Exhibit 10.2

 

EXECUTION COPY

 

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GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED,

 

PRIMUS TELECOMMUNICATIONS HOLDING, INC.

 

and certain of its Subsidiaries

 

in favor of

 

LEHMAN COMMERCIAL PAPER INC.,

 

as Administrative Agent

 

Dated as of February 18, 2005

 

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TABLE OF CONTENTS

 

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SECTION 1. DEFINED TERMS

    

1.1

  

Definitions

    

1.2

  

Other Definitional Provisions

    

SECTION 2. GUARANTEE

    

2.1

  

Guarantee

    

2.2

  

Right of Contribution

    

2.3

  

Subrogation

    

2.4

  

Amendments, etc. with respect to the Borrower Obligations

    

2.5

  

Guarantee Absolute and Unconditional

    

2.6

  

Reinstatement

    

2.7

  

Payments

    

SECTION 3. GRANT OF SECURITY INTEREST

    

SECTION 4. REPRESENTATIONS AND WARRANTIES

    

4.1

  

Representations in Term Loan Agreement

    

4.2

  

Title; No Other Liens

    

4.3

  

Perfected First Priority Liens

    

4.4

  

Jurisdiction of Organization; Chief Executive Office

    

4.5

  

Inventory and Equipment

    

4.6

  

Farm Products

    

4.7

  

Investment Property

    

4.8

  

Receivables

    

4.9

  

Intellectual Property

    

4.10

  

Vehicles

    

4.11

  

Deposit Accounts and Securities Accounts

    

SECTION 5. COVENANTS

    

5.1

  

Covenants in Term Loan Agreement

    

5.2

  

Delivery of Instruments and Chattel Paper

    

5.3

  

Maintenance of Insurance

    

5.4

  

Payment of Obligations.

    

5.5

  

Maintenance of Perfected Security Interest; Further Documentation.

    

5.6

  

Changes in Name, etc.

    

5.7

  

Notices

    

5.8

  

Investment Property

    

5.9

  

Receivables

    

5.10

  

Intellectual Property

    

5.11

  

Commercial Tort Claims

    

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SECTION 6. REMEDIAL PROVISIONS

    

6.1

  

Certain Matters Relating to Receivables

    

6.2

  

Communications with Obligors; Grantors Remain Liable

    

6.3

  

Pledged Stock

    

6.4

  

Proceeds to be Turned Over To Administrative Agent

    

6.5

  

Application of Proceeds

    

6.6

  

Code and Other Remedies

    

6.7

  

Registration Rights

    

6.8

  

Deficiency

    

SECTION 7. THE ADMINISTRATIVE AGENT

    

7.1

  

Administrative Agent’s Appointment as Attorney-in-Fact, etc

    

7.2

  

Duty of Administrative Agent

    

7.3

  

Execution of Financing Statements

    

7.4

  

Authority of Administrative Agent

    

SECTION 8. MISCELLANEOUS

    

8.1

  

Amendments in Writing

    

8.2

  

Notices

    

8.3

  

No Waiver by Course of Conduct; Cumulative Remedies

    

8.4

  

Enforcement Expenses; Indemnification

    

8.5

  

Successors and Assigns

    

8.6

  

Set-Off

    

8.7

  

Counterparts

    

8.8

  

Severability

    

8.9

  

Section Headings

    

8.10

  

Integration

    

8.11

  

GOVERNING LAW

    

8.12

  

Submission To Jurisdiction; Waivers

    

8.13

  

Acknowledgements

    

8.14

  

Additional Grantors

    

8.15

  

Releases

    

8.16

  

Limitations Applicable to Guarantee Approval Pending Subsidiaries and Security
Interest Approval Pending Subsidiaries

    

8.17

  

Approvals

    

8.18

  

WAIVER OF JURY TRIAL

    

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Schedules

    

Schedule 1

  

Notice Addresses of Guarantors

Schedule 2

  

Description of Pledged Securities

Schedule 3

  

Filings and Other Actions Required to Perfect Security Interest

Schedule 4

  

Jurisdiction of Organization, Identification Number and Location of Chief
Executive Office

Schedule 5

  

Locations of Inventory and Equipment

Schedule 6

  

Intellectual Property

Schedule 7

  

Existing Prior Liens

Schedule 8

  

Deposit Accounts and Securities Accounts

Schedule 9

  

Receivables

Annexes

    

Annex I

  

Assumption Agreement

Annex II

  

Acknowledgment and Consent

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GUARANTEE AND COLLATERAL AGREEMENT, dated as of February 18, 2005, made by each
of the signatories hereto (together with any other entity that may become a
party hereto as provided herein, the “Grantors”), in favor of LEHMAN COMMERCIAL
PAPER INC., as Administrative Agent (in such capacity, the “Administrative
Agent”) for the banks and other financial institutions (the “Lenders”) from time
to time parties to the Term Loan Agreement, dated as of February 18, 2005 (as
amended, supplemented or otherwise modified from time to time, the “Term Loan
Agreement”), among Primus Telecommunications Holding, Inc., a Delaware
corporation (the “Borrower”), Primus Telecommunications Group, Incorporated, a
Delaware corporation (“Parent”), the several banks and other financial
institutions or entities from time to time parties to the Term Loan Agreement
(the “Lenders”), LEHMAN BROTHERS INC., as advisor, sole lead arranger and sole
bookrunner (in such capacity, the “Arranger”), LEHMAN COMMERCIAL PAPER INC., as
syndication agent (in such capacity, the “Syndication Agent”), and the
Administrative Agent.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Term Loan Agreement, the Lenders have severally agreed
to make extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein;

 

WHEREAS, the Borrower is a member of an affiliated group of companies that
includes each other Grantor;

 

WHEREAS, the proceeds of the extensions of credit under the Term Loan Agreement
will be used in part to enable the Borrower to make valuable transfers to one or
more of the other Grantors in connection with the operation of their respective
businesses;

 

WHEREAS, the Borrower and the other Grantors are engaged in related businesses,
and each Grantor will derive substantial direct and indirect benefit from the
extensions of credit under the Term Loan Agreement; and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make
their respective extensions of credit to the Borrower under the Term Loan
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent;

 

NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Term Loan Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby agrees with the Administrative Agent,
for the benefit of the Secured Parties, as follows:

 

SECTION 1. DEFINED TERMS

 

1.1 Definitions. (a) Unless otherwise defined herein, terms defined in the Term
Loan Agreement and used herein shall have the meanings given to them in the Term
Loan Agreement and the following terms are used herein as defined in the New
York UCC: Accounts,

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Certificated Security, Chattel Paper, Commercial Tort Claims, Documents,
Equipment, Farm Products, General Intangibles, Goods, Instruments, Inventory,
Letter-of-Credit Rights and Supporting Obligations.

 

(b) The following terms shall have the following meanings:

 

“Agreement”: this Guarantee and Collateral Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.

 

“Borrower Hedge Agreement Obligations”: the collective reference to all
obligations and liabilities of the Borrower (including, without limitation,
interest accruing at the then applicable rate provided in any Specified Hedge
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Qualified Counterparty, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, any Specified
Hedge Agreement or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the relevant Qualified
Counterparty that are required to be paid by the Borrower pursuant to the terms
of any Specified Hedge Agreement).

 

“Borrower Obligations”: the collective reference to (i) the Borrower Term Loan
Agreement Obligations, (ii) the Borrower Hedge Agreement Obligations, but only
to the extent that, and only so long as, the Borrower Term Loan Agreement
Obligations are secured and guaranteed pursuant hereto, and (iii) all other
obligations and liabilities of the Borrower, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this Agreement
(including, without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Secured Parties that are required to be paid by
the Borrower pursuant to the terms of this Agreement).

 

“Borrower Term Loan Agreement Obligations”: the collective reference to the
unpaid principal of and interest on the Loans and all other obligations and
liabilities of the Borrower (including, without limitation, interest accruing at
the then applicable rate provided in the Term Loan Agreement after the maturity
of the Loans and interest accruing at the then applicable rate provided in the
Term Loan Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to the Administrative Agent or any Lender,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Term Loan Agreement, this Agreement, or the other Loan Documents, or
any other document made, delivered or given in connection therewith, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by the Borrower pursuant to the terms of any of the
foregoing agreements).

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“Collateral”: as defined in Section 3.

 

“Collateral Account”: any collateral account established by the Administrative
Agent as provided in Section 6.1 or 6.4.

 

“Copyrights”: (i) all copyrights arising under the laws of the United States,
any other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished (including, without
limitation, those listed in Schedule 6), all registrations and recordings
thereof, and all applications in connection therewith, including, without
limitation, all registrations, recordings and applications in the United States
Copyright Office, and (ii) the right to obtain all renewals thereof.

 

“Copyright Licenses”: any written agreement naming any Grantor as licensor or
licensee (including, without limitation, those listed in Schedule 6), granting
any right under any Copyright, including, without limitation, the grant of
rights to manufacture, distribute, exploit and sell materials derived from any
Copyright.

