.

(e)           The First Lien Collateral Agent shall not have by reason of the Junior Lien Documents or this Agreement or any other document a fiduciary relationship in respect of any Junior Lien Collateral Agent or any Junior Lien Secured Party and each of the Junior Lien Collateral Agent, the Junior Lien Representatives and the Junior Lien Secured Parties hereby waive and release the First Lien Collateral Agent from all claims and liabilities arising pursuant to the First Lien Collateral Agent’s role under this Section 5.5, as agent and gratuitous bailee with respect to the Common Collateral.

(f)            Upon the Discharge of First Lien Obligations, the First Lien Collateral Agent shall (x) deliver to the Junior Lien Collateral Agent written notice of the occurrence thereof (which notice may state that such Discharge of First Lien Obligations is subject to the provisions of this Agreement, including Sections 5.1(a)(y), 5.6 and 6.3) (it being understood that until the delivery of such notice to the Junior Lien Collateral Agent, the Junior Lien Collateral Agent shall not be charged with knowledge of the Discharge of First Lien Obligations or required to take any actions based on such Discharge of First Lien Obligations) and (y) deliver to the Junior Lien Collateral Agent, to the extent required hereunder and that it is legally permitted to do so, the remaining Pledged Collateral (if any) together with any necessary endorsements (or otherwise allow the Junior Lien Collateral Agent to obtain control of such Pledged Collateral) or as a court of competent jurisdiction may otherwise direct. The Company

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and each Grantor shall take such further action as is required to effectuate the transfer contemplated hereby and shall indemnify the First Lien Collateral Agent for loss or damage suffered by the First Lien Collateral Agent as a result of such transfer except for loss or damage suffered by the First Lien Collateral Agent as a result of its own willful misconduct, gross negligence or bad faith. The First Lien Collateral Agent has no obligation to follow instructions from the Junior Lien Collateral Agent, any Junior Lien Representative or any Junior Lien Secured Party in contravention of this Agreement.

(g)           Neither the First Lien Collateral Agent nor the First Lien Secured Parties shall be required to marshal any present or future collateral security for the Company’s or its Subsidiaries’ obligations to the First Lien Collateral Agent or the First Lien Secured Parties under the Credit Agreement or the First Lien Documents or any assurance of payment in respect thereof or to resort to such collateral security or other assurances of payment in any particular order, and all of their rights in respect of such collateral security or any assurance of payment in respect thereof shall be cumulative and in addition to all other rights, however existing or arising.

(h)           Notwithstanding the foregoing, the First Lien Collateral Agent shall not have any obligation, duty or responsibility to any Junior Lien Secured Party or any other Person to possess or control (directly or indirectly), as bailee, agent or otherwise, any Revolver Collateral at any time prior to the time that the Revolver Collateral Agent has delivered such Revolver Collateral to the First Lien Collateral Agent or has delivered such documents and endorsements as the First Lien Collateral Agent reasonably requests to enable the First Lien Collateral Agent to obtain control of such Revolver Collateral, in each case in connection with a Discharge of Revolver Obligations (as defined in the Revolver Intercreditor Agreement). Upon the First Lien Collateral Agent’s receipt of such Revolver Collateral or its obtaining control thereof, in each case as reasonably determined by the First Lien Collateral Agent, the provisions of Sections 5.5(a), (b), (d) and (f) shall apply with respect thereto to the extent such Revolver Collateral constitutes Pledged Collateral.

5.6           No Release if Event of Reinstatement. If at any time in connection with or after the Discharge of First Lien Obligations the Company either in connection therewith or thereafter enters into any Refinancing of any First Lien Document evidencing a First Lien Obligation, then such Discharge of First Lien Obligations shall automatically be deemed not to have occurred for all purposes of this Agreement, the First Lien Documents and the Junior Lien Documents, and the obligations under such Refinancing shall automatically be treated as First Lien Obligations for all purposes of this Agreement (a “Reinstatement”), including for purposes of the Lien priorities and rights in respect of Common Collateral set forth herein, the related documents shall be treated as First Lien Documents for all purposes of this Agreement and the first lien collateral agent under such Refinanced First Lien Documents shall be First Lien Collateral Agent for all purposes of this Agreement. Upon receipt of a notice stating that the Company has entered into a new First Lien Document (which notice shall include the identity of the new collateral agent, such agent, the “New Agent”), the Junior Lien Collateral Agent and each Junior Lien Representative shall promptly (at the expense of the Company) (a) enter into such documents and agreements (including amendments or supplements to this Agreement) as the Company or such New Agent shall reasonably request in order to confirm to the New Agent the rights contemplated hereby, in each case consistent in all material respects with the terms of this Agreement and (b) deliver to the New Agent the Pledged Collateral together with any

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necessary endorsements (or otherwise allow the New Agent to obtain possession or control of such Pledged Collateral). The Junior Lien Collateral Agent shall not be charged with knowledge of such Reinstatement until it receives written notice from the First Lien Collateral Agent, New Agent or the Company of the occurrence of such Reinstatement.

SECTION 6. Insolvency or Liquidation Proceedings.

6.1         Financing Issues.   The Junior Lien Collateral Agent, each Junior Lien Representative and each other Junior Lien Secured Party agree that if the Company or any other Grantor shall be subject to any Insolvency or Liquidation Proceeding:

(a)           if the First Lien Collateral Agent shall desire to permit the use of cash collateral or to permit the Company or any other Grantor to obtain financing under Section 363 or Section 364 of the Bankruptcy Code or any similar provision in any Bankruptcy Law (“DIP Financing”), including if such DIP Financing is secured by Liens senior in priority to the Liens securing Junior Lien Obligations, then the Junior Lien Collateral Agent, for itself and on behalf of each Junior Lien Representative and each applicable Junior Lien Secured Party, agrees that it will raise no objection to, and will not support any objection to, and will not otherwise contest such use of cash collateral or DIP Financing and will not request adequate protection or any other relief in connection therewith (except to the extent permitted by Section 6.2) and, to the extent the Liens securing the First Lien Obligations are subordinated or pari passu with such DIP Financing, will subordinate its Liens in the Common Collateral and any other collateral to such DIP Financing (and all obligations relating thereto) on the same basis as the other Liens securing the Junior Lien Obligations are so subordinated to Liens securing First Lien Obligations;

(b)           none of them will object to, or otherwise contest (or support any other Person contesting), any motion for relief from the automatic stay or from any injunction against foreclosure or enforcement in respect of First Lien Obligations made by the First Lien Collateral Agent or any First Lien Secured Party;

(c)           none of them will object to, or otherwise contest (or support any other Person contesting), any order relating to a sale of assets of the Company or any Grantor for which the First Lien Collateral Agent has consented that provides, to the extent that sale is to be free and clear of Liens, that the Liens securing the First Lien Obligations and the Junior Lien Obligations will attach to the proceeds of the sale on the same basis of priority as the existing Liens in accordance with this Agreement;

(d)           none of them will seek relief from the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of the Common Collateral, First Lien Collateral or any other collateral, without the prior written consent of the First Lien Collateral Agent;

(e)           none of them will object to, or otherwise contest (or support any other Person contesting), (i) any request by the First Lien Collateral Agent or any First Lien Secured Party for adequate protection or (ii) any objection by the First Lien Collateral Agent or

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any First Lien Secured Party to any motion, relief, action or proceeding based on the First Lien Collateral Agent’s or such First Lien Secured Party’s claiming a lack of adequate protection;

(f)            none of them will assert or enforce any claim under Section 506(c) of the Bankruptcy Code senior to or on a parity with the Liens securing the First Lien Obligations for costs or expenses of preserving or disposing of any Common Collateral or First Lien Collateral;

(g)           none of them will oppose or otherwise contest (or support any Person contesting) any lawful exercise by the First Lien Collateral Agent or any First Lien Secured Party of the right to credit bid First Lien Obligations at any sale of Common Collateral or First Lien Collateral; and

(h)           none of them will challenge (or support any other Person challenging) the validity, enforceability, perfection or priority of the First Priority Liens on Common Collateral or First Lien Collateral (and the First Lien Collateral Agent and the First Lien Secured Parties agree not to challenge the validity, enforceability, perfection or priority of the Liens in favor of the Junior Lien Collateral Agent and each other Junior Lien Secured Party on the Common Collateral).

6.2           Adequate Protection. The Junior Lien Collateral Agent, each Junior Lien Representative and each other Junior Lien Secured Party agree that it will not file or prosecute in any Insolvency or Liquidation Proceeding any motion for adequate protection (or any comparable request for relief) based upon their respective security interests in the Common Collateral, except that:

(1)           any of them may freely seek and obtain relief granting a junior Lien coextensive in all respects with, but subordinated to, all Liens granted in the Insolvency or Liquidation Proceeding to, or for the benefit of, the First Lien Secured Parties (and the First Lien Collateral Agent and the First Lien Secured Parties agree not to object to the granting of such a junior Lien); and

(2)           any of them may freely seek and obtain any relief upon a motion for adequate protection (or any comparable relief), without any condition or restriction whatsoever, at any time after the Discharge of First Lien Obligations.

6.3           Preference Issues.   If any First Lien Secured Party is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of the Company or any other Grantor (or any trustee, receiver or similar person therefor), because the payment of such amount was declared to be fraudulent or preferential in any respect or for any other reason, any amount (a “Recovery”), whether received as proceeds of security, enforcement of any right of setoff or otherwise, then as among the parties hereto, the First Lien Obligations shall be deemed to be reinstated to the extent of such Recovery and to be outstanding as if such payment had not occurred and such First Lien Secured Party shall be entitled to a reinstatement of First Lien Obligations with respect to all such recovered amounts and shall have all rights hereunder. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not

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diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto. Any Common Collateral or First Lien Collateral or proceeds thereof received by any Junior Lien Secured Party prior to the time of such Recovery shall be deemed to have been received prior to the Discharge of First Lien Obligations and subject to the provisions of Section 4.2.

6.4           Application.   This Agreement shall be applicable prior to and after the commencement of any Insolvency or Liquidation Proceeding. All references herein to any Grantor shall apply to any trustee for such Person and such Person as debtor in possession. The relative rights as to the Common Collateral and other collateral and proceeds thereof shall continue after the filing thereof on the same basis as prior to the date of the petition, subject to any court order approving the financing of, or use of cash collateral by, any Grantor.

6.5           Reorganization Securities.   If, in any Insolvency or Liquidation Proceeding, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed, pursuant to a plan of reorganization or similar dispositive restructuring plan, both on account of First Lien Obligations and on account of Junior Lien Obligations, then, to the extent the debt obligations distributed on account of the First Lien Obligations and on account of the Junior Lien Obligations are secured by Liens upon the same property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations.

6.6         Post-Petition Interest.

(a)           Neither the Junior Lien Collateral Agent nor any Junior Lien Secured Party shall oppose or seek to challenge any claim by the First Lien Collateral Agent or any First Lien Secured Party for allowance in any Insolvency or Liquidation Proceeding of First Lien Obligations consisting of post-petition interest, fees or expenses.

(b)           Neither the First Lien Collateral Agent nor any other First Lien Secured Party shall oppose or seek to challenge any claim by the Junior Lien Collateral Agent or any Junior Lien Secured Party for allowance in any Insolvency or Liquidation Proceeding of Junior Lien Obligations consisting of post-petition interest, fees or expenses to the extent of the value of the Lien in favor of the Junior Lien Secured Parties on the Common Collateral (after taking into account the Lien in favor of the First Lien Secured Parties).

6.7           Nature of Obligations; Post-Petition Interest. The Junior Lien Collateral Agent and each Junior Lien Representative, on behalf of the Junior Lien Secured Parties, hereby acknowledges and agrees that (i) the Junior Lien Secured Parties’ claims against the Company and/or any Grantor in respect of the Common Collateral constitute junior claims separate and apart (and of a different class) from the senior claims of the First Lien Secured Parties against the Company and the Grantor in respect of the Common Collateral, (ii) the First Lien Obligations include all interest that accrues after the commencement of any Insolvency or Liquidation Proceeding of the Company or any Grantor at the rate provided for in the applicable First Lien Documents governing the same, whether or not a claim for post-petition interest is allowed or allowable in any such Insolvency or Liquidation Proceeding and (iii) this Agreement constitutes a “subordination agreement” under Section 510 of the Bankruptcy Code. To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that the

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claims against the Company or any Grantor in respect of the Common Collateral constitute only one secured claim (rather than separate classes of senior and junior claims), then the Junior Lien Collateral Agent and each Junior Lien Representative, on behalf of the Junior Lien Secured Parties, hereby acknowledges and agrees that all distributions pursuant to Section 4.1 or otherwise shall be made as if there were separate classes of senior and junior secured claims against the Company and the Grantors in respect of the Common Collateral (with the effect being that, to the extent that the aggregate value of the Common Collateral is sufficient (for this purpose ignoring all claims held by the Junior Lien Collateral Agent on behalf of the Junior Lien Secured Parties), the First Lien Secured Parties shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest at the relevant contract rate (even though such claims may or may not be allowed in whole or in part in the respective Insolvency or Liquidation Proceeding) before any distribution is made in respect of the claims held by the Junior Lien Collateral Agent, on behalf of the Junior Lien Secured Parties, with the Junior Lien Collateral Agent, on behalf of the Junior Lien Secured Parties, hereby acknowledging and agreeing to turn over to the holders of the First Lien Obligations all amounts otherwise received or receivable by them to the extent needed to effectuate the intent of this sentence even if such turnover of amounts has the effect of reducing the amount of the claim of the Junior Lien Secured Parties).

6.8           Proofs of Claim.   Subject to the limitations set forth in this Agreement, the First Lien Collateral Agent may file proofs of claim and other pleadings and motions with respect to any First Lien Obligations, any Junior Lien Obligations or the Common Collateral in any Insolvency or Liquidation Proceeding. If a proper proof of claim has not been filed in the form required in such Insolvency or Liquidation Proceeding at least ten (10) days prior to the expiration of the time for filing thereof, the First Lien Collateral Agent shall have the right (but not the duty) to file an appropriate claim for and on behalf of the Junior Lien Secured Parties with respect to any of the Junior Lien Obligations or any of the Common Collateral. In furtherance of the foregoing, the Junior Lien Collateral Agent hereby appoints the First Lien Collateral Agent as its attorney-in-fact, with full authority in the place and stead of the Junior Lien Collateral Agent and full power of substitution and in the name of the Junior Lien Secured Parties or otherwise, to execute and deliver any document or instrument that the First Lien Collateral Agent is required or permitted to deliver pursuant to this Section 6.8, such appointment being coupled with an interest and irrevocable.

6.9           Plan of Reorganization.   Without limiting the generality of any provisions of this Agreement, any vote to accept, and any other act to support the confirmation or approval of, any Non-Conforming Plan of Reorganization shall be inconsistent with and accordingly, a violation of the terms of this Agreement, and the First Lien Collateral Agent shall be entitled to have any such vote to accept a Non-Conforming Plan of Reorganization dismissed and any such support of any Non-Conforming Plan of Reorganization withdrawn.

SECTION 7. Reliance; Waivers; etc.

7.1           Reliance. The consent by the First Lien Secured Parties to the execution and delivery of the Junior Lien Documents to which the First Lien Secured Parties have consented and all loans and other extensions of credit made or deemed made on and after the date hereof by the First Lien Secured Parties to the Company or any Subsidiary shall be deemed

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to have been given and made in reliance upon this Agreement. The Junior Lien Collateral Agent and each Junior Lien Representative, on behalf of itself and each applicable Junior Lien Secured Party, acknowledges that it and the applicable Junior Lien Secured Parties have, independently and without reliance on the First Lien Collateral Agent or any First Lien Secured Parties, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into the applicable Junior Lien Document, this Agreement and the transactions contemplated hereby and thereby and they will continue to make their own credit decision in taking or not taking any action under the applicable Junior Lien Document or this Agreement.

