Exhibit 10.2
 
 

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GUARANTEE AND COLLATERAL AGREEMENT
 
 
dated as of May 30, 2008,
 
 
among
 
 
RENTECH ENERGY MIDWEST CORPORATION,
 
 
as the Borrower,
 
 
RENTECH, INC.,
 
 
as Holdings,
 
 
the Subsidiaries of Holdings from time to time party hereto
 
 
and
 
 
CREDIT SUISSE, CAYMAN ISLANDS BRANCH
 
 
as Collateral Agent
 

 

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[CS&M Ref. No. ________] 
 

 
 

 

TABLE OF CONTENTS

 
Page
ARTICLE I
Definitions
   
SECTION 1.01.   Credit Agreement
2
SECTION 1.02.   Other Defined Terms
2
   
ARTICLE II
Guarantee
   
SECTION 2.01.   Guarantee
2
SECTION 2.02.   Guarantee of Payment; Continuing Guarantee
2
SECTION 2.03.   No Limitations, Etc
2
SECTION 2.04.   Reinstatement
2
SECTION 2.05.   Agreement To Pay; Subrogation
2
SECTION 2.06.   Information
2
SECTION 2.07.   Taxes
2
   
ARTICLE III
Pledge of Securities
   
SECTION 3.01.   Pledge
2
SECTION 3.02.   Delivery of the Pledged Collateral
2
SECTION 3.03.   Representations, Warranties and Covenants
2
SECTION 3.04.   Certification of Limited Liability Company Interests and Limited
Partnership Interests
2
SECTION 3.05.   Registration in Nominee Name; Denominations
2
SECTION 3.06.   Voting Rights; Dividends and Interest, Etc
2
   
ARTICLE IV
Security Interests in Personal Property
   
SECTION 4.01.   Security Interest
2
SECTION 4.02.   Representations and Warranties
2
SECTION 4.03.   Covenants
2
SECTION 4.04.   Other Actions
2
SECTION 4.05.   Covenants Regarding Patent, Trademark and Copyright Collateral
2
   

 
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ARTICLE V
Remedies
   
SECTION 5.01.   Remedies Upon Default
2
SECTION 5.02.   Application of Proceeds
2
SECTION 5.03.   Grant of License to Use Intellectual Property
2
SECTION 5.04.   Securities Act, Etc
2
   
ARTICLE VI
Indemnity, Subrogation and Subordination
   
SECTION 6.01.   Indemnity and Subrogation
2
SECTION 6.02.   Contribution and Subrogation
2
SECTION 6.03.   Subordination
2
   
ARTICLE VII
Miscellaneous
   
SECTION 7.01.   Notices
2
SECTION 7.02.   Security Interest Absolute
2
SECTION 7.03.   Survival of Agreement
2
SECTION 7.04.   Binding Effect; Several Agreement
2
SECTION 7.05.   Successors and Assigns
2
SECTION 7.06.   Agent’s Fees and Expenses; Indemnification
2
SECTION 7.07.   Agent Appointed Attorney-in-Fact
2
SECTION 7.08.   Applicable Law
2
SECTION 7.09.   Waivers; Amendment
2
SECTION 7.10.   WAIVER OF JURY TRIAL
2
SECTION 7.11.   Severability
2
SECTION 7.12.   Counterparts
2
SECTION 7.13.   Headings
2
SECTION 7.14.   Jurisdiction; Consent to Service of Process
2
SECTION 7.15.   Termination or Release
2
SECTION 7.16.   Additional Subsidiaries
2
SECTION 7.17.   Right of Setoff
2

 
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Schedules
 
Schedule I
Subsidiary Guarantors

Schedule II
Pledged Equity Interests; Pledged Debt Securities

Schedule III
Intellectual Property

 
Exhibits
 
Exhibit A
Form of Supplement

Exhibit B
Form of Perfection Certificate

 

 
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GUARANTEE AND COLLATERAL AGREEMENT dated as of May 30, 2008 (this “Agreement”),
among RENTECH ENERGY MIDWEST CORPORATION, a corporation organized under the laws
of the State of Delaware (the “Borrower”), RENTECH, INC., a corporation
organized under the laws of the State of Colorado (“Holdings”), the Subsidiaries
of Holdings from time to time party hereto and CREDIT SUISSE, Cayman Islands
Branch, as collateral agent for the Secured Parties (in such capacity, the
“Collateral Agent”).
 
PRELIMINARY STATEMENT
 
Reference is made to the Credit Agreement dated as of May 30, 2008 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among the Borrower, Holdings, the lenders from time to time party thereto (the
“Lenders”) and Credit Suisse, Cayman Islands Branch, as administrative agent for
the Lenders and collateral agent for the Secured Parties (such term and each
other capitalized term used but not defined in this preliminary statement being
defined as provided in Article I).
 
The Lenders have agreed to extend credit to the Borrower pursuant to, and upon
the terms and conditions specified in, the Credit Agreement.  The obligations of
the Lenders to extend credit to the Borrower are conditioned upon, among other
things, the execution and delivery of this Agreement by the Borrower and each
Guarantor.  Each Guarantor is an affiliate of the Borrower, will derive
substantial benefits from the extension of credit to the Borrower pursuant to
the Credit Agreement and is willing to execute and deliver this Agreement in
order to induce the Lenders to extend such credit.  Accordingly, the parties
hereto agree as follows:
 
ARTICLE I

 
Definitions
 
SECTION 1.01.   Credit Agreement.  (a)  Each capitalized term used but not
defined herein shall have the meaning assigned to it in the Credit
Agreement.  Each capitalized term defined in the New York UCC (as such term is
defined herein) and not defined in this Agreement shall have the meaning
assigned to it in the New York UCC.  All references to the Uniform Commercial
Code shall mean the New York UCC.
 
(b)           The rules of construction specified in Section 1.02 of the Credit
Agreement also apply to this Agreement.
 
SECTION 1.02.    Other Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:
 
“Accounts Receivable” shall mean all Accounts and all right, title and interest
in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
 

 
 

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“Agent” shall mean Credit Suisse, in its capacity as collateral agent for the
Secured Parties.  References to “Agent” shall also include Credit Suisse, acting
in its capacity as administrative agent for the Lenders under the Credit
Agreement.
 
“Agreement” shall have the meaning assigned to such term in the introductory
paragraph.
 
“Article 9 Collateral” shall have the meaning assigned to such term in
Section 4.01.
 
“Borrower” shall have the meaning assigned to such term in introductory
paragraph to this Agreement.
 
“Claiming Party” has the meaning assigned to such term in Section 6.02.
 
“Collateral” shall mean the Article 9 Collateral and the Pledged Collateral.
 
“Collateral Agent” shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
 
“Contributing Party” has the meaning assigned to such term in Section 6.02.
 
“Controlled Foreign Corporation” shall mean “controlled foreign corporation” as
defined in the Tax Code.
 
“Copyright License” shall mean any written agreement, now or hereafter in
effect, granting any right to any third person under any copyright now or
hereafter owned by any Grantor or that such Grantor otherwise has the right to
license, or granting any right to any Grantor under any copyright now or
hereafter owned by any third person, and all rights of such Grantor under any
such agreement.
 
“Copyrights” shall mean all of the following now owned or hereafter acquired by
any Grantor:  (a) all copyright rights in any work subject to the copyright laws
of the United States or any other country, whether as author, assignee,
transferee or otherwise and (b) all registrations and applications for
registration of any such copyright in the United States or any other country,
including registrations, recordings, supplemental registrations and pending
applications for registration in the United States Copyright Office (or any
successor office or any similar office in any other country), including those
listed on Schedule III.
 
“Credit Agreement” shall have the meaning assigned to such term in the
preliminary statement to this Agreement.
 
“Federal Securities Laws” shall have the meaning assigned to such term in
Section 5.04.

 
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“General Intangibles” shall mean all choses in action and causes of action and
all other intangible personal property of every kind and nature (other than
Accounts) and other general intangibles now owned or hereafter acquired by any
Grantor, including all rights and interests in partnerships, limited
partnerships, limited liability companies and other unincorporated entities,
corporate or other business records, indemnification claims, contract rights
(including rights under other leases, Hedging Agreements, the Management
Agreement and other agreements), Intellectual Property, goodwill, registrations,
franchises, tax refund claims and any letter of credit, guarantee, claim,
security interest or other security held by or granted to any Grantor to secure
payment by an Account Debtor of any of the Accounts.
 
“Grantors” shall mean Holdings, the Borrower and the Subsidiary Guarantors.
 
“Guarantors” shall mean Holdings and the Subsidiary Guarantors.
 
“Holdings” shall have the meaning assigned to such term in the introductory
paragraph to this Agreement.
 
“Intellectual Property” shall mean all intellectual and similar property of
every kind and nature now owned or hereafter acquired by any Grantor, including
inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets,
confidential or proprietary technical and business information, know-how,
show-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations and
franchises, and all additions, improvements and accessions to, and books and
records describing or used in connection with, any of the foregoing.
 
“Lenders” shall have the meaning assigned to such term in the preliminary
statements to this Agreement.
 
“License” shall mean any Patent License, Trademark License, Copyright License or
other license or sublicense agreement relating to Intellectual Property to which
any Grantor is a party, including those listed on Schedule III.
 