 

“Deposit Account”: as defined in the Uniform Commercial Code of any applicable
jurisdiction and, in any event, including, without limitation, any demand, time,
savings, passbook or like account maintained with a depositary institution.

 

“Excluded Assets”: the collective reference to (i) any contract, General
Intangible, Copyright License, Patent License or Trademark License (“Intangible
Assets”), or any other Property in each case to the extent the grant by the
relevant Grantor of a security interest pursuant to this Agreement in such
Grantor’s right, title and interest in such Intangible Asset or other Property
(A) is prohibited by legally enforceable provisions of any contract, agreement,
instrument or indenture governing such Intangible Asset or other Property, or by
any law, (B) would give any other party to such contract, agreement, instrument
or indenture a legally enforceable right to terminate its obligations thereunder
or (C) is permitted only with the consent of another party, if the requirement
to obtain such consent is legally enforceable and such consent has not been
obtained; provided, that in any event any Receivable or any money or other
amounts due or to become due under any such contract, agreement, instrument or
indenture shall not be Excluded Assets to the extent that any of the foregoing
is (or if it contained a provision limiting the transferability or pledge
thereof would be) subject to Section 9-406 of the New York UCC, and (ii) Foreign
Subsidiary Voting Stock excluded from the definition of “Pledged Stock” set
forth in this Section 1.1.

 

“Foreign Subsidiary”: any Subsidiary organized under the laws of any
jurisdiction outside the United States of America.

 

“Foreign Subsidiary Voting Stock”: the voting Capital Stock of any Foreign
Subsidiary owned directly by the Borrower or any Subsidiary Guarantor of the
Borrower. For avoidance of doubt, Foreign Subsidiary Voting Stock shall not
include any voting Capital Stock of any Foreign Subsidiary owned by another
Foreign Subsidiary.

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“Guarantor Hedge Agreement Obligations”: the collective reference to all
obligations and liabilities of a Guarantor (including, without limitation,
interest accruing at the then applicable rate provided in any Specified Hedge
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to such Guarantor,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Qualified Counterparty, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, any Specified
Hedge Agreement or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the relevant Qualified
Counterparty that are required to be paid by such Guarantor pursuant to the
terms of any Specified Hedge Agreement).

 

“Guarantor Obligations”: with respect to any Guarantor, the collective reference
to (i) any Guarantor Hedge Agreement Obligations of such Guarantor, but only to
the extent that, and only so long as, the other Obligations of such Guarantor
are secured and guaranteed pursuant hereto, and (ii) all obligations and
liabilities of such Guarantor which may arise under or in connection with this
Agreement (including, without limitation, Section 2) or any other Loan Document
to which such Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to any Secured Party that are required to be paid
by such Guarantor pursuant to the terms of this Agreement or any other Loan
Document).

 

“Guarantors”: the collective reference to each Grantor other than the Borrower.

 

“Hedge Agreements”: as to any Person, all interest rate swaps, currency exchange
agreements, commodity swaps, caps or collar agreements or similar arrangements
entered into by such Person providing for protection against fluctuations in
interest rates, currency exchange rates or commodity prices or the exchange of
nominal interest obligations, either generally or under specific contingencies.
For avoidance of doubt, Hedge Agreements shall include any interest rate swap or
similar agreement that provides for the payment by the Borrower or any of its
Subsidiaries of amounts based upon a floating rate in exchange for receipt by
the Borrower or such Subsidiary of amounts based upon a fixed rate.

 

“Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at
law or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.

 

“Intercompany Note”: any promissory note evidencing loans made by any Grantor to
Parent or any of its Subsidiaries.

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“Investment Property”: the collective reference to (i) all “investment property”
as such term is defined in Section 9-102(a)(49) of the New York UCC (other than
any Foreign Subsidiary Voting Stock excluded from the definition of “Pledged
Stock” in this Section 1.1) and (ii) whether or not constituting “investment
property” as so defined, all Pledged Notes and all Pledged Stock.

 

“Issuers”: the collective reference to each issuer of any Investment Property.

 

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

 

“Obligations”: (i) in the case of the Borrower, the Borrower Obligations, and
(ii) in the case of each Guarantor, its Guarantor Obligations.

 

“Patents”: (i) all letters patent of the United States, any other country or any
political subdivision thereof, all reissues and extensions thereof and all
goodwill associated therewith, including, without limitation, any of the
foregoing referred to in Schedule 6, (ii) all applications for letters patent of
the United States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any of the
foregoing referred to in Schedule 6, and (iii) all rights to obtain any reissues
or extensions of the foregoing.

 

“Patent License”: all agreements, whether written or oral, providing for the
grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.

 

“Pledged Notes”: all promissory notes, if any, listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course
of business).

 

“Pledged Securities”: the collective reference to the Pledged Notes and the
Pledged Stock.

 

“Pledged Stock”: the shares of Capital Stock listed on Schedule 2, together with
any other shares, stock certificates, options or rights of any nature whatsoever
in respect of the Capital Stock of any Person that may be issued or granted to,
or held directly by, any Grantor while this Agreement is in effect; provided
that in no event shall more than 65% of the total outstanding Foreign Subsidiary
Voting Stock of any Foreign Subsidiary be required to be pledged hereunder.

 

“Proceeds”: all “proceeds” as such term is defined in Section 9-102(a)(64) of
the Uniform Commercial Code in effect in the State of New York on the date
hereof and, in any event, including, without limitation, all dividends or other
income from the Investment Property, collections thereon or distributions or
payments with respect thereto.

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“Qualified Counterparty”: with respect to any Specified Hedge Agreement, any
counterparty thereto that, at the time such Specified Hedge Agreement was
entered into, was a Lender or an affiliate of a Lender.

 

“Receivable”: any right to payment for goods sold, leased, licensed, assigned or
otherwise disposed of, or for services rendered, whether or not such right is
evidenced by an Instrument or Chattel Paper and whether or not it has been
earned by performance (including, without limitation, any Account).

 

“Secured Parties”: the collective reference to the Administrative Agent, the
Syndication Agent, the Lenders and any Qualified Counterparties.

 

“Securities Account”: as defined in the Uniform Commercial Code of any
applicable jurisdiction.

 

“Securities Act”: the Securities Act of 1933, as amended.

 

“Security Interest Approval Pending Collateral”: with respect to each Security
Interest Approval Pending Subsidiary, all assets of such Subsidiary which, to
the extent described in Schedule 3.15(c) of the Term Loan Agreement, may not be
lawfully included in Collateral until the Governmental Approvals specified in
respect of such assets in such Schedule 3.15(c) have been obtained.

 

“Specified Hedge Agreement”: any Hedge Agreement entered into by (i) the
Borrower or any Guarantor and (ii) any Qualified Counterparty.

 

“Trademarks”: (i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos
and other source or business identifiers, and all goodwill associated therewith,
now existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related thereto,
including, without limitation, any of the foregoing referred to in Schedule 6,
and (ii) the right to obtain all renewals thereof.

 

“Trademark License”: any agreement, whether written or oral, providing for the
grant by or to any Grantor of any right to use any Trademark, including, without
limitation, any of the foregoing referred to in Schedule 6.

 

“Vehicles”: all cars, trucks, trailers, construction and earth moving equipment
and other vehicles covered by a certificate of title law of any state and all
tires and other appurtenances to any of the foregoing.

 

1.2 Other Definitional Provisions. (a) The words “hereof,” “herein”, “hereto”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.

 

(b) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

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(c) Where the context requires, terms relating to the Collateral or any part
thereof, when used in relation to a Grantor, shall refer to such Grantor’s
Collateral or the relevant part thereof.

 

SECTION 2. GUARANTEE

 

2.1 Guarantee. (a) (i) The Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantee to the Administrative Agent, for the
ratable benefit of the Secured Parties and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at stated maturity, by
acceleration or otherwise) of the Borrower Obligations (other than, in the case
of each Guarantor, Borrower Obligations arising pursuant to clause (ii) of this
Section 2.1(a) in respect of Guarantor Hedge Agreement Obligations in respect of
which such Guarantor is a primary obligor).

 

(ii) The Borrower hereby unconditionally and irrevocably guarantees to the
Administrative Agent, for the ratable benefit of the Secured Parties and their
respective successors, endorsees, transferees and assigns, the prompt and
complete payment and performance by each Guarantor when due (whether at stated
maturity, by acceleration or otherwise) of the Guarantor Hedge Agreement
Obligations of such Guarantor.

 

(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, (i) the maximum liability of each Guarantor hereunder and under
the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating to
fraudulent conveyances or transfers or the insolvency of debtors (after giving
effect to the right of contribution established in Section 2.2) and (ii) the
maximum liability of the Borrower under this Section 2 shall in no event exceed
the amount which can be guaranteed by the Borrower under applicable federal and
state laws relating to fraudulent conveyances or transfers or the insolvency of
debtors (after giving effect to the right of contribution established in Section
2.2).