7.2         No Warranties or Liability.   The Junior Lien Collateral Agent, on behalf of itself and each Junior Lien Secured Party, acknowledges and agrees that neither the First Lien Collateral Agent nor any First Lien Secured Parties has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectibility or enforceability of any of the First Lien Documents, the ownership of any Common Collateral or the perfection or priority of any Liens thereon. The First Lien Secured Parties will be entitled to manage and supervise their respective loans, notes and extensions of credit under the First Lien Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate, and the First Lien Secured Parties may manage their loans, notes and extensions of credit without regard to any rights or interests that the Junior Lien Collateral Agent, any Junior Lien Representatives or any of the Junior Lien Secured Parties have in the Common Collateral or otherwise, except as otherwise provided in this Agreement. Neither the First Lien Collateral Agent nor any First Lien Secured Parties shall have any duty to the Junior Lien Collateral Agent, any Junior Lien Representative or any Junior Lien Secured Party to act or refrain from acting in a manner that allows, or results in, the occurrence or continuance of an event of default or default under any agreements with the Company or any Subsidiary thereof (including the Junior Lien Documents), regardless of any knowledge thereof that they may have or be charged with. Except as expressly set forth in this Agreement, the First Lien Collateral Agent, the First Lien Secured Parties, the Junior Lien Collateral Agent and the Junior Lien Secured Parties have not otherwise made to each other, nor do they hereby make to each other, any warranties, express or implied, nor do they assume any liability to each other with respect to (a) the enforceability, validity, value or collectibility of any of the Junior Lien Obligations, the First Lien Obligations or any guarantee or security which may have been granted to any of them in connection therewith, (b) the Company’s title to or right to transfer any of the Common Collateral or (c) any other matter except as expressly set forth in this Agreement.

7.3         Obligations Unconditional.   All rights, interests, agreements and obligations of the First Lien Collateral Agent and the First Lien Secured Parties, and the Junior Lien Collateral Agent and the Junior Lien Secured Parties, respectively, hereunder shall remain in full force and effect irrespective of:

(a)           any lack of validity or enforceability of any First Lien Documents or any Junior Lien Documents;

(b)           any change in the time, manner or place of payment of, or in any other terms of, all or any of the First Lien Obligations or Junior Lien Obligations, or any

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amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of the Credit Agreement or any other First Lien Document or of the terms of the Indenture or any other Junior Lien Document;

(c)           any exchange of any security interest in any Common Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the First Lien Obligations or Junior Lien Obligations or any guarantee thereof;

(d)           the commencement of any Insolvency or Liquidation Proceeding in respect of the Company or any other Grantor; or

(e)           any other circumstances that otherwise might constitute a defense available to, or a discharge of, the Company or any other Grantor in respect of the First Lien Obligations or the Junior Lien Obligations in respect of this Agreement.

SECTION 8. Miscellaneous.

8.1           Conflicts.   Subject to Section 8.19, in the event of any conflict between the provisions of this Agreement and the provisions of any First Lien Document or any Junior Lien Document, the provisions of this Agreement shall govern.

8.2           Continuing Nature of This Agreement; Severability. Subject to Section 5.1(a)(y), Section 5.6 and Section 6.3, this Agreement shall continue to be effective until the Discharge of First Lien Obligations shall have occurred or such later time as all the obligations in respect of the Junior Lien Obligations shall have been paid in full. This is a continuing agreement of lien subordination and the First Lien Secured Parties may continue, at any time and without notice to the Junior Lien Collateral Agent or any Junior Lien Secured Party, to extend credit and other financial accommodations and lend monies to or for the benefit of the Company or any other Grantor constituting First Lien Obligations in reliance hereon. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

8.3           Amendments; Waivers. No amendment, modification or waiver of any of the provisions of this Agreement by the Junior Lien Collateral Agent or the First Lien Collateral Agent shall be deemed to be made unless the same shall be in writing signed by or on behalf of the First Lien Collateral Agent and the Junior Lien Collateral Agent or their respective authorized agents, and consented to in writing by the Company, and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. Notwithstanding anything in this Section 8.3 to the contrary, this Agreement may be amended from time to time at the request of the Company, at the Company’s expense, and without the consent of First Lien Collateral Agent, any First Lien Secured Party, the Junior Lien Collateral Agent, any Junior Lien Representative or any Junior Lien Secured

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Party to (i) provide for a replacement First Lien Collateral Agent in accordance with the First Lien Documents, provide for a replacement Junior Lien Collateral Agent in accordance with the Junior Lien Documents and/or secure additional extensions of credit or add other parties holding First Lien Obligations or Junior Lien Obligations to the extent such Indebtedness does not expressly violate the First Lien Documents or the Junior Lien Documents and (ii) in the case of such additional Junior Lien Obligations, (a) establish that the Lien on the Common Collateral securing such Junior Lien Obligations shall be junior and subordinate in all respects to all Liens on the Common Collateral securing any First Lien Obligations (at least to the same extent as (taken together as a whole) the Liens on Common Collateral in favor of the Junior Lien Obligations are junior and subordinate to the Liens on Common Collateral in favor of the First Lien Obligations pursuant to this Agreement immediately prior to the incurrence of such additional Junior Lien Obligations) and (b) provide to the holders of such Junior Lien Obligations (or any agent or trustee thereof) the comparable rights and benefits (including any improved rights and benefits that have been consented to by the First Lien Collateral Agent) as are provided to the Junior Lien Secured Parties under this Agreement. Such amendments adding additional agents may be accomplished by delivering to the First Lien Collateral Agent and the Junior Lien Collateral Agent an “Additional Party Addendum” hereto substantially in the form of Exhibit A hereto, accompanied by an Officers’ Certificate referred to below. Any such additional party and agent shall be entitled to rely on the determination of officers of the Company that such modifications do not expressly violate the Credit Agreement, the other First Lien Documents, the Bridge Loan Agreement, the other Junior Lien Documents and this Agreement if such determination is set forth in an Officers’ Certificate delivered to such party, the First Lien Collateral Agent and the Junior Lien Collateral Agent. For the avoidance of doubt, unless otherwise agreed to among the Junior Lien Secured Parties, the Junior Lien Collateral Agent shall for all purposes hereof act at the direction of the Junior Lien Secured Parties holding a majority of then outstanding Junior Lien Obligations.

8.4           Information Concerning Financial Condition of the Company and the Subsidiaries.   The First Lien Collateral Agent, the First Lien Secured Parties, the Junior Lien Collateral Agent, each Junior Lien Representative and the Junior Lien Secured Parties shall each be responsible for keeping themselves informed of (a) the financial condition of the Company and the Subsidiaries and all endorsers and/or guarantors of the First Lien Obligations or the Junior Lien Obligations and (b) all other circumstances bearing upon the risk of nonpayment of the First Lien Obligations or the Junior Lien Obligations. The First Lien Collateral Agent, the First Lien Secured Parties, the Junior Lien Collateral Agent, each Junior Lien Representative and the Junior Lien Secured Parties shall have no duty to advise any other party hereunder of information known to it or them regarding such condition or any such circumstances or otherwise. In the event that the First Lien Collateral Agent, any First Lien Secured Party, the Junior Lien Collateral Agent, any Junior Lien Representative or any Junior Lien Secured Party, undertakes at any time or from time to time to provide any such information to any other party, it or they shall be under no obligation (w) to make, and the First Lien Collateral Agent, the First Lien Secured Parties, the Junior Lien Collateral Agent, the Junior Lien Representatives and the Junior Lien Secured Parties shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided, (x) to provide any additional information or to provide any such information on any subsequent occasion, (y) to undertake any investigation or (z) to disclose any

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information that, pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.

8.5           Subrogation.   The Junior Lien Collateral Agent and each Junior Lien Representative, on behalf of itself and each applicable Junior Lien Secured Party, hereby waives any rights of subrogation it may acquire as a result of any payment hereunder until the Discharge of First Lien Obligations has occurred.

8.6           Application of Payments.   Except as otherwise provided herein, all payments received by the First Lien Secured Parties may be applied, reversed and reapplied, in whole or in part, to such part of the First Lien Obligations by the First Lien Secured Parties, in a manner consistent with the terms of the First Lien Documents. Except as otherwise provided herein, the Junior Lien Collateral Agent and each Junior Lien Representative, on behalf of itself and each applicable Junior Lien Secured Party, assents to any such extension or postponement of the time of payment of the First Lien Obligations or any part thereof and to any other indulgence with respect thereto, to any substitution, exchange or release of any security that may at any time secure any part of the First Lien Obligations and to the addition or release of any other Person primarily or secondarily liable therefor.

8.7           Consent to Jurisdiction; Waivers.   The parties hereto consent to the jurisdiction of any state or federal court located in New York, New York, and consent that all service of process may be made by registered mail directed to such party as provided in Section 8.8 for such party. Service so made shall be deemed to be completed three days after the same shall be posted as aforesaid. The parties hereto waive any objection to any action instituted hereunder in any such court based on forum non conveniens, and any objection to the venue of any action instituted hereunder in any such court. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO IN CONNECTION WITH THE SUBJECT MATTER HEREOF.

8.8           Notices. All notices to the First Lien Secured Parties and the Junior Lien Secured Parties permitted or required under this Agreement may be sent to the Junior Lien Collateral Agent, the First Lien Collateral Agent or the Junior Lien Collateral Agent, respectively, as provided in the Credit Agreement, the other relevant First Lien Document, the Bridge Loan Agreement or the other relevant Junior Lien Document, as applicable. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telecopied, electronically mailed or sent by courier service or U.S. mail and shall be deemed to have been given when delivered in person or by courier service, upon receipt of a telecopy or electronic mail or upon receipt via U.S. mail (registered or certified, with postage prepaid and properly addressed). For the purposes hereof, the addresses of the parties hereto shall be asset forth below each party’s name on the signature pages hereto, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.

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8.9           Further Assurances.   The Junior Lien Collateral Agent, on behalf of itself and each Junior Lien Secured Party, and the First Lien Collateral Agent, on behalf of itself and each First Lien Secured Party, agrees that each of them shall take such further action and shall execute and deliver to the First Lien Collateral Agent and the First Lien Secured Parties such additional documents and instruments (in recordable form, if requested) as the First Lien Collateral Agent or the First Lien Secured Parties may reasonably request to effectuate the terms of and the lien priorities contemplated by this Agreement.

8.10         Governing Law.   This Agreement has been delivered and accepted at and shall be deemed to have been made at New York, New York and shall be interpreted, and the rights and liabilities of the parties bound hereby determined, in accordance with the laws of the State of New York.

8.11         Binding on Successors and Assigns.   This Agreement shall be binding upon the First Lien Collateral Agent, the First Lien Secured Parties, the Junior Lien Collateral Agent, the Junior Lien Representatives, the Junior Lien Secured Parties, the Company, the Company’s Subsidiaries consenting hereto and their respective permitted successors and assigns.

8.12         Specific Performance. The First Lien Collateral Agent may demand specific performance of this Agreement. The Junior Lien Collateral Agent, on behalf of itself and each Junior Lien Secured Party, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense that might be asserted to bar the remedy of specific performance in any action that may be brought by the First Lien Collateral Agent.

8.13         Section Titles. The section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Agreement.

8.14         Counterparts. This Agreement may be executed in one or more counterparts, including by means of facsimile or “pdf” file thereof, each of which shall be an original and all of which shall together constitute one and the same document.

8.15         Authorization. By its signature, each Person executing this Agreement on behalf of a party hereto represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement. The First Lien Collateral Agent represents and warrants that this Agreement is binding upon the First Lien Secured Parties. The Junior Lien Collateral Agent and each Junior Lien Representative represents and warrants that this Agreement is binding upon the Junior Lien Secured Parties.

8.16         No Third Party Beneficiaries; Successors and Assigns. This Agreement and the rights and benefits hereof shall inure to the benefit of, and be binding upon, each of the parties hereto and their respective successors and assigns and shall inure to the benefit of each of, and be binding upon, the holders of First Lien Obligations and Junior Lien Obligations. No other Person shall have or be entitled to assert rights or benefits hereunder.

8.17         Effectiveness. This Agreement shall become effective when executed and delivered by the parties hereto. This Agreement shall be effective both before and after the commencement of any Insolvency or Liquidation Proceeding. All references to the Company or

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any other Grantor shall include the Company or any other Grantor as debtor and debtor-in-possession and any receiver or trustee for the Company or any other Grantor (as the case may be) in any Insolvency or Liquidation Proceeding.

8.18         First Lien Collateral Agent and Junior Lien Collateral Agent.  It is understood and agreed that (a) DBTCA is entering into this Agreement in its capacity as collateral agent under the First Lien Security Agreement and the Collateral Agency Agreement and the provisions of Section 6 of the Collateral Agency Agreement applicable to the collateral agent thereunder shall also apply to the First Lien Collateral Agent hereunder, (b) Deutsche Bank Cayman is entering in this Agreement in its capacity as administrative agent and collateral agent under the Bridge Loan Agreement, and the provisions of Article 7 of the Bridge Loan Agreement applicable to the administrative agent and collateral agent thereunder shall also apply to the Junior Lien Collateral Agent hereunder.

8.19         Relative Rights.   Notwithstanding anything in this Agreement to the contrary (except to the extent contemplated by Section 5.3(b)), nothing in this Agreement is intended to or will (a) amend, waive or otherwise modify the provisions of the Credit Agreement or any other First Lien Document, or the Bridge Loan Agreement or any other Junior Lien Document or permit the Company or any Subsidiary to take any action, or fail to take any action, to the extent such action or failure would otherwise constitute a breach of, or default under, the Credit Agreement or any other First Lien Documents or the Bridge Loan Agreement or any other Junior Lien Documents, (b) change the relative priorities of the First Lien Obligations or the Liens granted under the First Lien Documents on the Common Collateral (or any other assets) as among the First Lien Secured Parties, (c) otherwise change the relative rights of the First Lien Secured Parties in respect of the Common Collateral as among such First Lien Secured Parties or (d) obligate the Company or any Subsidiary to take any action, or fail to take any action, if taking or failing to take such action, as the case may be, would otherwise constitute a breach of, or default under, the Credit Agreement or any other First Lien Document or the Indenture or any other Junior Lien Document.

8.20         References.   Notwithstanding anything to the contrary in this Agreement, any references contained herein to any Section, clause, paragraph, definition or other provision of the First Lien Document or Junior Lien Document (including any definition contained therein) shall be deemed to be a reference to such Section, clause, paragraph, definition or other provision as in effect on the date of this Agreement; provided that any reference to any such Section, clause, paragraph or other provision shall refer to such Section, clause, paragraph or other provision of the applicable First Lien Document or Junior Lien Document, as applicable (including any definition contained therein), as amended or modified from time to time if such amendment or modification has been made in accordance with the applicable First Lien Document or Junior Lien Document.

8.21         Intercreditor Agreements.   Notwithstanding anything to the contrary contained in this Agreement, each party hereto agrees that the Junior Lien Secured Parties (as among themselves) may enter into intercreditor agreements (or similar arrangements) governing the rights, benefits and privileges as among the Junior Lien Secured Parties in respect of the Common Collateral, this Agreement and the other Junior Lien Documents, including as to application of proceeds of the Common Collateral, voting rights, control of the Common

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Collateral and waivers with respect to the Common Collateral, in each case so long as the terms thereof do not violate or conflict with the provisions of this Agreement or the Indenture Documents. In any event, if a respective intercreditor agreement (or similar arrangement) exists, the provisions thereof shall not be (or be construed to be) an amendment, modification or other change to this Agreement or any other First Lien Security Document or Junior Lien Security Document, and the provisions of this Agreement and the other First Lien Security Documents and Junior Lien Security Documents shall remain in full force and effect in accordance with the terms hereof and thereof (as such provisions may be amended, modified or otherwise supplemented from time to time in accordance with the terms hereof and thereof, including to give effect to any intercreditor agreement (or similar arrangement)). The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the First Lien Secured Parties on the one hand and the Junior Lien Secured Parties on the other hand. None of the Company, any Grantor or any Subsidiary of the Company or any other creditor thereof shall have any rights hereunder. Nothing in this Agreement is intended to or shall impair the obligations of the Company or any other Grantor to pay the First Lien Obligations and the Junior Lien Obligations as and when the same shall become due and payable in accordance with their terms.