“New York UCC” shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
 
“Obligations” shall mean (a) the due and punctual payment by the Borrower of (i)
the principal of, premium (if any) and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise and (ii) all other monetary
obligations of the Borrower to any of the Secured Parties under the Credit
Agreement and each of the other Loan Documents, including obligations to pay
fees, expense reimbursement obligations and indemnification obligations, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), (b) the due and punctual performance of all other
obligations of the Borrower under or pursuant to this Agreement and each of the
other Loan Documents to which it is a party and (c) the due and punctual payment
and performance of all the obligations of each other Loan Party under or
pursuant to the Security Documents and each of the other Loan Documents to which
they are a party.

 
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“Patent License” shall mean any written agreement, now or hereafter in effect,
granting to any third person any right to make, use or sell any invention on
which a patent, now or hereafter owned by any Grantor or that any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a patent, now or hereafter
owned by any third person, is in existence, and all rights of any Grantor under
any such agreement.
 
“Patents” shall mean all of the following now owned or hereafter acquired by any
Grantor:  (a) all letters patent of the United States or the equivalent thereof
in any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office (or any successor
or any similar offices in any other country), including those listed on
Schedule III and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
 
“Perfection Certificate” shall mean a certificate substantially in the form of
Exhibit B, completed and supplemented with the schedules and attachments
contemplated thereby.
 
“Pledged Collateral” shall have the meaning assigned to such term in
Section 3.01.
 
“Pledged Debt Securities” shall have the meaning assigned to such term
in Section 3.01.
 
“Pledged Equity Interests” shall have the meaning assigned to such term in
Section 3.01.
 
“Pledged Securities” shall mean any promissory notes, unit certificates, stock
certificates or other securities (as defined in Article 8 of the New York UCC)
now or hereafter included in the Pledged Collateral, including all certificates,
instruments or other documents representing or evidencing any Pledged
Collateral.
 
“Secured Parties” shall mean the Lenders.
 
“Security Interest” shall have the meaning assigned to such term in
Section 4.01.
 
“Subsidiary Guarantors” shall mean (a) the Subsidiaries identified on Schedule I
hereto as Subsidiary Guarantors and (b) each other Subsidiary that becomes a
party to this Agreement as a Subsidiary Guarantors after the Closing Date.
 
“Tax Code” shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.

 
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“Trademark License” shall mean any written agreement, now or hereafter in
effect, granting to any third person any right to use any trademark now or
hereafter owned by any Grantor or that any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any trademark now or
hereafter owned by any third person, and all rights of any Grantor under any
such agreement.
 
“Trademarks” shall mean all of the following now owned or hereafter acquired by
any Grantor:  (a) all trademarks, service marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith, including registrations and
registration applications in the United States Patent and Trademark Office (or
any successor office) or any similar offices in any State of the United States
or any other country or any political subdivision thereof, and all extensions or
renewals thereof, including those listed on Schedule III, (b) all goodwill
associated therewith or symbolized thereby and (c) all other assets, rights and
interests that uniquely reflect or embody such goodwill.
 
ARTICLE II
 
Guarantee
 
SECTION 2.01.    Guarantee.  Each Guarantor irrevocably and unconditionally
guarantees, jointly with the other Guarantors and severally, as a primary
obligor and not merely as a surety, the due and punctual payment and performance
of the Obligations.  Each Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee hereunder
notwithstanding any such extension or renewal of any Obligation.  Each Guarantor
waives presentment to, demand of payment from and protest to the Borrower or any
other Loan Party of any Obligation, and also waives notice of acceptance of its
guarantee and notice of protest for nonpayment.
 
SECTION 2.02.    Guarantee of Payment; Continuing Guarantee.  Each Guarantor
further agrees that its guarantee hereunder constitutes a guarantee of payment
when due (whether or not any bankruptcy or similar proceeding shall have stayed
the accrual or collection of any of the Obligations or operated as a discharge
thereof) and not of collection, and waives any right to require that any resort
be had by the Agent or any other Secured Party to any security held for the
payment of the Obligations or to any balance of any Deposit Account or credit on
the books of the Agent or any other Secured Party in favor of the Borrower, any
other Loan Party or any other person.  Each Guarantor agrees that its guarantee
hereunder is continuing in nature and applies to all Obligations, whether
currently existing or hereafter incurred.
 
SECTION 2.03.    No Limitations, Etc.  (b)  Except for termination of a
Guarantor’s obligations hereunder as expressly provided in Section 7.15, the
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations, any
impossibility in the performance of the Obligations or otherwise.

 
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Without limiting the generality of the foregoing, the obligations of each
Guarantor hereunder shall not be discharged, impaired or otherwise affected by
(i) the failure of the Agent or any other Secured Party to assert any claim or
demand or to enforce or exercise any right or remedy under the provisions of any
Loan Document or otherwise, (ii) any extension or renewal of any of the
Obligations, (iii) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, any Loan Document or any other
agreement, including with respect to any other Guarantor under this Agreement,
(iv) the release of, or any impairment of or failure to perfect any Lien on or
security interest in, any security held by the Agent or any other Secured Party
for the Obligations or any of them, (v) any default, failure or delay, willful
or otherwise, in the performance of the Obligations or (vi) any other act,
omission or delay to do any other act that may or might in any manner or to any
extent vary the risk of any Guarantor or otherwise operate as a discharge of any
Guarantor as a matter of law or equity (other than the indefeasible payment in
full in cash of all the Obligations (other than contingent indemnification
obligations)) or which would impair or eliminate the right of any Guarantor to
subrogation.  Each Guarantor expressly authorizes the Agent and the other
Secured Parties to take and hold security for the payment and performance of the
Obligations, to exchange, waive or release any or all such security (with or
without consideration), to enforce or apply such security and direct the order
and manner of any sale thereof in their sole discretion or to release or
substitute any one or more other guarantors or obligors upon or in respect of
the Obligations, all without affecting the obligations of any Guarantor
hereunder.  Each Guarantor acknowledges that it will receive substantial direct
and indirect benefits from the financing arrangements contemplated by the Loan
Documents.
 
(b)           Each Guarantor waives any defense based on or arising out of any
defense of the Borrower or any other Loan Party or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower or any other Loan Party, other than the
indefeasible payment in full in cash of all the Obligations (other than
contingent indemnification obligations).  The Agent and the other Secured
Parties may, at their election, foreclose on any security held by one or more of
them by one or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other Loan
Party or exercise any other right or remedy available to them against the
Borrower or any other Loan Party, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Obligations (other
than contingent indemnification obligations) have been fully and indefeasibly
paid in full in cash.  Each Guarantor waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of such Guarantor against the Borrower or any other Loan Party, as the
case may be, or any security.
 
SECTION 2.04.    Reinstatement.  Each Guarantor agrees that its guarantee
hereunder shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any Obligation is rescinded or
must otherwise be restored by the Agent or any other Secured Party upon the
bankruptcy or reorganization of the Borrower, any other Loan Party or otherwise.
 

 
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SECTION 2.05.   Agreement To Pay; Subrogation.  In furtherance of the foregoing
and not in limitation of any other right that the Agent or any other Secured
Party has at law or in equity against any Guarantor by virtue hereof, upon the
failure of the Borrower or any other Loan Party to pay any Obligation when and
as the same shall become due, whether at maturity, by acceleration, after notice
of prepayment or otherwise, each Guarantor, upon notice from Agent, hereby
promises to and will forthwith pay, or cause to be paid, to the Agent for
distribution to the applicable Secured Parties in cash the amount of such unpaid
Obligation.  Upon payment by any Guarantor of any sums to the Agent as provided
above, all rights of such Guarantor against the Borrower or any other Loan Party
arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subject to
Article VI.  If any amount shall erroneously be paid to any Guarantor on account
of any such Indebtedness of the Borrower or any other Loan Party, such amount
shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Agent to be credited against the payment of the
Obligations, whether matured or unmatured, in accordance with the terms of the
Credit Agreement and any other Loan Document.
 
SECTION 2.06.  Information.  Each Guarantor assumes all responsibility for being
and keeping itself informed of the Borrower’s and each other Loan Party’s
financial condition and assets and of all other circumstances bearing upon the
risk of nonpayment of the Obligations and the nature, scope and extent of the
risks that such Guarantor assumes and incurs hereunder, and agrees that neither
the Agent nor any other Secured Party will have any duty to advise such
Guarantor of information known to it or any of them regarding such circumstances
or risks.
 
SECTION 2.07.  Taxes.  Each Guarantor agrees that the provisions of Section 2.15
of the Credit Agreement shall apply equally to such Guarantor with respect to
payments made by it hereunder.
 
ARTICLE III

 
Pledge of Securities
 
SECTION 3.01.   Pledge.  As security for the payment or performance, as the case
may be, in full of the Obligations, each Grantor hereby assigns and pledges to
the Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, and hereby grants to the Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, a security interest in, all of such
Grantor’s right, title and interest in, to and under (a)(i) the Equity Interests
in any Subsidiary owned by such Grantor on the date hereof (including all such
Equity Interests listed on Schedule II), (ii) any other Equity Interests in any
Subsidiary obtained in the future by such Grantor and (iii) all certificates, if
any, representing any such Equity Interests (all the foregoing collectively
referred to herein as the “Pledged Equity Interests”), (b)(i) the debt
securities owing by any Subsidiary held by such Grantor on the date hereof
(including all such debt securities listed opposite the name of such Grantor on
Schedule II), (ii) any debt securities owing by any Subsidiary obtained in the
future by such Grantor and (iii) all promissory notes and other instruments
evidencing any such debt securities (all the foregoing collectively referred to
herein as the “Pledged Debt Securities”), (c) all other property that may be
delivered to and held by the Agent pursuant to the terms of this Section 3.01,
(d) subject to Section 3.06, all payments of principal or interest, dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of, in exchange for or upon the conversion of,
and all other Proceeds received in respect of, the securities referred to in
clauses (a) and (b) above, (e) subject to Section 3.06, all rights and
privileges of such Grantor with respect to the securities and other property
referred to in clauses (a), (b), (c) and (d) above, and (f) all Proceeds of any
of the foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the “Pledged Collateral”).
 