 

(c) (i) Each Guarantor agrees that the Borrower Obligations may at any time and
from time to time exceed the amount of the liability of such Guarantor hereunder
without impairing the guarantee of such Guarantor contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent or any Secured
Party hereunder.

 

(ii) The Borrower agrees that the Guarantor Hedge Agreement Obligations may at
any time and from time to time exceed the amount of the liability of the
Borrower under this Section 2 without impairing the guarantee of the Borrower
contained in this Section 2 or affecting the rights and remedies of the
Administrative Agent or any Secured Party hereunder.

 

(d) Subject to Section 8.15, the guarantee contained in this Section 2 shall
remain in full force and effect until all the Borrower Obligations (other than
Borrower Obligations arising under Section 2.1(a)(ii)) and the obligations of
each Guarantor under the guarantee

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contained in this Section 2 (other than Guarantor Obligations in respect of
Borrower Obligations arising under Section 2.1(a)(ii) shall have been satisfied
by full and final payment in cash and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the Term Loan
Agreement the Borrower may be free from any Borrower Obligations and any or all
of the Guarantors may be free from their respective Guarantor Hedge Agreement
Obligations.

 

(e) No payment made by the Borrower, any of the Guarantors, any other guarantor
or any other Person or received or collected by the Administrative Agent or any
Secured Party from the Borrower, any of the Guarantors, any other guarantor or
any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Borrower Obligations or the Guarantor Hedge Agreement
Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of the Borrower or any Guarantor under this Section 2 which shall,
notwithstanding any such payment (other than any payment made by the Borrower or
such Guarantor in respect of the Borrower Obligations or the Guarantor Hedge
Agreement Obligations or any payment received or collected from the Borrower or
such Guarantor in respect of the Borrower Obligations or the Guarantor Hedge
Agreement Obligations), remain liable for the Borrower Obligations and the
Guarantor Hedge Agreement Obligations up to the maximum liability of the
Borrower or such Guarantor hereunder until the Borrower Obligations and the
Guarantor Hedge Agreement Obligations are fully and finally paid in cash and the
Commitments are terminated.

 

2.2 Right of Contribution. (a) Each Guarantor hereby agrees that to the extent
that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder or under the Guarantor Hedge Agreement Obligations, such
Guarantor shall be entitled to seek and receive contribution from and against
any other Guarantor hereunder which has not paid its proportionate share of such
payment.

 

(b) The Borrower and each Guarantor agrees that to the extent that the Borrower
or any Guarantor shall have paid more than its proportionate share of any
payment made hereunder in respect of any Guarantor Hedge Agreement Obligation of
any other Guarantor, the Borrower or such Guarantor, as the case may be, shall
be entitled to seek and receive contribution from and against the Borrower and
any other Guarantor which has not paid its proportionate share of such payment.

 

(c) The Borrower’s and each Guarantor’s right of contribution under this Section
2.2 shall be subject to the terms and conditions of Section 2.3. The provisions
of this Section 2.2 shall in no respect limit the obligations and liabilities of
the Borrower or any Guarantor to the Administrative Agent and the Secured
Parties, and the Borrower and each Guarantor shall remain liable to the
Administrative Agent and the Secured Parties for the full amount guaranteed by
the Borrower or such Guarantor hereunder.

 

2.3 Subrogation. Notwithstanding any payment made by the Borrower or any
Guarantor hereunder or any set-off or application of funds of the Borrower or
any Guarantor by the Administrative Agent or any Secured Party, neither the
Borrower nor any Guarantor shall be entitled to be subrogated to any of the
rights of the Administrative Agent or any Secured Party against the Borrower or
any other Guarantor or any collateral security or guarantee or right of offset
held by the Administrative Agent or any Secured Party for the payment of the
Borrower Obligations or the Guarantor Hedge Agreement Obligations, nor shall the
Borrower or any

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Guarantor seek or be entitled to seek any contribution or reimbursement from the
Borrower or any other Guarantor in respect of payments made by the Borrower or
such Guarantor hereunder, until all amounts owing to the Administrative Agent
and the Secured Parties by the Borrower on account of the Borrower Obligations
are fully and finally paid in cash and the Commitments are terminated. If any
amount shall be paid to the Borrower or any Guarantor on account of such
subrogation rights at any time when all of the Borrower Obligations shall not
have been fully and finally paid in cash, such amount shall be held by the
Borrower or such Guarantor in trust for the Administrative Agent and the Secured
Parties, segregated from other funds of the Borrower or such Guarantor, and
shall, forthwith upon receipt by the Borrower or such Guarantor, be turned over
to the Administrative Agent in the exact form received by the Borrower or such
Guarantor (duly indorsed by the Borrower or such Guarantor to the Administrative
Agent, if required), to be applied against the Borrower Obligations or the
Guarantor Hedge Agreement Obligations, whether matured or unmatured, in such
order as the Administrative Agent may determine.

 

2.4 Amendments, etc. with respect to the Borrower Obligations. The Borrower and
each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against the Borrower or any Guarantor and without
notice to or further assent by the Borrower or any Guarantor, any demand for
payment of any of the Borrower Obligations or Guarantor Hedge Agreement
Obligations made by the Administrative Agent or any Secured Party may be
rescinded by the Administrative Agent or such Secured Party and any of the
Borrower Obligations or Guarantor Hedge Agreement Obligations continued, and the
Borrower Obligations or Guarantor Hedge Agreement Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent or any
Secured Party (with the consent of such of the Borrower and any Guarantor as
shall be required thereunder), and the Specified Hedge Agreements, the Term Loan
Agreement and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders or all Lenders, as the case may be) may (with the consent of such of the
Borrower and any Guarantor as shall be required thereunder) deem advisable from
time to time, and any collateral security, guarantee or right of offset at any
time held by the Administrative Agent or any Secured Party for the payment of
the Borrower Obligations or Guarantor Hedge Agreement Obligations may (with the
consent of such of the Borrower and any Guarantor as shall be required
thereunder) be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Secured Party shall, except to the extent set forth
in, and for the benefit of the parties to, the agreements and instruments
governing such Lien or guarantee, have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Borrower
Obligations or Guarantor Hedge Agreement Obligations or for the guarantees
contained in this Section 2 or any property subject thereto.

 

2.5 Guarantee Absolute and Unconditional. (a) Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations (other than any notice with respect to any Guarantor Hedge Agreement
Obligation with respect to which such Guarantor is a primary obligor and to
which it is entitled pursuant to the applicable Specified Hedge Agreement) and
notice of or proof of reliance by the Administrative Agent or

 

9

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any Secured Party upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Borrower Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the Borrower and
any of the Guarantors, on the one hand, and the Administrative Agent and the
Secured Parties, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this
Section 2. Each Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower or any of
the Guarantors with respect to the Borrower Obligations (other than any
diligence, presentment, protest, demand or notice with respect to any Guarantor
Hedge Agreement Obligation with respect to which such Guarantor is a primary
obligor and to which it is entitled pursuant to the applicable Specified Hedge
Agreement). Each Guarantor understands and agrees that the guarantee of such
Guarantor contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Term Loan Agreement or any other Loan
Document, any of the Borrower Obligations or any collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Secured Party, (b) any defense,
set-off or counterclaim (other than a defense of payment or performance) which
may at any time be available to or be asserted by the Borrower or any other
Person against the Administrative Agent or any Secured Party, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Borrower Obligations, or of
such Guarantor under the guarantee of such Guarantor contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the
Administrative Agent or any Secured Party may, but shall be under no obligation
to, make a similar demand on or otherwise pursue such rights and remedies as it
may have against the Borrower, any other Guarantor or any other Person or
against any collateral security or guarantee for the Borrower Obligations or any
right of offset with respect thereto, and any failure by the Administrative
Agent or any Secured Party to make any such demand, to pursue such other rights
or remedies or to collect any payments from the Borrower, any other Guarantor or
any other Person or to realize upon any such collateral security or guarantee or
to exercise any such right of offset, or any release of the Borrower, any other
Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve any Guarantor of any obligation or liability
under this Section 2, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent or any Secured Party against any Guarantor. For the purposes hereof
“demand” shall include the commencement and continuance of any legal
proceedings.