8.22         Acknowledgement.   Each of the parties hereto acknowledges that the Revolver Collateral is subject in all respects to the provisions of the Revolver Intercreditor Agreement. Notwithstanding anything herein to the contrary, the liens and security interests granted to the First Lien Collateral Agent pursuant to this Agreement and the exercise of any right or remedy by the First Lien Collateral Agent hereunder are subject to the limitations and provisions of the Revolver Intercreditor Agreement. In the event of any conflict between the terms of the Revolver Intercreditor Agreement and the terms of this Agreement, the terms of the Revolver Intercreditor Agreement shall govern and control.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

DEUTSCHE BANK TRUST COMPANY AMERICAS, as First Lien Collateral Agent
By:	/Kerry Warwicker/
Name: Kerry Warwicker
Title: Vice President
By:	/Randy Kahn/
Name: Randy Kahn
Title: Vice President

DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, as Junior Lien Collateral Agent
By:	/Marguerite Sutton/
Name: Marguerite Sutton
Title: Director
By:	/Carin Keegan/
Name: Carin Keegan
Title: Vice President

EX-10.44

Exhibit 10.44

EXECUTION COPY

ADDITIONAL PARTY ADDENDUM

Reference is made to the General Intercreditor Agreement dated as of February 22, 2007 (the “Intercreditor Agreement”) between Deutsche Bank Trust Company Americas and Deutsche Bank AG Cayman Islands Branch, as Junior Lien Collateral Agent (the “Existing Junior Lien Collateral Agent”). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Intercreditor Agreement.

Deutsche Bank AG New York Branch is executing this Additional Party Addendum in its capacity as collateral agent (the “Collateral Agent”) under the Junior Lien Term Loan Agreement (amending and restating in its entirety the Bridge Loan Agreement dated as of February 22, 2007, the “Existing Bridge Loan Agreement”) dated as of March 15, 2007 (the “Loan Agreement”), among Building Materials Corporation of America and certain of its Subsidiaries and the lenders party thereto from time to time. The Loan Agreement amends and restates in its entirety the Existing Bridge Loan Agreement and constitutes the Junior Lien Obligations under the Intercreditor Agreement, and the Collateral Agent is the replacement for the Existing Junior Lien Collateral Agent. By execution of this Additional Party Addendum, the Collateral Agent hereby acknowledges and agrees to be bound by the terms of the Intercreditor Agreement as the Junior Lien Collateral Agent, as if originally so bound. The Collateral Agent represents and warrants that it has received a copy of each of the First Lien Documents and the Junior Lien Documents and satisfies each and all of the criteria set forth therein for the assumption of its role as a Junior Lien Collateral Agent. Accompanying this Additional Party Addendum is the Officers’ Certificate contemplated by Section 8.3 of the Intercreditor Agreement.

This Additional Party Addendum shall be governed and construed in accordance with the laws of the State of New York. Notices delivered to the undersigned pursuant to this Additional Party Addendum shall be delivered in accordance with the notice provisions set forth in the Loan Agreement but to the address set forth below or such other address provided in writing, to the Company and other parties to the Intercreditor Agreement.

[SIGNATURE PAGE FOLLOWS]

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DEUTSCHE BANK AG NEW YORK BRANCH
60 Wall Street, MS 0208
New York, NY 10005
By:	/Marguerite Sutton/
Name: Marguerite Sutton
Title: Director
By:	/Evelyn Thierry/
Name: Evelyn Thierry
Title: Vice President

EX-10.45

Exhibit 10.45

EXECUTION VERSION

REVOLVER INTERCREDITOR AGREEMENT

THIS REVOLVER INTERCREDITOR AGREEMENT (as amended, supplemented, restated or otherwise modified from time to time pursuant to the terms hereof, this “Agreement”) is entered into as of February 22, 2007 among DEUTSCHE BANK AG NEW YORK BRANCH (“Deutsche Bank New York”), in its capacity as First Lien Collateral Agent (as defined below), DEUTSCHE BANK TRUST COMPANY AMERICAS (“DBTCA”), in its capacity as Second Lien Collateral Agent (as defined below), and DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH (“Deutsche Bank Cayman”), in its capacity as Third Lien Collateral Agent (as defined below).  Capitalized terms used herein but not otherwise defined herein have the meanings set forth in Section 1 below.

RECITALS

A.            BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the “Company”) is party to the Revolving Credit Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived, Refinanced or otherwise modified from time to time (including to add new loans or other extensions of credit thereunder or increase the amount of loans or other obligations thereunder), the “Revolving Credit Agreement”), among the Company and certain of its Subsidiaries, the lender parties party thereto from time to time, Deutsche Bank New York, as collateral monitoring agent, administrative agent, swingline lender and letter of credit issuer, Bear Stearns & Co. Inc., as syndication agent, J.P. Morgan Securities Inc., as documentation agent, and Deutsche Bank Securities Inc., Bear Stearns & Co. Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers.

B.            The Company is party to the Term Loan Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived, Refinanced or otherwise modified from time to time (including to add new loans or other extensions of credit thereunder or increase the amount of loans or other obligations thereunder), the “Term Loan Agreement”), among the Company and certain of its Subsidiaries, the lenders party thereto from time to time, Deutsche Bank New York, as administrative agent, Bear Stearns & Co., Inc., as syndication agent and J.P. Morgan Securities, Inc., as documentation agent, and Deutsche Bank Securities Inc., Bear Stearns & Co., Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers.

C.            The Company is party to (i) an indenture dated as of October 20, 1997 (as amended, restated, supplemented, waived, Refinanced or otherwise modified from time to time, the “2007 Notes Indenture”), among the Company, the guarantors identified therein and The Bank of New York, as trustee pursuant to which certain 8% senior notes due 2007 (the “2007 Notes”) were issued; (ii) an indenture dated as of December 3, 1998 (as amended, restated, supplemented, waived, Refinanced or otherwise modified from time to time, the “2008 Notes Indenture”), among the Company, the guarantors identified therein and The Bank of New York, as trustee pursuant to which certain 8% senior notes due 2008 (the “2008 Notes”) were issued; and (iii) an indenture dated as of July 26, 2004 (as amended, restated, supplemented, waived,

Refinanced or otherwise modified from time to time, the “2014 Notes Indenture” and together with the 2007 Notes Indenture, the 2008 Notes Indenture and the 2014 Notes Indenture, the “Existing Indentures”) among the Company, the Guarantors identified therein and Wilmington Trust Company, as Trustee, pursuant to which certain 7.75% senior notes (the “2014 Notes” and together with the 2007 Notes and the 2008 Notes, collectively, the “Existing Notes”) were issued.

D.            The Company is a party to a Bridge Loan Agreement dated as of February 22, 2007 (as amended, restated, supplemented, waived, Refinanced or otherwise modified from time to time, the “Bridge Loan Agreement”), among the Company and certain of its Subsidiaries, the Lenders party thereto from time to time, Deutsche Bank Cayman, as Administrative Agent, Deutsche Bank Cayman and Bear Stearns Corporate Lending Inc., as Joint Lead Arrangers and Deutsche Bank Cayman, Bear Stearns Corporate Lending Inc. and JPMorgan Chase Bank, N.A. as Joint Book Managers pursuant to which the Company and certain of its Subsidiaries will borrow a senior secured bridge loan (the “Bridge Loan”).  It is contemplated that the Bridge Loan will be refinanced with the issuance of Senior Notes (as defined in the Revolving Credit Agreement).

E.             Deutsche Bank New York, as Administrative Agent for the Lenders and Agents party to the Term Loan Agreement from time to time, The Bank of New York, as Trustee under the 2007 Notes Indenture and the 2008 Notes Indenture, and Wilmington Trust Company, as Trustee under the 2014 Notes Indenture, DBTCA, the Company and the other Grantors are party to the Collateral Agency Agreement dated February 22, 2007 (as amended, restated, supplemented, waived, replaced or otherwise modified from time to time, the “Collateral Agency Agreement”) in which the parties thereto have appointed DBTCA to act as collateral agent on behalf of the parties thereto.

Accordingly, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE 1
DEFINITIONS

Section 1.1            Definitions.  As used in this Agreement, the following terms shall have the meanings set forth below:

“Additional Party Addendum” shall have the meaning set forth in Section 7.4.

“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with such Person.  A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” shall have the meaning set forth in the recitals.

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“Bankruptcy Code” shall mean Title 11 of the United States Code.

“Bridge Loan” shall have the meaning set forth in the recitals.

“Bridge Loan Agreement” shall have the meaning set forth in the recitals.

“Capital Stock” shall mean, as to any Person that is a corporation, the authorized shares of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the membership or other ownership interests in such Person, including the right to share in profits and losses, the right to receive distributions of cash and other property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise Control over such Person, collectively with, in any such case, all warrants, options and other rights to purchase or otherwise acquire, and all other instruments convertible into or exchangeable for, any of the foregoing.

“Collateral Agency Agreement” shall have the meaning set forth in the recitals.

“Collateral Agent(s)” means individually the First Lien Collateral Agent, the Second Lien Collateral Agent or the Third Lien Collateral Agent and collectively means the First Lien Collateral Agent, the Second Lien Collateral Agent and the Third Lien Collateral Agent.

“Common Collateral” means all “Collateral” as defined in the First Lien Security Agreement.

“Common Collateral Enforcement Actions” shall have the meaning set forth in Section 3.3.

“Common Collateral Processing and Sale Period” shall have the meaning set forth in Section 3.3.

“Comparable Subordinated Lien Security Document” shall mean, in relation to any Common Collateral subject to any Lien created under any First Lien Document, those Subordinated Lien Security Documents that create a Lien on the same Common Collateral (but only to the extent relating to such Common Collateral), granted by the same Grantor.

“Control” shall mean the possession, directly or indirectly, of the power (a) to vote 50% or more of the securities having ordinary voting power for the election of directors (or any similar governing body) of a Person, or (b) to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  The terms “Controlling” and “Controlled” have meanings correlative thereto.

“Credit Documents” shall mean the First Lien Documents, the Second Lien Documents and the Third Lien Documents.

“DBTCA” shall have the meaning set forth in the recitals.

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“Deposit Account” has the meaning set forth in the UCC.

“Deutsche Bank New York” shall have the meaning set forth in the recitals.

“Deutsche Bank Cayman” shall have the meaning set forth in the recitals.

“DIP Financing” shall have the meaning set forth in Section 6.1(a).

“Discharge of First Lien Obligations” shall mean, except to the extent otherwise provided in Section 5.3, payment in full in cash (except for contingent obligations) of all First Lien Obligations and, with respect to letters of credit or letter of credit guaranties outstanding under the First Lien Documents, delivery of cash collateral or backstop letters of credit in respect thereof in a manner consistent with the Revolving Credit Agreement, in each case after or concurrently with the termination of all commitments to extend credit thereunder, and the termination of all commitments of First Lien Secured Parties under First Lien Documents; provided, however, that the Discharge of First Lien Obligations shall not be deemed to have occurred if such payments are made with the proceeds of other First Lien Obligations that constitute an exchange or replacement for or a Refinancing of such First Lien Obligations (unless in connection with such exchange, replacement or Refinancing all the First Lien Obligations are repaid in full in cash (and the other conditions set forth in this definition prior to the proviso are satisfied).  In the event the First Lien Obligations are modified and the First Lien Obligations are paid over time or otherwise modified pursuant to Section 1129 of the Bankruptcy Code, the First Lien Obligations shall be deemed to be discharged when the final payment is made, in cash, in respect of such indebtedness and any obligations pursuant to such new indebtedness shall have been satisfied.

“Discharge of Second Lien Obligations” means “Discharge of First Lien Obligations,” as defined in the General Intercreditor Agreement, as in effect on the date hereof.

“Disposition” has the meaning set forth in Section 2.4(b).

“Enforcement Notice” shall mean a written notice delivered by the Second Lien Collateral Agent to the First Lien Collateral Agent announcing the commencement of an Exercise of Secured Creditor Remedies.

“Event of Default” shall mean an Event of Default under the Revolving Credit Agreement, the Term Loan Agreement, the Existing Indentures or the Bridge Loan Agreement.

“Exercise Any Secured Creditor Remedies” or “Exercise of Secured Creditor Remedies” shall mean, except as otherwise provided in the final sentence of this definition:

(a)           the taking by any Secured Party of any action to enforce or realize upon any Lien on Common Collateral, including the institution of any foreclosure proceedings or the noticing of any public or private sale pursuant to Article 9 of the Uniform Commercial Code;

(b)           the exercise by any Secured Party of any right or remedy provided to a secured creditor on account of a Lien on Common Collateral under any of the

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Credit Documents, under applicable law, in an Insolvency Proceeding or otherwise, including the election to retain any of the Common Collateral in satisfaction of a Lien;

(c)           the taking of any action by any Secured Party or the exercise of any right or remedy by any Secured Party in respect of the collection on, set off against, marshaling of, injunction respecting or foreclosure on the Common Collateral or the Proceeds thereof;

(d)           the appointment on the application of a Secured Party, of a receiver, receiver and manager or interim receiver of all or part of the Common Collateral;

(e)           the sale, lease, license, or other disposition of all or any portion of the Common Collateral by private or public sale conducted by a Secured Party or any other means at the direction of a Secured Party permissible under applicable law; or

(f)            the exercise of any other right of a secured creditor under Part 6 of Article 9 of the Uniform Commercial Code in respect of Common Collateral.

For the avoidance of doubt, none of the following shall be deemed to constitute an Exercise of Secured Creditor Remedies: (i) the filing a proof of claim in bankruptcy court or seeking adequate protection, (ii) the exercise of rights by the First Lien Collateral Agent to obtain cash dominion (as defined in the Revolving Credit Agreement), including, without limitation, the notification of account debtors, depository institutions or any other Person to deliver proceeds of Common Collateral to the First Lien Collateral Agent (unless and until the Lenders under the Revolving Credit Agreement cease to extend credit to the Borrowers thereunder, in which event an Exercise of Secured Creditor Remedies shall be deemed to have occurred), (iii) the consent by a Secured Party to a sale or other disposition by any Grantor of any of its assets or properties, (iv) the acceleration of all or a portion of the First Lien Obligations or any Subordinated Lien Obligations, (v) the reduction of the borrowing base, advance rates or sublimits by the Administrative Agent under the Revolving Credit Agreement, the First Lien Collateral Agent and the Lenders under the First Lien Credit Agreement, (vi) the imposition of reserves in the determination of Loan Value (as defined in the Revolving Credit Agreement) by the Administrative Agent under the Revolving Credit Agreement, or (vii) an account ceasing to be an “Eligible Receivable” under the Revolving Credit Agreement.  For the avoidance of doubt, the actions permitted by Sections 2.3(b), 2.4(a) and 3.1 shall not be deemed to be an Exercise of Secured Creditor Remedies.

“Existing Indentures” shall have the meaning set forth in the recitals.

“First Lien Collateral Agent” shall mean Deutsche Bank New York, in its capacity as collateral monitoring agent for the lenders and other secured parties under the Revolving Credit Agreement and the other First Lien Documents entered into pursuant to the Revolving Credit Agreement, together with its successors and permitted assigns under the Revolving Credit Agreement exercising substantially the same rights and powers; provided, however, that, if such

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First Lien Collateral Agent is not Deutsche Bank New York, such First Lien Collateral Agent shall have become a party to this Agreement and the other applicable First Lien Security Documents.

“First Lien Documents” means the credit, guarantee and security documents governing the First Lien Obligations, including, without limitation, the Revolving Credit Agreement and the First Lien Security Documents and agreements in respect of Cash Management Services (as defined in the Revolving Credit Agreement as in effect on the date hereof) and Secured Hedge Agreements (as defined in the Revolving Credit Agreement as in effect on the date hereof).

“First Lien Obligations” shall mean all “Secured Obligations” as defined in the First Lien Security Agreement.

“First Lien Security Agreement” means the Security Agreement (as defined in the Revolving Credit Agreement).

“First Lien Security Documents” means the First Lien Security Agreement and any other agreement, document or instrument pursuant to which a Lien is granted or purported to be granted securing First Lien Obligations or under which rights or remedies with respect to such Liens are governed.

“First Lien Secured Parties” means “Secured Parties” as defined in the Revolving Credit Agreement.

“General Intercreditor Agreement” means that certain General Intercreditor Agreement dated the date hereof among the Second Lien Collateral Agent and the Third Lien Collateral Agent, as the same may be amended, restated, modified or waived from time to time.

“Governmental Authority” shall mean any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Grantors” shall mean the Company and each Subsidiary that has executed and delivered a First Lien Security Document, a Second Lien Security Document or a Third Lien Security Document.

“Indebtedness” shall mean and include all obligations that constitute “Indebtedness” or “Debt”, as the case may be, within the meaning of the Revolving Credit Agreement, the Term Loan Agreement, the Existing Indentures or the Bridge Loan Agreement.