 
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Notwithstanding anything herein to the contrary, in no event shall the Security
Interest attach to the outstanding capital stock of 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, to the extent, and for
so long as, such pledge would result in adverse tax consequences to the Secured
Parties as a result of such pledge; provided, that immediately upon the
amendment of the Tax Code to allow the pledge of a greater percentage of the
voting power of capital stock in a Controlled Foreign Corporation without
adverse tax consequences, the Collateral shall include, and the security
interest granted by such Grantor shall attach to, such greater percentage of
capital stock of each Controlled Foreign Corporation.
 
TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.
 
SECTION 3.02.   Delivery of the Pledged Collateral.  (c)  To the extent required
for the validity and first priority of the security interests created or
intended to be created by the Security Documents, each Grantor agrees promptly
to deliver or cause to be delivered to the Agent any and all certificates,
instruments or other documents representing or evidencing Pledged Securities.
 
(b)           Upon delivery to the Agent, (i) any certificate, instrument or
document representing or evidencing Pledged Securities constituting a “security”
shall be accompanied by undated stock or unit powers duly executed in blank or
other undated instruments of transfer satisfactory to the Agent and duly
executed in blank and by such other instruments and documents as the Agent may
request and (ii) all other property composing part of the Pledged Collateral
shall be accompanied by proper instruments of assignment duly executed by the
applicable Grantor and such other instruments or documents as the Agent may
request.  Each delivery of Pledged Securities shall be accompanied by a schedule
describing the applicable securities, which schedule shall be attached hereto as
Schedule II and made a part hereof; provided that failure to attach any such
schedule hereto shall not affect the validity of the pledge of such Pledged
Securities.  Each schedule so delivered shall supplement any prior schedules so
delivered.
 
SECTION 3.03.    Representations, Warranties and Covenants.  Each Grantor,
jointly with the other Grantors and severally, represents and warrants, as of
the Effective Date, that, and covenants to and with the Agent, for the benefit
of the Secured Parties, that:

 
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(a)           Schedule II correctly sets forth the percentage of the issued and
outstanding units of each class of the Equity Interests of the issuer thereof
represented by such Pledged Equity Interests and includes all Equity Interests,
debt securities and promissory notes required to be pledged hereunder to the
extent required for the validity and first priority of the security interests
created or intended to be created by the Security Documents;
 
(b)           the Pledged Equity Interests and Pledged Debt Securities have been
duly and validly authorized and issued by the issuers thereof and (i) in the
case of Pledged Equity Interests, are fully paid and (ii) in the case of Pledged
Debt Securities, are legal, valid and binding obligations of the issuers
thereof;
 
(c)           except for the security interests granted hereunder (or otherwise
permitted under the Credit Agreement), each Grantor (i) is and, subject to any
transfers made in compliance with the Credit Agreement, will continue to be the
direct owner, beneficially and of record, of the Pledged Securities indicated on
Schedule II as owned by such Grantor, (ii) holds the same free and clear of all
Liens and (iii) will make no assignment, pledge, hypothecation or transfer of,
or create or permit to exist any security interest in or other Lien on, the
Pledged Collateral, other than transfers made in compliance with the Credit
Agreement;
 
(d)           except for restrictions and limitations imposed by the Loan
Documents or securities laws generally, the Pledged Collateral is and will
continue to be freely transferable and assignable, and none of the Pledged
Collateral is or will be subject to any option, right of first refusal,
shareholders agreement, charter or by-law provisions or contractual restriction
of any nature that might prohibit, impair, delay or otherwise affect the pledge
of such Pledged Collateral hereunder, the sale or disposition thereof pursuant
hereto or the exercise by the Agent of rights and remedies hereunder;
 
(e)           each Grantor (i) has the power and authority to pledge the Pledged
Collateral pledged by it hereunder in the manner hereby done or contemplated and
(ii) will defend its title or interest thereto or therein against any and all
Liens (other than any Lien created or permitted by the Loan Documents), however
arising, of all persons whomsoever;
 
(f)           no consent or approval of any Governmental Authority, any
securities exchange or any other person was or is necessary to the validity of
the pledge effected hereby (other than such as have been obtained and are in
full force and effect);
 
(g)           by virtue of the execution and delivery by each Grantor of this
Agreement, when any Pledged Securities are delivered to the Agent in accordance
with this Agreement, the Agent will obtain a legal, valid and perfected first
priority lien upon and security interest in such Pledged Securities as security
for the payment and performance of the Obligations; and
 
(h)           the pledge effected hereby is effective to vest in the Agent, for
the ratable benefit of the Secured Parties, the rights of the Agent in the
Pledged Collateral as set forth herein and all action by any Grantor necessary
or desirable to protect and perfect the Lien on the Pledged Collateral has been
duly taken.
 

 
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SECTION 3.04.  Certification of Limited Liability Company Interests and Limited
Partnership Interests.  As of the Closing Date, except as may be set forth on
Schedule II, no interest in any limited liability company or limited partnership
which is a Subsidiary is represented by a certificate or is a “security” within
the meaning of Article 8 of the New York UCC or governed by Article 8 of the New
York UCC.  If after the Closing Date any interest in any limited liability
company or limited partnership which is a Subsidiary becomes represented by a
certificate or becomes a “security” within the meaning of Article 8 of the
New York UCC, the applicable Grantor agrees to deliver such certificate to the
extent required for the validity and first priority of the security interests
created or intended to be created by the Security Documents.
 
SECTION 3.05.  Registration in Nominee Name; Denominations.  The Agent, on
behalf of the Secured Parties, shall have the right (in its sole and absolute
discretion), if an Event of Default shall have occurred and be continuing, to
hold the Pledged Securities in its own name as pledgee, the name of its nominee
(as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or
assigned in blank or in favor of the Agent.  Each Grantor will promptly give to
the Agent copies of any notices or other communications received by it with
respect to Pledged Securities in its capacity as the registered owner
thereof.  The Agent shall at all times have the right to exchange the
certificates representing Pledged Securities for certificates of smaller or
larger denominations for any purpose consistent with this Agreement.
 
SECTION 3.06.  Voting Rights; Dividends and Interest, Etc.  (d)  Unless and
until an Event of Default shall have occurred and be continuing and, subject to
applicable law, the Agent shall have given the Grantors notice of its intent to
exercise its rights under this Agreement (which notice shall be deemed to have
been given immediately upon the occurrence of an Event of Default under
paragraph (g) or (h) of Article VII of the Credit Agreement):
 
(i)           Each Grantor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms of this
Agreement, the Credit Agreement and the other Loan Documents; provided, however,
that such rights and powers shall not be exercised in any manner that could
materially and adversely affect the rights inuring to a holder of any Pledged
Securities or the rights and remedies of the Agent or the other Secured Parties
under this Agreement or the Credit Agreement or any other Loan Document or the
ability of the Secured Parties to exercise the same.
 
(ii)           The Agent shall execute and deliver to each Grantor, or cause to
be executed and delivered to each Grantor, all such proxies, powers of attorney
and other instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and/or consensual rights and powers
it is entitled to exercise pursuant to subparagraph (i) above.
 

 
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(iii)           Each Grantor shall be entitled to receive and retain, free and
clear of the Lien of this Agreement, any and all dividends, interest, principal
and other distributions paid on or distributed in respect of the Pledged
Securities to the extent and only to the extent that such dividends, interest,
principal and other distributions are permitted by, and otherwise paid or
distributed in accordance with, the terms and conditions of the Credit
Agreement, the other Loan Documents and applicable law; provided, however, that
any noncash dividends, interest, principal or other distributions that would
constitute Pledged Equity Interests or Pledged Debt Securities, whether
resulting from a subdivision, combination or reclassification of the outstanding
Equity Interests in the issuer of any Pledged Securities or received in exchange
for Pledged Securities or any part thereof, or in redemption thereof, or as a
result of any merger, consolidation, acquisition or other exchange of assets to
which such issuer may be a party or otherwise, shall be and become part of the
Pledged Collateral, and, if received by any Grantor, shall not be commingled by
such Grantor with any of its other funds or property but shall be held separate
and apart therefrom, shall be held in trust for the ratable benefit of the
Secured Parties and shall be forthwith delivered to the Agent in the same form
as so received (with any necessary endorsement or instrument of assignment).
 
(b)           Upon the occurrence and during the continuance of an Event of
Default, after the Agent shall have notified (or shall be deemed to have
notified pursuant to Section 3.06(a)) the Grantors of the suspension of their
rights under paragraph (a)(iii) of this Section 3.06, then all rights of any
Grantor to dividends, interest, principal or other distributions that such
Grantor is authorized to receive pursuant to paragraph (a)(iii) of this
Section 3.06 shall cease, and all such rights shall thereupon become vested in
the Agent, for the ratable benefit of the Secured Parties.  The Agent shall have
the sole and exclusive right and authority to receive and retain such dividends,
interest, principal or other distributions.  All dividends, interest, principal
or other distributions received by any Grantor contrary to the provisions of
this Section 3.06 shall be held in trust for the benefit of the Agent, for the
ratable benefit of the Secured Parties, and shall be segregated from other
property or funds of such Grantor and shall be forthwith delivered to the Agent
upon demand in the same form as so received (with any necessary endorsement or
instrument of assignment).  Any and all money and other property paid over to or
received by the Agent pursuant to the provisions of this paragraph (b) shall be
retained by the Agent in an account to be established by the Agent upon receipt
of such money or other property and shall be applied in accordance with the
provisions of Section 5.02.  After all Obligations (other than contingent
indemnification obligations) are indefeasibly paid in full in cash, the Agent
shall, promptly after all such Events of Default have been cured or waived,
repay to each applicable Grantor (without interest) all dividends, interest,
principal or other distributions that such Grantor would otherwise be permitted
to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.06 and
that remain in such account.
 

 
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(c)           Upon the occurrence and during the continuance of an Event of
Default, after the Agent shall have notified (or shall be deemed to have
notified pursuant to Section 3.06(a)) the Grantors of the suspension of their
rights under paragraph (a)(i) of this Section 3.06, then all rights of any
Grantor to exercise the voting and consensual rights and powers it is entitled
to exercise pursuant to paragraph (a)(i) of this Section 3.06, and the
obligations of the Agent under paragraph (a)(ii) of this Section 3.06, shall
cease, and all such rights shall thereupon become vested in the Agent, for the
ratable benefit of the Secured Parties.  The Agent shall have the sole and
exclusive right and authority to exercise such voting and consensual rights and
powers; provided that, unless otherwise directed by the Required Lenders, the
Agent shall have the right from time to time following and during the
continuance of an Event of Default to permit the Grantors to exercise such
rights.
 
(d)           Any notice given by the Agent to the Grantors exercising its
rights under paragraph (a) of this Section 3.06 (i) may be given by telephone if
promptly confirmed in writing, (ii) may be given to one or more of the Grantors
at the same or different times and (iii) may suspend the rights of the Grantors
under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such
rights (as specified by the Agent in its sole and absolute discretion) and
without waiving or otherwise affecting the Agent’s rights to give additional
notices from time to time suspending other rights so long as an Event of Default
has occurred and is continuing.
 
ARTICLE IV

 
Security Interests in Personal Property
 
SECTION 4.01.   Security Interest.  (e)  As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
grants to the Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest (the “Security Interest”), in all right,
title or interest in or to any and all of the following assets and properties
now owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the “Article 9 Collateral”):
 
(i)           all Accounts;
 
(ii)           all As-Extracted Collateral;
 
(iii)           all Chattel Paper;
 
(iv)           all cash and Deposit Accounts;
 
(v)           all Documents;
 
(vi)           all Equipment;
 
(vii)           all Fixtures;
 
(viii)          all General Intangibles;
 

 
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(ix)           all Instruments;
 
(x)           all Inventory;
 
(xi)           all Investment Property;
 
(xii)           all Letter-of-Credit Rights;
 
(xiii)          all Commercial Tort Claims;
 
(xiv)          all Securities Accounts;
 
(xv)           all books and records pertaining to the Article 9 Collateral; and
 
(xvi)           to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees given
by any person with respect to any of the foregoing.
 
(b)           Each Grantor hereby irrevocably authorizes the Agent at any time
and from time to time to file in any relevant jurisdiction any initial financing
statements (including fixture filings) with respect to the Article 9 Collateral
or any part thereof and amendments thereto that (i) indicate the Article 9
Collateral as “all assets” of such Grantor or words of similar effect and (ii)
contain the information required by Article 9 of the Uniform Commercial Code of
each applicable jurisdiction for the filing of any financing statement or
amendment, including whether such Grantor is an organization, the type of
organization and any organizational identification number issued to such
Grantor.  Each Grantor agrees to provide such information to the Agent promptly
upon request.
 
Each Grantor also ratifies its authorization for the Agent to file in any
relevant jurisdiction any initial financing statements or amendments thereto if
filed prior to the Closing Date.
 
The Agent is further authorized to file with the United States Patent and
Trademark Office or United States Copyright Office (or any successor office or
any similar office in any other country) such documents as may be necessary or
advisable for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by each Grantor, without the signature
of such Grantor, and naming such Grantor or the Grantors as debtors and the
Agent as secured party.
 
(c)           The Security Interest is granted as security only and shall not
subject the Agent or any other Secured Party to, or in any way alter or modify,
any obligation or liability of any Grantor with respect to or arising out of the
Article 9 Collateral.
 

 
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(d)           Notwithstanding anything herein to the contrary, (i) in no event
shall the Security Interest attach to (A) any contract or agreement to which any
Grantor is a party or any of its rights or interests thereunder to the extent
and for so long as the grant of the Security Interest shall constitute or result
in (I) the unenforceability of any right of such Grantor therein or (II) a
breach or termination pursuant to the terms of, or a default under, any such
contract or agreement (other than to the extent that any such term would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
New York UCC or any other applicable law or principles of equity), (B)  any
fixtures, improvements or equipment acquired by any Grantor after the Closing
Date if (I) at least 80% of the purchase price of such fixtures, improvements or
equipment was financed through the incurrence of Indebtedness, (II) such
Indebtedness is secured by a Lien on such fixtures, improvements or equipment
and (III) the terms of the instrument or instruments governing such Indebtedness
(but not of any refinancings or replacements thereof) would be violated by the
attachment of the Security Interest to such fixtures, improvements or equipment,
(C) the Equity Interests in any person that is not the Borrower or a Subsidiary
to the extent and for so long as the grant of the Security Interest shall
constitute or result in a breach of, or default under, the terms of such
person’s joint venture agreement, limited liability company agreement, joint
operating agreement or similar document (other than to the extent that any such
term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the New York UCC or any other applicable law or principles of equity);
provided, however, that, in the case of clauses (A), (B) and (C) above, the
Security Interest shall attach immediately at such time as the condition causing
such unenforceability shall be remedied or removed, such Indebtedness shall be
repaid, refinanced or replaced or such term shall be removed and, to the extent
severable, shall attach immediately to any portion of such contract, agreement,
document, real property, improvement or equipment (including any proceeds of the
foregoing) that does not result in any of the consequences specified in clauses
(A), (B)(III) or (C) above, as the case may be and (ii) the Grantors will not be
required to make filings with the United States Patent and Trademark Office or
the United States Copyright Office in order to perfect the Security Interest in
Article 9 Collateral consisting of United States Patents, United States
Trademarks and United States Copyrights that have, in the Agent’s reasonable
judgment, an aggregate fair market value not in excess of $1,000,000, or (D)
Excluded Assets, which shall be defined as the securities account with Lehman
and the securities securing the Lehman loan for so long as the Lehman loan is
outstanding.
 
SECTION 4.02.   Representations and Warranties.  Each Grantor, jointly with the
other Grantors and severally, represents and warrants, as of the Closing Date,
to the Agent and the other Secured Parties that:
 
(a)           Each Grantor has good and valid rights in and title to the
Article 9 Collateral with respect to which it has purported to grant a Security
Interest hereunder and has full power and authority to grant to the Agent, for
the ratable benefit of the Secured Parties, the Security Interest in such
Article 9 Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other person other than any consent or approval that has been
obtained and is in full force and effect.

 
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(b)           The Perfection Certificate, when delivered in accordance with the
Credit Agreement, will be duly prepared, completed and executed and the
information set forth therein (including (x) the exact legal name of each
Grantor and (y) the jurisdiction of organization of each Grantor) will be
correct and complete in all material respects when delivered.  Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations containing a
description of the Article 9 Collateral have been prepared by the Agent, or will
be based upon the information provided to the Agent and the other Secured
Parties in the Perfection Certificate for filing in each governmental, municipal
or other office specified in Section 2 of the Perfection Certificate (or
specified by notice from the Borrower to the Agent after the Closing Date in the
case of filings, recordings or registrations required by Sections 5.06 or 5.12
of the Credit Agreement), which are all the filings, recordings and
registrations (other than filings required to be made in the United States
Patent and Trademark Office and the United States Copyright Office in order to
perfect the Security Interest in the Article 9 Collateral consisting of United
States Patents, United States registered Trademarks and United States registered
Copyrights) that are necessary to publish notice of and protect the validity of
and to establish a legal, valid and perfected security interest in favor of the
Agent (for the ratable benefit of the Secured Parties) in respect of all
Article 9 Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States of America, its territories or
possessions, any constituent State of the United States of America or the
District of Columbia, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.  Each Grantor represents and warrants that a fully
executed agreement in the form hereof (or a fully executed short form agreement
in form and substance satisfactory to the Agent), and containing a description
of all Article 9 Collateral consisting of Intellectual Property with respect to
United States Patents (and Patents for which the United States patent
applications are pending), United States registered Trademarks (and Trademarks
for which United States registration applications are pending) and United States
registered Copyrights (and Copyrights for which United States registration
applications are pending) has been delivered to the Agent for recording by the
United States Patent and Trademark Office and the United States Copyright Office
pursuant to 35 U.S.C. §261, 15 U.S.C. §1060 or 17 U.S.C. §205 and the
regulations thereunder, as applicable, and otherwise as may be required pursuant
to the laws of any other necessary jurisdiction, to protect the validity of and
to establish a legal, valid and perfected security interest in favor of the
Agent (for the ratable benefit of the Secured Parties) in respect of all
Article 9 Collateral consisting of Patents, Trademarks and Copyrights in which a
security interest may be perfected by filing, recording or registration in the
United States of America, its territories or possessions, any constituent State
of the United States of America or the District of Columbia, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to perfect
the Security Interest with respect to any Article 9 Collateral consisting of
Patents, Trademarks and Copyrights (or registration or application for
registration thereof) acquired or developed after the date hereof).

 
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(c)           The Security Interest constitutes (i) a legal and valid security
interest in all the Article 9 Collateral securing the payment and performance of
the Obligations, (ii) subject to the filings described in Section 4.02(b), a
perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document in the in the United States of America, its
territories or possessions, any constituent State of the United States of
America or the District of Columbia pursuant to the Uniform Commercial Code or
other applicable law in such jurisdictions and (iii) a security interest that
shall be perfected in all Article 9 Collateral in which a security interest may
be perfected upon the receipt and recording of this Agreement (or a fully
executed short form agreement in form and substance satisfactory to the Agent)
with the United States Patent and Trademark Office and the United States
Copyright Office, as applicable.  The Security Interest is and shall be prior to
any other Lien on any of the Article 9 Collateral, other than Liens expressly
permitted pursuant to Section 6.02 of the Credit Agreement.
 
(d)           The Article 9 Collateral is owned by the Grantors free and clear
of any Lien, except for Liens expressly permitted pursuant to Section 6.02 of
the Credit Agreement.  No Grantor has filed or consented to the filing of
(i) any financing statement or analogous document under the Uniform Commercial
Code or any other applicable laws covering any Article 9 Collateral, (ii) any
assignment in which any Grantor assigns any Collateral or any security agreement
or similar instrument covering any Article 9 Collateral with the United States
Patent and Trademark Office or the United States Copyright Office, (iii) any
notice under the Assignment of Claims Act or (iv) any assignment in which any
Grantor assigns any Article 9 Collateral or any security agreement or similar
instrument covering any Article 9 Collateral with any foreign governmental,
municipal or other office, which financing statement or analogous document,
assignment, security agreement or similar instrument is still in effect, except,
in each case, for Liens expressly permitted pursuant to Section 6.02 of the
Credit Agreement.  As of the date hereof, no Grantor holds any Commercial Tort
Claims except as indicated on the Perfection Certificate.
 
SECTION 4.03.   Covenants.  (f)  Each Grantor agrees promptly to notify the
Agent in writing of any change (i) in such Grantor’s legal name, as reflected in
its organizational documents, (ii) in the jurisdiction of organization or
formation of such Grantor, (iii) if it is not a registered organization (as
defined in the New York UCC), in the location of its chief executive office or
its principal place of business, (iv) in such Grantor’s organizational form or
(v) in such Grantor’s Federal Taxpayer Identification Number or organizational
identification number assigned by the jurisdiction of organization.  Each
Grantor agrees to promptly provide the Agent with certified organizational
documents reflecting any of the changes described in the first sentence of this
paragraph.  Each Grantor agrees not to effect or permit any change referred to
in the preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Agent to
continue at all times following such change to have a valid, legal and perfected
security interest in all the Collateral.  Each Grantor also agrees promptly to
notify the Agent in writing if any material portion of the Collateral is damaged
or destroyed.

 
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(b)           Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Article 9 Collateral owned by
it as is consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged, but in any event to include
complete accounting records indicating all payments and proceeds received with
respect to any part of the Article 9 Collateral, and, at such time or times as
the Agent may request, promptly to prepare and deliver to the Agent a duly
certified schedule or schedules in form and detail satisfactory to the Agent
showing the identity, amount and location of any and all Article 9 Collateral.
 
(c)           Upon request of the Agent, at the time of delivery of annual
financial statements pursuant to Section 5.04(a) of the Credit Agreement, the
Borrower shall deliver to the Agent a certificate executed by a Responsible
Officer of the Borrower certifying that all Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings recordings or registrations, including all refilings, recordings and
registrations, containing a description of the Article 9 Collateral have been
filed of record in each governmental, municipal or other appropriate office in
each jurisdiction identified pursuant to paragraph (a) of this Section to the
extent necessary to protect and perfect the Security Interest for a period of
not less than 12 months after the date of such certificate (except as noted
therein with respect to any continuation statements to be filed within such
period).  Each certificate delivered pursuant to this paragraph shall identify
in the format of Schedule III all Intellectual Property of any Grantor in
existence on the date thereof and not then listed on such Schedules or
previously so identified to the Agent.
 
(d)           Each Grantor shall, at its own expense, take any and all actions
necessary to defend title to the Article 9 Collateral against all persons and to
defend the Security Interest and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02 of the Credit Agreement.
 
(e)           Each Grantor agrees, at its own expense, promptly to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Agent may from time to time request
to better assure, obtain, preserve, protect and perfect the Security Interest
and the rights and remedies created hereby, including the payment of any fees
and Taxes required in connection with the execution and delivery of this
Agreement, the granting of the Security Interest and the filing of any financing
or continuation statements (including fixture filings) or other documents in
connection herewith or therewith.  If any amount payable to any Grantor under or
in connection with any of the Article 9 Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
promptly pledged and delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent.

 
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Without limiting the generality of the foregoing, each Grantor hereby authorizes
the Agent, with prompt notice thereof to the Grantors, to supplement this
Agreement by supplementing Schedule III or adding additional schedules hereto to
identify specifically any asset or item of a Grantor (i) that constitutes
Copyrights, Licenses, Patents or Trademarks and (ii) that, together with all
United States Copyrights, United States Patents and United States Trademarks
with respect to which a filing with the United States Patent and Trademark
Office or the United States Copyright Office has not been made, has, in the
Agent’s reasonable judgment, an aggregate fair market value in excess of
$1,000,000; provided that any Grantor shall have the right, exercisable within
10 days after it has been notified by the Agent of the specific identification
of such Collateral, to advise the Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor hereunder with respect to
such Collateral.  Each Grantor agrees that it will use its reasonable best
efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral within 30 days after the date it has been notified by the
Agent of the specific identification of such Collateral.
 
(f)           The Agent and such persons as the Agent may designate shall have
the right, at the applicable Grantor’s own cost and expense, upon reasonable
notice and during normal business hours, to inspect the Article 9 Collateral,
all records related thereto (and to make extracts and copies from such records)
and the premises upon which any of the Article 9 Collateral is located, to
discuss the applicable Grantor’s affairs with the officers of such Grantor and
its independent accountants and to verify under reasonable procedures, the
existence, validity, amount, quality, quantity, value, condition and status of,
or any other matter relating to, the Article 9 Collateral, including, in the
case of Accounts or other Article 9 Collateral in the possession of any third
person, by contacting Account Debtors or the third person possessing such
Article 9 Collateral for the purpose of making such a verification.  The Agent
shall have the absolute right to share any information it gains from such
inspection or verification with any Secured Party.
 
(g)           At its option, the Agent may discharge past due Taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Article 9 Collateral and not expressly
permitted pursuant to Section 5.03 or Section 6.02 of the Credit Agreement, and
may pay for the maintenance and preservation of the Article 9 Collateral to the
extent any Grantor fails to do so as required by the Credit Agreement or this
Agreement, and each Grantor jointly and severally agrees to reimburse the Agent
on demand for any payment made or any expense incurred by the Agent pursuant to
the foregoing authorization; provided, however, that nothing in this paragraph
shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on the Agent or any Secured Party to cure or perform,
any covenants or other promises of any Grantor with respect to Taxes,
assessments, charges, fees, Liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.
 
(h)           Each Grantor shall remain liable to observe and perform all the
conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral, all in
accordance with the terms and conditions thereof, and each Grantor jointly and
severally agrees to indemnify and hold harmless the Agent and the other Secured
Parties from and against any and all liability for such performance.
 
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(i)           No Grantor shall make or permit to be made an assignment, pledge
or hypothecation of the Article 9 Collateral or shall grant any other Lien in
respect of the Article 9 Collateral or permit any notice to be filed under the
Assignment of Claims Act, except, in each case, as expressly permitted by
Section 6.02 of the Credit Agreement.  No Grantor shall make or permit to be
made any transfer of the Article 9 Collateral and each Grantor shall remain at
all times in possession or otherwise in control of the Article 9 Collateral
owned by it, except as permitted by the Credit Agreement.
 
(j)           No Grantor will, without the Agent’s prior written consent, grant
any extension of the time of payment of any Accounts included in the Article 9
Collateral, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any person liable for the payment
thereof or allow any credit or discount whatsoever thereon, other than
extensions, compromises, compoundings, settlements, releases, credits or
discounts granted or made in the ordinary course of business and consistent with
its current practices and in accordance with such prudent and standard practice
used in industries that are the same as or similar to those in which such
Grantor is engaged.
 
SECTION 4.04.  Other Actions.  In order to further insure the attachment,
perfection and priority of, and the ability of the Agent to enforce, the
Security Interest in the Article 9 Collateral, each Grantor agrees, in each case
at such Grantor’s own expense, to take the following actions with respect to the
following Article 9 Collateral:
 
(a)           Instruments. If any Grantor shall at any time hold or acquire any
Instruments, such Grantor shall forthwith endorse, assign and deliver the same
to the Agent, accompanied by such undated instruments of endorsement, transfer
or assignment duly executed in blank as the Agent may from time to time specify.
 
(b)           [Deposit Accounts. At all times after the [60th] day following the
Closing Date and thereafter, for each Deposit Account that any Grantor at any
time opens or maintains, such Grantor shall either (i) cause the depositary bank
to agree to comply at any time with instructions from the Agent to such
depositary bank directing the disposition of funds from time to time credited to
such Deposit Account, without further consent of such Grantor or any other
person, pursuant to an agreement in form and substance reasonably satisfactory
to the Agent or (ii) arrange for the Agent to become the customer of the
depositary bank with respect to the Deposit Account, with the Grantor being
permitted, only with the consent of the Agent, to exercise rights to withdraw
funds from such Deposit Account.  The Agent agrees with each Grantor that the
Agent shall not give any such instructions or withhold any withdrawal rights
from any Grantor, unless an Event of Default has occurred and is continuing, or,
after giving effect to any withdrawal, would occur.  The provisions of this
paragraph shall not apply to any Deposit Account for which any Grantor, the
depositary bank and the Agent have entered into a cash collateral agreement
specially negotiated among such Grantor, the depositary bank and the Agent for
the specific purpose set forth therein.]
 

 
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(c)           Investment Property. Except to the extent otherwise provided in
Article III, if any Grantor shall at any time hold or acquire any certificated
securities, such Grantor shall forthwith endorse, assign and deliver the same to
the Agent, accompanied by such undated instruments of transfer or assignment
duly executed in blank as the Agent may from time to time specify. If any
securities now or hereafter acquired by any Grantor are uncertificated and are
issued to such Grantor or its nominee directly by the issuer thereof, such
Grantor shall promptly notify the Agent thereof and, at the Agent’s request and
option, pursuant to an agreement in form and substance satisfactory to the
Agent, either (i) cause the issuer to agree to comply with instructions from the
Agent as to such securities, without further consent of any Grantor or such
nominee or (ii) arrange for the Agent to become the registered owner of the
securities.  If any securities, whether certificated or uncertificated, or other
Investment Property now or hereafter acquired by any Grantor are held by such
Grantor or its nominee through a Securities Intermediary or Commodity
Intermediary, such Grantor shall promptly notify the Agent thereof and, at the
Agent’s request and option, pursuant to an agreement in form and substance
satisfactory to the Agent, either (i) cause such Securities Intermediary or
Commodity Intermediary, as the case may be, to agree to comply with Entitlement
Orders from the Agent to such Securities Intermediary as to such securities or
other Investment Property, or (as the case may be) to apply any value
distributed on account of any commodity contract as directed by the Agent to
such Commodity Intermediary, in each case without further consent of any Grantor
or such nominee or (ii) in the case of Financial Assets (as governed by
Article 8 of the New York UCC) or other Investment Property held through a
Securities Intermediary, arrange for the Agent to become the Entitlement Holder
with respect to such Investment Property, with the Grantor being permitted, only
with the consent of the Agent, to exercise rights to withdraw or otherwise deal
with such Investment Property.  The Agent agrees with each Grantor that the
Agent shall not give any such Entitlement Orders or instructions or directions
to any such issuer, Securities Intermediary or Commodity Intermediary, and shall
not withhold its consent to the exercise of any withdrawal or dealing rights by
any Grantor, unless an Event of Default has occurred and is continuing, or,
after giving effect to any such investment and withdrawal rights would occur.
 
(d)           Electronic Chattel Paper and Transferable Records. If any Grantor
at any time holds or acquires an interest in any Electronic Chattel Paper or any
“transferable record” with a principal amount in excess $250,000, as that term
is defined in Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or in Section 16 of the Uniform Electronic Transactions
Act as in effect in any relevant jurisdiction, such Grantor shall promptly
notify the Agent thereof and, at the request of the Agent, shall take such
action as the Agent may request to vest in the Agent control under New York UCC
Section 9-105 of such Electronic Chattel Paper or control under Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act, as so in
effect in such jurisdiction, of such transferable record.  The Agent agrees with
such Grantor that the Agent will arrange, pursuant to procedures satisfactory to
the Agent and so long as such procedures will not result in the Agent’s loss of
control, for the Grantor to make alterations to the Electronic Chattel Paper or
transferable record permitted under UCC Section 9-105 or, as the case may be,
Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act or Section 16 of the Uniform Electronic Transactions Act for a party in
control to allow without loss of control, unless an Event of Default has
occurred and is continuing or would occur after taking into account any action
by such Grantor with respect to such Electronic Chattel Paper or transferable
record.

 
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(e)           Letter-of-Credit Rights. If any Grantor is at any time a
beneficiary under a letter of credit with a face value in excess of $500,000 now
or hereafter issued in favor of such Grantor, such Grantor shall promptly notify
the Agent thereof and, at the request and option of the Agent, such Grantor
shall, pursuant to an agreement in form and substance satisfactory to the Agent,
either (i) arrange for the issuer and any confirmer of such letter of credit to
consent to an assignment to the Agent of the proceeds of any drawing under the
letter of credit or (ii) arrange for the Agent to become the transferee
beneficiary of the letter of credit, with the Agent agreeing, in each case, that
the proceeds of any drawing under the letter of credit are to be paid to the
applicable Grantor unless an Event of Default has occurred or is continuing, in
which case they will be applied to the repayment of the Loans.
 
(f)           Commercial Tort Claims. If any Grantor shall at any time hold or
acquire a Commercial Tort Claim in an amount reasonably estimated to exceed
$1,500,000, such Grantor shall promptly notify the Agent thereof in a writing
signed by such Grantor including a summary description of such claim and grant
to the Agent, for the ratable benefit of the Secured Parties, in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
the Agent.
 
SECTION 4.05.   Covenants Regarding Patent, Trademark and Copyright
Collateral.  (g)  Each Grantor agrees that it will not, and will not permit any
of its licensees to, do any act, or omit to do any act, whereby any Patent that
is material to the conduct of any Grantor’s business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
 
(b)           Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of any Grantor’s
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
 
(c)           Each Grantor (either itself or through its licensees or
sublicensees) will, for each work covered by a Copyright material to the conduct
of any Grantor’s business, continue to publish, reproduce, display, adopt and
distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
 
(d)           Each Grantor shall notify the Agent promptly if it knows or has
reason to know that any Patent, Trademark or Copyright material to the conduct
of its business may become abandoned, lost or dedicated to the public, or of any
material and adverse determination or development (including the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office, United States Copyright Office or any court or
similar office of any country) regarding such Grantor’s ownership of any Patent,
Trademark or Copyright, its right to register the same, or its right to keep and
maintain the same.

 
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(e)           In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly notifies
the Agent, and, upon request of the Agent, executes and delivers any and all
agreements, instruments, documents and papers as the Agent may request to
evidence the Security Interest in such Patent, Trademark or Copyright, and each
Grantor hereby appoints the Agent as its attorney-in-fact to execute and file
such writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
 
(f)           Each Grantor will take all necessary steps that are consistent
with the practice in any proceeding before the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
any Grantor’s business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancelation proceedings against third parties.
 
(g)           If any Grantor knows or has reason to believe that any Article 9
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor’s business has been or is about to be infringed,
misappropriated or diluted by a third person, such Grantor promptly shall notify
the Agent and shall, if consistent with good business judgment, promptly sue for
infringement, misappropriation or dilution and to recover any and all damages
for such infringement, misappropriation or dilution, and take such other actions
as are appropriate under the circumstances to protect such Article 9 Collateral.
 
(h)           Upon the occurrence and during the continuance of an Event of
Default, each Grantor shall use its reasonable efforts to obtain all requisite
consents or approvals by the licensor of each Copyright License, Patent License,
Trademark License and each other material License to effect the assignment of
all such Grantor’s right, title and interest thereunder to the Agent, for the
ratable benefit of the Secured Parties, or its designee.
 
ARTICLE V

 
Remedies
 
SECTION 5.01.   Remedies Upon Default.  Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Agent on demand, and it is agreed that the Agent shall have
the right to take any of or all the following actions at the same or different
times to the extent permitted by applicable law:  (a) with respect to any
Article 9 Collateral consisting of Intellectual Property, on demand, to cause
the Security Interest to become an assignment, transfer and conveyance of any of
or all such Article 9 Collateral by the applicable Grantor to the Agent, or to
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or nonexclusive basis, any such Article 9 Collateral throughout the
world on such terms and conditions and in such manner as the Agent shall
determine (other than in violation of any then-existing licensing arrangements
to the extent that waivers cannot be obtained) and

 
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(b) with or without legal process and with or without prior notice or demand for
performance, to take possession of the Article 9 Collateral and without
liability for trespass to enter any premises where the Article 9 Collateral may
be located for the purpose of taking possession of or removing the Article 9
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the Uniform Commercial Code or other applicable law.  Without
limiting the generality of the foregoing, each Grantor agrees that the Agent
shall have the right to sell or otherwise dispose of all or any part of the
Collateral at a public or private sale or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery as the Agent
shall deem appropriate.  The Agent shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the Agent shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold.  Each such purchaser at any such sale shall hold the
property sold absolutely, free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Grantor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted.
 
The Agent shall give each applicable Grantor 10 days’ written notice (which each
Grantor agrees is reasonable notice within the meaning of Section 9-611 of the
New York UCC or its equivalent in other jurisdictions) of the Agent’s intention
to make any sale of Collateral.  Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the case of a sale at a
broker’s board or on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange.  Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Agent may fix and state in the notice (if
any) of such sale.  At any such sale, the Collateral, or portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the Agent
may (in its sole and absolute discretion) determine.  The Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given.  The Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned.  In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Agent until the sale
price is paid by the purchaser or purchasers thereof, but the Agent shall not
incur any liability in case any such purchaser or purchasers shall fail to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice.  At any public (or private) sale
made pursuant to this Agreement, any Secured Party may bid for or purchase, free
from any right of redemption, stay, valuation or appraisal on the part of any
Grantor (all said rights being also hereby waived and released), the Collateral
or any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Secured Party from any Grantor as a
credit against the purchase price, and such Secured Party may, upon compliance
with the terms of sale, hold, retain and dispose of such property without
further accountability to any Grantor therefor.  For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Agent shall be free to carry out such sale pursuant to such
agreement and no Grantor shall be entitled to the return of the Collateral or
any portion thereof subject thereto, notwithstanding the fact that after the
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full.  As an alternative to exercising
the power of sale herein conferred upon it, the Agent may proceed by a suit or
suits at law or in equity to foreclose under this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.  Any sale pursuant to the provisions of this
Section 5.01 shall be deemed to conform to the commercially reasonable standards
as provided in Section 9-610(b) of the New York UCC or its equivalent in other
jurisdictions.

 
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SECTION 5.02.   Application of Proceeds.  The Agent shall apply the proceeds of
any collection, sale, foreclosure or other realization upon any Collateral,
including any Collateral consisting of cash, as follows:
 
FIRST, to the payment of all costs and expenses incurred by the Agent (in its
capacity as administrative agent or collateral agent under the Loan Documents)
in connection with such collection, sale, foreclosure or realization or
otherwise in connection with this Agreement, any other Loan Document or any of
the Obligations, including all court costs and the fees and expenses of its
agents and legal counsel, the repayment of all advances made by the Agent
hereunder or under any other Loan Document on behalf of any Grantor and any
other costs or expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Loan Document;
 
SECOND, to the payment in full of all other Obligations (the amounts so applied
to be distributed among the Secured Parties pro rata in accordance with the
amounts of the Obligations owed to them on the date of any such distribution);
 
THIRD, to the Grantors, their successors or assigns, or as a court of competent
jurisdiction may otherwise direct.
 
The Agent shall have absolute discretion as to the time of application of any
such proceeds, moneys or balances in accordance with this Agreement.  Upon any
sale of Collateral by the Agent (including pursuant to a power of sale granted
by statute or under a judicial proceeding), the receipt of the Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Agent or such officer or be answerable in any way for the
misapplication thereof.
 
SECTION 5.03.   Grant of License to Use Intellectual Property.  For the purpose
of enabling the Agent to exercise rights and remedies under this Agreement at
such time as the Agent shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby grants to the Agent an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to the
Grantors), to use, license or sublicense any of the Article 9 Collateral
consisting of Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof.  The use of such license by the Agent may be
exercised, at the option of the Agent, only upon the occurrence and during the
continuation of an Event of Default; provided, however, that any license,
sublicense or other transaction entered into by the Agent in accordance herewith
shall be binding upon each Grantor notwithstanding any subsequent cure of an
Event of Default.

 
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SECTION 5.04.   Securities Act, Etc.  In view of the position of the Grantors in
relation to the Pledged Collateral, or because of other current or future
circumstances, a question may arise under the U.S. Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the “Federal Securities Laws”) with respect to any
disposition of the Pledged Collateral permitted hereunder.  Each Grantor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Agent if the Agent were to attempt to dispose
of all or any part of the Pledged Collateral, and might also limit the extent to
which or the manner in which any subsequent transferee of any Pledged Collateral
could dispose of the same.  Similarly, there may be other legal restrictions or
limitations affecting the Agent in any attempt to dispose of all or part of the
Pledged Collateral under applicable “blue sky” or other state securities laws or
similar laws analogous in purpose or effect.  Each Grantor recognizes that in
light of such restrictions and limitations the Agent may, with respect to any
sale of the Pledged Collateral, limit the purchasers to those who will agree,
among other things, to acquire such Pledged Collateral for their own account,
for investment, and not with a view to the distribution or resale thereof.  Each
Grantor acknowledges and agrees that in light of such restrictions and
limitations, the Agent, in its sole and absolute discretion (a) may proceed to
make such a sale whether or not a registration statement for the purpose of
registering such Pledged Collateral or part thereof shall have been filed under
the Federal Securities Laws and (b) may approach and negotiate with a limited
number of potential purchasers (including a single potential purchaser) to
effect such sale.  Each Grantor acknowledges and agrees that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. In the event of any such sale, the
Agent shall incur no responsibility or liability for selling all or any part of
the Pledged Collateral at a price that the Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a limited number of purchasers (or a single purchaser) were
approached.  The provisions of this Section 5.04 will apply notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which the Agent sells.
 
ARTICLE VI
Indemnity, Subrogation and Subordination
 
SECTION 6.01.   Indemnity and Subrogation.  In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 6.03), the Borrower agrees that (a) in the event a payment
shall be made by any Guarantor (other than Holdings) under this Agreement, the
Borrower shall indemnify such Guarantor for the full amount of such payment and
such Guarantor shall be subrogated to the rights of the person to whom such
payment shall have been made to the extent of such payment and (b) in the event
any assets of any Guarantor (other than Holdings) shall be sold pursuant to this
Agreement or any other Security Document to satisfy in whole or in part a claim
of any Secured Party, the Borrower shall indemnify such Guarantor in an amount
equal to the greater of the book value or the fair market value of the assets so
sold.

 
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SECTION 6.02.  Contribution and Subrogation.  Each Guarantor (other than
Holdings) (a “Contributing Party”) agrees (subject to Section 6.03) that, in the
event a payment shall be made by any other Guarantor (other than Holdings)
hereunder in respect of any Obligation or assets of any other Guarantor (other
than Holdings) shall be sold pursuant to any Security Document to satisfy any
Obligation owed to any Secured Party, and such other Guarantor (the “Claiming
Party”) shall not have been fully indemnified by the Borrower as provided in
Section 6.01, the Contributing Party shall indemnify the Claiming Party in an
amount equal to (i) the amount of such payment or (ii) the greater of the book
value or the fair market value of such assets, as the case may be, in each case
multiplied by a fraction of which the numerator shall be the net worth of the
Contributing Party on the date hereof and the denominator shall be the aggregate
net worth of all the Guarantors (other than Holdings) on the date hereof (or, in
the case of any Guarantor becoming a party hereto pursuant to Section 7.16, the
date of the supplement hereto executed and delivered by such Guarantor).  Any
Contributing Party making any payment to a Claiming Party pursuant to this
Section 6.02 shall be subrogated to the rights of such Claiming Party under
Section 6.01 to the extent of such payment.
 
SECTION 6.03.  Subordination.  (h)  Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors under Sections 6.01 and
6.02 and all other rights of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full in cash of the Obligations.  No failure on the part of the
Borrower or any Guarantor to make the payments required by Sections 6.01 and
6.02 (or any other payments required under applicable law or otherwise) shall in
any respect limit the obligations and liabilities of any Guarantor with respect
to its obligations hereunder, and each Guarantor shall remain liable for the
full amount of its obligations hereunder.
 
(b)           The Borrower and each Guarantor hereby agree that all Indebtedness
and other monetary obligations owed by it to any other Guarantor or the Borrower
shall be fully subordinated to the indefeasible payment in full in cash of the
Obligations.
 
ARTICLE VII

 
Miscellaneous
 
SECTION 7.01.   Notices.  All communications and notices hereunder (a) to any
party other than the Subsidiary Guarantors, shall (except as otherwise expressly
permitted herein) be in writing and given as provided in Section 9.01 of the
Credit Agreement or (b) to any Subsidiary Guarantor, shall (except as otherwise
expressly permitted herein) be in writing and given to it in care of the
Borrower as provided in Section 9.01 of the Credit Agreement.
 
SECTION 7.02.  Security Interest Absolute.  All rights of the Agent hereunder,
the Security Interest, the grant of a security interest in the Pledged
Collateral and all obligations of each Grantor hereunder shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Credit Agreement, any other Loan Document, any agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to the foregoing, (c) any
exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.

 
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SECTION 7.03.    Survival of Agreement.  All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans,
regardless of any investigation made by any Lender or on its behalf and
notwithstanding that the Agent or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended under the Credit Agreement, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or
any other amount payable under any Loan Document is outstanding and unpaid.
 
SECTION 7.04.   Binding Effect; Several Agreement.  This Agreement shall become
effective as to any Loan Party when a counterpart hereof executed on behalf of
such Loan Party shall have been delivered to the Agent and a counterpart hereof
shall have been executed on behalf of the Agent, and thereafter shall be binding
upon such Loan Party and the Agent and their permitted successors and assigns,
and shall inure to the benefit of such Loan Party, the Agent and the other
Secured Parties and their successors and assigns, except that no Loan Party
shall have the right to assign or transfer its rights or obligations hereunder
or any interest herein or in the Collateral (and any such assignment or transfer
shall be void) except as expressly contemplated or permitted by this Agreement
or the Credit Agreement.  This Agreement shall be construed as a separate
agreement with respect to each Loan Party and may be amended, modified,
supplemented, waived or released with respect to any Loan Party without the
approval of any other Loan Party and without affecting the obligations of any
other Loan Party hereunder.
 
SECTION 7.05.   Successors and Assigns.  Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Grantor or the Agent that are contained in
this Agreement shall bind and inure to the benefit of their successors and
assigns.
 
SECTION 7.06.  Agent’s Fees and Expenses; Indemnification.  (i)  Each Grantor
shall pay all out-of-pocket expenses incurred by the Agent and its Affiliates,
including the fees, charges and disbursements of counsel, in connection with (i)
the administration of the Loan Documents and any amendments, modifications or
waivers of the provisions thereto, (ii) the custody, inspection, supervision and
preservation of, the sale of, the collection from, or any other realization
upon, the Collateral, (iii) the enforcement or protection of the Agent’s rights
under the Loan Documents, including its rights under this Section and during any
workout, restructuring or negotiations in respect of the Loans and (iv) the
failure of any Grantor to perform or observe any of the provisions thereof.

 
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(b)           Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor agrees to, jointly and severally, indemnify
the Agent and the other Indemnitees against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including counsel fees, charges and disbursements, incurred by or asserted
against any Indemnitee arising out of, in any way connected with, or as a result
of (i) the execution, delivery or performance of this Agreement or any other
Loan Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties thereto of their obligations thereunder or the
consummation of the Transactions and the other transactions contemplated hereby
or thereby, (ii) the use of the proceeds of the Loans, (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing or to
the Collateral, whether or not any Indemnitee is a party thereto (and regardless
of whether such matter is initiated by a third party, a Loan Party or any of
Affiliate thereof) or (iv) any actual or alleged presence or Release of
Hazardous Materials on any property currently or formerly owned or operated by
the Borrower or the Subsidiaries, or any Environmental Liability related in any
way to the Borrower or the Subsidiaries; provided that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted primarily from
the gross negligence or willful misconduct of such Indemnitee.  No Grantor shall
assert, and each Grantor hereby waives any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement, the other Loan Documents, any agreement or
instrument contemplated hereby, the Transactions, any Loan or the use of
proceeds thereof.
 
(c)           Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document, or any investigation made by or on
behalf of the Agent or any other Secured Party.  All amounts due under this
Section 7.06 shall be payable on written demand therefor and shall bear
interest, on and from the date of demand, at the rate specified in Section 2.06
of the Credit Agreement.
 
SECTION 7.07.  Agent Appointed Attorney-in-Fact.  Each Grantor hereby appoints
the Agent as the attorney-in-fact of such Grantor for the purpose of carrying
out the provisions of this Agreement and taking any action and executing any
instrument that the Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, the Agent shall have the
right, upon the occurrence and during the continuance of an Event of Default,
with full power of substitution either in the Agent’s name or in the name of
such Grantor (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof, (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral, (c) to sign the name of any Grantor on any invoice or bill of lading
relating to any of the Collateral, (d) to send verifications of Accounts
Receivable to any Account Debtor, (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral,

 
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(f) to settle, compromise, compound, adjust or defend any actions, suits or
proceedings relating to all or any of the Collateral, (g) to notify, or to
require any Grantor to notify, Account Debtors to make payment directly to the
Agent, and (h) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Collateral, and to do all
other acts and things necessary to carry out the purposes of this Agreement in
accordance with its terms, as fully and completely as though the Agent were the
absolute owner of the Collateral for all purposes; provided, however, that
nothing herein contained shall be construed as requiring or obligating the Agent
to make any commitment or to make any inquiry as to the nature or sufficiency of
any payment received by the Agent, or to present or file any claim or notice, or
to take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby.
The Agent and the other Secured Parties shall be accountable only for amounts
actually received as a result of the exercise of the powers granted to them
herein, and neither they nor their officers, directors, employees or agents
shall be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence, willful misconduct or bad faith.
 
SECTION 7.08.   Applicable Law.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
 
SECTION 7.09.  Waivers; Amendment.  (j)  No failure or delay by the Agent or any
Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver hereof or thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agent and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of any Loan Document or
consent to any departure by any Loan Party therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this
Section 7.09, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the
generality of the foregoing, the making of a Loan shall not be construed as a
waiver of any Default, regardless of whether the Agent or any Lender may have
had notice or knowledge of such Default at the time. No notice or demand on any
Loan Party in any case shall entitle any Loan Party to any other or further
notice or demand in similar or other circumstances.
 
(b)           Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Agent and the Loan Party or Loan Parties with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
 

 
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SECTION 7.10.    WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
SECTION 7.11.    Severability.  In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
 
SECTION 7.12.    Counterparts.  This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in
Section 7.04.  Delivery of an executed signature page to this Agreement by
facsimile transmission or other electronic imaging means shall be as effective
as delivery of a manually signed counterpart of this Agreement.
 
SECTION 7.13.    Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
 
SECTION 7.14.   Jurisdiction; Consent to Service of Process.  (k)  Each of the
Grantors 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 or any other Loan Document, or for recognition or
enforcement of any judgment, and each of the Loan Parties hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or in such Federal
court.  Each of the Loan Parties 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 or any other Loan Document shall affect any right that the Agent or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against any Grantor or its properties in
the courts of any jurisdiction.

 
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(b)           Each of the Loan Parties hereby irrevocably and unconditionally
waives any objection which 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
or any other Loan Document in any court referred to in paragraph (a) of this
Section (it being understood that such waiver shall not require any suit, action
or proceeding initiated in any court to be remanded or removed to any court
referred to in paragraph (a) of this Section).  Each of the Loan Parties hereby
irrevocably waives the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
 
(c)           Each of the Loan Parties hereby irrevocably consents to service of
process in the manner provided for notices in Section 7.01.  Nothing in this
Agreement or any other Loan Document will affect the right of the Agent to serve
process in any other manner permitted by law.
 
SECTION 7.15.   Termination or Release.  This Agreement, the guarantees made
herein, the Security Interest and all other security interests granted hereby
shall terminate, and the Loan Parties shall automatically be released from their
obligations hereunder, upon payment in full in cash of all Obligations (other
than contingent indemnification obligations).  Upon request made to Collateral
Agent by Borrower, Collateral Agent shall promptly prepare for filing by
Borrower, at the expense of Borrower, any and all such requested releases.
 
SECTION 7.16.   Additional Subsidiaries.  Any Subsidiary that is required to
become a party hereto pursuant to Section 5.12 of the Credit Agreement shall
enter into this Agreement as a Guarantor and a Grantor upon becoming such a
Subsidiary.  Upon execution and delivery by the Agent and such Subsidiary of a
supplement in the form of Exhibit A hereto, such Subsidiary shall become a
Guarantor and a Grantor hereunder with the same force and effect as if
originally named as a Guarantor and a Grantor herein.  The execution and
delivery of any such instrument shall not require the consent of any other Loan
Party hereunder. The rights and obligations of each Loan Party hereunder shall
remain in full force and effect notwithstanding the addition of any new Loan
Party as a party to this Agreement.
 
SECTION 7.17.  Right of Setoff.  If an Event of Default shall have occurred and
is continuing, each Secured Party is hereby authorized at any time and from time
to time to set off and apply any and all Collateral (including any deposits
(general or special, time or demand, provisional or final)) at any time held and
other obligations at any time owing by such Secured Party to or for the credit
or the account of any Grantor against any and all of the obligations of such
Grantor now or hereafter existing under this Agreement and the other Loan
Documents held by such Secured Party, irrespective of whether or not such
Secured Party shall have made any demand under this Agreement or any other Loan
Document and although such obligations may be unmatured.  The rights of each
Secured Party under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Secured Party may have.

 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Guarantee and
Collateral Agreement as of the day and year first above written.
 

 
RENTECH ENERGY MIDWEST CORPORATION
 
By: /s/ Merrick Kerr                                                       
Name: Merrick Kerr
Title:
 
 
RENTECH, INC.
 
By: /s/ Merrick Kerr                                                         
Name: Merrick Kerr
Title: CFO
 
 
RENTECH DEVELOPMENT CORPORATION
 
By: /s/ Merrick Kerr                                                          
Name: Merrick Kerr
Title:
 
 
RENTECH SERVICES CORPORATION
 
By: /s/ Merrick Kerr                                                          
Name: Merrick Kerr
Title:
 
 
RENTECH ENERGY TECHNOLOGY CENTER, LLC
 
By: /s/ Merrick Kerr                                                          
Name: Merrick Kerr
Title:
 

 
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CREDIT SUISSE, Cayman Islands Branch,
as Collateral Agent
 
 
By:   /s/ Vanessa Gomez                                                 
Name: Vanessa Gomez
Title: Director
 
 
by    /s/ James Moran                                                     
Name: James Moran
Title: Managing Director 

 

 
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Schedule I

SUBSIDIARY GUARANTORS

 
1.
Rentech Development Corporation, a Colorado corporation

 
2.
Rentech Services Corporation, a Colorado corporation

 
3.
Rentech Energy Technology Center, LLC, a Colorado limited liability company

 
 
 
 

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