 

(b) The Borrower waives any and all notice of the creation, renewal, extension
or accrual of any of the Guarantor Hedge Agreement Obligations and notice of or
proof of reliance by the Administrative Agent or any Secured Party upon the
guarantee by the Borrower contained in this Section 2 or acceptance of the
guarantee by the Borrower contained in this Section 2; the Guarantor Hedge
Agreement Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended or waived,
in reliance upon the guarantee by the Borrower contained in this Section 2; and
all dealings between the Borrower and any of the Guarantors, on the one hand,
and the Administrative Agent and the Secured

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Parties, on the other hand, with respect to any Guarantor Hedge Agreement
Obligation likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee by the Borrower contained in this
Section 2. The Borrower waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower with respect
to the Guarantor Hedge Agreement Obligations. The Borrower understands and
agrees that the guarantee by the Borrower contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of the Guarantor Hedge
Agreement Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any Secured Party, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by any Person against the Administrative
Agent or any Secured Party, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of the Borrower or any Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the applicable Guarantor for the applicable Guarantor Hedge
Agreement Obligations, or of the Borrower under its guarantee contained in this
Section 2, in bankruptcy or in any other instance. When making any demand under
this Section 2 or otherwise pursuing its rights and remedies under this Section
2 against the Borrower, the Administrative Agent or any Secured Party may, but
shall be under no obligation to, make a similar demand on or otherwise pursue
such rights and remedies as it may have against any Guarantor or any other
Person or against any collateral security or guarantee for the Guarantor Hedge
Agreement Obligations or any right of offset with respect thereto, and any
failure by the Administrative Agent or any Secured Party to make any such
demand, to pursue such other rights or remedies or to collect any payments from
any Guarantor or any other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release of
any Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve the Borrower of any obligation or liability
under this Section 2, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent or any Secured Party against the Borrower under this Section 2. For the
purposes hereof “demand” shall include the commencement and continuance of any
legal proceedings.

 

2.6 Reinstatement. The guarantee contained in this Section 2 shall continue to
be effective, or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any of the Borrower Obligations or Guarantor Hedge
Agreement Obligations is rescinded or must otherwise be restored or returned by
the Administrative Agent or any Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.

 

2.7 Payments. The Borrower and each Guarantor hereby guarantees that payments by
it hereunder will be paid to the Administrative Agent without set-off or
counterclaim (i) in the case of obligations in respect of Borrower Obligations
arising under the Term Loan Agreement or any other Loan Document in Dollars at
the Payment Office specified in the Term Loan Agreement and (ii) in the case of
obligations in respect of any Borrower Hedge Agreement Obligations or any
Guarantor Hedge Agreement Obligations, in the currency and at the place
specified in the applicable Specified Hedge Agreement.

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SECTION 3. GRANT OF SECURITY INTEREST

 

Each Grantor hereby assigns and transfers to the Administrative Agent, and
hereby grants to the Administrative Agent, for the ratable benefit of the
Secured Parties, a security interest in, all of the following property 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 “Collateral”), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor’s Obligations:

 

  (a) all Accounts;

 

  (b) all Chattel Paper;

 

  (c) all Deposit Accounts;

 

  (d) all Documents;

 

  (e) all Equipment;

 

  (f) all General Intangibles;

 

  (g) all Instruments;

 

  (h) all Intellectual Property;

 

  (i) all Inventory;

 

  (j) all Investment Property;

 

  (k) all Vehicles;

 

  (l) all Letter-of-Credit Rights;

 

  (m) all Commercial Tort Claims to the extent they have been notified to the
Administrative Agent pursuant to Section 5.11;

 

  (n) all Goods and other property not otherwise described above;

 

  (o) all books and records pertaining to the Collateral; and

 

  (p) to the extent not otherwise included, all Proceeds and products of any and
all of the foregoing, all Supporting Obligations in respect of any of the
foregoing and all collateral security and guarantees given by any Person with
respect to any of the foregoing;

 

provided, that the Collateral shall not include any Excluded Assets.

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SECTION 4. REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders to enter into the Term Loan
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to the Administrative Agent and each Lender that:

 

4.1 Representations in Term Loan Agreement. In the case of each Guarantor, the
representations and warranties set forth in Section 3 of the Term Loan Agreement
as they relate to such Guarantor or to the Loan Documents to which such
Guarantor is a party, each of which is hereby incorporated herein by reference,
are true and correct, and the Administrative Agent and each Lender shall be
entitled to rely on each of them as if they were fully set forth herein,
provided that each reference in each such representation and warranty to the
Borrower’s knowledge shall, for the purposes of this Section 4.1, be deemed to
be a reference to such Guarantor’s knowledge.

 

4.2 Title; No Other Liens. Except for the security interest granted to the
Administrative Agent for the ratable benefit of the Secured Parties pursuant to
this Agreement and the other Liens permitted to exist on the Collateral by the
Term Loan Agreement, such Grantor owns its right, title and interest in and to
each item of the Collateral free and clear of any and all Liens or claims of
others. No financing statement or other public notice with respect to all or any
part of the Collateral is on file or of record in any public office, except (a)
such as have been filed in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, pursuant to this Agreement, (b) or as are
permitted by the Term Loan Agreement or (c) as described on Schedule 7. For the
avoidance of doubt, it is understood and agreed that any Grantor may, as part of
its business, grant licenses to third parties to use Intellectual Property owned
or developed by a Grantor. For purposes of this Agreement and the other Loan
Documents, such licensing activity shall not constitute a “Lien” on such
Intellectual Property. Each of the Administrative Agent and each Secured Party
understands that any such licenses may be exclusive to the applicable licensees,
and such exclusivity provisions may limit the ability of the Administrative
Agent to utilize, sell, lease or transfer the related Intellectual Property or
otherwise realize value from such Intellectual Property pursuant hereto.

 

4.3 Perfected First Priority Liens. The security interests granted by such
Grantor pursuant to this Agreement (a) upon completion of the filings and other
actions specified on Schedule 3 (which, in the case of all filings and other
documents referred to on said Schedule except with respect to (i) Vehicles and
(ii) other Collateral in respect of which a security interest cannot be
perfected by Domestic Perfection Actions, have been delivered to the
Administrative Agent in completed and duly executed form except as otherwise
indicated in Section 5.12 of the Term Loan Agreement or Schedule 3.15(c) of the
Term Loan Agreement) will constitute valid perfected security interests in all
of the Collateral with respect to which perfection may be accomplished by
Domestic Perfection Actions in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, as collateral security for such
Grantor’s Obligations, enforceable in accordance with the terms hereof and (b)
are prior to all other Liens on the Collateral in existence on the date hereof
except for (i) Liens permitted by the Term Loan Agreement to have priority over
the Liens on the Collateral and (ii) Liens described on Schedule 7.

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4.4 Jurisdiction of Organization; Chief Executive Office. On the date hereof,
such Grantor’s jurisdiction of organization, identification number from the
jurisdiction of organization (if any), and the location of such Grantor’s chief
executive office or sole place of business or principal residence, as the case
may be, are specified on Schedule 4. Such Grantor has furnished to the
Administrative Agent a certified charter, certificate of incorporation or other
organization document and long-form good standing certificate as of a date which
is recent to the date hereof.

 

4.5 Inventory and Equipment. On the date hereof, the material portion of
Inventory and the Equipment (other than mobile goods) are kept at the locations
listed on Schedule 5.

 

4.6 Farm Products. None of the Collateral constitutes, or is the Proceeds of,
Farm Products.

 

4.7 Investment Property. (a) The shares of Pledged Stock pledged by such Grantor
hereunder constitute all the issued and outstanding shares of all classes of the
Capital Stock of each Issuer owned by such Grantor or, in the case of Foreign
Subsidiary Voting Stock, if less, 65% of the outstanding Foreign Subsidiary
Voting Stock of each relevant Issuer.

 

(b) To the knowledge of such Grantor, all the shares of the Pledged Stock have
been duly and validly issued and are fully paid and nonassessable.

 

(c) To the knowledge of such Grantor, each of the Pledged Notes constitutes the
legal, valid and binding obligation of the obligor with respect thereto,
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

 

(d) Such Grantor is the record and beneficial owner of, and has good and
marketable title to, the Investment Property pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement or as permitted by the Term Loan
Agreement.

 

4.8 Receivables. (a) Schedule 9 is a list of the Receivables evidenced by any
Instrument or Chattel Paper which has been delivered to the Administrative
Agent.

 

(b) None of the obligors on any Receivable is a Governmental Authority, except
for Receivables constituting not more than 5% of the face amount of all
Receivables.

 

(c) The amounts represented by such Grantor to the Secured Parties from time to
time as owing to such Grantor in respect of the Receivables will at such times
be accurate in all material respects.

 

4.9 Intellectual Property. (a) Schedule 6 lists all material Intellectual
Property owned by such Grantor in its own name on the date hereof.

 

14

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(b) On the date hereof, to its knowledge, all material Intellectual Property of
such Grantor described on Schedule 6 is valid, subsisting, unexpired and
enforceable, has not been abandoned and does not infringe upon the intellectual
property rights of any other Person.

 

(c) Except (i) for licensing or franchise agreements between any two or more of
Parent and its Subsidiaries, (ii) the licensing of one provisional patent to
various companies to enable them to provide void services, (iii) the licensing
of Trademarks to independent sales agents, and (iv) as set forth in Schedule 6,
on the date hereof, none of the Intellectual Property is the subject of any
licensing or franchise agreement pursuant to which such Grantor is the licensor
or franchisor.