“Insolvency Proceeding” shall mean:

(1)           any case commenced by or against the Company or any other Grantor under any Bankruptcy Law, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of the Company or any other Grantor, any receivership or assignment for the benefit of creditors relating to the Company or any other Grantor or any similar case or

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proceeding relative to the Company or any other Grantor or its creditors, as such, in each case whether or not voluntary;

(2)           any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to the Company or any other Grantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency; or

(3)           any other proceeding of any type or nature in which substantially all claims of creditors of the Company or any other Grantor are determined and any payment or distribution is or may be made on account of such claims.

“Lien” shall mean any mortgage, pledge, security interest, hypothecation, assignment, lien (statutory or other) or similar encumbrance (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof).

“Lien Priority” shall mean with respect to any Lien of the First Lien Collateral Agent, the First Lien Secured Parties, the Second Lien Collateral Agent, the Second Lien Secured Parties, the Third Lien Collateral Agent or the Third Lien Secured Parties in the Common Collateral, the order of priority of such Lien as specified in Section 2.1.

“Non-Revolver Collateral” means all “Collateral” as defined in the Second Lien Security Documents other than Common Collateral.

“Non-Revolver Collateral Agent” means “First Lien Collateral Agent” as defined in the General Intercreditor Agreement.

“Non-Revolver Collateral Enforcement Action” shall have the meaning set forth in Section 3.3.

“Non-Revolver Collateral Enforcement Action Notice” shall have the meaning as set forth in Section 3.3.

“Officers’ Certificate” shall have the meaning set forth in the Existing Indentures.

“Party” shall mean the First Lien Collateral Agent, the Second Lien Collateral Agent or the Third Lien Collateral Agent, and “Parties” shall mean collectively the First Lien Collateral Agent, the Second Lien Collateral Agent and the Third Lien Collateral Agent.

“Payment Discharge” shall have the meaning set forth in Section 2.4.

“Person” shall mean an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

“Proceeds” shall mean (a) all “proceeds,” as defined in Article 9 of the Uniform Commercial Code, with respect to the Common Collateral, and (b) whatever is recoverable or

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recovered when any Common Collateral is sold, exchanged, collected, or disposed of, whether voluntarily or involuntarily.

“Recovery” shall have the meaning set forth in Section 5.3.

“Refinance” means, in respect of any indebtedness, to refinance, extend, renew, defease, amend, increase, modify, supplement, restructure, refund, replace or repay, or to issue other indebtedness or enter alternative financing arrangements, in exchange or replacement for such indebtedness, in whole or in part, including by adding or replacing lenders, creditors, agents, borrowers and/or guarantors, and including in each case, but not limited to, after the original instrument giving rise to such indebtedness has been terminated. “Refinanced” and “Refinancing” have correlative meanings.

“Revolving Credit Agreement” shall have the meaning set forth in the recitals.

“Second Lien Collateral Agent” shall mean DBTCA, in its capacity as collateral agent for the lenders and other secured parties under the Term Loan Agreement and the holders of the Existing Notes pursuant to the Collateral Agency Agreement, together with its successors and permitted assigns in such capacity; provided, however, that, if such Second Lien Collateral Agent is not DBTCA, such Second Lien Collateral Agent shall have become a party to this Agreement and the other applicable Second Lien Security Documents.

“Second Lien Documents” means the indentures, loan, guarantee and security documents governing the Second Lien Obligations, including, without limitation, the Term Loan Agreement, the Existing Indentures, Secured Hedge Agreements (as defined in the Term Loan Agreement) and the Second Lien Security Documents.

“Second Lien Enforcement Date” means the date which is 180 days after the occurrence of both (i) a continuing Event of Default (under the Term Loan Agreement or the Existing Indentures) and (ii) the First Lien Collateral Agent’s receipt of an Enforcement Notice from the Second Lien Collateral Agent, provided, however, that the Second Lien Enforcement Date shall be stayed and shall not occur (or be deemed to have occurred) (A) at any time the First Lien Collateral Agent or the First Lien Secured Parties have commenced and are diligently pursuing enforcement action against the Common Collateral, (B) at any time that any Grantor is then a debtor under or with respect to (or otherwise subject to any Insolvency Proceeding), or (C) if the Event of Default under any of the Second Lien Documents is waived or cured in accordance with the terms of the Term Loan Agreement or the Existing Indentures.

“Second Lien Obligations” shall mean all “Secured Obligations” as defined in the Second Lien Security Agreement and the Existing Indentures.

“Second Lien Secured Parties” means, at any relevant time, the holders of Second Lien Obligations at such time, including the lenders and agents under the Term Loan Agreement, the noteholders and trustees under the Existing Indentures, hedge banks providing the Secured Hedge Agreements (as defined in the Term Loan Agreement) and the Second Lien Collateral Agent.

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“Second Lien Security Agreement” means the Security Agreement dated February 22, 2007 made by the Company and each other Grantor identified therein to DBTCA for the Secured Parties (as defined therein).

“Second Lien Security Documents” means the Second Lien Security Agreement and any other agreement, document or instrument pursuant to which a Lien is granted or purported to be granted securing Second Lien Obligations or under which rights or remedies with respect to such Liens are governed.

“Secured Parties” shall mean the First Lien Secured Parties, the Second Lien Secured Parties and the Third Lien Secured Parties.

“Subordinated Lien Collateral Agents” means the Second Lien Collateral Agent and the Third Lien Collateral Agent, collectively.

“Subordinated Lien Documents” means, collectively, the Second Lien Documents and the Third Lien Documents.

“Subordinated Lien Obligations” means, collectively, the Second Lien Obligations and the Third Lien Obligations.

“Subordinated Lien Secured Parties” means, collectively, the Second Lien Secured Parties and the Third Lien Secured Parties.

“Subordinated Lien Security Documents” means, collectively, the Second Lien Security Documents and the Third Lien Security Documents.

“Subsidiary” shall mean any Subsidiary of the Company as defined in the Credit Documents.

“Term Loan Agreement” shall have the meaning set forth in the recitals.

“Third Lien Collateral Agent” shall mean (i) so long as Third Lien Obligations are outstanding under the Bridge Loan Agreement, Deutsche Bank Cayman, in its capacity as collateral agent for the lenders and other secured parties under the Bridge Loan Agreement and the other security documents thereunder, together with its successors and permitted assigns under the Bridge Loan Agreement exercising substantially the same rights and powers; provided, however, that, if such Third Lien Collateral Agent is not Deutsche Bank Cayman, such Third Lien Collateral Agent shall have become a party to this Agreement and the other applicable Third Lien Security Documents and (ii) any time thereafter, such agent or trustee as is designated “Third Lien Collateral Agent” by the Third Lien Secured Parties holding a majority in principal amount of the Third Lien Obligations then outstanding or pursuant to such other arrangement as agreed to among the holders of Third Lien Obligations.

“Third Lien Documents” means the credit documents and security documents governing the Third Lien Obligations, including, without limitation, the Bridge Loan Agreement and the related Third Lien Security Documents.

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“Third Lien Obligations” means “Secured Obligations” as defined in the Security Agreement (as defined in the Bridge Loan Agreement), obligations with respect to any Indebtedness that Refinances the Obligations (as defined in the Bridge Loan Agreement) under the Bridge Loan Agreement and obligations with respect to other Indebtedness permitted to be incurred under the Bridge Loan Agreement, the Term Loan Agreement, the Existing Indentures and the Revolving Credit Agreement, which is by its terms intended to be secured equally and ratably with the Bridge Loan or on a basis junior to the Liens securing the Bridge Loan (provided that such Lien is permitted to be incurred under the Bridge Loan Agreement, the Term Loan Agreement, the Existing Indentures and the Revolving Credit Agreement); provided, however, that the holders of such Indebtedness or their Third Lien Representative is a party to the Third Lien Security Documents in accordance with the terms thereof and has appointed the Third Lien Collateral Agent as collateral agent for such holders of Third Lien Obligations with respect to all or a portion of the Common Collateral.

“Third Lien Representative” means any duly authorized representative of any holders of Third Lien Obligations which representative is a party to the Third Lien Documents.

“Third Lien Secured Parties” means (i) so long as the Bridge Loan is outstanding, the lenders and agents under the Bridge Loan Agreement, (ii) the Third Lien Collateral Agent, (iii) the holders from time to time of any other Third Lien Obligations, and (iv) each Third Lien Representative.

“Third Lien Security Documents” means the Security Agreement (as defined in the Bridge Loan Document) and any agreement, document or instrument pursuant to which a Lien is granted or purported to be granted securing Third Lien Obligations or under which rights or remedies with respect to such Liens are governed, which in each case may include intercreditor and/or subordination agreements or arrangements among various Third Lien Secured Parties.

“2007 Notes” shall have the meaning set forth in the recitals.

“2007 Notes Indenture” shall have the meaning set forth in the recitals.

“2008 Notes” shall have the meaning set forth in the recitals.

“2008 Notes Indenture” shall have the meaning set forth in the recitals.

“2014 Notes” shall have the meaning set forth in the recitals.

“2014 Notes Indenture” shall have the meaning set forth in the recitals.

“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, however, that to the extent that the Uniform Commercial Code is used to define any term in any security document and such term is defined differently in differing Articles of the Uniform Commercial Code, the definition of such term contained in Article 9 shall govern; provided, further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, publication or priority of, or remedies with respect to, Liens of any Party is governed by the Uniform Commercial Code or foreign personal property security laws as enacted and in effect in

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a jurisdiction other than the State of New York, the term “Uniform Commercial Code” will mean the Uniform Commercial Code or such foreign personal property security laws as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

Section 1.2            Rules of Construction.  Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term “including” is not limiting and shall be deemed to be followed by the phrase “without limitation,” and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.  Article, section, subsection, clause, schedule and exhibit references herein are to this Agreement unless otherwise specified.  Any reference in this Agreement to any agreement, instrument, or document shall include all alterations, amendments, changes, restatements, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, restatements, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein).  Any reference herein to any Person shall be construed to include such Person’s successors and assigns.  Any reference herein to the repayment in full of an obligation shall mean the payment in full in cash of such obligation, or in such other manner as may be approved in writing by the requisite holders or representatives in respect of such obligation, or in such other manner as may be approved by the requisite holders or representatives in respect of such obligation.

ARTICLE 2
LIEN PRIORITY SECTION

Section 2.1            Priority of Liens.

(a)           Notwithstanding (i) the date, time, method, manner, or order of grant, attachment, or perfection of any Liens granted to the First Lien Collateral Agent or the First Lien Secured Parties in respect of all or any portion of the Common Collateral or of any Liens granted to any Subordinated Lien Collateral Agent or any Subordinated Lien Secured Parties in respect of all or any portion of the Common Collateral, and regardless of how any such Lien was acquired (whether by grant, statute, operation of law, subrogation or otherwise), (ii) the order or time of filing or recordation of any document or instrument for perfecting the Liens in favor of the First Lien Collateral Agent or any Subordinated Lien Collateral Agent (or the First Lien Secured Parties or any of the Subordinated Lien Secured Parties) on any Common Collateral, (iii) any provision of the Uniform Commercial Code, the Bankruptcy Code or any other applicable law, or of any of the First Lien Documents or any of the Subordinated Lien Documents, or (iv) whether the First Lien Collateral Agent or any Subordinated Lien Collateral Agent, in each case, either directly or through agents, holds possession of, or has control over, all or any part of the Common Collateral, the First Lien Collateral Agent, on behalf of itself and the First Lien Secured Parties, the Second Lien Collateral Agent, on behalf of itself the Second Lien Secured Parties and the Third Lien Collateral Agent, on behalf of itself and the Third Lien Secured Parties, hereby agree that:

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(1)           any Lien in respect of all or any portion of the Common Collateral now or hereafter held by or on behalf of any Subordinated Lien Collateral Agent or any Subordinated Lien Secured Party that secures all or any portion of the Subordinated Lien Obligations shall in all respects be junior and subordinate to all Liens granted to the First Lien Collateral Agent and the First Lien Secured Parties on the Common Collateral; and

(2)           any Lien in respect of all or any portion of the Common Collateral now or hereafter held by or on behalf of the First Lien Collateral Agent or any First Lien Secured Party that secures all or any portion of the First Lien Obligations shall in all respects be senior and prior to all Liens granted any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party on the Common Collateral.

Each Subordinated Lien Collateral Agent, for and on behalf of itself and each applicable Subordinated Lien Secured Party, expressly agrees that any Lien purported to be granted on any Common Collateral as security for the First Lien Obligations shall be deemed to be and shall be deemed to remain senior in all respects and prior to all Liens on the Common Collateral securing any Subordinated Lien Obligations for all purposes regardless of whether the Lien purported to be granted is found to be improperly granted, improperly perfected, preferential, a fraudulent conveyance or legally or otherwise deficient in any manner.

(b)           The First Lien Collateral Agent, for and on behalf of itself and the First Lien Secured Parties, acknowledges and agrees that, concurrently herewith, the Second Lien Collateral Agent, for the benefit of itself and the Second Lien Secured Parties, and the Third Lien Collateral Agent, for the benefit of itself and the Third Lien Secured Parties, have each been granted Liens upon all of the Common Collateral in which the First Lien Collateral Agent has been granted Liens and the First Lien Collateral Agent hereby consents thereto.  The subordination of Liens by the Subordinated Lien Collateral Agents in favor of the First Lien Collateral Agent as set forth herein shall not be deemed to subordinate the respective Liens of the Subordinated Lien Collateral Agents or the Subordinated Lien Secured Parties to Liens securing any other obligations other than the First Lien Obligations (subject to the General Intercreditor Agreement).

Section 2.2            Waiver of Right to Contest Liens.

(a)           Each of (x) the Second Lien Collateral Agent, for and on behalf of itself and the Second Lien Secured Parties, and (y) the Third Lien Collateral Agent, for and on behalf of itself and the Third Lien Secured Parties, severally agrees that it shall not (and hereby waives any right to) take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in any proceeding (including in any Insolvency Proceeding), the validity, priority, enforceability, or perfection of the Liens of the First Lien Collateral Agent and the First Lien Secured Parties in respect of Common Collateral or the provisions of this Agreement.  Except to the extent expressly set forth in this Agreement, each of the (x) Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties, and (y) the Third Lien Collateral Agent, for itself and on behalf of the Third Lien Secured Parties, severally agrees that it will not take any action that would interfere with any Exercise of Secured Creditor Remedies undertaken by the First Lien Collateral Agent or any First Lien Secured Party under the First Lien Documents with respect to the Common Collateral.

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Except to the extent expressly set forth in this Agreement, each of (x) the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties, and (y) the Third Lien Collateral Agent, for itself and the Third Lien Secured Parties, hereby waives any and all rights it may have as a junior lien creditor or otherwise to contest, protest, object to, or interfere with the manner in which the First Lien Collateral Agent or any First Lien Secured Party seeks to enforce its Liens in any Common Collateral.

(b)           The First Lien Collateral Agent, for and on behalf of itself and the First Lien Secured Parties, agrees that it and they shall not (and hereby waives any right to) take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in any proceeding (including in any Insolvency Proceeding), the validity, priority, enforceability, or perfection of the respective Liens of the Subordinated Lien Collateral Agents or the Subordinated Lien Secured Parties in respect of the Common Collateral or the provisions of this Agreement.

Section 2.3            Remedies Standstill.

(a)           Each of (x) the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties, and (y) the Third Lien Collateral Agent, on behalf of itself and the Third Lien Secured Parties, severally agrees that, from the date hereof until the date upon which the Discharge of First Lien Obligations shall have occurred, (x) neither the Second Lien Collateral Agent nor any Second Lien Secured Party and (y) neither the Third Lien Collateral Agent nor any Third Lien Secured Party will Exercise Any Secured Creditor Remedies with respect to any Common Collateral without the written consent of the First Lien Collateral Agent, and will not take, receive or accept any Proceeds of Common Collateral, it being understood and agreed that the temporary deposit of Proceeds of Common Collateral in a Deposit Account controlled by any Subordinated Lien Collateral Agent shall not constitute a breach of this Agreement so long as such Proceeds are promptly remitted to the First Lien Collateral Agent; provided, however, that, subject to Section 4.1(b), upon the occurrence of the Second Lien Enforcement Date, the Second Lien Collateral Agent acting on behalf of itself and the Second Lien Secured Parties may exercise such remedies without such prior written consent of any other Collateral Agent.  From and after the date upon which the Discharge of First Lien Obligations shall have occurred (or, with respect to the Second Lien Collateral Agent, acting on behalf of itself and the Second Lien Secured Parties, prior thereto upon the occurrence of the Second Lien Enforcement Date), the Subordinated Lien Collateral Agents or any Subordinated Lien Secured Party may Exercise Any Secured Creditor Remedies under the applicable Subordinated Lien Documents or applicable law as to any Common Collateral.

(b)           Notwithstanding the provisions of Section 2.3(a) or any other provision of this Agreement, nothing contained herein shall be construed to prevent any Collateral Agent or any Secured Party from (i) filing a claim or statement of interest with respect to the First Lien Obligations or Subordinated Lien Obligations owed to it in any Insolvency Proceeding commenced by or against any Grantor, (ii) taking any action (not adverse to the priority status of the Liens of the other Collateral Agents or other Secured Parties on the Common Collateral in which such other Collateral Agents or other Secured Parties has a priority Lien or the rights of the other Collateral Agents or any of the other Secured Parties to exercise remedies in respect thereof) in order to create, perfect, preserve or protect (but not enforce) its Lien on any Common

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Collateral, (iii) filing any necessary or responsive pleadings in opposition to any motion, adversary proceeding or other pleading filed by any Person objecting to or otherwise seeking disallowance of the claim or Lien of such Collateral Agent or Secured Party, (iv) filing any pleadings, objections, motions, or agreements which assert rights available to unsecured creditors of the Grantors arising under any Insolvency Proceeding or applicable non-bankruptcy law, (vi) voting on any plan of reorganization or file any proof of claim in any Insolvency Proceeding of any Grantor, or (vii) objecting to the proposed retention of collateral by any other Agent or any other Secured Party in full or partial satisfaction of any First Lien Obligations or Subordinated Lien Obligations due to such other Collateral Agent or Secured Party, in each case (i) through (vii) above to the extent not inconsistent with, or could not result in a resolution inconsistent with, the terms of this Agreement.

(c)           Subject to Section 2.3(b), (i) each Subordinated Lien Collateral Agent, for itself and on behalf of the applicable Subordinated Lien Secured Parties, agrees that neither it nor any such Subordinated Lien Secured Party will take any action that would hinder any exercise of remedies undertaken by the First Lien Collateral Agent or the First Lien Secured Parties with respect to the Common Collateral, including any sale, lease, exchange, transfer or other disposition of Common Collateral, whether by foreclosure or otherwise, and (ii) each Subordinated Lien Collateral Agent, for itself and on behalf of the applicable Subordinated Lien Secured Parties, hereby waives any and all rights it or any such Subordinated Lien Secured Party may have as a junior lien creditor or otherwise to object to the manner in which the First Lien Collateral Agent or the First Lien Secured Parties seek to enforce or collect the First Lien Obligations or the Liens granted in any of the Common Collateral, regardless of whether any action or failure to act by or on behalf of the First Lien Collateral Agent or First Lien Secured Parties is adverse to the interests of the Subordinated Lien Secured Parties.

(d)           Each Subordinated Lien Collateral Agent, for itself and on behalf of the applicable Subordinated Lien Secured Parties, hereby acknowledges and agrees that no covenant, agreement or restriction contained in any applicable Subordinated Lien Document shall be deemed to restrict in any way the rights and remedies of the First Lien Collateral Agent or the First Lien Secured Parties with respect to the Common Collateral as set forth in this Agreement and the First Lien Documents.

(e)           Subject to Section 2.3(b), each Subordinated Lien Collateral Agent, for itself and on behalf of the applicable Subordinated Lien Secured Parties, agrees that, unless and until the Discharge of First Lien Obligations has occurred, it will not commence, or join with any Person (other than the First Lien Secured Parties and the First Lien Collateral Agent upon the request thereof) in commencing, any enforcement, collection, execution, levy or foreclosure action or proceeding with respect to any Lien held by it in the Common Collateral.

(f)            Notwithstanding the foregoing, clauses (c), (d) and (e) of this Section 2.3 shall not apply to the Second Lien Collateral Agent or the Second Lien Secured Parties from and after the occurrence of the Second Lien Enforcement Date.

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Section 2.4            Exercise of Rights.

(a)           No Other Restrictions.  Except as otherwise expressly set forth in Section 2.1(a), Section 2.2(a), Section 2.3, Section 3.5 and Article 6, each Subordinated Lien Collateral Agent and Subordinated Lien Secured Party may exercise rights and remedies as an unsecured creditor against the Company or any Subsidiary that has guaranteed or is otherwise obligated in respect of the applicable Subordinated Lien Obligations in accordance with the terms of the applicable Subordinated Lien Documents and applicable law.  Nothing in this Agreement shall prohibit the receipt by any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party of the required payments of interest and principal so long as such receipt is not the direct or indirect result of the exercise by any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party of rights or remedies as a secured creditor in respect of Common Collateral or enforcement in contravention of this Agreement of any Lien in respect of Subordinated Lien Obligations held by any of them or in any Insolvency Proceeding. In the event any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party becomes a judgment lien creditor or other secured creditor in respect of Common Collateral as a result of its enforcement of its rights as an unsecured creditor in respect of Subordinated Lien Obligations or otherwise, such judgment or other lien shall be subordinated to the Liens securing First Lien Obligations on the same basis as the other Liens securing the Subordinated Lien Obligations are so subordinated to such Liens securing First Lien Obligations under this Agreement. Nothing in this Agreement impairs or otherwise adversely affects any rights or remedies the First Lien Collateral Agent or the First Lien Secured Parties may have with respect to the Common Collateral.  Furthermore, subject to Section 3.3, for the avoidance of doubt, nothing in this Agreement shall restrict any right any Subordinated Lien Secured Party may have (secured or otherwise) in any property or asset of any Grantor that does not constitute Common Collateral.

(b)           Release of Liens.

If, at any time any Grantor or any First Lien Secured Party delivers notice to the Subordinated Lien Collateral Agents with respect to any specified Common Collateral that:

(A)          such specified Common Collateral is sold, transferred or otherwise disposed of (a “Disposition”) by the owner of such Common Collateral in a transaction permitted under the First Lien Documents, the Second Lien Documents and the Third Lien Documents; or

(B)           the First Lien Secured Parties are releasing or have released their Liens on such Common Collateral in connection with a Disposition in connection with an Exercise of Secured Creditor Remedies with respect to such Common Collateral; or

(C)           the Liens securing the First Lien Obligations thereon are otherwise released as permitted by the First Lien Documents or by the First Lien Collateral Agent on behalf of the First Lien Secured Parties (unless, in the case of clause (B) or (C) of this Section 2.4(b) such release occurs in connection with, and after giving effect to, a Discharge of First Lien Obligations which discharge is not in connection with a foreclosure of, or other exercise of remedies with respect to, Common Collateral by the First Lien Secured Parties (such discharge not in

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connection with any such foreclosure or exercise of remedies, a “Payment Discharge”)),

then the Liens upon such Common Collateral (and any other Common Collateral where notice of a Disposition is not required) securing Subordinated Lien Obligations will automatically be released and discharged as and when, but only to the extent, such Liens on such Common Collateral securing First Lien Obligations are released and discharged (provided that in the case of clause (B) or (C) of this Section 2.4(b), the Liens on any Common Collateral disposed of in connection with an Exercise of Secured Creditor Remedies thereon shall be automatically released but any proceeds thereof not applied to repay First Lien Obligations shall be subject to the respective Liens securing Subordinated Lien Obligations and shall be applied pursuant to Section 4.1).  Upon delivery to the Subordinated Lien Collateral Agents of a notice from the First Lien Collateral Agent stating that any such release of Liens securing or supporting the First Lien Obligations has become effective, each such Subordinated Lien Collateral Agent shall, at the Company’s expense, promptly execute and deliver such instruments, releases, termination statements or other documents confirming such release on customary terms, which instruments, releases and termination statements shall be substantially identical to the comparable instruments, releases and termination statements executed by the First Lien Collateral Agent in connection with such release. Each Subordinated Lien Collateral Agent hereby appoints the First Lien Collateral Agent and any officer or duly authorized person of the First Lien Collateral Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power of attorney in the place and stead of such Subordinated Lien Collateral Agent and in the name of such Subordinated Lien Collateral Agent or in the First Lien Collateral Agent’s own name, from time to time, in the First Lien Collateral Agent’s sole discretion, for the purposes of carrying out the terms of this paragraph, to take any and all appropriate action and to execute and deliver any and all documents and instruments as may be necessary or desirable to accomplish the purposes of this paragraph, including any financing statements, endorsements, assignments, releases or other documents or instruments of transfer (which appointment, being coupled with an interest, is irrevocable).

(c)           In the event of a Payment Discharge, the Liens securing the Second Lien Obligations on Common Collateral owned by the Company or a Grantor immediately after giving effect to such Payment Discharge shall become first-priority security interests (subject to any intercreditor agreements or arrangements among Subordinated Lien Secured Parties referred to in Section 7.15).

Section 2.5            No New Liens.

Until the date upon which the Discharge of First Lien Obligations shall have occurred, the parties hereto agree that no Subordinated Lien Secured Party shall acquire or hold any Lien on any assets of any Grantor constituting Common Collateral, securing any Subordinated Lien Obligation, if such assets are not also subject to the Lien of the First Lien Collateral Agent under the First Lien Documents (and subject to the Lien Priority contemplated herein).  If any Subordinated Lien Secured Party shall (nonetheless and in breach hereof) acquire or hold any Lien on any such assets securing any Subordinated Lien Obligation, which assets are not also subject to the Lien of the First Lien Collateral Agent under the First Lien Documents, subject to the Lien Priority set forth herein, then the applicable Subordinated Lien Collateral

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Agent (or the applicable Subordinated Lien Secured Party) shall, without the need for any further consent of any other Subordinated Lien Secured Party and notwithstanding anything to the contrary in any other Subordinated Lien Document, be deemed to also hold and have held such Lien as agent or bailee for the benefit of the First Lien Collateral Agent as security for the First Lien Obligations (subject to the Lien Priority and other terms hereof) and shall use its best efforts to promptly notify the First Lien Collateral Agent in writing of the existence of such Lien.

Section 2.6            Waiver of Marshalling.

Until the Discharge of the First Lien Obligations, each Subordinated Lien Collateral Agent, on behalf of itself and the applicable Subordinated Lien Secured Parties, agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Common Collateral or any other similar rights a junior secured creditor may have under applicable law.

ARTICLE 3
ACTIONS OF THE PARTIES

Section 3.1            Certain Actions Permitted.  The Subordinated Lien Collateral Agents and the First Lien Collateral Agent may make such demands or file such claims in respect of the Subordinated Lien Obligations or the First Lien Obligations, as applicable, as are necessary to prevent the waiver or bar of such claims under applicable statutes of limitations or other statutes, court orders, or rules of procedure at any time.  Except as provided in Section 5.2, nothing in this Agreement shall prohibit the receipt by any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party of the required payments of interest, principal and other amounts owed in respect of the applicable Subordinated Lien Obligations so long as such receipt is not the direct or indirect result of the exercise by the applicable Subordinated Lien Collateral Agent or Subordinated Lien Secured Party of rights or remedies as a secured creditor or enforcement in contravention of this Agreement of any Lien held by any of them.

Section 3.2            Agent for Perfection.  None of the First Lien Collateral Agent, any First Lien Secured Party, any Subordinated Lien Collateral Agent or any Subordinated Lien Secured Party, as applicable, shall have any obligation whatsoever to the others to assure that the Common Collateral is genuine or owned by the Company, any Grantor or any other Person or to preserve rights or benefits of any Person.  The duties or responsibilities of the First Lien Collateral Agent under this Section 3.2, are and shall be limited solely to holding or maintaining control of the Common Collateral as agent for the Subordinated Lien Secured Parties for purposes of perfecting the respective Liens held by the applicable Subordinated Lien Secured Parties.  The First Lien Collateral Agent is not and shall not be deemed to be a fiduciary of any kind for any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party, or any other Person.  Neither Subordinated Lien Collateral Agent is or shall be deemed to be a fiduciary of any kind for any other Collateral Agent or Secured Party, or any other Person.  Prior to the Discharge of First Lien Obligations, in the event that any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party receives any Common Collateral or Proceeds of Common Collateral in violation of the terms of this Agreement, then such Subordinated Lien Collateral

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Agent or Subordinated Lien Secured Party, as the case may be, shall promptly pay over such Proceeds or Common Collateral to the First Lien Collateral Agent in the same form as received with any necessary endorsements, for application in accordance with the provisions of Section 4.1 of this Agreement.

Section 3.3            Access to Process and Sell Inventory.

(a)  (i)  If the First Lien Collateral Agent commences any action or proceeding with respect to any of its rights or remedies (or any other Exercise of Secured Creditor Remedies) (including, but not limited to, any action of foreclosure), enforcement, collection or execution with respect to the Common Collateral (“Common Collateral Enforcement Actions”) or if any Subordinated Lien Collateral Agent commences any action or proceeding with respect to any of its rights or remedies (including any action of foreclosure), enforcement, collection or execution with respect to the Non-Revolver Collateral and a Subordinated Lien Collateral Agent (or a purchaser at a foreclosure sale conducted in foreclosure of any Subordinated Lien Collateral Agent’s Liens) takes actual or constructive possession of the Non-Revolver Collateral of any Grantor (“Non-Revolver Collateral Enforcement Actions”), then the Subordinated Lien Secured Parties and the Subordinated Lien Collateral Agents shall (subject to, in the case of any Non-Revolver Collateral Enforcement Action, a prior written request by the First Lien Collateral Agent to the Subordinated Lien Collateral Agents (the “Non-Revolver Collateral Enforcement Action Notice”)) (x) cooperate with the First Lien Collateral Agent (and with its officers, employees, representatives and agents) in its efforts to conduct Common Collateral Enforcement Actions in the Common Collateral and to finish any work-in-process and process, ship, produce, store, complete, supply, lease, sell or otherwise handle, deal with, assemble or dispose of, in any lawful manner, the Common Collateral, (y) not hinder or restrict in any respect the First Lien Collateral Agent from conducting Common Collateral Enforcement Actions in the Common Collateral or from finishing any work- in-process or processing, shipping, producing, storing, completing, supplying, leasing, selling or otherwise handling, dealing with, assembling or disposing of, in any lawful manner, the Common Collateral, and (z) permit the First Lien Collateral Agent, its employees, agents, advisers and representatives, at the cost and expense of the First Lien Secured Parties (but with the Grantors’ reimbursement and indemnity obligation with respect thereto, which shall not be limited), to enter upon and use the Non-Revolver Collateral (including, without limitation, equipment, processors, computers and other machinery related to the storage or processing of records, documents or files and intellectual property), for a period commencing on (I) the date of the initial Common Collateral Enforcement Action or the date of delivery of the Non-Revolver Collateral Enforcement Action Notice, as the case may be, and (II) ending on the earlier of the date occurring 180 days thereafter and the date on which all Common Collateral has been removed from the Non-Revolver Collateral (such period, the “Common Collateral Processing and Sale Period”), for purposes of:

(1)           assembling and storing the Common Collateral and completing the processing of and turning into finished goods any Common Collateral consisting of work- in-process;

(2)           selling any or all of the Common Collateral located in or on such Non-Revolver Collateral, whether in bulk, in lots or to customers in the ordinary course of business or otherwise;

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(3)           removing and transporting any or all of the Common Collateral located in or on such Non-Revolver Collateral;

(4)           otherwise processing, shipping, producing, storing, completing, supplying, leasing, selling or otherwise handling, dealing with, assembling or disposing of, in any lawful manner, the Common Collateral; and/or

(5)           taking reasonable actions to protect, secure, and otherwise enforce the rights or remedies of the First Lien Secured Parties and/or the First Lien Collateral Agent (including with respect to any Common Collateral Enforcement Actions) in and to the Common Collateral;

provided, however, that nothing contained in this Agreement shall restrict the rights of any Subordinated Lien Collateral Agent from selling, assigning or otherwise transferring any Non-Revolver Collateral prior to the expiration of such Common Collateral Processing and Sale Period if the purchaser, assignee or transferee thereof agrees in writing (for the benefit of the First Lien Collateral Agent and the First Lien Secured Parties) to be bound by the provisions of this Section 3.3.  If any stay or other order prohibiting the exercise of remedies with respect to the Common Collateral has been entered by a court of competent jurisdiction, such Common Collateral Processing and Sale Period shall be tolled during the pendency of any such stay or other order.