 

(d) No holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of, or such
Grantor’s rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.

 

(e) No action or proceeding is pending, or, to the knowledge of such Grantor,
threatened, on the date hereof (i) seeking to limit, cancel or question the
validity of any material Intellectual Property or such Grantor’s ownership
interest therein, or (ii) which, if adversely determined, would have a material
adverse effect on the value of any material Intellectual Property.

 

4.10 Vehicles. To its knowledge, the aggregate book value of all Vehicles owned
by all Grantors is less than $500,000.

 

4.11 Deposit Accounts and Securities Accounts. Schedule 8 lists each Deposit
Account and each Securities Account maintained by such Grantor.

 

SECTION 5. COVENANTS

 

Each Grantor covenants and agrees with the Administrative Agent and the Secured
Parties that, from and after the date of this Agreement until the Obligations
shall have been paid in full and the Commitments shall have terminated:

 

5.1 Covenants in Term Loan Agreement. In the case of each Guarantor, such
Guarantor shall take, or shall refrain from taking, as the case may be, each
action that is necessary to be taken or not taken, as the case may be, so that
no Default or Event of Default is caused by the failure to take such action or
to refrain from taking such action by such Guarantor or any of its Subsidiaries.

 

5.2 Delivery of Instruments and Chattel Paper. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
Instrument, Certificated Security or Chattel Paper, such Instrument,
Certificated Security or Chattel Paper shall, not later than the end of the
fiscal quarter in which any such amount becomes so evidenced, be delivered to
the Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement;
provided, that the Grantors shall not be obligated to deliver to the
Administrative Agent any Instruments or Chattel

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Paper held by any Grantor at any time to the extent that the aggregate face
amount of all such Instruments and Chattel Paper held by all Grantors at such
time does not exceed $3,000,000 or such Instruments and Chattel Paper reflect an
agreement between any two or more of Parent and its Subsidiaries.

 

5.3 Maintenance of Insurance. (a) Such Grantor will maintain, with financially
sound and reputable companies, insurance policies insuring the Inventory,
Equipment and Vehicles against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the Administrative Agent and
such policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Administrative Agent.

 

(b) All such insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until the applicable insurer has complied with applicable state law (ii) name
the Administrative Agent as additional insured party or loss payee, and (iii) be
reasonably satisfactory in all other respects to the Administrative Agent.

 

(c) The Borrower shall deliver to the Administrative Agent such additional
information concerning such insurance as the Administrative Agent may from time
to time reasonably request.

 

5.4 Payment of Obligations. Such Grantor will pay and discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of income or profits therefrom, as well as all claims
of any kind (including, without limitation, claims for labor, materials and
supplies) against or with respect to the Collateral, except that no such tax,
assessment, charge, levy or claim need be paid if the amount or validity thereof
is currently being contested in good faith by appropriate proceedings, reserves
in conformity with GAAP with respect thereto have been provided on the books of
such Grantor and such proceedings could not reasonably be expected to result in
the sale, forfeiture or loss of any material portion of the Collateral or such
Grantor’s interest in such material portion of the Collateral.

 

5.5 Maintenance of Perfected Security Interest; Further Documentation. (a) Such
Grantor shall maintain the security interest created by this Agreement as a
perfected security interest in the manner, and having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.

 

(b) Such Grantor will furnish to the Administrative Agent and the Lenders from
time to time statements and schedules further identifying and describing the
assets and property of such Grantor and such other reports in connection with
the Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.

 

(c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein

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granted, including, without limitation, (i) the filing of any financing or
continuation statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction in the United States with respect to the
security interests created hereby and (ii) in the case of Investment Property,
Deposit Accounts and Letter-of-Credit Rights, taking, to the extent required by
the Term Loan Agreement, any actions necessary to enable the Administrative
Agent to obtain “control” (within the meaning of the applicable Uniform
Commercial Code) with respect thereto.

 

5.6 Changes in Name, etc. Such Grantor will not, except upon 15 days’ prior
written notice to the Administrative Agent and delivery to the Administrative
Agent of all additional financing statements and other documents reasonably
requested by the Administrative Agent to maintain the validity, perfection and
priority of the security interests provided for herein:

 

(i) change its jurisdiction of organization or the location of its chief
executive office or sole place of business or principal residence from that
referred to in Section 4.3; or

 

(ii) change its name.

 

5.7 Notices. Such Grantor will advise the Administrative Agent and the Lenders:

 

(a) No less often than on a quarterly basis, in reasonable detail, of any Lien
(other than security interests created hereby or Liens permitted under the Term
Loan Agreement) on any of the Collateral which would adversely affect the
ability of the Administrative Agent to exercise any of its remedies hereunder;
and

 

(b) Promptly, in reasonable detail, of the occurrence of any other event which
could reasonably be expected to have a material adverse effect on the aggregate
value of the Collateral or on the security interests created hereby.

 

5.8 Investment Property. (a) If such Grantor shall become entitled to receive or
shall receive any certificate (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of any Issuer of Pledged Stock, whether in addition to, in substitution
of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or
otherwise in respect thereof, such Grantor shall accept the same as the agent of
the Administrative Agent and the Secured Parties, hold the same in trust for the
Administrative Agent and the Secured Parties and deliver the same promptly to
the Administrative Agent in the exact form received, duly indorsed by such
Grantor to the Administrative Agent, if required, together with an undated stock
power covering such certificate duly executed in blank by such Grantor and with,
if the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Investment
Property pledged hereunder upon the liquidation or dissolution of any Issuer
shall be paid over to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any distribution
of capital shall be made on or

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in respect of such Investment Property, or any property shall be distributed
upon or with respect to such Investment Property pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent promptly to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of such Investment Property shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the Administrative Agent, hold such money or property in
trust for the Secured Parties, segregated from other funds of such Grantor, as
additional collateral security for the Obligations. Notwithstanding the
foregoing, the Grantors shall not be required to pay over to the Administrative
Agent or deliver to the Administrative Agent as Collateral any proceeds of any
liquidation or dissolution of any Issuer, or any distribution of capital or
property in respect of any Investment Property, to the extent that (i) such
liquidation, dissolution or distribution, if treated as a Disposition of the
relevant Issuer, would be permitted by the Term Loan Agreement and (ii) the
proceeds thereof are applied toward prepayment of Loans and reduction of
Commitments to the extent required by the Term Loan Agreement.

 

(b) Except with respect to the Lingo Subsidiary following the Lingo Offering,
without the prior written consent of the Administrative Agent, such Grantor will
not (i) except as otherwise permitted by the Term Loan Agreement, vote to
enable, or take any other action to permit, any Issuer to issue any stock or
other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of any Issuer, unless such securities are
delivered to the Administrative Agent, concurrently with the issuance thereof,
to be held by the Administrative Agent as Collateral, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Investment Property pledged hereunder or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Term Loan Agreement), (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of such Investment Property or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement and Permitted Liens or (iv) enter into any agreement or undertaking
restricting the right or ability of such Grantor or the Administrative Agent to
sell, assign or transfer any of the Pledged Securities or Proceeds thereof.

 

(c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i)
it will be bound by the terms of this Agreement relating to the Pledged
Securities issued by it and will comply with such terms insofar as such terms
are applicable to it, (ii) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) with
respect to the Pledged Securities issued by it and (iii) the terms of Sections
6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions
that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Pledged Securities issued by it.

 

(d) Each Issuer that is a partnership or a limited liability company (i)
confirms that none of the terms of any equity interest issued by it provides
that such equity interest is a “security” within the meaning of Sections 8-102
and 8-103 of the New York UCC (a “Security”),

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(ii) agrees that it will take no action to cause or permit any such equity
interest to become a Security, (iii) agrees that it will not issue any
certificate representing any such equity interest and (iv) agrees that if,
notwithstanding the foregoing, any such equity interest shall be or become a
Security, such Issuer will (and the Grantor that holds such equity interest
hereby instructs such Issuer to) comply with instructions originated by the
Administrative Agent without further consent by such Grantor.

 

5.9 Receivables. (a) Other than in the ordinary course of business consistent
with its past practice, or unless the applicable Grantor concludes that any of
the following is in the best interest of such Grantor, such Grantor will not (i)
grant any extension of the time of payment of any Receivable, (ii) compromise or
settle any Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any Receivable, (iv)
allow any credit or discount whatsoever on any Receivable or (v) amend,
supplement or modify any Receivable in any manner that could adversely affect
the value thereof.

 

(b) Such Grantor will deliver to the Administrative Agent no less often than on
a quarterly basis a copy of each material demand, notice or document received by
it that questions or calls into doubt the validity or enforceability of more
than 5% of the aggregate amount of the then outstanding Receivables.