(ii)           During the period of actual occupation, use and/or control by the First Lien Secured Parties and/or the First Lien Collateral Agent (or their respective employees, agents, advisers and representatives) of any Non-Revolver Collateral, the First Lien Secured Parties and the First Lien Collateral Agent shall be obligated to repair at their expense any physical damage (but not any diminution in value) to such Non-Revolver Collateral, as the case may be, resulting from such occupancy, use or control, and to leave such Non-Revolver Collateral, as the case may be, in substantially the same condition as it was at the commencement of such occupancy, use or control, ordinary wear and tear excepted.  Notwithstanding the foregoing, in no event shall the First Lien Secured Parties or the First Lien Collateral Agent have any liability to the Subordinated Lien Secured Parties and/or to any Subordinated Lien Collateral Agent pursuant to this Section 3.3(a) as a result of any condition (including any environmental condition, claim or liability) on or with respect to the Non-Revolver Collateral existing prior to the date of the exercise by the First Lien Secured Parties (or the First Lien Collateral Agent, as the case may be) of their rights under this Section 3.3(a) and the First Lien Secured Parties shall have no duty or liability to maintain the Non-Revolver Collateral in a condition or manner better than that in which it was maintained prior to the use thereof by the First Lien Secured Parties, or for any diminution in the value of the Non-Revolver Collateral that results from ordinary wear and tear resulting from the use of the Non-Revolver Collateral by the First Lien Secured Parties in the manner and for the time periods specified under this Section 3.3(a).  Without limiting the rights granted in this Section 3.3(a), the First Lien Secured Parties and the First Lien Collateral Agent shall cooperate with the Subordinated Lien Secured Parties and/or the Subordinated Lien Collateral Agents in connection with any efforts made by the Non-Revolver Secured Parties and/or the Subordinated Lien Collateral Agents to sell the Non-Revolver Collateral.

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(b)           The Subordinated Lien Collateral Agents shall be entitled, as a condition of permitting such access and use, to demand and receive assurances reasonably satisfactory to it that the access or use requested and all activities incidental thereto:

(i)            will be permitted, lawful and enforceable under applicable law and will be conducted in accordance with prudent manufacturing practices; and

(ii)           will be adequately insured for damage to property and liability to persons, including property and liability insurance for the benefit of the Subordinated Lien Collateral Agents and the Subordinated Lien Secured Parties, at no cost to the Subordinated Lien Collateral Agents or the Subordinated Lien Secured Parties.

The Subordinated Lien Collateral Agents (x) shall provide reasonable cooperation to the First Lien Collateral Agent in connection with the manufacture, production, completion, handling, removal and sale of any Common Collateral by the First Lien Collateral Agent as provided above and (y) shall be entitled to receive, from the First Lien Collateral Agent, fair compensation and reimbursement for their reasonable costs and expenses incurred in connection with such cooperation, support and assistance to the First Lien Collateral Agent.  The Subordinated Lien Collateral Agents and/or any such purchaser (or its transferee or successor) shall not otherwise be required to manufacture, produce, complete, remove, insure, protect, store, safeguard, sell or deliver any inventory subject to any First Priority Lien held by the First Lien Collateral Agent or to provide any support, assistance or cooperation to the First Lien Collateral Agent in respect thereof.

For the avoidance of doubt, this Section 3.3 governs the rights of access and inspection as between the First Lien Secured Parties on the one hand and the Subordinated Lien Secured Parties on the other (and not as between the Secured Parties and the Grantors, which rights are set forth in and governed by the applicable Credit Documents and are not affected by this Section 3.3).

Section 3.4            Insurance.  Proceeds of Common Collateral include insurance proceeds and, therefore, the Lien Priority shall govern the ultimate disposition of insurance proceeds to the extent such insurance insures Common Collateral.  Prior to the Discharge of First Lien Obligations, the First Lien Collateral Agent shall have the sole and exclusive right, as against the Subordinated Lien Collateral Agents, to the extent permitted by the First Lien Documents and subject to the rights of the Grantors thereunder, to adjust settlement of insurance claims to the extent such insurance insures Common Collateral in the event of any covered loss, theft or destruction of Common Collateral.  Prior to the Discharge of First Lien Obligations, all proceeds of such insurance with respect to Common Collateral shall be remitted for application in accordance Section 4.1 hereof.

Section 3.5            Exercise of Remedies - Set Off and Tracing of and Priorities in Proceeds.  Each Subordinated Lien Collateral Agent, for itself and on behalf of the applicable Subordinated Lien Secured Parties, acknowledges and agrees that, to the extent such Subordinated Lien Collateral Agent or Subordinated Lien Secured Party exercises its rights of set-off against any Grantor’s Deposit Accounts to the extent constituting or containing Common Collateral or proceeds thereof, the amount of such set-off shall be deemed to be Common

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Collateral to be held and distributed pursuant to Section 4.1.  In addition, unless and until the Discharge of First Lien Obligations occurs, each Subordinated Lien Collateral Agent and Subordinated Lien Secured Party hereby consents to the application, of cash or other proceeds of Common Collateral, deposited under control agreements to the repayment of First Lien Obligations pursuant to the First Lien Documents.

Section 3.6            Intellectual Property License.  The Second Lien Collateral Agent and the First Lien Collateral Agent acknowledge that the Grantors have granted to the First Lien Collateral Agent an irrevocable, nonexclusive, royalty-free right and license to use the Intellectual Property Collateral (as defined in the Second Lien Security Agreement) to the extent necessary to enable the First Lien Collateral Agent to realize on, and exercise all rights of the First Lien Collateral Agent and the First Lien Secured Parties in relation to the Common Collateral.

ARTICLE 4
APPLICATION OF PROCEEDS

Section 4.1            Application of Proceeds.

(a)           Revolving Nature of First Lien Obligations.  Each Subordinated Lien Collateral Agent, for and on behalf of itself and the applicable Subordinated Lien Secured Parties, expressly acknowledges and agrees that (i) the Revolving Credit Agreement includes a revolving commitment, that in the ordinary course of business the First Lien Collateral Agent and the First Lien Secured Parties will apply payments and make advances thereunder, and that no application of any Common Collateral or the release of any Lien by the First Lien Collateral Agent upon any portion of the Common Collateral in connection with a permitted disposition by the Grantors under the Revolving Credit Agreement shall constitute an Exercise of Secured Creditor Remedies under this Agreement; (ii) subject to the limitations, if any, set forth in the Second Lien Documents (as in effect on the date hereof), the amount of the First Lien Obligations that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed, and that the terms of the First Lien Obligations may be modified, extended or amended from time to time, and that the aggregate amount of the First Lien Obligations may be increased, replaced or Refinanced, in each event, without notice to or consent by the Subordinated Lien Secured Parties and without affecting the provisions hereof; and (iii) all Common Collateral received by the First Lien Collateral Agent may be applied, reversed, reapplied, credited, or reborrowed, in whole or in part, to the First Lien Obligations at any time. The Lien Priority shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or Refinancing of either the First Lien Obligations or any Subordinated Lien Obligations, or any portion thereof.

(b)           Application of Proceeds of Common Collateral.  The First Lien Collateral Agent and each Subordinated Lien Collateral Agent hereby agree that all Common Collateral and all Proceeds thereof, received by any of them in connection with any Exercise of Secured Creditor Remedies with respect to the Common Collateral shall be applied, first, to the payment of costs and expenses of the First Lien Collateral Agent in connection with such Exercise of Secured Creditor Remedies, and second, to the payment of the First Lien Obligations in

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accordance with the First Lien Documents until the Discharge of First Lien Obligations shall have occurred.

(c)           Payments Over.  Any Common Collateral or proceeds thereof received by any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party in connection with the exercise of any right or remedy (including set off or credit bid) or in any Insolvency Proceeding relating to the Common Collateral not expressly permitted by this Agreement or prior to the Discharge of First Lien Obligations shall be segregated and held in trust for the benefit of and forthwith paid over to the First Lien Collateral Agent (and/or its designees) for the benefit of the First Lien Secured Parties in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The First Lien Collateral Agent is hereby authorized to make any such endorsements as agent for each such Subordinated Lien Collateral Agent or Subordinated Lien Secured Party.  This authorization is coupled with an interest and is irrevocable.

(d)           Limited Obligation or Liability.  In exercising remedies, whether as a secured creditor or otherwise, the First Lien Collateral Agent shall have no obligation or liability to any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party regarding the adequacy of any proceeds realized on any collateral or for any action or omission, save and except solely for an action or omission that breaches the express obligations undertaken by each Party under the terms of this Agreement.  Notwithstanding anything to the contrary herein contained, none of the Parties hereto waives any claim that it may have against a Secured Party on the grounds that and sale, transfer or other disposition by the Secured Party was not commercially reasonable in every respect as required by the UCC.

(e)           Turnover of Collateral After Discharge.  Upon the Discharge of First Lien Obligation, the First Lien Collateral Agent shall (a) notify the Second Lien Collateral Agent (or, if the First Lien Collateral Agent has been notified in writing by the Company and the Second Lien Collateral Agent of the occurrence of a Discharge of Second Lien Obligations, the Third Lien Collateral Agent) in writing of the occurrence of such Discharge of First Lien Obligations and (b) at the Company’s expense, deliver to such Subordinated Lien Collateral Agent or execute such documents as such Subordinated Lien Collateral Agent may reasonably request in order to affect a transfer of control to such Subordinated Lien Collateral Agent over any and all Common Collateral.

Section 4.2            Specific Performance.  Each of the First Lien Collateral Agent and each Subordinated Lien Collateral Agent is hereby authorized to demand specific performance of this Agreement, whether or not the Company or any Grantor shall have complied with any of the provisions of any of the Credit Documents, at any time when the other Party shall have failed to comply with any of the provisions of this Agreement applicable to it.  Each of the First Lien Collateral Agent, for and on behalf of itself and the First Lien Secured Parties, and each Subordinated Lien Collateral Agent, for and on behalf of itself and the applicable Subordinated Lien Secured Parties, hereby irrevocably waives any defense based on the adequacy of a remedy at law that might be asserted as a bar to such remedy of specific performance.

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ARTICLE 5
INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

Section 5.1            Notice of Acceptance and Other Waivers.

(a)           All First Lien Obligations at any time made or incurred by the Company or any Grantor shall be deemed to have been made or incurred in reliance upon this Agreement, and each Subordinated Lien Collateral Agent, on behalf of itself and the applicable Subordinated Lien Secured Parties, hereby waives notice of acceptance, or proof of reliance by the First Lien Collateral Agent or any First Lien Secured Party of this Agreement, and notice of the existence, increase, renewal, extension, accrual, creation, or non-payment of all or any part of the First Lien Obligations.  All Subordinated Lien Obligations at any time made or incurred by the Company or any Grantor shall be deemed to have been made or incurred in reliance upon this Agreement, and each Subordinated Lien Collateral Agent, on behalf of itself and the applicable Subordinated Lien Secured Parties, hereby waives notice of acceptance, or proof of reliance, by such other Subordinated Lien Collateral Agent or Subordinated Lien Secured Party of this Agreement, and notice of the existence, increase, renewal, extension, accrual, creation, or non-payment of all or any part of the applicable Subordinated Lien Obligations.

(b)           None of the First Lien Collateral Agent, any First Lien Secured Party or any of their respective Affiliates, directors, officers, employees, or agents shall be liable for failure to demand, collect or realize upon any of the Common Collateral or any Proceeds thereof, or for any delay in doing so, or shall be under any obligation to sell or otherwise dispose of any Common Collateral or Proceeds thereof or to take any other action whatsoever with regard to the Common Collateral or any part or Proceeds thereof, except as specifically provided in this Agreement. If the First Lien Collateral Agent or any First Lien Secured Party honors (or fails to honor) a request by any Borrower under the Revolving Credit Agreement for an extension of credit pursuant to any Revolving Credit Agreement or any of the other First Lien Documents, whether the First Lien Collateral Agent or any First Lien Secured Party has knowledge that the honoring of (or failure to honor) any such request would constitute a default under the terms of any Subordinated Lien Document (but not a default under this Agreement) or an act, condition, or event that, with the giving of notice or the passage of time, or both, would constitute such a default, or if the First Lien Collateral Agent or any First Lien Secured Party otherwise should exercise any of its contractual rights or remedies under any First Lien Documents (subject to the express terms and conditions hereof), neither the First Lien Collateral Agent nor any First Lien Secured Party shall have any liability whatsoever to any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party as a result of such action, omission, or exercise (so long as any such exercise does not breach the express terms and provisions of this Agreement). The First Lien Collateral Agent and the First Lien Secured Parties shall be entitled to manage and supervise their loans and extensions of credit under any Revolving Credit Agreement and any of the other First Lien Documents as they may, in their sole discretion, deem appropriate, and may manage their loans and extensions of credit without regard to any rights or interests that any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party have in the Common Collateral, except as otherwise expressly set forth in this Agreement. Each Subordinated Lien Collateral Agent, on behalf of itself and the applicable Subordinated Lien Secured Parties, agrees that neither the First Lien Collateral Agent nor any First Lien Secured Party shall incur any liability as a result of a sale, lease, license, application, or other disposition of all or any portion

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of the Common Collateral or Proceeds thereof, pursuant to the First Lien Documents, so long as such disposition is conducted in accordance with mandatory provisions of applicable law and does not breach the provisions of this Agreement. The Subordinated Lien Collateral Agents and the Subordinated Lien Secured Parties shall be entitled to manage and supervise their loans and extensions of credit under the any applicable Subordinated Lien Document as they may, in their sole discretion, deem appropriate, and may manage their loans and extensions of credit without regard to any rights or interests of the First Lien Collateral Agent or any First Lien Secured Parties, except as otherwise expressly set forth in this Agreement.

Section 5.2            Modifications to First Lien Documents and Subordinated Lien Documents.

(a)           In the event that the First Lien Collateral Agent or the First Lien Secured Parties enter into any amendment, waiver or consent in respect of or replace any of the First Lien Security Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any First Lien Security Document or changing in any manner the rights of the First Lien Collateral Agent, the First Lien Secured Parties, the Company or any other Grantor thereunder (including the release of any Liens in Common Collateral in accordance with Section 2.4(b)), then such amendment, waiver or consent, to the extent related to Common Collateral, shall apply automatically to any comparable provision (but only to the extent as such provision relates to Common Collateral) of each Comparable Subordinated Lien Security Document without the consent of any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party and without any action by any Subordinated Lien Collateral Agent, Subordinated Lien Secured Party, the Company or any other Grantor; provided, however, that such amendment, waiver or consent does not materially adversely affect the rights of the Subordinated Lien Secured Parties or the interests of the Subordinated Lien Secured Parties in the Common Collateral in a manner materially different from that affecting the rights of the First Lien Secured Parties thereunder or therein. The First Lien Collateral Agent shall give written notice of such amendment, waiver or consent (along with a copy thereof) to each Subordinated Lien Collateral Agent; provided, however, that the failure to give such notice shall not affect the effectiveness of such amendment with respect to the provisions of any Subordinated Lien Security Document as set forth in this Section 5.2(a).  For the avoidance of doubt, no such amendment, modification or waiver shall apply or otherwise effect (a) any Non-Revolver Collateral or (b) any document, agreement or instrument which neither grants nor purports to grant a Lien on, nor governs nor purports to govern any rights or remedies in respect of, Common Collateral.

(b)           So long as the Discharge of First Lien Obligations has not occurred, without the prior written consent of the First Lien Collateral Agent, no Subordinated Lien Collateral Agent shall consent to amend, supplement or otherwise modify any, or enter into any new, Subordinated Lien Security Document relating to Common Collateral to the extent such amendment, supplement or modification, or the terms of such new Subordinated Lien Security Document, would be prohibited by or inconsistent with any of the terms of this Agreement. Each Subordinated Lien Collateral Agent agrees that each applicable Subordinated Lien Security Document relating to Common Collateral shall include the following language (or language to similar effect approved by the First Lien Collateral Agent):

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“Notwithstanding anything herein to the contrary, the liens and security interests granted to the [Subordinated Lien Collateral Agent] pursuant to this Agreement and the exercise of any right or remedy by the [Subordinated Lien Collateral Agent] hereunder are subject to the limitations and provisions of the Revolver Intercreditor Agreement, dated as of February 22, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among Deutsche Bank AG New York Branch, as First Lien Collateral Agent, DBTCA, as Second Lien Collateral Agent and Deutsche Bank AG Cayman Islands Branch, as Third Lien Collateral Agent, and certain other persons party or that may become party thereto from time to time, and consented to by Building Materials Corporation of America and the Grantors identified therein.  In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern and control.”