 

5.10 Intellectual Property. (a) Such Grantor (either itself or through
licensees) will (i) to such extent as such Grantor determines it is desirable to
do so, continue to use each material Trademark on each and every material
trademark class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such Trademark
in full force free from any claim of abandonment for non-use, (ii) maintain the
quality of products and services offered under such Trademark, (iii) use such
Trademark with the appropriate notice of registration and all other notices and
legends required by applicable Requirements of Law, and (iv) not (and not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby such Trademark may become invalidated or materially impaired in any
way.

 

(b) Such Grantor (either itself or through licensees) will not do any act, or
omit to do any act, whereby any material Patent may become forfeited, abandoned
or dedicated to the public.

 

(c) Such Grantor (either itself or through licensees) will not (and will not
permit any licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any material portion of any material Copyrights may become
invalidated or otherwise impaired. Such Grantor will not (either itself or
through licensees) do any act whereby any material portion of any material
Copyrights may fall into the public domain.

 

(d) Such Grantor (either itself or through licensees) will not do any act that
knowingly uses any material Intellectual Property to infringe upon the
intellectual property rights of any other Person.

 

(e) Such Grantor will notify the Administrative Agent and the Lenders if it
knows, or has reason to know, that any application or registration relating to
any material

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Intellectual Property may become forfeited, abandoned or dedicated to the
public, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, or the United
States Copyright Office or any court in the United States regarding such
Grantor’s ownership of, or the validity of, any material Intellectual Property
or such Grantor’s right to register the same or to own and maintain the same.

 

(f) Whenever such Grantor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any
material Intellectual Property with the United States Patent and Trademark
Office or the United States Copyright Office, such Grantor shall report such
filing to the Administrative Agent no less often than on a quarterly basis. Upon
request of the Administrative Agent, such Grantor shall execute and deliver, and
have recorded, any and all agreements, instruments, documents, and papers as the
Administrative Agent may request that are required to evidence the
Administrative Agent’s and the Secured Parties’ security interest in any
material Copyright, Patent or Trademark and the goodwill and general intangibles
of such Grantor relating thereto or represented thereby.

 

(g) Such Grantor will take all reasonable and necessary steps, including,
without limitation, in any proceeding before the United States Patent and
Trademark Office or the United States Copyright Office, that such Grantor
determines may be desirable to maintain and pursue each application relating to
any material Intellectual Property (and to obtain the relevant registration) and
to maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.

 

In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, notify the Administrative
Agent after it learns thereof no less often than on a quarterly basis and, if
such Grantor determines in its reasonable judgment that legal action is
appropriate, take legal action to contest the infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover any and all
damages for such infringement, misappropriation or dilution.

 

5.11 Commercial Tort Claims. If any Grantor shall at any time commence a suit,
action or proceeding with respect to any Commercial Tort Claim held by it with a
value which such Grantor reasonably believes to be of $ 3,000,000 or more, such
Grantor shall promptly notify the Administrative Agent thereof no less often
than on a quarterly basis in a writing signed by such Grantor and describing the
details thereof and shall grant to the Administrative Agent for the 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 reasonably satisfactory to the Administrative Agent.

 

SECTION 6. REMEDIAL PROVISIONS

 

6.1 Certain Matters Relating to Receivables. (a) The Administrative Agent shall
have the right, at any time after the occurrence and during the continuance of
an Event of

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Default, to make test verifications of the Receivables in any manner and through
any medium that it reasonably considers advisable, and each Grantor shall
furnish all such assistance and information as the Administrative Agent may
reasonably require in connection with such test verifications. At any time and
from time to time after the occurrence and during the continuance of an Event of
Default, upon the Administrative Agent’s request and at the expense of the
relevant Grantor, such Grantor shall cause independent public accountants or
others satisfactory to the Administrative Agent to furnish to the Administrative
Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Receivables.

 

(b) The Administrative Agent hereby authorizes each Grantor to collect such
Grantor’s Receivables, subject to the Administrative Agent’s direction and
control after the occurrence and during the continuance of an Event of Default,
and the Administrative Agent may curtail or terminate said authority at any time
after the occurrence and during the continuance of an Event of Default. If
required by the Administrative Agent at any time after the occurrence and during
the continuance of an Event of Default, any payments of Receivables, when
collected by any Grantor, (i) shall be forthwith (and, in any event, within two
Business Days) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Administrative Agent if required, in a
Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Secured Parties only as provided in Section 6.5, and (ii) until
so turned over, shall be held by such Grantor in trust for the Administrative
Agent and the Secured Parties, segregated from other funds of such Grantor. Each
such deposit of Proceeds of Receivables shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.

 

(c) At any time after the occurrence and during the continuance of an Event of
Default, at the Administrative Agent’s request, each Grantor shall deliver to
the Administrative Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the Receivables,
including, without limitation, all original orders, invoices and shipping
receipts.

 

(d) At any time after the occurrence and during the continuance of an Event of
Default, each Grantor will cooperate with the Administrative Agent to establish
a system of lockbox accounts, under the sole dominion and control of the
Administrative Agent, into which all Receivables shall be paid and from which
all collected funds will be transferred to a Collateral Account.

 

6.2 Communications with Obligors; Grantors Remain Liable. (a) The Administrative
Agent in its own name or in the name of others may at any time after the
occurrence and during the continuance of an Event of Default communicate with
obligors under the Receivables to verify with them to the Administrative Agent’s
satisfaction the existence, amount and terms of any Receivables.

 

(b) Upon the request of the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
notify obligors on the Receivables that the Receivables have been assigned to
the Administrative Agent for the ratable benefit of the Secured Parties and that
payments in respect thereof shall be made directly to the Administrative Agent.

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

 

6.3 Pledged Stock. (a) Unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have given notice to the relevant
Grantor of the Administrative Agent’s intent to exercise its corresponding
rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive
all cash dividends paid in respect of the Pledged Stock and all payments made in
respect of the Pledged Notes, in each case paid in the normal course of business
of the relevant Issuer, and to exercise all voting, corporate and other rights
with respect to the Pledged Securities; provided, however, that no vote shall be
cast or corporate right exercised or other action taken which, in the
Administrative Agent’s reasonable judgment, would impair the Collateral or which
would be inconsistent with or result in any violation of any provision of the
Term Loan Agreement, this Agreement or any other Loan Document.

 

(b) If an Event of Default shall occur and be continuing and the Administrative
Agent shall give notice of its intent to exercise such rights to the relevant
Grantor or Grantors, (i) the Administrative Agent shall have the right to
receive any and all cash dividends, payments or other Proceeds paid in respect
of the Pledged Securities and make application thereof to the Obligations in the
order set forth in Section 6.5, and (ii) any or all of the Pledged Securities
shall be registered in the name of the Administrative Agent or its nominee, and
the Administrative Agent or its nominee may thereafter exercise (x) all voting,
corporate and other rights pertaining to such Pledged Securities at any meeting
of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and
all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to such Pledged Securities as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Securities upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any Issuer, or upon the exercise by any Grantor or
the Administrative Agent of any right, privilege or option pertaining to such
Pledged Securities, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Securities with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.

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(c) Each Grantor hereby authorizes and instructs each Issuer of any Pledged
Securities pledged by such Grantor hereunder to (i) comply with any instruction
received by it from the Administrative Agent in writing that (x) states that an
Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to the Administrative Agent.

 

6.4 Proceeds to be Turned Over To Administrative Agent. In addition to the
rights of the Administrative Agent and the Secured Parties specified in Section
6.1 with respect to payments of Receivables, if an Event of Default shall occur
and be continuing, all Proceeds received by any Grantor consisting of cash,
checks and Instruments shall be held by such Grantor in trust for the
Administrative Agent and the Secured Parties, segregated from other funds of
such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over
to the Administrative Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Administrative Agent, if required). All Proceeds
received by the Administrative Agent hereunder shall be held by the
Administrative Agent in a Collateral Account maintained under its sole dominion
and control. All Proceeds while held by the Administrative Agent in a Collateral
Account (or by such Grantor in trust for the Administrative Agent and the
Secured Parties) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 6.5.

 

6.5 Application of Proceeds. At such intervals as may be agreed upon by the
Borrower and the Administrative Agent, or, if an Event of Default shall have
occurred and be continuing, at any time at the Administrative Agent’s election,
the Administrative Agent may apply all or any part of Proceeds constituting
Collateral, whether or not held in any Collateral Account, and any proceeds of
the guarantee set forth in Section 2, in payment of the Obligations in the
following order:

 

First, to pay incurred and unpaid fees and expenses of the Administrative Agent
under the Loan Documents;

 

Second, to the Administrative Agent, for application by it towards payment of
amounts then due and owing and remaining unpaid in respect of the Obligations,
pro rata among the Secured Parties according to the amounts of the Obligations
then due and owing and remaining unpaid to the Secured Parties;

 

Third, to the Administrative Agent, for application by it towards prepayment of
the Obligations, pro rata among the Secured Parties according to the amounts of
the Obligations then held by the Secured Parties; and

 

Fourth, any balance of such Proceeds remaining after the Obligations shall have
been paid in full and the Commitments shall have terminated shall be paid over
to the Borrower or to whomsoever may be lawfully entitled to receive the same.