(c)           No consent furnished by the First Lien Collateral Agent or any Subordinated Lien Collateral Agent pursuant to Sections 5.2(a) or 5.2(b) hereof shall be deemed to constitute the modification or waiver of any provisions of the First Lien Documents or any of the Subordinated Lien Documents, each of which remain in full force and effect as written.

(d)           The First Lien Obligations and the several Subordinated Lien Obligations may be Refinanced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is required to permit the refinancing transaction under any First Lien Document or any Subordinated Lien Document) of the First Lien Collateral Agent, the First Lien Secured Parties, any Subordinated Lien Collateral Agent or any Subordinated Lien Secured Parties, as the case may be, provided such Refinancing does not affect the relative Lien Priorities provided for herein or directly alter the other provisions hereof to the extent relating to the relative rights, obligations and priorities of the First Lien Secured Parties on the one hand and the Subordinated Lien Secured Parties on the other.

Section 5.3            Reinstatement and Continuation of Agreement.

If the First Lien Collateral Agent or any First Lien Secured Party is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of the Company, any other Grantor, or any other Person any payment made in satisfaction of all or any portion of the First Lien Obligations (a “Recovery”), then the First Lien Obligations shall be reinstated to the extent of such Recovery.  If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect in the event of such Recovery, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the Parties from such date of reinstatement.  The First Lien Collateral Agent shall use commercially reasonable efforts to give written notice to the Subordinated Lien Collateral Agents of the occurrence of any such Recovery (provided that the failure to give such notice shall not affect the First Lien Collateral Agent’s rights hereunder, except it being understood that no Subordinated Lien Collateral Agent shall be charged with knowledge of such Recovery or required to take any actions based on such Recovery until it has received such written notice of the occurrence of such Recovery).

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All rights, interests, agreements, and obligations of the First Lien Collateral Agent, each Subordinated Lien Collateral Agent, the First Lien Secured Parties and the Subordinated Lien Secured Parties under this Agreement shall remain in full force and effect and shall continue irrespective of the commencement of, or any discharge, confirmation, conversion, or dismissal of, any Insolvency Proceeding by or against the Company or any Grantor or any other circumstance which otherwise might constitute a defense (other than a defense that such obligations have in fact been repaid) available to, or a discharge of the Company or any Grantor in respect of the First Lien Obligations or the applicable Subordinated Lien Obligations. No priority or right of the First Lien Collateral Agent or any First Lien Secured Party shall at any time be prejudiced or impaired in any way by any act or failure to act on the part of the Company or any other Grantor or by the non-compliance by any Person with the terms, provisions, or covenants of any of the First Lien Documents, regardless of any knowledge thereof which the First Lien Collateral Agent or any First Lien Secured Party may have.

ARTICLE 6
INSOLVENCY PROCEEDINGS

Section 6.1            DIP Financing.

(a)           If the Company or any Grantor shall be subject to any Insolvency Proceeding at any time prior to the Discharge of First Lien Obligations, and the First Lien Collateral Agent or the First Lien Secured Parties shall seek to provide the Company or any other Grantor with, or consent to a third party providing, any financing under Section 364 of the Bankruptcy Code or consent to any order for the use of cash collateral constituting Common Collateral under Section 363 of the Bankruptcy Code (each, a “DIP Financing”), with such DIP Financing to be secured by all or any portion of the Common Collateral (including assets that, but for the application of Section 552 of the Bankruptcy Code would be Common Collateral) but not any other asset or any Non-Revolver Collateral, then each Subordinated Lien Collateral Agent, on behalf of itself and the applicable Subordinated Lien Secured Parties, agrees that it will raise no objection and will not support any objection to such DIP Financing or use of cash collateral or to the Liens curing the same on the grounds of a failure to provide “adequate protection” for the Liens of such Subordinated Lien Collateral Agent securing the applicable Subordinated Lien Obligations or on any other grounds (and will not request any adequate protection solely as a result of such DIP Financing or use of cash collateral that is Common Collateral, except as permitted by Section 6.3(b)), so long as (i) such Subordinated Lien Collateral Agent retains its Lien on the Common Collateral to secure the applicable Subordinated Lien Obligations (in each case, including Proceeds thereof arising after the commencement of the case under the Bankruptcy Code), (ii) the terms of the DIP Financing do not compel the applicable Grantor to seek confirmation of a specific plan of reorganization for which all or substantially all of the material terms of such plan are set forth in the DIP Financing documentation or related document; and (iii) all Liens on Common Collateral securing any such DIP Financing shall be senior to or on a parity with the Liens of the First Lien Collateral Agent and the First Lien Secured Parties securing the First Lien Obligations on Common Collateral; provided, however, that nothing contained in this Agreement shall prohibit or restrict any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party from raising any objection or supporting any objection to such DIP Financing or use of cash collateral or to the Liens securing the same on the grounds of a failure to provide “adequate protection” for the

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Liens of such Subordinated Lien Collateral Agent on Non-Revolver Collateral securing the applicable Subordinated Lien Obligations.

(b)           All Liens granted to the First Lien Collateral Agent or any Subordinated Lien Collateral Agent in any Insolvency Proceeding, whether as adequate protection or otherwise, are intended by the Parties to be and shall be deemed to be subject to the Lien Priority and the other terms and conditions of this Agreement.

Section 6.2            Relief from Stay.  Each Subordinated Lien Collateral Agent, on behalf of itself and the applicable Subordinated Lien Secured Parties, agrees not to seek relief from the automatic stay or any other stay in any Insolvency Proceeding in respect of any portion of the Common Collateral without the First Lien Collateral Agent’s express written consent.

Section 6.3            No Contest; Adequate Protection.

(a)           Each Subordinated Lien Collateral Agent, on behalf of itself and the applicable Subordinated Lien Secured Parties, agrees that it shall not contest (or support any other Person contesting) (x) any request by the First Lien Collateral Agent or any First Lien Secured Party for adequate protection of its interest in the Common Collateral, (y) any objection by the First Lien Collateral Agent or any First Lien Secured Party to any motion, relief, action, or proceeding based on a claim by the First Lien Collateral Agent or any First Lien Secured Party that its interests in the Common Collateral are not adequately protected (or any other similar request under any law applicable to an Insolvency Proceeding), so long as any Liens granted to the First Lien Collateral Agent as adequate protection of its interests are subject to this Agreement or (z) any lawful exercise by the First Lien Collateral Agent or any First Lien Secured Party of the right to credit bid First Lien Obligations at any sale of Common Collateral; provided, however, that nothing contained in this Agreement shall prohibit or restrict any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party from contesting or challenging (or support any other Person contesting or challenging) any request by the First Lien Collateral Agent or any First Lien Secured Party for “adequate protection” (or the grant of any such “adequate protection”) to the extent such “adequate protection” is in the form of a Lien on any Non-Revolver Collateral.

(b)           Notwithstanding the foregoing provisions in this Section 6.3, in any Insolvency Proceeding, if the First Lien Secured Parties (or any subset thereof) are granted adequate protection with respect to Common Collateral in the form of additional collateral (even if such collateral is not of a type which would otherwise have constituted Common Collateral), then the First Lien Collateral Agent, on behalf of itself and the First Lien Secured Parties, agrees that each Subordinated Lien Collateral Agent, on behalf of itself and/or any of the applicable Subordinated Lien Secured Parties, may seek or request (and the First Lien Secured Parties will not oppose such request) adequate protection with respect to its interests in such Common Collateral in the form of a Lien on the same additional collateral, which Lien will be subordinated to the Liens securing the First Lien Obligations on the same basis as the other Liens of such Subordinated Lien Collateral Agent on the Common Collateral (it being understood that to the extent that any such additional collateral constituted Non-Revolver Collateral at the time it was granted to the First Lien Secured Parties, the Lien thereon in favor of the First Lien Secured

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Parties shall be subordinate in all respects to the Liens thereon in favor of the Second Lien Secured Parties and the Third Lien Secured Parties).

Section 6.4            Asset Sales.  Each Subordinated Lien Collateral Agent agrees, on behalf of itself and the applicable Subordinated Lien Secured Parties, that it will not oppose any sale consented to by the First Lien Collateral Agent of any Common Collateral pursuant to Section 363(f) of the Bankruptcy Code (or any similar provision under the law applicable to any Insolvency Proceeding) so long as the proceeds of such sale are applied in accordance with this Agreement.

Section 6.5            Separate Grants of Security and Separate Classification.  Each Subordinated Lien Collateral Agent, each Subordinated Lien Secured Party, each First Lien Secured Party and the First Lien Collateral Agent each acknowledge and agree that (i) the grants of Liens pursuant to the First Lien Security Documents and each of the Subordinated Lien Security Documents constitute separate and distinct grants of Liens and the Subordinated Lien Secured Parties’ claims against the Company and/or any Grantor in respect of Common Collateral constitute two independent junior claims separate and apart (and of a different class) from the senior claims of the First Lien Secured Parties and from the other Subordinated Lien Secured Parties against the Company and the Grantors in respect of Common Collateral and (ii) because of, among other things, their differing rights in the Common Collateral, the Subordinated Lien Obligations are fundamentally different from the First Lien Obligations and must be separately classified in any plan of reorganization proposed or adopted in an Insolvency Proceeding.  To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that the claims of the First Lien Secured Parties and any Subordinated Lien Secured Parties in respect of the Common Collateral constitute only one secured claim (rather than separate classes of senior and junior secured claims), then the First Lien Secured Parties and the Subordinated Lien Secured Parties hereby acknowledge and agree that all distributions shall be made as if there were separate classes of First Lien Obligation claims and Subordinated Lien Obligation claims against the Grantors (with the effect being that, to the extent that the aggregate value of the Common Collateral is sufficient (for this purpose ignoring all claims held by the Subordinated Lien Secured Parties), the First Lien Secured Parties shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest at the relevant contract rate, before any distribution is made in respect of the claims held by the Subordinated Lien Secured Parties from such Common Collateral, with the Subordinated Lien Secured Parties hereby acknowledging and agreeing to turn over to the First Lien Secured Parties amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the aggregate recoveries.

Section 6.6            Enforceability.  The provisions of this Agreement are intended to be and shall be enforceable under Section 510(a) of the Bankruptcy Code.

Section 6.7            First Lien Obligations Unconditional.  All rights, interests, agreements and obligations of the First Lien Collateral Agent and the First Lien Secured Parties, and the Subordinated Lien Collateral Agents and the Subordinated Lien Secured Parties, respectively, hereunder shall remain in full force and effect irrespective of:

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(a)           any lack of validity or enforceability of any First Lien Documents or any Subordinated Lien Documents;

(b)           any change in the time, manner or place of payment of, or in any other terms of, all or any of the First Lien Obligations or Subordinated Lien Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any First Lien Document or of the terms of the Subordinated Lien Document;

(c)           any exchange of any security interest in any Common Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the First Lien Obligations or Subordinated Lien Obligations or any guarantee thereof;

(d)           the commencement of any Insolvency Proceeding in respect of the Company or any other Grantor; or

(e)           any other circumstances that otherwise might constitute a defense (other than a defense that such obligations have in-fact been repaid) available to, or a discharge of, the Company or any other Grantor in respect of First Lien Obligations or Subordinated Lien Obligations in respect of this Agreement.

ARTICLE 7
MISCELLANEOUS

Section 7.1            Rights of Subrogation.  Each Subordinated Lien Collateral Agent, for and on behalf of itself and the applicable Subordinated Lien Secured Parties, agrees that no payment to the First Lien Collateral Agent or any First Lien Secured Party pursuant to the provisions of this Agreement shall entitle such Subordinated Lien Collateral Agent or Subordinated Lien Secured Party to exercise any rights of subrogation in respect thereof until the Discharge of First Lien Obligations shall have occurred.  Following the Discharge of First Lien Obligations, the First Lien Collateral Agent agrees to execute such documents, agreements, and instruments as any Subordinated Lien Collateral Agent or Subordinated Lien Secured Party may reasonably request, at the Company’s expense, to evidence the transfer by subrogation to any such Person of an interest in the First Lien Obligations resulting from payments to the First Lien Collateral Agent by such Person.

Section 7.2            Further Assurances.  The Parties will, at their own expense and at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that any Party may reasonably request, in order to protect any right or interest granted or purported to be granted hereby or to enable the First Lien Collateral Agent or any Subordinated Lien Collateral Agent to exercise and enforce its rights and remedies hereunder; provided, however, that no Party shall be required to pay over any payment or distribution, execute any instruments or documents, or take any other action referred to in this Section 7.2, to the extent that such action would contravene any law, order or other legal requirement or any of the terms or provisions of this Agreement, and in the event of a controversy or dispute, such Party may interplead any payment or distribution in any

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court of competent jurisdiction, without further responsibility in respect of such payment or distribution under this Section 7.2.

Section 7.3            Representations.  Each Subordinated Lien Collateral Agent represents and warrants for itself to the First Lien Collateral Agent that it has the requisite power and authority under the applicable Subordinated Lien Documents to enter into, execute, deliver, and carry out the terms of this Agreement on behalf of itself and the applicable Subordinated Lien Secured Parties and that this Agreement shall be binding obligations of such Subordinated Lien Collateral Agent and such Subordinated Lien Secured Parties, enforceable against such Subordinated Lien Collateral Agent and Subordinated Lien Secured Parties in accordance with its terms.  The First Lien Collateral Agent represents and warrants to the Subordinated Lien Collateral Agents that it has the requisite power and authority under the First Lien Documents to enter into, execute, deliver, and carry out the terms of this Agreement on behalf of itself and the First Lien Secured Parties and that this Agreement shall be binding obligations of the First Lien Collateral Agent and the First Lien Secured Parties, enforceable against the First Lien Collateral Agent and the First Lien Secured Parties in accordance with its terms.

Section 7.4            Amendments.  No amendment or waiver of any provision of this Agreement nor consent to any departure by any Party hereto shall be effective unless it is in a written agreement executed by the Subordinated Lien Collateral Agents and the First Lien Collateral Agent, and consented to in writing by the Company, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  Notwithstanding anything in this Section 7.4 to the contrary, this Agreement may be amended from time to time at the request of the Company, at the Company’s expense, and without the consent of the First Lien Collateral Agent, any First Lien Secured Party, any Subordinated Lien Collateral Agent or any Subordinated Lien Secured Party to (i) provide for a replacement First Lien Collateral Agent in accordance with the First Lien Documents, provide for a replacement Subordinated Lien Collateral Agent in accordance with the applicable Subordinated Lien Documents and/or secure additional extensions of credit or add other parties holding First Lien Obligations or Subordinated Lien Obligations to the extent such Indebtedness does not expressly violate the First Lien Document or any Subordinated Lien Documents, and (ii) in the case of such additional Subordinated Lien Obligations, (a) establish that the Lien on the Common Collateral securing such Subordinated Lien Obligations shall be junior and subordinate in all respects to all Liens on the Common Collateral securing any First Lien Obligations (at least to the same extent as (taken together as a whole) the Liens on Common Collateral in favor of the Subordinated Lien Obligations are junior and subordinate to the Liens on Common Collateral in favor of the First Lien Obligations pursuant to this Agreement immediately prior to the incurrence of such additional Subordinated Lien Obligations) and (b) provide to the holders of such Subordinated Lien Obligations (or any agent or trustee thereof) the comparable rights and benefits (including any improved rights and benefits that have been consented to by the First Lien Collateral Agent) as are provided to the Subordinated Lien Secured Parties under this Agreement.  Amendments adding additional agents may be accomplished by delivering to the parties hereto an “Additional Party-Addendum” hereto substantially in the form of Exhibit A hereto, accompanied by an Officers’ Certificate referred to below.  Any such additional party and agent shall be entitled to rely on the determination of officers of the Company that such modifications do not expressly violate the First Lien Documents, the Subordinated Lien

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Documents and this Agreement if such determination is set forth in an Officers’ Certificate delivered to such party.

Section 7.5            Addresses for Notices.  All notices to the First Lien Secured Parties and the Subordinated Lien Secured Parties permitted or required under this Agreement may be sent to the applicable Collateral Agent for such Secured Party, respectively, as provided in the applicable Credit Document.  Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telecopied, electronically mailed or sent by courier service or U.S. mail and shall be deemed to have been given when delivered in person or by courier service, upon receipt of a telecopy or electronic mail or upon receipt via U.S. mail (registered or certified, with postage prepaid and properly addressed).

Section 7.6            No Waiver, Remedies.  No failure on the part of any Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

Section 7.7            Continuing Agreement, Transfer of Secured Obligations.  This Agreement is a continuing agreement and shall (a) subject to Section 5.3, remain in full force and effect until the Discharge of First Lien Obligations shall have occurred, (b) be binding upon the Parties and their successors and assigns, and (c) inure to the benefit of and be enforceable by the Parties and their respective successors, transferees and assigns.  Nothing herein is intended, or shall be construed to give, any other Person any right, remedy or claim under, to or in respect of this Agreement or any Common Collateral.  All references to any Grantor shall include any Grantor as debtor-in-possession and any receiver or trustee for such Grantor in any Insolvency Proceeding.  Without limiting the generality of the foregoing clause (c), the First Lien Collateral Agent, any First Lien Secured Party, any Subordinated Lien Collateral Agent and any Subordinated Lien Secured Party may assign or otherwise transfer all or any portion of the First Lien Obligations or the applicable Subordinated Lien Obligations, as applicable, to any other Person (other than the Company, any Grantor or any Affiliate of the Company or any Grantor and any Subsidiary of the Company or any Grantor), and such other Person shall thereupon become vested with all the rights and obligations in respect thereof granted to the First Lien Collateral Agent, the applicable Subordinated Lien Collateral Agent, any First Lien Secured Party, or any applicable Subordinated Secured Party, as the case may be, herein or otherwise.  The First Lien Secured Parties and the Subordinated Lien Secured Parties may continue, at any time and without notice to the other parties hereto, to extend credit and other financial accommodations, lend monies and provide Indebtedness to, or for the benefit of, any Grantor on the faith hereof.

Section 7.8            Governing Law; Entire Agreement.  The validity, performance, and enforcement of this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.  This Agreement constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes any prior agreements, written or oral, with respect thereto.

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Section 7.9Counterparts.  This Agreement may be executed in any number of counterparts, including by means of facsimile or “pdf’ file thereof, and it is not necessary that the signatures of all Parties be contained on any one counterpart hereof, each counterpart will be deemed to be an original, and all together shall constitute one and the same document.

Section 7.10         No Third Party Beneficiaries.  This Agreement is solely for the benefit of the First Lien Collateral Agent, the First Lien Secured Parties, the Second Lien Collateral Agent, the Second Lien Secured Parties, the Third Lien Collateral Agent and the Third Lien Secured Parties.  No other Person (including the Company, any other Grantor or any Affiliate or Subsidiary of the Company or any other Grantor) shall be deemed to be a third party beneficiary of this Agreement.

Section 7.11         Headings.  The headings of the articles and sections of this Agreement are inserted for purposes of convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof.

Section 7.12         Severability.  If any of the provisions in this Agreement shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement and shall not invalidate the Lien Priority or the application of Proceeds and other priorities set forth in this Agreement.

Section 7.13         Attorneys’ Fees.  The Parties agree that if any dispute, arbitration, litigation, or other proceeding is brought with respect to the enforcement of this Agreement or any provision hereof, the prevailing party in such dispute, arbitration, litigation, or other proceeding shall be entitled to recover its reasonable attorneys’ fees and all other costs and expenses incurred in the enforcement of this Agreement, irrespective of whether suit is brought.

Section 7.14         VENUE; JURY TRIAL WAIVER.  The parties hereto consent to the jurisdiction of any state or federal court located in New York, New York, and consent that all service of process may be made by registered mail directed to such party as provided in Section 7.5 for such party.  Service so made shall be deemed to be completed three days after the same shall be posted as aforesaid.  The parties hereto waive any objection to any action instituted hereunder in any such court based on forum non conveniens, and any objection to the venue of any action instituted hereunder in any such court.  EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH 1270 THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO IN CONNECTION WITH THE SUBJECT MATTER HEREOF.

(a)           EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 7.5. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

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Section 7.15         Intercreditor Agreement.  This Agreement is the Revolver Intercreditor Agreement referred to in the First Lien Documents, the Second Lien Documents and the Third Lien Documents.  Nothing in this Agreement shall be deemed to subordinate the obligations due to (i) any First Lien Secured Party to the obligations due to any Subordinated Lien Secured Party or (ii) any Subordinated Lien Secured Party to the obligations due to any First Lien Secured Party (in each case, whether before or after the occurrence of an Insolvency Proceeding), it being the intent of the Parties that this Agreement shall effectuate a subordination of Liens but not a subordination of Indebtedness.

Notwithstanding anything to the contrary contained in this Agreement, each party hereto agrees that the Subordinated Lien Secured Parties may enter into intercreditor agreements (or similar arrangements (including without limitation the General Intercreditor Agreement)) governing the rights, benefits and privileges as among the Subordinated Lien Secured Parties in respect of the Common Collateral, this Agreement and the other Third Lien Documents, including as to application of proceeds of the Common Collateral, voting rights, control of the Common Collateral and waivers with respect to the Common Collateral, in each case so long as the terms thereof do not violate or conflict with the provisions of this Agreement, the Second Lien Documents or the Third Lien Documents. In any event, if a respective intercreditor agreement (or similar arrangement) exists, the provisions thereof shall not be (or be construed to be) an amendment, modification or other change to this Agreement and the provisions of this Agreement and the other First Lien Security Documents and Subordinated Lien Security Documents shall remain in full force and effect in accordance with the terms hereof and thereof (as such provisions may be amended, modified or otherwise supplemented from time to time in accordance with the terms hereof and thereof, including to give effect to any intercreditor agreement (or similar arrangement)).

Section 7.16         Effectiveness. This Agreement shall become effective when executed and delivered by the parties hereto. This Agreement shall be effective both before and after the commencement of any Insolvency Proceeding.

Section 7.17         Collateral Agents. It is understood and agreed that (a) Deutsche Bank New York is entering into this Agreement in its capacity as collateral monitoring agent under the Revolving Credit Agreement and the provisions of Section 7 of the Revolving Credit Agreement applicable to the administrative agent and collateral agent thereunder shall also apply to the First Lien Collateral Agent hereunder, (b) DBTCA is entering into this Agreement in its capacity as collateral agent under the Second Lien Security Agreement and the Collateral Agency Agreement and the provisions of Section 6 of the Collateral Agency Agreement applicable to the collateral agent thereunder shall also apply to the Second Lien Collateral Agent hereunder and (c) Deutsche Bank Cayman is entering in this Agreement in its capacity as Third Lien Collateral Agent, and the provisions of Article 7 of the Bridge Loan Agreement applicable to the administrative agent and collateral agent thereunder shall also apply to the Third Lien Collateral Agent hereunder.

Section 7.18         No Warranties or Liability. Each of the First Lien Collateral Agent, the Second Lien Collateral Agent and the Third Lien Collateral Agent acknowledge and agree that none of the other has made any representation or warranty with respect to the execution, validity,

33

legality, completeness, collectability or enforceability of any other First Lien Document, Second Lien Document or Third Lien Document, as the case may be.

Section 7.19         Conflicts. In the event of any conflict between the provisions of this Agreement and the provisions of any Credit Document, the provisions of this Agreement shall govern.

Section 7.20         Information Concerning Financial Condition of the Credit Parties.  Each of the Third Lien Collateral Agent, the Second Lien Collateral Agent and the First Lien Collateral Agent hereby assume responsibility for keeping itself informed of the financial condition of the Grantors and all other circumstances bearing upon the risk of nonpayment of the First Lien Obligations, the Second Lien Obligations or the Third Lien Obligations.  The First Lien Collateral Agent, the Second Lien Collateral Agent and the Third Lien Collateral Agent each hereby agrees that no party shall have any duty to advise any other party of information known to it regarding such condition or any such circumstances. In the event either the First Lien Collateral Agent, the Second Lien Collateral Agent or the Third Lien Collateral Agent, in its sole discretion, undertakes at any time or from time to time to provide any information to any other party to this Agreement, (a) it shall be under no obligation (i) to provide any such information to any other party or any other party on any subsequent occasion, (ii) to undertake any investigation not a part of its regular business routine, or (iii) to disclose any other information, or (b) it makes no representation as to the accuracy or completeness of any such information and shall not be liable for any information contained therein, and (c) the Party receiving such information hereby to hold the other Party harmless from any action the receiving Party may take or conclusion the receiving Party may reach or draw from any such information, as well as from and against any and all losses, claims, damages, liabilities, and expenses to which such receiving Party may become subject arising out of or in connection with the use of such information.

Section 7.21         Acknowledgement.  The Second Lien Collateral Agent and the Third Lien Collateral Agent, acknowledge and agree, as between themselves and on behalf of the applicable Subordinated Lien Secured Parties, that the relative priorities as among themselves of the Liens granted on Common Collateral are governed under the General Intercreditor Agreement.  Furthermore, the parties hereto acknowledge that (a) the Second Lien Collateral Agent is acting hereunder on behalf of the Second Lien Secured Parties and, except as expressly stated otherwise, not on behalf of the Third Lien Collateral Agent or Third Lien Secured Parties and (b) the Third Lien Collateral Agent is acting hereunder on behalf of the Third Lien Secured Parties and, except as expressly stated otherwise, not on behalf of the Second Lien Collateral Agent or Second Lien Secured Parties, and with respect thereto, as of this Agreement by the Second Lien Collateral Agent or any Second Lien Secured Party shall not be deemed, in and of itself, to be a breach of this Agreement by the Third Lien Collateral Agent or any Third Lien Secured Party, and a breach of this Agreement by the Third Lien Collateral Agent or any Third Lien Secured Parties shall not be deemed, in and of itself, to be a breach of this Agreement by the Second Lien Collateral Agent or any Second Lien Secured Party.

[Signature pages follow]

34

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

DEUTSCHE BANK AG NEW YORK BRANCH,
as First Lien Collateral Agent
By:	/Marguerite Sutton/
	Name: Marguerite Sutton
	Title: Director
By:	/Carin Keegan/
	Name: Carin Keegan
	Title: Vice President

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Second Lien Collateral Agent
By:	/Kerry Warwicker/
	Name: Kerry Warwicker
	Title: Vice President
By:	/Randy Kahn/
	Name: Randy Kahn
	Title: Vice President

DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH,
as Third Lien Collateral Agent
By:	/Marguerite Sutton/
	Name: Marguerite Sutton
	Title: Director
By:	/Carin Keegan/
	Name: Carin Keegan
	Title: Vice President

EX-10.46

Exhibit 10.46

EXECUTION COPY

ADDITIONAL PARTY ADDENDUM

Reference is made to the Revolver Intercreditor Agreement dated as of February 22, 2007 (the “Intercreditor Agreement”) between Deutsche Bank AG New York Branch (“DBNY”), as First Lien Collateral Agent, Deutsche Bank Trust Company Americas, as Second Lien Collateral Agent and Deutsche Bank AG Cayman Islands Branch, as Third Lien Collateral Agent (the “Existing Third Lien Collateral Agent”).  Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Intercreditor Agreement.

DBNY is executing this Additional Party Addendum in its capacity as collateral agent (the “Collateral Agent”) under the Junior Lien Term Loan Agreement (amending and restating in its entirety the Bridge Loan Agreement dated as of February 22, 2007, the “Existing Bridge Loan Agreement”) dated as of March 15, 2007 (the “Loan Agreement”), among Building Materials Corporation of America and certain of its Subsidiaries and the lenders party thereto from time to time.  The Loan Agreement amends and restates in its entirety the Existing Bridge Loan Agreement and constitutes the Third Lien Obligations under the Intercreditor Agreement, and the Collateral Agent is the replacement for the Existing Third Lien Collateral Agent.  By execution of this Additional Party Addendum, the Collateral Agent hereby acknowledges and agrees to be bound by the terms of the Intercreditor Agreement as the Third Lien Collateral Agent, as if originally so bound.  The Collateral Agent represents and warrants that it has received a copy of each of the First Lien Documents, the Second Lien Documents and the Third Lien Documents and satisfies each and all of the criteria set forth therein for the assumption of its role as a Third Lien Collateral Agent.  Accompanying this Additional Party Addendum is the Officers’ Certificate contemplated by Section 7.4 of the Intercreditor Agreement.

This Additional Party Addendum shall be governed and construed in accordance with the laws of the State of New York.  Notices delivered to the undersigned pursuant to this Additional Party Addendum shall be delivered in accordance with the notice provisions set forth in the Credit Agreement but to the address set forth below or such other address provided in writing, to the Company and other parties to the Intercreditor Agreement.

[SIGNATURE PAGE FOLLOWS]

1

DEUTSCHE BANK AG NEW YORK BRANCH
60 Wall Street, MS 0208
New York, NY 10005
By:	/s/ Marguerite Sutton
	Name:   Marguerite sutton
	Title:              Director
By:	/s/ Evelyn Thierry
	Name: Evelyn Thierry
	Title: Vice President

EX-21

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Exhibit 21

BUILDING MATERIALS CORPORATION OF AMERICA

LIST OF SUBSIDIARIES

COMPANY					STATE OF INCORPORATION
BMCA Acquisition Inc.					Delaware
	Elkcorp				Delaware
		Elk Premium Building Products, Inc.			Delaware
			Elk Corporation of Texas		Nevada
			Elk Corporation of Alabama		Delaware
			Elk Corporation of Arkansas		Arkansas
			Elk Corporation of America		Nevada
			Elk Slate Products, Inc.		Delaware
			Elk Performance Nonwoven Fabrics, Inc.		Delaware
			Elk Composite Building Products, Inc.		Delaware
			Elk VersaShield Building Solutions, Inc.		Delaware
			RGM Products, Inc.		California
				Ridgemate Manufacturing Company, Inc.	California
		Elk Technology Group, Inc.			Delaware
			Chromium Corporation		Delaware
			Lufkin Path Forward, Inc.		Texas
			Elk Technologies, Inc.		Delaware
			Midland Path Forward, Inc.		Nevada
		Elk Group, Inc.			Nevada
		NELPA, Inc.			Nevada
			Elk Group, LP(1)		Texas
BMCA Gainesville LLC					Delaware
BMCA Quakertown Inc.					Delaware
BMCA Insulation Products Inc.					Delaware
Building Materials Investment Corporation					Delaware
Building Materials Manufacturing Corporation					Delaware
	HBP Acquisition LLC				Delaware
	BMCA Fresno LLC				Delaware
	BMCA Fresno II LLC				Delaware
GAF Leatherback Corp.					Delaware
GAF Materials Corporation (Canada)					Delaware
GAF Premium Products Inc.					Delaware
	Wind Gap Real Property Acquisition Corp.				Delaware
GAF Real Properties, Inc.					Delaware
GAFTECH Corporation					Delaware
LL Building Products Inc.					Delaware
	Ductwork Manufacturing Corporation				Delaware
Pequannock Valley Claim Service Company, Inc.					Delaware
South Ponca Realty Corp.					Delaware

(1)

Elk Group, Inc. 1% General Partner and NELPA, Inc. 99% Limited Partner.

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Exhibit 21

BUILDING MATERIALS CORPORATION OF AMERICA LIST OF SUBSIDIARIES

EX-31.1

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Exhibit 31.1

Certification of Chief Executive Officer

I, Robert B. Tafaro, certify that:

1.

I have reviewed this annual report on Form 10-K of Building Materials Corporation of America;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-(f) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 28, 2008

/s/  ROBERT B. TAFARO Name: Robert B. Tafaro
Title: Chief Executive Officer and President

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Exhibit 31.1

Certification of Chief Executive Officer

EX-31.2

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Exhibit 31.2

Certification of Chief Financial Officer

        I, John F. Rebele, certify that:

1.

I have reviewed this annual report on Form 10-K of Building Materials Corporation of America;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-(f) for the registrant and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and



5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 28, 2008

/s/  JOHN F. REBELE Name: John F. Rebele
Title: Senior Vice President, Chief Executive Officer and Chief Administrative Officer

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Exhibit 31.2

Certification of Chief Financial Officer

EX-32.1

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Exhibit 32.1

Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

        In connection with the Annual Report on Form 10-K of Building Materials Corporation of America (the "Company") for the fiscal year ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Robert B. Tafaro, as Chief Executive Officer and President of the Company, and John F. Rebele, as Senior Vice President, Chief Financial Officer and Chief Administrative Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  ROBERT B. TAFARO Name:  Robert B. Tafaro
Title:    Chief Executive Officer and President

Date: March 28, 2008

/s/  JOHN F. REBELE Name:  John F. Rebele
Title:    Senior Vice President, Chief Financial
             Officer and Chief Administrative Officer

Date: March 28, 2008

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Exhibit 32.1

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002