 

6.6 Code and Other Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Secured Parties, may
exercise, in addition

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to all other rights and remedies granted to them in this Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of the Administrative Agent or any Secured
Party or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Administrative Agent or any Secured
Party shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.
Each Grantor further agrees, at the Administrative Agent’s request, to assemble
the Collateral and make it available to the Administrative Agent at places which
the Administrative Agent shall reasonably select, whether at such Grantor’s
premises or elsewhere. The Administrative Agent shall apply the net proceeds of
any action taken by it pursuant to this Section 6.6 with respect to any
Grantor’s Collateral, after deducting all reasonable costs and expenses of every
kind incurred in connection therewith or incidental to the care or safekeeping
of any of the Collateral of such Grantor or in any way relating to the
Collateral of such Grantor or the rights of the Administrative Agent and the
Secured Parties hereunder with respect thereto, including, without limitation,
reasonable attorneys’ fees and disbursements, to the payment in whole or in part
of the Obligations of such Grantor, in the order specified in Section 6.5, and
only after such application and after the payment by the Administrative Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-615(a)(3) of the New York UCC, need the Administrative
Agent account for the surplus, if any, to any Grantor. To the extent permitted
by applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Administrative Agent or any Secured Party arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition.

 

6.7 Registration Rights. (a) If the Administrative Agent shall determine to
exercise its right to sell any or all of the Pledged Stock pursuant to Section
6.6, and if in the opinion of the Administrative Agent it is necessary or
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the relevant Grantor will
cause the Issuer thereof to (i) execute and deliver, and cause the directors and
officers of such Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the
opinion of the Administrative Agent, necessary or advisable to register the
Pledged Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of the Pledged Stock, or that
portion thereof to be sold, and (iii) make all

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amendments thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or “Blue Sky”
laws of any and all jurisdictions which the Administrative Agent shall designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the provisions
of Section 11(a) of the Securities Act.

 

(b) Each Grantor recognizes that the Administrative Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.

 

(c) Each Grantor agrees to use its best efforts to do or cause to be done all
such other acts as may be necessary to make such sale or sales of all or any
portion of the Pledged Stock pursuant to this Section 6.7 valid and binding and
in compliance with any and all other applicable Requirements of Law. Each
Grantor further agrees that a breach of any of the covenants contained in this
Section 6.7 will cause irreparable injury to the Administrative Agent and the
Secured Parties, that the Administrative Agent and the Secured Parties have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 6.7 shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Term Loan Agreement.

 

6.8 Deficiency. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the fees and disbursements of any attorneys employed by
the Administrative Agent or any Secured Party to collect such deficiency.

 

SECTION 7. THE ADMINISTRATIVE AGENT

 

7.1 Administrative Agent’s Appointment as Attorney-in-Fact, etc. (a) Each
Grantor hereby irrevocably constitutes and appoints the Administrative Agent and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may

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be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, to do any or all of the following:

 

(i) in the name of such Grantor or its own name, or otherwise, take possession
of and indorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Receivable or with respect
to any other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the
Administrative Agent for the purpose of collecting any and all such moneys due
under any Receivable or with respect to any other Collateral when payable;

 

(ii) in the case of any Intellectual Property, execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Administrative Agent’s and the
Secured Parties’ security interest in such Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby;

 

(iii) pay or discharge taxes and Liens levied or placed on or threatened against
the Collateral, effect any repairs or any insurance called for by the terms of
this Agreement and pay all or any part of the premiums therefor and the costs
thereof;

 

(iv) execute, in connection with any sale provided for in Section 6.6 or 6.7,
any indorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral;

 

(v) (1) direct any party liable for any payment under any of the Collateral to
make payment of any and all moneys due or to become due thereunder directly to
the Administrative Agent or as the Administrative Agent shall direct; (2) ask or
demand for, collect, and receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral; (3) sign and indorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in connection
with any of the Collateral; (4) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle, compromise or
adjust any such suit, action or proceeding and, in connection therewith, give
such discharges or releases as the Administrative Agent may deem appropriate;
(7) assign any Copyright, Patent or Trademark (along with the goodwill of the
business to which any such Copyright, Patent or Trademark pertains), throughout
the world for such term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (8) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Administrative
Agent were the absolute owner thereof for all purposes, and do, at the
Administrative Agent’s option and such Grantor’s expense, at any time, or from
time to

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time, all acts and things which the Administrative Agent deems necessary to
protect, preserve or realize upon the Collateral and the Administrative Agent’s
and the Secured Parties’ security interests therein and to effect the intent of
this Agreement, all as fully and effectively as such Grantor might do; and

 

(vi) license or sublicense whether on an exclusive or non-exclusive basis, any
Intellectual Property for such term and on such conditions and in such manner as
the Administrative Agent shall in its sole judgment determine and, in connection
therewith, such Grantor hereby grants to the Administrative Agent for the
benefit of the Secured Parties a royalty-free, world-wide irrevocable license of
its Intellectual Property.

 

Anything in this Section 7.1 (a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.

 

(b) If any Grantor fails to perform or comply with any of its agreements
contained herein, the Administrative Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.

 

(c) The expenses of the Administrative Agent incurred in connection with actions
undertaken as provided in this Section 7.1, together with interest thereon at a
rate per annum equal to the rate per annum at which interest would then be
payable on past due Base Rate Loans under the Term Loan Agreement, from the date
of payment by the Administrative Agent to the date reimbursed by the relevant
Grantor, shall be payable by such Grantor to the Administrative Agent on demand.

 

(d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.

 

7.2 Duty of Administrative Agent. The Administrative Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the New York UCC or otherwise, shall
be to deal with it in the same manner as the Administrative Agent deals with
similar property for its own account. Neither the Administrative Agent, any
Secured Party nor any of their respective officers, directors, employees or
agents shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Administrative Agent
and the Secured Parties hereunder are solely to protect the Administrative
Agent’s and the Secured Parties’ interests in the Collateral and shall not
impose any duty upon the Administrative Agent or any Secured Party to exercise
any such powers. The Administrative Agent and the Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of 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 or willful misconduct.

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7.3 Execution of Financing Statements. Pursuant to any applicable law, each
Grantor authorizes the Administrative Agent to file or record financing
statements and other filing or recording documents or instruments with respect
to the Collateral without the signature of such Grantor in such form and in such
offices as the Administrative Agent determines appropriate to perfect the
security interests of the Administrative Agent under this Agreement. Each
Grantor authorizes the Administrative Agent to use the collateral description
“all personal property” or “all assets” in any such financing statements. Each
Grantor hereby ratifies and authorizes the filing by the Administrative Agent of
any financing statement with respect to the Collateral made prior to the date
hereof.

 

7.4 Authority of Administrative Agent. Each Grantor acknowledges that the rights
and responsibilities of the Administrative Agent under this Agreement with
respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the Secured
Parties, be governed by the Term Loan Agreement and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority. Notwithstanding any other provision herein or in any Loan Document,
the only duty or responsibility of the Administrative Agent to any Qualified
Counterparty under this Agreement is the duty to remit to such Qualified
Counterparty any amounts to which it is entitled pursuant to Section 6.5.

 

SECTION 8. MISCELLANEOUS

 

8.1 Amendments in Writing. None of the terms or provisions of this Agreement may
be waived, amended, supplemented or otherwise modified except in accordance with
Section 9.1 of the Term Loan Agreement. No consent of any Qualified Counterparty
shall be required for any waiver, amendment, supplement or other modification to
this Agreement.

 

8.2 Notices. All notices, requests and demands to or upon the Administrative
Agent or any Grantor hereunder shall be effected in the manner provided for in
Section 9.2 of the Term Loan Agreement; provided that any such notice, request
or demand to or upon any Guarantor shall be addressed to such Guarantor at its
notice address set forth on Schedule 1.

 

8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Secured Party shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Secured Party, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further

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exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Administrative Agent or any Secured Party of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Administrative Agent or such Secured Party would otherwise have
on any future occasion. The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.

 

8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees to pay, or
reimburse each Secured Party and the Administrative Agent for, all its costs and
expenses incurred in collecting against such Guarantor under the guarantee
contained in Section 2 or otherwise enforcing (other than any such enforcement
determined by a final, non-appealable judgment of a court to have been in bad
faith) or preserving any rights under this Agreement and the other Loan
Documents to which such Guarantor is a party, including, without limitation, the
fees and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to each Secured Party and of counsel to the Administrative
Agent.

 

(b) Each Guarantor agrees to pay, and to save the Administrative Agent and the
Secured Parties harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.

 

(c) Each Guarantor agrees to pay, and to save the Administrative Agent and the
Secured Parties harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the
Borrower would be required to do so pursuant to Section 9.5 of the Term Loan
Agreement.

 

(d) The agreements in this Section shall survive repayment of the Obligations
and all other amounts payable under the Term Loan Agreement and the other Loan
Documents.

 

8.5 Successors and Assigns. This Agreement shall be binding upon the successors
and assigns of each Grantor and shall inure to the benefit of the Administrative
Agent and the Secured Parties and their successors and assigns; provided that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Administrative Agent.

 

8.6 Set-Off. Each Grantor hereby irrevocably authorizes the Administrative Agent
and each Secured Party at any time and from time to time while an Event of
Default shall have occurred and be continuing, without notice to such Grantor or
any other Grantor, any such notice being expressly waived by each Grantor, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Secured Party to or for the credit or
the account of such Grantor, or any part thereof in such amounts as the
Administrative Agent or such Secured Party may elect, against and on account of
the obligations and liabilities of such Grantor to the Administrative Agent or
such Secured Party

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hereunder, in any currency, whether arising hereunder, under the Term Loan
Agreement or any other Loan Document, as the Administrative Agent or such
Secured Party may elect, whether or not the Administrative Agent or any Secured
Party has made any demand for payment and although such obligations, liabilities
and claims may be contingent or unmatured. The Administrative Agent and each
Secured Party shall notify such Grantor promptly of any such set-off and the
application made by the Administrative Agent or such Secured Party of the
proceeds thereof, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Administrative
Agent and each Secured Party under this Section are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which the
Administrative Agent or such Secured Party may have.

 

8.7 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

 

8.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

8.9 Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

 

8.10 Integration. This Agreement and the other Loan Documents represent the
agreement of the Grantors, the Administrative Agent and the Secured Parties with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Secured Party relative to subject matter hereof and thereof not expressly set
forth or referred to herein or in the other Loan Documents.

 

8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby irrevocably and
unconditionally:

 

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

 

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

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(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;

 

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

 

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

 

8.13 Acknowledgements. Each Grantor hereby acknowledges that:

 

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents to which it is a party;

 

(b) neither the Administrative Agent nor any Secured Party has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Grantors, on the one hand, and the Administrative Agent and Secured Parties,
on the other hand, in connection herewith or therewith is solely that of debtor
and creditor; and

 

(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Secured Parties or among the Grantors and the Secured Parties.

 

8.14 Additional Grantors. Each Subsidiary of the Borrower that is required to
become a party to this Agreement pursuant to Section 5.9(c) of the Term Loan
Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.

 

8.15 Releases. (a) At such time as the Loans and the other Obligations (other
than Borrower Hedge Agreement Obligations and Guarantor Hedge Agreement
Obligations) shall have been paid in full and the Commitments have been
terminated, the Collateral shall be released from the Liens created hereby, and
this Agreement and all obligations (other than those expressly stated to survive
such termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor, on a date to be reasonably
specified by such Grantor, any Collateral held by the Administrative Agent
hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.

 

(b) If any of the Collateral shall be sold, transferred or otherwise disposed of
by any Grantor in a transaction permitted by the Term Loan Agreement, then the
Administrative Agent, at the request and sole expense of such Grantor, shall
execute and deliver to such Grantor all releases or other documents reasonably
necessary or desirable for the release of the Liens

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created hereby on such Collateral. At the request and sole expense of the
Borrower, a Subsidiary Guarantor shall be released from its obligations
hereunder in the event that all the Capital Stock of such Subsidiary Guarantor
shall be sold, transferred or otherwise disposed of in a transaction permitted
by the Term Loan Agreement; provided that the Borrower shall have delivered to
the Administrative Agent, at least ten Business Days prior to the date of the
proposed release, a written request for release identifying the relevant
Subsidiary Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with the Term Loan Agreement and the other Loan
Documents.

 

(c) No consent of any Qualified Counterparty shall be required for any release
of Collateral or Guarantors pursuant to this Section.

 

(d) The Administrative Agent will, in connection with or at any time following
the Lingo Offering, at the request and sole expense of the Borrower, release the
Lingo Subsidiary from its obligations hereunder and following such release, the
Administrative Agent shall take such actions as shall be required or reasonably
requested by the Lingo Subsidiary to evidence such release, including delivery
to the Lingo Subsidiary of all Collateral belonging to the Lingo Subsidiary and
held by the Administrative Agent hereunder, and execution and delivery to the
Lingo Subsidiary of such documents as the Lingo Subsidiary shall reasonably
request to evidence such release.

 

8.16 Limitations Applicable to Guarantee Approval Pending Subsidiaries and
Security Interest Approval Pending Subsidiaries. (a) Notwithstanding anything
contained herein or in any other Loan Document to the contrary, no Guarantee
Approval Pending Subsidiary shall be deemed (i) to incur any obligations or
liabilities as a Guarantor hereunder or (ii) to make any representations and
warranties herein or in any other Loan Document in respect of such Subsidiary’s
guarantee obligations hereunder, in each case, until delivery by the Borrower to
the Administrative Agent of a Guarantee Approval Notice with respect to such
Guarantee Approval Pending Subsidiary.

 

(b) Notwithstanding anything contained herein or in any other Loan Document to
the contrary, no Security Interest Approval Pending Subsidiary shall be deemed
(i) to grant a security interest hereunder in any Security Interest Approval
Pending Collateral, (ii) to be a Grantor hereunder in respect of any Security
Interest Approval Pending Collateral, (iii) to make any representations and
warranties herein or in any other Loan Document concerning any security interest
of the Administrative Agent in respect of any Security Interest Approval Pending
Collateral or (iv) to grant any remedies to the Administrative Agent in respect
of any Security Interest Approval Pending Collateral, in each case, until
delivery by the Borrower to the Administrative Agent of a Security Interest
Approval Notice with respect to such Security Interest Approval Pending
Collateral.

 

8.17 Approvals. Any provision contained herein to the contrary notwithstanding,
no action shall be taken hereunder by the Administrative Agent with respect to
the Collateral unless and until all applicable requirements, if any, under
applicable federal and state laws and the respective rules and regulations
thereunder and thereof, as well as any other laws, rules and regulations of any
Governmental Authority applicable to or having jurisdiction over any Grantor,
have in the reasonable judgment of the Administrative Agent been fully

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satisfied to the extent necessary to take such action and there have been
obtained such consents, approvals and authorizations as may be required to be
obtained from applicable federal, state and local regulatory authorities and
municipalities and any other Governmental Authority under the terms of any
franchise, license or similar operating right held by such Grantor in order to
take such action. It is the intention of the parties hereto that the grant to
the Administrative Agent of security interests in the Collateral, and all rights
and remedies by the Administrative Agent with respect to the Collateral, shall
in all relevant aspects be subject to and governed by said statutes, rules and
regulations and that nothing in this Agreement shall be construed to diminish
the control exercised by any Grantor, except in accordance with the provisions
of any statutory requirements and rules and regulations. By its acceptance of
this Agreement, the Administrative Agent agrees that it will not take any action
pursuant to this Agreement which constitutes or results in any assignment of a
license or franchise or any change of control over the communications properties
owned and operated by any Grantor, if such assignment of license or franchise or
change of control would, under then existing law or under any franchise, require
the prior approval of Governmental Authority, without first obtaining such
approval. Upon the exercise by the Administrative Agent of any power, right,
privilege or remedy pursuant to this Agreement which requires any consent,
approval, recording, qualification or authorization of any Governmental
Authority, each Grantor will execute and deliver, or will cause the execution
and delivery of, all applications, certificates, instruments and other documents
and papers that the Administrative Agent may reasonably require in order for
such governmental consent, approval, recording, qualification or authorization
to be obtained. Each Grantor agrees to use its best efforts to cause such
governmental consents, approvals, recordings, qualifications and authorizations
to be forthcoming.

 

8.18 WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ACCEPTANCE OF THE BENEFITS
HEREOF, EACH AGENT AND EACH SECURED PARTY, HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and
Collateral Agreement to be duly executed and delivered as of the date first
above written.

 

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED By:  

 

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Name:     Title:     PRIMUS TELECOMMUNICATIONS HOLDING, INC. By:  

 

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Name:     Title:     PRIMUS TELECOMMUNICATIONS, INC. By:  

 

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Name:     Title:     PRIMUS TELECOMMUNICATIONS INTERNATIONAL, INC. By:  

 

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Name:     Title:     TRESCOM INTERNATIONAL, INC. By:  

 

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Name:     Title:    

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ROCKWELL COMMUNICATIONS CORPORATION By:  

 

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Name:     Title:     LEAST COST ROUTING, INC. By:  

 

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Name:     Title:     TRESCOM U.S.A., INC. By:  

 

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Name:     Title:     iPRIMUS USA, INC. By:  

 

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Name:     Title:     iPRIMUS.COM, INC. By:  

 

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Name:     Title:     PRIMUS TELECOMMUNICATIONS IHC, INC. By:  

 

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Name:     Title: