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Exhibit 10.2
 
execution version
 
Guarantee And Collateral Agreement
 
Dated as of February 2, 2015,
 
made by
 
ULTRA CLEAN HOLDINGS, INC.,
 
ULTRA CLEAN TECHNOLOGY SYSTEMS AND SERVICE, INC.,
 
AMERICAN INTEGRATION TECHNOLOGIES LLC,
 
UCT SIEGER ENGINEERING LLC,

 
INTEGRATED FLOW SYSTEMS LLC,
 
DRAKE ACQUISITION SUBSIDIARY, INC.
 

 
and the other Grantors referred to herein and from time to time party hereto,
 

 
in favor of
 

 
EAST WEST BANK,
as Administrative Agent
 
 
 

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TABLE OF CONTENTS
 

    Page      
SECTION 1.
DEFINED TERMS
1
1.1
Definitions
1
1.2
Other Definitional Provisions
4
     
SECTION 2.
GUARANTEE
4
2.1
Guarantee
4
2.2
Right of Contribution
5
2.3
No Subrogation
5
2.4
Amendments, etc. with respect to the Secured Obligations
6
2.5
Guarantee Absolute and Unconditional; Guarantor Waivers; Guarantor Consents
6
2.6
Reinstatement
8
2.7
Payments
8
     
SECTION 3.
GRANT OF SECURITY INTEREST
8
3.1
Grant of Security Interests
8
3.2
Grantors Remains Liable
9
3.3
Perfection and Priority
10
     
SECTION 4.
REPRESENTATIONS AND WARRANTIES
11
4.1
Title; No Other Liens
11
4.2
Perfected Liens
11
4.3
Jurisdiction of Organization; Chief Executive Office and Locations of Books
11
4.4
Inventory and Equipment
12
4.5
Farm Products
12
4.6
Pledged Collateral
12
4.7
Investment Accounts
12
4.8
Receivables
13
4.9
Intellectual Property
13
4.10
Instruments
13
4.11
Letter of Credit Rights
13
4.12
Commercial Tort Claims
13
     
SECTION 5.
COVENANTS
13
5.1
Delivery of Instruments, Certificated Securities and Chattel Paper
13
5.2
Maintenance of Insurance
13
5.3
Maintenance of Perfected Security Interest; Further Documentation
14
5.4
Changes in Locations, Name, Etc.
14
5.5
Notices
15
5.6
Instruments; Investment Property
15
5.7
Securities Accounts; Deposit Accounts
15
5.8
Intellectual Property
16
5.9
Receivables
17
5.10
Defense of Collateral
17
5.11
Preservation of Collateral
17
5.12
Compliance with Laws, Etc.
17
5.13
Location of Books and Chief Executive Office
17
5.14
Location of Collateral
17
5.15
Maintenance of Records
18
5.16
Disposition of Collateral
18
5.17
Liens
18
5.18
Expenses
18
5.19
Leased Premises;  Collateral Held by Warehouseman, Bailee, Etc.
18
5.20
Chattel Paper
18
5.21
Commercial Tort Claims
18
5.22
Letter-of-Credit Rights
18

 
 
 
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TABLE OF CONTENTS
(continued)
 

   
Page
     
5.23
Shareholder Agreements and Other Agreements
18
     
SECTION 6.
REMEDIAL PROVISIONS
19
6.1
Certain Matters Relating to Receivables
19
6.2
Communications with Obligors; Grantors Remain Liable
19
6.3
Investment Property
19
6.4
Proceeds to be Turned Over to Administrative Agent
20
6.5
Application of Proceeds
20
6.6
Code and Other Remedies
21
6.7
Registration Rights
21
6.8
Intellectual Property License
22
6.9
Deficiency
22
     
SECTION 7.
THE ADMINISTRATIVE AGENT
22
7.1
Administrative Agent’s Appointment as Attorney-in-Fact, etc.
22
7.2
Duty of Administrative Agent
23
7.3
Authority of Administrative Agent
24
     
SECTION 8.
MISCELLANEOUS
24
8.1
Amendments in Writing
24
8.2
Notices
24
8.3
No Waiver by Course of Conduct; Cumulative Remedies
24
8.4
Enforcement Expenses; Indemnification
24
8.5
Successors and Assigns
25
8.6
Set Off
25
8.7
Counterparts
26
8.8
Severability
26
8.9
Section Headings
26
8.10
Integration
26
8.11
Governing Law; Submission to Jurisdiction; Jury Trial Waiver
26
8.12
Acknowledgements
26
8.13
Additional Grantors
27
8.14
Releases
27

 
 
SCHEDULES
         
Schedule 1
Notice Addresses of Guarantors
 
Schedule 2
Description of Investment Property
 
Schedule 3
Filings and Other Actions Required to Perfect Security Interests
 
Schedule 4
Locations of Jurisdictions of Organization, Chief Executive Offices and Books
 
Schedule 5
Locations of Equipment and Inventory
 
Schedule 6
Rights of the Grantors Relating to Intellectual Property
 
Schedule 7
Letter of Credit Rights
 
Schedule 8
Commercial Tort Claims
       
ANNEXES
         
Annex 1
Form of Assumption Agreement  
Annex 2
Form of Pledge Supplement  

 
 
 
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GUARANTEE AND COLLATERAL AGREEMENT
 
This GUARANTEE AND COLLATERAL AGREEMENT (this “Agreement”), dated as of February
__, 2015, is entered into by and among ULTRA CLEAN HOLDINGS, INC., a Delaware
corporation (“Borrower” or a “Grantor,” as the context may require), ULTRA CLEAN
TECHNOLOGY SYSTEMS AND SERVICE, INC., a California corporation (“UCTSS”),
AMERICAN INTEGRATION TECHNOLOGIES LLC, a Delaware limited liability company
(“AIT”), UCT SIEGER ENGINEERING LLC, a Delaware limited liability company
(“Sieger”), INTEGRATED FLOW SYSTEMS, LLC, a California limited liability company
(“IFS”), DRAKE ACQUISITION SUBSIDIARY, INC., a Delaware corporation (“Drake”,
together with Borrower, UCTSS, AIT, Sieger and IFS, each a “Grantor”), and EAST
WEST BANK, as administrative agent (together with its successors, in such
capacity, the “Administrative Agent”) for the banks and other financial
institutions or entities (each a “Lender” and, collectively, the “Lenders”) from
time to time parties to the Credit Agreement, dated as of the date hereof (as
amended, amended and restated, supplemented, restructured or otherwise modified,
renewed or replaced from time to time, the “Credit Agreement”), among Borrower,
the Lenders party thereto and the Administrative Agent.
 
INTRODUCTORY STATEMENTS
 
WHEREAS, Borrower is a member of an affiliated group of companies that includes
each Grantor;
 
WHEREAS, the proceeds of the extensions of credit under the Credit Agreement
will be used in part to enable Borrower to make valuable transfers to one or
more of the Guarantors in connection with the operation of their respective
business;
 
WHEREAS, certain of the Qualified Counterparties may enter into Specified Swap
Agreements with Borrower;
 
WHEREAS, Grantors are engaged in related businesses, and each Grantor derives
substantial direct and indirect benefit from the extensions of credit under the
Credit Agreement and from the Specified Swap Agreements; and
 
WHEREAS, it is a condition precedent to the Closing Date and to the extension of
credit under the Credit Agreement that the Grantors shall have executed and
delivered this Agreement in favor of the Administrative Agent for the ratable
benefit of the Secured Parties;
 
NOW, THEREFORE, in consideration of the above premises, the parties hereto
hereby agree as follows:
 
SECTION 1.
DEFINED TERMS

 
1.1           Definitions.
 
(a)           Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the respective meanings given to them in
the Credit Agreement, and the following terms are used herein as defined in the
UCC:  Account, Certificated Security, Chattel Paper, Commercial Tort Claim,
Commodity Account, Document, Equipment, Farm Products, Fixtures, General
Intangible, Goods, Instrument, Inventory, Letter-of-Credit Rights, money,
Securities Account, Uncertificated Security and Supporting Obligation.
 
(b)           The following terms shall have the following meanings:
 
“Agreement”:  as defined in the preamble hereto.
 
“Books”:  all books, records and other written, electronic or other
documentation in whatever form maintained now or hereafter by or for any Grantor
in connection with the ownership of its assets or the conduct of its business or
evidencing or containing information relating to the Collateral,
including:  (a) ledgers; (b) records indicating, summarizing, or evidencing such
Grantor’s assets (including Inventory and Rights to Payment), business
operations or financial condition; (c) computer programs and software;
(d) computer discs, tapes, files, manuals,
 
 
 
 

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spreadsheets; (e) computer printouts and output of whatever kind; (f) any other
computer prepared or electronically stored, collected or reported information
and equipment of any kind; and (g) all other rights now or hereafter arising out
of any contract or agreement between such Grantor and any service bureau,
computer or data processing company or other Person charged with preparing or
maintaining any of such Grantor’s books or records or with credit reporting,
including with regard to any of such Grantor’s Accounts.
 
“Collateral”:  as defined in Section 3.1.
 
“Collateral Account”:  any collateral account established by the Administrative
Agent as provided in Section 6.1 or Section 6.4.
 
“Copyright License”:  any written agreement which (a) names a Grantor as
licensor or licensee (including those listed on Schedule 6, as may be amended
from time to time by Grantors with notice to and the consent of the
Administrative Agent), or (b) grants any right under any Copyright to a Grantor,
if it is the licensee, including any rights to manufacture, distribute, exploit
and sell materials derived from any Copyright.
 
“Copyrights”:  (a) all copyrights arising under the laws of the United States,
any other country or any political subdivision thereof, together with the
underlying works of authorship (including titles), whether registered or
unregistered and whether published or unpublished (including those listed on
Schedule 6, as may be amended from time to time by Grantors with notice to and
the consent of the Administrative Agent), all computer programs, computer
databases, computer program flow diagrams, source codes, object codes and all
tangible property embodying or incorporating any copyrights, all registrations
and recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the U.S.
Copyright Office, and (b) the right to obtain any renewals thereof.
 
“Credit Agreement”:  as defined in the recitals to this Agreement.
 
“Discharge of Obligations”:  as defined in Section 2.1(d).
 
“Excluded Assets”:  collectively,
 
(a)           any Equipment owned by any Grantor as of the date of this
Agreement or hereafter acquired that is subject to a Lien securing a purchase
money obligation or Capital Lease Obligation not prohibited by the terms of the
Credit Agreement if the agreement pursuant to which such Lien is granted (or the
documentation providing for such purchase money obligation or Capital Lease
Obligation) validly prohibits the creation of any other Lien on such Equipment
and proceeds of such Equipment;
 
(b)           any margin stock (within the meaning of Regulation U issued by the
Board);
 
(c)           any Capital Stock of any Foreign Subsidiary (other than Capital
Stock representing up to sixty-six percent (66%) of the total outstanding voting
Capital Stock of any First Tier Foreign Subsidiary and Capital Stock
representing up to one hundred percent (100%) of the total outstanding
non-voting Capital Stock of any First Tier Foreign Subsidiary);
 
(d)           any motor vehicles the perfection of a security interest in which
is not governed by the UCC;
 
(e)           any asset that is subject to a purchase-money Lien or Lien
securing Capital Lease Obligations, in each case, to the extent not prohibited
by the terms of the Credit Agreement if the contract or other agreement pursuant
to which such purchase-money Lien or Lien securing Capital Lease Obligations
does not permit such asset to be subject to the security interests created
thereby; and
 
(f)           any interests in real property (including real property leasehold
interests), timber to be cut, as extracted collateral, consumer goods and
agricultural products;
 
 
 
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provided, however, that any Proceeds, substitutions or replacements of any
Excluded Assets shall not be Excluded Assets (unless such Proceeds,
substitutions or replacements are otherwise, in and of themselves, Excluded
Assets).
 
“Grantor”:  is any Loan Party that is party hereto as of the date hereof or that
accedes hereto as a “Grantor” pursuant to an Assumption Agreement executed and
delivered to the Administrative Agent in accordance with the terms hereof.
 
“Guarantor”:  as defined in Section 2.1(a).
 
“Indemnitee”:  as defined in Section 10.5(b) of the Credit Agreement.
 
“Investment Account”:  any of a Securities Account, a Commodity Account or a
Deposit Account.
 
“Investment Property”:  the collective reference to (a) all “investment
property” as such term is defined in Section 9102 (a)(49) of the UCC (other than
any voting Capital Stock or other ownership interests of a First Tier Foreign
Subsidiary excluded from the definition of “Pledged Stock”), and (b) whether or
not constituting “investment property” as so defined, all Pledged Notes and all
Pledged Collateral.
 
“Issuer”:  with respect to any Investment Property, the issuer of such
Investment Property.
 
“Lender”:  as defined in the preamble hereto.
 
“Patent License”:  any written agreement which (a) names a Grantor as licensor
or licensee and (b) grants to such Grantor, if the licensee, any right under a
Patent, including the right to manufacture, use or sell any invention covered in
whole or in part by such Patent, including any such agreements referred to on
Schedule 6 (as may be amended from time to time by Grantors with notice to and
the consent of the Administrative Agent).
 
“Patents”:  (a) 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 on Schedule 6 (as may be amended from time to time by
Grantors with notice to and the consent of the Administrative Agent), (b) 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 on Schedule 6  (as may be
amended from time to time by Grantors with notice to and the consent of the
Administrative Agent), and (c) all rights to obtain any reissues or extensions
of the foregoing.
 
“Pledged Collateral”:  (a) all Pledged Stock; (b) all other Investment Property
of any Grantor; (c) all warrants, options or other rights entitling any Grantor
to acquire any interest in Capital Stock or other securities of the direct or
indirect Subsidiaries of such Grantor or of any other Person; (d) all
Instruments; (e) all securities, property, interest, dividends and other
payments and distributions issued as an addition to, in redemption of, in
renewal or exchange for, in substitution or upon conversion of, or otherwise on
account of, any of the foregoing; (f) all certificates and instruments now or
hereafter representing or evidencing any of the foregoing; (g) all rights,
interests and claims with respect to the foregoing, including under all related
agreements, instruments and other documents; and (h) all cash and non-cash
proceeds of any of the foregoing, in each case whether presently existing or
owned or hereafter arising or acquired and wherever located, and as from time to
time received or receivable by, or otherwise paid or distributed to or acquired
by, any Grantor.
 
“Pledged Collateral Agreements”:  as defined in Section 5.23(a).
 
“Pledged Notes”:  all promissory notes listed on Schedule 2 (as may be amended
from time to time by Grantors with notice to and the consent of the
Administrative Agent) and all other promissory notes issued to or held by any
Grantor.
 
“Pledged Stock”:  all of the issued and outstanding shares of Capital Stock,
whether certificated or uncertificated, of any Grantor’s Subsidiaries now or
hereafter owned by any such Grantor and including the Capital
 
 
 
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Stock listed on Schedule 2 (as may be amended from time to time by Grantors with
notice to and the consent of the Administrative Agent); provided that in no
event shall Pledged Stock include any Excluded Assets.
 
“Proceeds”:  all “proceeds” as such term is defined in Section 9102(a)(64) of
the UCC and, in any event, shall include, without limitation, all dividends or
other income from any Investment Property constituting Collateral and all
collections thereon or distributions or payments with respect thereto.
 
“Receivable”:  any right to payment for goods sold or leased 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 any
Account).
 
“Rights to Payment”:  all of any Grantor’s Accounts and all of any Grantor’s
rights and claims to the payment or receipt of money or other forms of
consideration of any kind in, to and under or with respect to its Chattel Paper,
Documents, General Intangibles, Instruments, Investment Property,
Letter-of-Credit Rights, Proceeds and Supporting Obligations.
 
“Secured Obligations”:  collectively, the “Obligations”, as such term is defined
in the Credit Agreement.
 
“Secured Parties”:  the collective reference to the Administrative Agent, the
Lenders (including any Issuing Lender in its capacity as Issuing Lender and any
Swingline Lender in its capacity as Swingline Lender), and any Qualified
Counterparties.
 
“Trademark License”:  any written agreement which (a) names a Grantor as
licensor or licensee and (b) grants to such Grantor, if the licensee, any right
to use any Trademark, any such agreement referred to on Schedule 6 (as may be
amended from time to time by Grantors with notice to and the consent of the
Administrative Agent).
 
“Trademarks”:  (a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos,
Internet domain names 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 U.S. 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
on Schedule 6 (as may be amended from time to time by Grantors with notice to
and the consent of the Administrative Agent) and (b) the right to obtain all
renewals thereof.
 
1.2           Other Definitional Provisions.  The rules of interpretation set
forth in Section 1.2 of the Credit Agreement are by this reference incorporated
herein, mutatis mutandis, as if set forth herein in full.
 
SECTION 2.
GUARANTEE

 
2.1           Guarantee.
 
(a)           Each Grantor who has executed this Agreement as of the date
hereof, together with each Material Domestic Subsidiary of Borrower or other
Guarantor who accedes to this Agreement as a Grantor after the date hereof
pursuant to Section 6.12 of the Credit Agreement (each a “Guarantor” and,
collectively, the “Guarantors”), hereby, jointly and severally, unconditionally
and irrevocably, guarantees 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 Borrower and the
other Loan Parties when due (whether at the stated maturity, by acceleration or
otherwise) of the Secured Obligations.  In furtherance of the foregoing, and
without limiting the generality thereof, each Guarantor agrees as follows:
 
(i)           each Guarantor’s liability hereunder shall be the immediate,
direct, and primary obligation of such Guarantor and shall not be contingent
upon the Administrative Agent’s or any Secured Party’s
 
 
 
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exercise or enforcement of any remedy it or they may have against Borrower, any
other Guarantor, any other Person, or all or any portion of the Collateral; and
 
(ii)           the Administrative Agent may enforce this guaranty
notwithstanding the existence of any dispute between any of the Secured Parties
and Borrower or any other Guarantor with respect to the existence of any Event
of Default.
 
(b)           Anything herein or in any other Loan Document to the contrary
notwithstanding, 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 the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
 
(c)           Each Guarantor agrees that the Secured Obligations may at any time
and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent or any other
Secured Party hereunder.
 
(d)           The guarantee contained in this Section 2 shall remain in full
force and effect until all the Secured Obligations shall have been satisfied by
payment in full, in cash (or, as applicable, Cash Collateralized in accordance
with the terms of the Credit Agreement), no Letter of Credit shall be
outstanding (or, as applicable, each outstanding and undrawn Letter of Credit
has been Cash Collateralized in accordance with the terms of the Credit
Agreement), and all of the Commitments are terminated (the “Discharge of
Obligations”), notwithstanding that from time to time during the term of the
Credit Agreement the outstanding amount of the Secured Obligations may be zero.
 
(e)           No payment made by Borrower, any Guarantor, any other guarantor or
any other Person or received or collected by the Administrative Agent or any
other Secured Party from Borrower, any Guarantor, any other guarantor or any
other Person by virtue of any action or proceeding or any setoff or
appropriation or application at any time or from time to time in reduction of or
in payment of the Secured Obligations shall be deemed to modify, reduce, release
or otherwise affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment (other than any payment made by such Guarantor
in respect of the Secured Obligations or any payment received or collected from
such Guarantor in respect of the Secured Obligations), remain liable for the
Secured Obligations up to the maximum liability of such Guarantor hereunder
until the Discharge of Obligations.
 
2.2           Right of Contribution.  If in connection with any payment made by
any Guarantor hereunder any rights of contribution arise in favor of such
Guarantor against one or more other Guarantors, such rights of contribution
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
any Guarantor to the Administrative Agent and the other Secured Parties, and
each Guarantor shall remain liable to the Administrative Agent and the other
Secured Parties for the full amount guaranteed by such Guarantor hereunder.
 
2.3           No Subrogation.  Notwithstanding any payment made by any Guarantor
hereunder or any setoff or application of funds of any Guarantor by the
Administrative Agent or any other Secured Party, no Guarantor shall be entitled
to be subrogated to any of the rights of the Administrative Agent or any other
Secured Party against Borrower or any other Guarantor or any Collateral or
guarantee or right of offset held by the Administrative Agent or any other
Secured Party for the payment of the Secured Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or reimbursement from
Borrower or any other Guarantor in respect of payments made by such Guarantor
hereunder, in each case, until the Discharge of Obligations.  If any amount
shall be paid to any Guarantor on account of such subrogation rights at any time
prior to the Discharge of Obligations, such amount shall be held by such
Guarantor in trust for the Administrative Agent and the other Secured Parties,
shall be segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Administrative Agent in
the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Administrative Agent, if required), to be applied in such order as set forth
in Section 6.5  irrespective of the existence of any Event of Default.
 
 
 
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2.4           Amendments, etc. with respect to the Secured Obligations.  Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Secured
Obligations made by the Administrative Agent or any other Secured Party may be
rescinded by the Administrative Agent or such Secured Party and any of the
Secured Obligations continued, and the Secured 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
other Secured Party, and the Credit Agreement, the other Loan Documents, the
Specified Swap Agreements 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, all of
the Lenders, or any applicable Qualified Counterparty, as the case may be) may
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 other
Secured Party for the payment of the Secured Obligations may be sold, exchanged,
waived, surrendered or released.  Neither the Administrative Agent nor any other
Secured Party shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Secured Obligations or for
the guarantee contained in this Section 2 or any property subject thereto.
 
2.5           Guarantee Absolute and Unconditional; Guarantor Waivers; Guarantor
Consents.  Each Guarantor waives notice of the creation, renewal, extension or
accrual of any of the Secured Obligations and notice of or proof of reliance by
the Administrative Agent or any other Secured Party upon the guarantee contained
in this Section 2 or acceptance of the guarantee contained in this Section 2;
the Secured 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 Borrower and any of the Guarantors on the one hand, and the
Administrative Agent and the other 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 further waives:
 
(a)           diligence, presentment, protest, demand for payment and notice of
default or nonpayment to or upon Borrower or any of the other Guarantors with
respect to the Secured Obligations;
 
(b)           any right to require any Secured Party to marshal assets in favor
of Borrower, such Guarantor, any other Guarantor or any other Person, to proceed
against Borrower, any other Guarantor or any other Person, to proceed against or
exhaust any of the Collateral, to give notice of the terms, time and place of
any public or private sale of personal property security constituting the
Collateral or other collateral for the Secured Obligations or to comply with any
other provisions of Section 9611 of the UCC (or any equivalent provision of any
other applicable law) or to pursue any other right, remedy, power or privilege
of any Secured Party whatsoever;
 
(c)           the defense of the statute of limitations in any action hereunder
or for the collection or performance of the Secured Obligations;
 
(d)           any defense arising by reason of any lack of corporate or other
authority or any other defense of Borrower, such Guarantor or any other Person;
 
(e)           any defense based upon the Administrative Agent’s or any Secured
Party’s errors or omissions in the administration of the Secured Obligations;
 
(f)           any defense based on (A) Administrative Agent’s surrender,
release, exchange, substitution, dealing with or taking any additional
collateral, (B) Administrative Agent’s abstaining from taking advantage of or
realizing upon any Lien or other guaranty, and (C) any impairment of collateral
securing the Secured Obligations, including, but not limited to, Administrative
Agent’s failure to perfect, or maintain the perfection or priority of, a Lien in
such collateral;
 
(g)           any defense based on Administrative Agent’s failure to be diligent
or to act in a commercially reasonable manner, or to satisfy any other standard
imposed on a secured party, in exercising rights with respect to collateral
securing the Secured Obligations;
 
 
 
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(h)           any rights to set-offs and counterclaims;
 
(i)           any defense based upon an election of remedies (including, if
available, an election to proceed by nonjudicial foreclosure) which destroys or
impairs the subrogation rights of such Guarantor or the right of such Guarantor
to proceed against Borrower or any other obligor of the Secured Obligations for
reimbursement;
 
(j)           any defense based on legal prohibition of Administrative Agent’s
and the other Secured Parties’ acceleration of the maturity of the Secured
Obligations during the continuance of an Event of Default or any other legal
prohibition on enforcement of any other right or remedy of the Secured Parties
with respect to the Secured Obligations and the security therefor; and
 
(k)           without limiting the generality of the foregoing, to the fullest
extent permitted by law, any defenses or benefits that may be derived from or
afforded by applicable law that limit the liability of or exonerate guarantors
or sureties, or which may conflict with the terms of this Agreement, including
any rights and defenses which are or may become available to any Guarantor by
reason of California Civil Code Sections 2787 through 2855, 2899 and 3433.
 
Each Guarantor understands and agrees that the guarantee contained in this
Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (i) the validity or enforceability of the
Credit Agreement or any other Loan Document, any of the Secured 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 other Secured Party, (ii) any defense, setoff or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by Borrower or any other Person against the
Administrative Agent or any other Secured Party, (iii) any other circumstance
whatsoever (with or without notice to or knowledge of Borrower or such
Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of Borrower or any other Guarantor for the Secured
Obligations, or of such Guarantor under the guarantee contained in this
Section 2, in bankruptcy or in any other instance, (iv) any Insolvency
Proceeding with respect to Borrower, any Guarantor or any other Person, (v) any
merger, acquisition, consolidation or change in structure of Borrower, any
Guarantor or any other Person, or any sale, lease, transfer or other disposition
of any or all of the assets or Voting Stock of Borrower, any Guarantor or any
other Person, (vi) any assignment or other transfer, in whole or in part, of any
Secured Party’s interests in and rights under this Agreement or the other Loan
Documents, including any Secured Party’s right to receive payment of the Secured
Obligations, or any assignment or other transfer, in whole or in part, of any
Secured Party’s interests in and to any of the Collateral, (vi) any Secured
Party’s vote, claim, distribution, election, acceptance, action or inaction in
any Insolvency Proceeding related to any of the Secured Obligations, and
(vii) any other guaranty, whether by such Guarantor or any other Person, of all
or any part of the Secured Obligations or any other indebtedness, obligations or
liabilities of any Guarantor to any Secured Party.
 
When making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against any Guarantor, the Administrative Agent or any other 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 Borrower, any
other Guarantor or any other Person or against any collateral security or
guarantee for the Secured Obligations or any right of offset with respect
thereto.  Any failure by the Administrative Agent or any other Secured Party to
make any such demand, to pursue such other rights or remedies or to collect any
payments from 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 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 hereunder, 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 other Secured Party against
any Guarantor.  For the purposes hereof “demand” shall include the commencement
and continuance of any legal proceedings.
 
Each Guarantor further unconditionally consents and agrees that, without notice
to or further assent from any Guarantor:  (a) the principal amount of the
Secured Obligations may be increased or decreased and additional indebtedness or
obligations of Borrower or any other Persons under the Loan Documents may be
incurred, by one or more amendments, modifications, renewals or extensions of
any Loan Document or otherwise; (b) the time, manner, place or terms of any
payment under any Loan Document may be extended or changed, including by an
increase or
 
 
 
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decrease in the interest rate on any Secured Obligation or any fee or other
amount payable under such Loan Document, by an amendment, modification or
renewal of any Loan Document or otherwise; (c) the time for Borrower’s (or any
other Loan Party’s) performance of or compliance with any term, covenant or
agreement on its part to be performed or observed under any Loan Document may be
extended, or such performance or compliance waived, or failure in or departure
from such performance or compliance consented to, all in such manner and upon
such terms as the Administrative Agent may deem proper; (d) in addition to the
Collateral, the Secured Parties may take and hold other security (legal or
equitable) of any kind, at any time, as collateral for the Secured Obligations,
and may, from time to time, in whole or in part, exchange, sell, surrender,
release, subordinate, modify, waive, rescind, compromise or extend such security
and may permit or consent to any such action or the result of any such action,
and may apply such security and direct the order or manner of sale thereof;
(e) the Secured Parties may, in accordance with the terms of the Loan Documents,
discharge or release, in whole or in part, any other Guarantor or any other Loan
Party or other Person liable for the payment and performance of all or any part
of the Secured Obligations, and may permit or consent to any such action or any
result of such action, and shall not be obligated to demand or enforce payment
upon any of the Collateral, nor shall any Secured Party be liable to any
Guarantor for any failure to collect or enforce payment or performance of the
Secured Obligations from any Person or to realize upon the Collateral, and
(f) the Secured Parties may request and accept other guaranties of the Secured
Obligations and any other indebtedness, obligations or liabilities of Borrower
or any other Loan Party to any Secured Party and may, from time to time, in
whole or in part, surrender, release, subordinate, modify, waive, rescind,
compromise or extend any such guaranty and may permit or consent to any such
action or the result of any such action; in each case (a) through (f), as the
Secured Parties may deem advisable, and without impairing, abridging, releasing
or affecting this Agreement.
 
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 Secured Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any other
Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of 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, Borrower or any such Guarantor or any substantial part of its
respective property, or otherwise, all as though such payments had not been
made.
 
2.7           Payments.  Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without setoff or
counterclaim in Dollars at the Funding Office.
 
SECTION 3.
GRANT OF SECURITY INTEREST

 
3.1           Grant of Security Interests.  Each Grantor hereby grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the Secured
Obligations, 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 and
wherever located (collectively, the “Collateral”):
 
 
(a)
all Accounts;

 
 
(b)
all Chattel Paper;

 
 
(c)
all Commercial Tort Claims;

 
 
(d)
all Deposit Accounts;

 
 
(e)
all Documents;

 
 
(f)
all Equipment;

 
 
(g)
all Fixtures;

 
 
 
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(h)
all General Intangibles;

 
 
(i)
all Goods;

 
 
(j)
all Instruments;

 
 
(k)
all Intellectual Property;

 
 
(l)
all Inventory;

 
 
(m)
all Investment Property (including all Pledged Collateral);

 
 
(n)
all Letter-of-Credit Rights;

 
 
(o)
all money;

 
 
(p)
all Books and records pertaining to the Collateral

 
 
(q)
all other personal property not otherwise described above; and

 
(r)           to the extent not otherwise included, all Proceeds, Supporting
Obligations and products of all of the foregoing; provided, however, that
notwithstanding anything to the contrary contained in clauses (a) through
(q) above, the security interests created by this Agreement shall not extend to,
and the term “Collateral” (including all of the individual items comprising
Collateral) shall not include, any Excluded Assets.
 
Notwithstanding any of the other provisions set forth in this Section 3, this
Agreement shall not constitute a grant of a security interest in any property to
the extent that such grant of a security interest is prohibited by any
Requirement of Law of a Governmental Authority or constitutes a breach or
default under or results in the termination of or requires any consent not
obtained under, any contract, license, agreement, instrument or other document
evidencing or giving rise to such property, except (i) to the extent that the
terms in such contract, license, instrument or other document providing for such
prohibition, breach, default or termination, or requiring such consent are not
permitted under the terms and conditions of the Credit Agreement or (ii) to the
extent that such Requirement of Law or the term in such contract, license,
agreement, instrument or other document providing for such prohibition, breach,
default or termination or requiring such consent is ineffective under Section
9406, 9407, 9408 or 9409 of the UCC (or any successor provision or provisions)
of any relevant jurisdiction or any other applicable law (including the
Bankruptcy Code) or principles of equity; provided, however, that such security
interest shall attach immediately at such time as such Requirement of Law is not
effective or applicable, or such prohibition, breach, default or termination is
no longer applicable or is waived, and, to the extent severable, shall attach
immediately to any portion of the Collateral that does not result in such
consequences; and provided, further, that no United States intent to use
trademark or service mark application shall be included in the Collateral to the
extent that, and solely for the period in which, the grant of a security
interest therein would impair the validity or enforceability of such intent to
use trademark or service mark application under Federal law.  After such period,
such interest in such trademark or service mark application shall be subject to
a security interest granted in favor of the Administrative Agent pursuant to
this Section 3.1 and shall be included in the Collateral.
 
3.2           Grantors Remains Liable.  Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under any contracts,
agreements and other documents included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by the
Administrative Agent of any of the rights granted to the Administrative Agent
hereunder shall not release any Grantor from any of its duties or obligations
under any such contracts, agreements and other documents included in the
Collateral, and (c) neither the Administrative Agent nor any other Secured Party
shall have any obligation or liability under any such contracts, agreements and
other documents included in the Collateral by reason of this Agreement, nor
shall the Administrative Agent or any other Secured Party be obligated to
perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any such contract, agreement or other document
included in the Collateral hereunder.
 
 
 
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3.3           Perfection and Priority.
 
(a)           Financing Statements.  Pursuant to any applicable law, each
Grantor authorizes the Administrative Agent (and its counsel and its agents) to
file or record at any time and from time to time any financing statements and
other filing or recording documents or instruments with respect to the
Collateral and each Grantor shall execute and deliver to the Administrative
Agent and each Grantor hereby authorizes the Administrative Agent (and its
counsel and its agents) to file (with or without the signature of such Grantor)
at any time and from time to time, all amendments to financing statements,
continuation financing statements, termination statements, Intellectual Property
Security Agreements, assignments, fixture filings, affidavits, reports notices
and all other documents and instruments, in such form and in such offices as the
Administrative Agent or the Required Lenders determine appropriate to perfect
and continue perfected, maintain the priority of or provide notice of the
Administrative Agent’s security interest in the Collateral under and to
accomplish the purposes of this Agreement.  Each Grantor authorizes the
Administrative Agent to use the collateral description “all personal property,
whether now owned or hereafter acquired” or any other similar collateral
description in any such financing statements.  Each Grantor hereby ratifies and
authorizes the filing by the Administrative Agent (and its counsel and its
agents) of any financing statement with respect to the Collateral made prior to
the date hereof.
 
(b)           Filing of Financing Statements.  Each Grantor shall deliver to the
Administrative Agent, from time to time, such completed UCC-1 financing
statements for filing or recording in the appropriate filing offices as may be
reasonably requested by the Administrative Agent.
 
(c)           Transfer of Security Interest Other Than by Delivery.  If for any
reason Pledged Collateral cannot be delivered to or for the account of the
Administrative Agent as provided in Section 5.6(b), each applicable Grantor
shall promptly take such other steps as may be necessary or as shall be
reasonably requested from time to time by the Administrative Agent to effect a
transfer of a perfected first priority security interest in and pledge of the
Pledged Collateral to the Administrative Agent for itself and on behalf of and
for the ratable benefit of the other Secured Parties pursuant to the UCC.  To
the extent practicable, each such Grantor shall thereafter deliver the Pledged
Collateral to or for the account of the Administrative Agent as provided in
Section 5.6(b).
 
(d)           Intellectual Property.
 
(i)           Each Grantor shall, in addition to executing and delivering this
Agreement, take such other action as may be necessary, or as the Administrative
Agent may reasonably request, to perfect the Administrative Agent’s security
interest in the Intellectual Property of such Grantor.
 
(ii)           Promptly following the creation or other acquisition of any
Intellectual Property by any Grantor after the date hereof which is registered
or becomes registered or the subject of an application for registration with the
U.S. Copyright Office or the U.S. Patent and Trademark Office, as applicable,
such Grantor shall modify this Agreement, with notice to and the consent of the
Administrative Agent, by amending Schedule 6 to include any Intellectual
Property of such Grantor which becomes part of the Collateral and which was not
included on Schedule 6 as of the date hereof and record an amendment to the
Intellectual Property Security Agreement of such Grantor with the U.S. Copyright
Office or the U.S. Patent and Trademark Office, as applicable, and take such
other action as may be necessary, or as the Administrative Agent or the Required
Lenders may reasonably request, to perfect or to give notice of the
Administrative Agent’s security interest in such Intellectual Property (held for
the ratable benefit of the Secured Parties).
 
(e)           Bailees.  Any Person (other than the Administrative Agent) at any
time and from time to time holding all or any portion of the Collateral shall be
deemed to, and shall, hold the Collateral as the agent of, and as pledge holder
for, the Administrative Agent.  At any time and from time to time, the
Administrative Agent may give notice to any such Person holding all or any
portion of the Collateral that such Person is holding the Collateral as the
agent and bailee of, and as pledge holder for, the Administrative Agent, and may
obtain such Person’s written acknowledgment thereof.  Without limiting the
generality of the foregoing, each Grantor will join with the Administrative
Agent in notifying any Person who has possession of any Collateral of the
Administrative Agent’s security interest therein and shall use commercially
reasonable efforts to obtain an acknowledgment from such Person that it is
holding such Collateral for the benefit of the Administrative Agent.
 
 
 
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(f)           Control.  Each Grantor will cooperate with the Administrative
Agent in obtaining “control” (as defined in the UCC) of Collateral consisting of
any Deposit Accounts, Electronic Chattel Paper, Investment Property or
Letter-of-Credit Rights, including delivery of control agreements, as the
Administrative Agent may reasonably request, to perfect and continue perfected,
maintain the priority of or provide notice of the Administrative Agent’s
security interest in such Collateral.
 
(g)           Additional Subsidiaries.  If any Grantor acquires rights in any
First Tier Foreign Subsidiary after the date hereof, it shall deliver to the
Administrative Agent a completed pledge supplement, substantially in the form of
Annex 2 (the “Pledge Supplement”), together with all schedules thereto,
reflecting the pledge of the Capital Stock of such new First Tier Foreign
Subsidiary (except to the extent such Capital Stock consists of Excluded
Assets), together with any other documents and agreements (including, as
applicable, any Foreign Pledge Documents reasonably requested by the
Administrative Agent) the Administrative Agent requires Borrower to cause such
Grantor to deliver pursuant to Section 6.12 of the Credit
Agreement.  Notwithstanding the foregoing, it is understood and agreed that the
security interest of the Administrative Agent shall attach to the Pledged
Collateral related to such First Tier Foreign Subsidiary immediately upon any
Grantor’s acquisition of rights therein and shall not be affected by the failure
of any Grantor to deliver a Pledge Supplement or, as applicable, any such other
Foreign Pledge Documents or other documents or agreements.
 
SECTION 4.
REPRESENTATIONS AND WARRANTIES

 
In addition to the representations and warranties of the Grantors set forth in
the Credit Agreement, which are incorporated herein by this reference, and to
induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to Borrower thereunder, each Grantor hereby represents and warrants to
the Administrative Agent and each other Secured Party that:
 
4.1           Title; No Other Liens.  Except for the Liens permitted to exist on
the Collateral by Section 7.3 of the Credit Agreement, such Grantor owns each
item of the Collateral in which a Lien is granted by it free and clear of all
Liens and other claims of others.  Other than precautionary filings in respect
of true leases, no financing statement, fixture filing or other public notice
with respect to all or any part of the Collateral is on file or of record or
will be filed in any public office, except such as have been filed as permitted
by the Credit Agreement.  For the avoidance of doubt, it is understood and
agreed that each Grantor may, in the ordinary course of business, grant licenses
to third parties to use Intellectual Property owned or developed by such
Grantor.  For purposes of this Agreement and the other Loan Documents, such
licensing activity shall not constitute a “Lien” on such Intellectual
Property.  The Administrative Agent and each other Secured Party understands
that any such licenses may be exclusive to the applicable licensees so long as
such exclusivity does not result in transfer of title to the licensed
Intellectual Property under applicable law, 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.
 
4.2           Perfected Liens.  The security interests granted to the
Administrative Agent 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 such Schedule, have been delivered to
the Administrative Agent in completed and duly (if applicable) executed form)
will constitute valid perfected security interests in all of the Collateral in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, as collateral security for the Secured Obligations, enforceable in
accordance with the terms hereof against any creditors of any Grantor and any
Persons purporting to purchase any Collateral from any Grantor, and (b) are
prior to all other Liens on the Collateral in existence on the date hereof
except for Liens permitted by the Credit Agreement which have priority over the
Liens of the Administrative Agent on the Collateral (for the ratable benefit of
the Secured Parties) by operation of law, and in the case of Collateral other
than Pledged Collateral, Liens permitted by Section 7.3 of the Credit
Agreement.  Unless an Event of Default exists, each Grantor has the right to
remove the Fixtures in which such Grantor has an interest within the meaning of
Section 9340(2) of the UCC.
 
4.3           Jurisdiction of Organization; Chief Executive Office and Locations
of Books.  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, as the case may be,
are specified on Schedule 4 (as may be amended from time to time by Grantors
with notice to and the consent of the Administrative Agent).  All
 
 
 
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locations where Books pertaining to the Rights to Payment of such Grantor are
kept, including all equipment necessary for accessing such Books and the names
and addresses of all service bureaus, computer or data processing companies and
other Persons keeping any Books or collecting Rights to Payment for such
Grantor, are set forth in Schedule 4 (as may be amended from time to time by
Grantors with notice to and the consent of the Administrative Agent).
 
4.4           Inventory and Equipment.  The Inventory and the Equipment (other
than mobile goods) are kept at the locations listed on Schedule 5 (as may be
amended from time to time by Grantors with notice to and the consent of the
Administrative Agent).
 
4.5           Farm Products.  None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
 
4.6           Pledged Collateral.  (a) All of the Pledged Stock held by such
Grantor has been duly and validly issued, and is fully paid and non-assessable,
subject in the case of Pledged Stock constituting partnership interests or
limited liability company membership interests to future assessments required
under applicable law and any applicable partnership or operating agreement,
(b) such Grantor is or, in the case of any such additional Pledged Collateral
will be, the legal record and beneficial owner thereof, (c) in the case of
Pledged Stock of a Subsidiary of such Grantor or Pledged Collateral of such
Grantor constituting Instruments issued by a Subsidiary of such Grantor, there
are no restrictions on the transferability of such Pledged Collateral or such
additional Pledged Collateral to the Administrative Agent or with respect to the
foreclosure, transfer or disposition thereof by the Administrative Agent, except
as provided under applicable securities or “Blue Sky” laws, (d) the Pledged
Stock pledged by such Grantor constitutes all of the issued and outstanding
shares of Capital Stock of each Issuer owned by such Grantor (except for
Excluded Assets), and such Grantor owns no securities convertible into or
exchangeable for any shares of Capital Stock of any such Issuer that do not
constitute Pledged Stock hereunder, (e) all Pledged Collateral Agreements which
affect or relate to the voting or giving of written consents with respect to any
of the Pledged Stock pledged by such Grantor have been disclosed to the
Administrative Agent, and (f) as to each such Pledged Collateral Agreement
relating to the Pledged Stock pledged by such Grantor, (i) to the best knowledge
of such Grantor, such Pledged Collateral Agreement contains the entire agreement
between the parties thereto with respect to the subject matter thereof and is in
full force and effect in accordance with its terms, (ii) to the best knowledge
of such Grantor party thereto, there exists no material violation or material
default under any such Pledged Collateral Agreement by such Grantor or the other
parties thereto, (iii) such Pledged Collateral Agreement does not contain any
right of first refusal or other restrictions with respect to such Grantor’s
disposition of the Pledged Stock subject thereto, (iv) the pledge of the Pledged
Stock hereunder will not cause a breach or default under such Pledged Collateral
Agreement, and (v) such Grantor has not knowingly waived or released any of its
material rights under or otherwise consented to a material departure from the
terms and provisions of such Pledged Collateral Agreement.
 
4.7           Investment Accounts.
 
(a)           Schedule 2 sets forth under the headings “Securities Accounts” and
“Commodity Accounts”, respectively, all of the Securities Accounts and Commodity
Accounts in which such Grantor has an interest.  Except as disclosed to the
Administrative Agent, such Grantor is the sole entitlement holder of each such
Securities Account and Commodity Account, and such Grantor has not consented to,
and is not otherwise aware of, any Person (other than the Administrative Agent)
having “control” (within the meanings of Sections 8106 and 9106 of the UCC)
over, or any other interest in, any such Securities Account or Commodity Account
or any securities or other property credited thereto;
 
(b)           Schedule 2 sets forth under the heading “Deposit Accounts” all of
the Deposit Accounts in which such Grantor has an interest and, except as
otherwise disclosed to the Administrative Agent, such Grantor is the sole
account holder of each such Deposit Account and such Grantor has not consented
to, and is not otherwise aware of, any Person (other than the Administrative
Agent) having either sole dominion and control (within the meaning of common
law) or “control” (within the meaning of Section 9104 of the UCC) over, or any
other interest in, any such Deposit Account or any money or other property
deposited therein; and
 
(c)           In each case to the extent requested by the Administrative Agent,
such Grantor has taken all actions necessary or desirable to:  (i) establish the
Administrative Agent’s “control” (within the meanings of Sections 8106 and 9106
of the UCC) over any Certificated Securities; (ii) establish the Administrative
Agent’s
 
 
 
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“control” (within the meanings of Sections 8106 and 9106 of the UCC) over any
portion of the Investment Accounts constituting Securities Accounts, Commodity
Accounts, Securities Entitlements or Uncertificated Securities; (iii) establish
the Administrative Agent’s “control” (within the meaning of Section 9104 of the
UCC) over all Deposit Accounts; and (iv) deliver all Instruments to the
Administrative Agent to the extent required hereunder, except, in each case
(i) through (iv), as is not required pursuant to Section 5.1 or 5.7, as
applicable.
 
4.8           Receivables.  No amount payable to such Grantor under or in
connection with any Receivable or other Right to Payment of such Grantor in a
principal amount greater than Ten Thousand Dollars ($10,000) is evidenced by any
Instrument (other than checks, drafts or other Instruments that will be promptly
deposited in an Investment Account) or Chattel Paper which has not been
delivered to the Administrative Agent.  None of the account debtors or other
obligors in respect of any such Receivable in excess of One Hundred Thousand
Dollars ($100,000) in the aggregate is the government of the United States or
any agency or instrumentality thereof.
 
4.9           Intellectual Property.  Schedule 6 (as may be amended from time to
time by Grantors with notice to and the consent of the Administrative Agent)
lists all registrations and applications for Intellectual Property (including
registered Copyrights, Patents, Trademarks and all applications therefor) as
well as all Copyright Licenses, Patent Licenses and Trademark Licenses, in each
case, owned by such Grantor in its own name on the date hereof.  Except as set
forth in Schedule 6 (as may be amended from time to time by Grantors with notice
to and the consent of the Administrative Agent), none of such Intellectual
Property of such Grantor is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor, other than
licensing agreements entered into in the ordinary course of business.
 
4.10           Instruments.  (i) Such Grantor has not previously assigned any
interest in any Instruments (including, but not limited to, the Pledged Notes)
held by such Grantor (other than such interests as will be released on or before
the date hereof), and (ii) no Person other than such Grantor owns an interest in
such Instruments (whether as joint holders, participants or otherwise).
 
4.11           Letter of Credit Rights.  Such Grantor does not have any
Letter-of-Credit Rights having a potential value in excess of One Hundred
Thousand Dollars ($100,000) except as set forth in Schedule 7 or as have been
notified to the Administrative Agent in accordance with Section 5.22.
 
4.12           Commercial Tort Claims.  Such Grantor does not have any
Commercial Tort Claims having a potential value in excess of One Hundred
Thousand Dollars ($100,000) except as set forth in Schedule 8 or as have been
notified to the Administrative Agent in accordance with Section 5.21.
 
SECTION 5.
COVENANTS

 
In addition to the covenants of the Grantors set forth in the Credit Agreement
(including, as applicable, any such covenants which Borrower is required to
cause other Grantors to observe), which covenants (including any such covenants
set forth in Section 2.21 of the Credit Agreement) are incorporated herein by
this reference, each Grantor covenants and agrees with the Administrative Agent
and the other Secured Parties that, from and after the date of this Agreement
and until the Discharge of Obligations:
 
5.1           Delivery of Instruments, Certificated Securities and Chattel
Paper.  If any amount payable under or in connection with any of the Collateral
shall be or become evidenced by any Instrument (other than checks, drafts or
other Instruments that will be promptly deposited in an Investment Account),
Certificated Security or Chattel Paper evidencing an amount in excess of One
Hundred Thousand Dollars ($100,000), such Instrument, Certificated Security or
Chattel Paper shall be promptly delivered to the Administrative Agent, duly
indorsed in a manner satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement.
 
5.2           Maintenance of Insurance.
 
(a)           Such Grantor will maintain, with financially sound and reputable
companies, insurance policies insuring all of its property in accordance with
the requirements set forth at Section 6.6 of the Credit Agreement, which shall
include policies insuring the Inventory and Equipment against loss by fire,
explosion, theft
 
 
 
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and such other casualties as may be reasonably satisfactory to the
Administrative Agent, and insuring such Grantor, the Administrative Agent and
the other Secured Parties against liability for personal injury and property
damage relating to such Inventory and Equipment, such policies to be in such
form and amounts and having such coverage as may be reasonably satisfactory to
the Administrative Agent and the other Secured Parties.
 
(b)           All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least thirty (30) days after receipt by the Administrative
Agent of written notice thereof, (ii) name the Administrative Agent as an
additional insured party or loss payee, (iii) to the extent available on
commercially reasonable terms, and if reasonably requested by the Administrative
Agent, include a breach of warranty clause and (iv) be reasonably satisfactory
in all other respects to the Administrative Agent.
 
(c)           Each Grantor shall deliver to the Administrative Agent a report of
a reputable insurance broker with respect to such insurance substantially
concurrently with each delivery of Borrower’s audited annual financial
statements pursuant to Section 6.1(a) of the Credit Agreement and such
supplemental reports with respect thereto as the Administrative Agent may from
time to time reasonably request.
 
5.3           Maintenance of Perfected Security Interest; Further Documentation.
 
(a)           Such Grantor shall maintain the security interests of the
Administrative Agent (for the ratable benefit of the Secured Parties) granted by
such Grantor pursuant to the terms of this Agreement as perfected security
interests having at least the priority described in Section 4.2 and shall defend
such security interests against the claims and demands of all Persons
whomsoever, subject to the rights of such Grantor under the Loan Documents to
dispose of the Collateral.
 
(b)           Such Grantor will furnish to the Administrative Agent from time to
time statements and schedules further identifying and describing the assets and
property of such Grantor and such other reports in connection therewith 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 granted,
including, without limitation, (i) filing any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property, Investment Accounts, Letter-of-Credit
Rights and any other relevant Collateral, taking any actions necessary to enable
the Administrative Agent to obtain “control” (within the meaning of the UCC)
with respect thereto to the extent required hereunder.
 
5.4           Changes in Locations, Name, Etc..  Such Grantor will not, except
upon fifteen (15) days’ (or such shorter period as may be agreed to by the
Administrative Agent) prior written notice to the Administrative Agent and
delivery to the Administrative Agent of (a) 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, and (b) if applicable, a written supplement to Schedule 4 showing the
relevant new jurisdiction of organization, location of chief executive office or
sole place of business, as appropriate:
 
(i)           change its jurisdiction of organization, identification number
from the jurisdiction of organization (if any) or the location of its chief
executive office or sole place of business, as appropriate, from that referred
to in Section 4.3;
 
(ii)           change its name; or
 
(iii)           subject to Section 5.14, locate any Collateral in any state or
other jurisdiction other than those in which such Grantor operates as of the
Closing Date.
 
 
 
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5.5           Notices.  Such Grantor will advise the Administrative Agent
promptly, in reasonable detail, of:
 
(a)           any Lien (other than Liens permitted under Section 7.3 of the
Credit Agreement) on any of the Collateral; and
 
(b)           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.
 
5.6           Instruments; Investment Property.
 
(a)           Upon the request of the Administrative Agent, such Grantor will
(i) promptly deliver to the Administrative Agent, or an agent designated by it,
appropriately endorsed or accompanied by appropriate instruments of transfer or
assignment, all Instruments, Documents, Chattel Paper and Certificated
Securities with respect to any Investment Property held by such Grantor, all
Letters of Credit of such Grantor, and all other Rights to Payment held by such
Grantor at any time evidenced by promissory notes, trade acceptances or other
instruments, and (ii) provide such notice, obtain such acknowledgments and take
all such other action, with respect to any Chattel Paper, Documents and
Letter-of-Credit Rights held by such Grantor, as the Administrative Agent shall
reasonably specify.
 
(b)           If such Grantor shall become entitled to receive or shall receive
any certificate (including 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, whether in addition to,
in substitution of, as a conversion of, or in exchange for, any Pledged
Collateral, or otherwise in respect thereof, such Grantor shall accept the same
as the agent of the Administrative Agent and the other Secured Parties, hold the
same in trust for the Administrative Agent and the other Secured Parties and
deliver the same forthwith 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 Secured
Obligations; provided that in no event shall this Section 5.6(b) apply to any
Excluded Assets.  Any sums paid upon or in respect of the Investment Property
upon the liquidation or dissolution of any Issuer shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be paid over to the Administrative Agent to be held by it hereunder as
additional collateral security for the Secured Obligations, and in case any
distribution of capital shall be made on or in respect of the Investment
Property or any property shall be distributed upon or with respect to the
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 to
be held by it hereunder as additional collateral security for the Secured
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, unless otherwise subject to a perfected security interest in favor of the
Administrative Agent, hold such money or property in trust for the
Administrative Agent and the other Secured Parties, segregated from other funds
of such Grantor, as additional collateral security for the Secured Obligations.
 
(c)           If such Grantor is an Issuer, such Grantor agrees that (i) it will
be bound by the terms of this Agreement relating to the Capital Stock 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 5.6(a) and Section
5.6(b) with respect to the Pledged Collateral issued by it and (iii) the terms
of Section 6.3(c) and Section 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
Section 6.7 with respect to the Capital Stock issued by it.
 
5.7           Securities Accounts; Deposit Accounts.
 
(a)           With respect to (i) any Securities Account, such Grantor shall
cause any applicable securities intermediary maintaining such Securities Account
to show on its books that the Administrative Agent is the entitlement holder
with respect to such Securities Account, and, if requested by the Administrative
Agent, cause
 
 
 
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such securities intermediary to enter into a Securities Account Control
Agreement, in form and substance reasonably satisfactory to the Administrative
Agent, with respect to such Securities Account pursuant to which such securities
intermediary shall agree to comply with the Administrative Agent’s “entitlement
orders” without further consent by such Grantor, as requested by the
Administrative Agent; and (ii) any Deposit Account, such Grantor shall enter
into and shall cause the depositary institution maintaining such account to
enter into a Deposit Account Control Agreement, in form and substance reasonably
satisfactory to the Administrative Agent, pursuant to which the Administrative
Agent shall be granted “control” (within the meaning of Section 9104 of the UCC)
over such Deposit Account; provided that the foregoing shall not require the
delivery by any Grantor of a Control Agreement with respect to any Investment
Account (other than the Borrower Designated Deposit Account) of such Grantor if
the balance of such Investment Account is less than Fifty Thousand Dollars
($50,000) individually, and the balance of all Investment Accounts of such
Grantor that are not subject to the Administrative Agent’s perfected Lien does
not exceed Two Hundred Thousand Dollars ($200,000) in the aggregate.
 
(b)           The Administrative Agent agrees that it will only communicate
“entitlement orders” with respect to the Securities Accounts of the Grantors
during the existence of an Event of Default and that it will give exclusive
control notices with respect to the Deposit Accounts of the Grantors during the
existence of an Event of Default.
 
(c)           Such Grantor shall give the Administrative Agent prompt notice of
its establishment of any new Deposit Account or any new Securities Account
relating to any Investment Property held by such Grantor.
 
5.8           Intellectual Property.
 
(a)           Such Grantor (either itself or through licensees) will
(i) continue to use each material Trademark in order to maintain such material
Trademark in full force free from any claim of abandonment for non-use,
(ii) maintain as in the past the quality of products and services offered under
each such material Trademark, (iii) use each such material Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) not adopt or use any mark which is
confusingly similar or a colorable imitation of any such material Trademark
unless the Administrative Agent, for the ratable benefit of the Secured Parties,
shall obtain, to the extent available, a perfected security interest in such
mark pursuant to this Agreement, and (v) not (and not knowingly permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any such material Trademark may become invalidated or 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 such 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 such 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 the
Intellectual Property rights of any other Person.
 
(e)           Such Grantor will notify the Administrative Agent promptly if it
knows, or has reason to know, that any application or registration relating to
any material Intellectual Property may become forfeited, abandoned or dedicated
to the public, or of any material 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,
the United States Copyright Office or any court or tribunal in any country)
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 Patent or Trademark with the U.S. Patent and Trademark Office or any
similar office or agency in any other country or political subdivision thereof,
such Grantor
 
 
 
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shall report (i) the initial application to and (ii) the corresponding grant, if
any, of the Patent or Trademark from the U.S. Patent and Trademark Office to the
Administrative Agent, each within forty-five (45) days after the last day of the
fiscal quarter in which such filing or grant, as applicable, occurs.  Whenever
such Grantor, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Copyright with
the U.S. Copyright Office, such Grantor shall report the filing of the initial
application to the Administrative Agent not less than fourteen (14) days prior
to such filing.  Upon request of the Administrative Agent, such Grantor shall
execute and deliver, and have recorded, all agreements, instruments, documents,
and papers as the Administrative Agent may reasonably request to evidence the
Administrative Agent’s and the other Secured Parties’ security interest in any
Copyright, Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby; provided, however, that such
Grantor shall not be required to take any of the foregoing actions with respect
to an intent to use trademark or service mark application if it is excluded from
the Collateral in accordance with Section 3.1.
 
(g)           Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the U.S. Patent and
Trademark Office, the U.S. Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain and pursue
each material application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including
filing of applications for renewal, affidavits of use and affidavits of
incontestability.
 
(h)           If any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property.
 
5.9           Receivables.  Other than in the ordinary course of business
consistent with its past practice and other than as otherwise expressly
permitted by Section 6.3(b) of the Credit Agreement, such Grantor will not
(a) grant any extension of the time of payment of any Receivable of such
Grantor, (b) compromise or settle any such Receivable for less than the full
amount thereof, (c) release, wholly or partially, any Person liable for the
payment of any such Receivable, (d) allow any credit or discount whatsoever on
any such Receivable, or (e) amend, supplement or modify any such Receivable in
any manner that could adversely affect the value thereof.
 
5.10           Defense of Collateral.  Such Grantor will appear in and defend
any action, suit or proceeding which may affect to a material extent its title
to, or right or interest in, or the Administrative Agent’s right or interest in,
any material portion of the Collateral of such Grantor.
 
5.11           Preservation of Collateral.  Such Grantor will do and perform all
reasonable acts that may be necessary and appropriate to maintain, preserve and
protect the Collateral of such Grantor.
 
5.12           Compliance with Laws, Etc..  Such Grantor will comply in all
material respects with all laws, regulations and ordinances, and all policies of
insurance, relating in a material way to the possession, operation, maintenance
and control of the Collateral of such Grantor.
 
5.13           Location of Books and Chief Executive Office.  Such Grantor
will:  (a) keep all Books pertaining to the Rights to Payment of such Grantor at
the locations set forth in Schedule 4 (as may be amended from time to time by
Grantors with notice to and the consent of the Administrative Agent); and
(b) give at least fifteen (15) days’ prior written notice to the Administrative
Agent of any changes in any location where Books pertaining to the Rights to
Payment of such Grantor are kept, including any change of name or address of any
service bureau, computer or data processing company or other Person preparing or
maintaining any such Books or collecting Rights to Payment for such Grantor.
 
5.14           Location of Collateral.  Such Grantor will:  (a) keep the
Collateral held by such Grantor at the locations set forth in Schedule 5 or at
such other locations as may be disclosed in writing to the Administrative Agent
pursuant to clause (b) and will not remove any such Collateral from such
locations (other than in connection with sales of Inventory in the ordinary
course of such Grantor’s business, the movement of Collateral as part of such
Grantor’s supply chain and in the ordinary course of such Grantor’s business,
other dispositions permitted by Section 7.5 of the Credit Agreement and
movements of Collateral from one disclosed location to another disclosed
location within the United States), except upon at least fifteen (15) days’
prior written notice of any removal to the
 
 
 
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Administrative Agent; and (b) give the Administrative Agent at least fifteen
(15) days’ prior written notice of any change in the locations set forth in
Schedule 5.
 
5.15           Maintenance of Records.  Such Grantor will keep separate,
accurate and complete Books with respect to Collateral held by such Grantor,
disclosing the Administrative Agent’s security interest hereunder.
 
5.16           Disposition of Collateral.  Such Grantor will not surrender or
lose possession of (other than to the Administrative Agent), sell, lease, rent,
or otherwise dispose of or transfer any of the Collateral held by such Grantor
or any right or interest therein, except to the extent permitted by the Loan
Documents.
 
5.17           Liens.  Such Grantor will keep the Collateral held by such
Grantor free of all Liens except Liens permitted under Section 7.3 of the Credit
Agreement.
 
5.18           Expenses.  Such Grantor will pay all expenses of protecting,
storing, warehousing, insuring, handling and shipping the Collateral held by
such Grantor, to the extent the failure to pay any such expenses could
reasonably be expected to materially and adversely affect the value of the
Collateral.
 
5.19           Leased Premises;  Collateral Held by Warehouseman, Bailee,
Etc..  Such Grantor shall observe the covenant of Borrower set forth at
Section 6.12(d) of the Credit Agreement, which covenant by its terms requires
Borrower to cause each Grantor (other than Borrower) to observe.
 
5.20           Chattel Paper.  Such Grantor will not create any Chattel Paper
without placing a legend on such Chattel Paper acceptable to the Administrative
Agent indicating that the Administrative Agent has a security interest in such
Chattel Paper.  Such Grantor will give the Administrative Agent immediate notice
if such Grantor at any time holds or acquires an interest in any Chattel Paper,
including any Electronic Chattel Paper and shall comply, in all respects, with
the provisions of Section 5.1 hereof.
 
5.21           Commercial Tort Claims.  Such Grantor will give the
Administrative Agent prompt notice if such Grantor shall at any time hold or
acquire any Commercial Tort Claim with a potential value in excess of One
Hundred Thousand Dollars ($100,000).
 
5.22           Letter-of-Credit Rights.  Such Grantor will give the
Administrative Agent prompt notice if such Grantor shall at any time hold or
acquire any Letter-of-Credit Rights with a potential value in excess of One
Hundred Thousand Dollars ($100,000).
 
5.23           Shareholder Agreements and Other Agreements.
 
(a)           Such Grantor shall comply with all of its obligations under any
shareholders agreement, operating agreement, partnership agreement, voting
trust, proxy agreement or other agreement or understanding (collectively, the
“Pledged Collateral Agreements”) to which it is a party and shall enforce all of
its rights thereunder, except, with respect to any such Pledged Collateral
Agreement relating to any Pledged Collateral issued by a Person other than a
Subsidiary of a Grantor, to the extent the failure to enforce any such rights
could reasonably be expected to materially and adversely affect the value of the
Pledged Collateral to which any such Pledged Collateral Agreement relates.
 
(b)           Such Grantor agrees that no Pledged Stock (i) shall be dealt in or
traded on any securities exchange or in any securities market, (ii) shall
constitute an investment company security, or (iii) shall be held by such
Grantor in a Securities Account.
 
(c)           Subject to the terms and conditions of the Credit Agreement,
including Sections 7.3 and 7.5 thereof, such Grantor shall not vote to enable
any amendment to, termination of, or waiver of compliance with, or take any
other action to amend, terminate, or waive compliance with, any of the terms of
any such Pledged Collateral Agreement, certificate or articles of incorporation,
bylaws or other organizational documents in any way that materially and
adversely affects the validity, perfection or priority of the Administrative
Agent’s security
 
 
 
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interest in any Pledged Collateral or in the other Collateral or that otherwise
materially impairs the interests of the Secured Parties in the Collateral.
 
SECTION 6.
REMEDIAL PROVISIONS

 
6.1           Certain Matters Relating to Receivables.
 
(a)           The Administrative Agent authorizes each Grantor to collect such
Grantor’s Receivables (and, with respect to Borrower, to collect its Receivables
in accordance with Section 6.3 of the Credit Agreement), and the Administrative
Agent may curtail or terminate such authority at any time during the continuance
of an Event of Default.  If required by the Administrative Agent at any time
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
(2) 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 over which the Administrative Agent has control, 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 other Secured
Parties, segregated from other funds of such Grantor.  During the continuance of
an Event of Default, 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.
 
(b)           At the Administrative Agent’s request, during the continuance of
an Event of Default, 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.
 
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 communicate with obligors under the Receivables to
verify with them to the Administrative Agent’s satisfaction the existence,
amount and terms of any Receivables; provided that if an Event of Default does
not exist, the Administrative Agent may communicate with such obligors only in
the name of others.
 
(b)           Upon the request of the Administrative Agent, at any time 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.
 
(c)           Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables 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 other 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 Lender of any payment relating thereto, nor shall the Administrative
Agent or any other 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           Investment Property.
 
(a)           Unless an Event of Default exists and the Administrative Agent
shall have given written 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 Collateral and all payments made in respect of the Pledged Notes to
the extent not prohibited by the Credit Agreement, and to
 
 
 
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exercise all voting and corporate or other organizational rights with respect to
the Investment Property of such Grantor; provided, however, that no vote shall
be cast or corporate or other organizational right exercised or other action
taken which, in the Administrative Agent’s reasonable discretion, would
materially impair the Collateral or which would be inconsistent with or result
in any violation of any provision of the Credit Agreement, this Agreement or any
other Loan Document.
 
(b)           If an Event of Default exists 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 (A) to receive all
cash dividends, payments or other Proceeds paid in respect of the Investment
Property (including the Pledged Collateral) of the Grantors and to make
application thereof to the Secured Obligations in the order set forth in
Section 6.5, and (B) to exchange uncertificated Pledged Collateral for
certificated Pledged Collateral and to exchange certificated Pledged Collateral
for certificates of larger or smaller denominations, for any purpose consistent
with this Agreement (in each case to the extent such exchanges are permitted
under the applicable Pledged Collateral Agreements or otherwise agreed upon by
the Issuer of such Pledged Collateral), and (ii) all of such Investment Property
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 Investment Property at any meeting
of the equity holders of the relevant Issuer or Issuers or otherwise and (y) all
rights of conversion, exchange and subscription and all other rights, privileges
or options pertaining to such Investment Property as if it were the absolute
owner thereof (including, without limitation, the right to exchange at its
discretion such Investment Property upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate or
other organizational structure of any Issuer, or upon the exercise by any
Grantor or the Administrative Agent of any right, privilege or option pertaining
to such Investment Property, and, in connection therewith, the right to deposit
and deliver any of such Investment Property 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.
 
(c)           Each Grantor authorizes and instructs each Issuer of any Pledged
Collateral or Pledged Notes pledged by such Grantor to (i) comply with any
instruction received by it from the Administrative Agent in writing that
(x) states that an Event of Default exists, 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 Collateral or, as
applicable, the Pledged Notes directly to the Administrative Agent.
 
(d)           If an Event of Default exists, the Administrative Agent shall have
the right to apply the balance from any Deposit Account of any Grantor or to
instruct the bank at which any such Deposit Account is maintained to pay the
balance of any such Deposit Account to or for the benefit of the Administrative
Agent to be applied to the Secured Obligations in accordance with the terms of
the Loan Documents.
 
6.4           Proceeds to be Turned Over to Administrative Agent.  In addition
to the rights of the Administrative Agent and the other Secured Parties
specified in Section 6.1 with respect to payments of Receivables, if an Event of
Default exists, all Proceeds received by any Grantor consisting of cash, checks,
Cash Equivalents and other near-cash items shall be held by such Grantor in
trust for the Administrative Agent and the other 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 over which it maintains
control, within the meaning of the UCC.  All Proceeds while held by the
Administrative Agent in a Collateral Account (or by such Grantor in trust for
the Administrative Agent and the other Secured Parties) shall continue to be
held as collateral security for all the Secured Obligations and shall not
constitute payment thereof until applied as provided in Section 6.5.
 
6.5           Application of Proceeds.  If an Event of Default exists, 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
 
 
 
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in any Collateral Account, in payment of the Secured Obligations in accordance
with Section 8.3 of the Credit Agreement.
 
6.6           Code and Other Remedies.  If an Event of Default exists, the
Administrative Agent, on behalf of the Secured Parties, may exercise, in
addition 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
Secured Obligations, all rights and remedies of a secured party under the 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) 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 other 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 other 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,
during the existence of an Event of Default, 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, in accordance with the provisions of
Section 6.5, only 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 or in any way relating to the Collateral or the rights
of the Administrative Agent and the other Secured Parties hereunder, including,
without limitation, reasonable attorneys’ fees and disbursements, to the payment
in whole or in part of the Secured Obligations, in such order as is contemplated
by Section 8.3 of the Credit Agreement, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including Section 9615(a)(3) of the UCC, but only to the
extent of the surplus, if any, owing 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 other Secured Party arising out
of the exercise by any of them of any rights hereunder, except to the extent
caused by the gross negligence or willful misconduct of the Administrative Agent
or such Secured Party or their respective agents.  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 ten (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 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 to 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 (1) year from the date of
the first public offering of the Pledged Stock, or that portion thereof to be
sold, and (iii) make all 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 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
 
 
 
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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.  Subject
to its compliance with state securities laws applicable to private sales, 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.  Each Grantor agrees that the Administrative Agent and the other Secured
Parties shall not have any liability, direct or indirect, for any short-swing
profits liability such Grantor incurs under Section 16(b) of the Securities
Exchange Act of 1934 (the “Exchange Act”), as a result of Agent’s disposition of
all or any part of the Pledged Collateral and that a disposition shall not be
deemed made in bad faith or in a commercially unreasonable manner for purposes
of the UCC if it gives rise to short-swing profits under Section 16(b) of the
Exchange Act.
 
(c)           Each Grantor agrees to use commercially reasonable 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 applicable Requirement of
Law.  Each Grantor further agrees that a breach of any of the covenants
contained in this Section 6.7will cause irreparable injury to the Administrative
Agent and the other Secured Parties, that the Administrative Agent and the other
Secured Parties have no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this Section 6.7 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 exists.
 
6.8           Intellectual Property License.  Solely for the purpose of enabling
the Administrative Agent to exercise rights and remedies under this Section 6
and at such time as the Administrative Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the
Administrative Agent, for the benefit of the Secured Parties, an irrevocable,
non-exclusive, worldwide license (exercisable without payment of royalty or
other compensation to such Grantor), subject, in the case of Trademarks, to
sufficient rights to quality control and inspection in favor of such Grantor to
avoid the risk of invalidation of such Trademarks, to use, operate under,
license, or sublicense any Intellectual Property now owned or hereafter acquired
by the Grantors.
 
6.9           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 the Secured Obligations and the fees and disbursements of
any attorneys employed by the Administrative Agent or any other 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 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 appropriate action and to execute documents and
instruments which may 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 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 whenever payable;
 
 
 
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(ii)           in the case of any Intellectual Property, execute and deliver,
and have recorded, agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Administrative Agent’s and the
other 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 endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
 
(v)           (A) direct any party liable for any payment under any of the
Collateral to make payment of moneys due or to become due thereunder directly to
the Administrative Agent or as the Administrative Agent shall direct; (B) ask or
demand for, collect, and receive payment of and receipt for, moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; (C) 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; (D) 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; (E) defend any suit, action or proceeding brought against such
Grantor with respect to any Collateral; (F) 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;
(G) 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 (H) 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 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 other Secured Parties’ security interests therein and to effect
the intent of this Agreement, all as fully and effectively as such Grantor might
do.
 
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) (except for the rights under
clause (ii)) unless an Event of Default exists.
 
(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 highest rate per annum at which
interest would then be payable on any category of past due ABR Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed shall be payable by the Grantors to the Administrative Agent on
demand.
 
(d)           Each Grantor hereby ratifies all that such 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 9207 of the UCC or otherwise, shall
be to deal with it in the same manner as the Administrative Agent deals with
similar property for its
 
 
 
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own account.  Neither the Administrative Agent, any other 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 other Secured
Parties hereunder are solely to protect the Administrative Agent’s and the other
Secured Parties’ interests in the Collateral and shall not impose any duty upon
the Administrative Agent or any other Secured Party to exercise any such
powers.  The Administrative Agent and the other 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.
 
7.3           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 other
Secured Parties, be governed by the Credit 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.
 
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 10.1 of the Credit 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 10.2 of the Credit 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 (as may be amended from
time to time by Grantors with notice to and the consent of the Administrative
Agent).
 
8.3           No Waiver by Course of Conduct; Cumulative Remedies.  Neither the
Administrative Agent nor any other 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, as applicable.  No failure to
exercise, nor any delay in exercising, on the part of the Administrative Agent
or any other 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 exercise thereof or
the exercise of any other right, power or privilege.  A waiver by the
Administrative Agent or any other 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 other 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)           The Grantors shall be jointly and severally obligated to pay
(i) all reasonable out of pocket expenses incurred by the Administrative Agent
and its Affiliates (including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent), and shall pay all fees and time charges
and disbursements for attorneys who may be employees of the Administrative
Agent, in connection with the administration of this Agreement and the other
Security Documents, or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated by
the Credit Agreement shall be consummated), and (ii) all out of pocket expenses
incurred by the Administrative Agent or any other Secured Party (including the
fees, charges and disbursements of any counsel for the Administrative Agent or
any other Secured Party), and shall pay all fees and time charges for attorneys
who may be employees of the Administrative Agent or any other Secured
 
 
 
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Party, in connection with the enforcement or protection of its rights in
connection with this Agreement and the other Security Documents, including its
rights under this Section 8.4.
 
(b)           The Grantors jointly and severally agree to indemnify each
Indemnitee against, and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses (including the fees, charges
and disbursements of any counsel for any Indemnitee), and shall indemnify and
hold harmless each Indemnitee from all fees and time charges and disbursements
for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee
or asserted against any Indemnitee by such Grantor arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement, any
other Security Document or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, or (ii) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by such
Grantor or any other Loan Party, and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee or (y) result from a claim brought by such
Grantor or any other Loan Party against an Indemnitee for breach in bad faith of
such Indemnitee’s obligations hereunder or under any other Loan Document, if
such Grantor or such Loan Party has obtained a final and nonappealable judgment
in its favor on such claim as determined by a court of competent jurisdiction.
 
(c)           To the fullest extent permitted by applicable law, no Grantor
shall assert, and each Grantor hereby waives, any claim such Grantor may at any
time have against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby or
the transactions contemplated hereby or thereby.  No Indemnitee referred to in
Section 8.4(b) shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.
 
(d)           The Grantors jointly and severally agree to pay, and to save the
Administrative Agent and each other Secured Party harmless from, all liabilities
with respect to, or resulting from any delay in paying, any and all stamp,
excise, sales or other taxes (including any withholding 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.
 
(e)           To the extent not included in the foregoing and for the avoidance
of doubt, the Guarantors jointly and severally agree to pay or reimburse the
Administrative Agent and each other Secured Party for all its costs and expenses
incurred in collecting against any Guarantor under the guaranty contained in
Section 2 or otherwise enforcing or preserving any rights under this Agreement
and the other Loan Documents to which such Guarantor is a party, including the
fees and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to the Administrative Agent and of counsel to each other
Secured Party.
 
(f)           All amounts due under this Section 8.4 shall be payable promptly
after demand therefor.
 
(g)           The agreements in this Section 8.4 shall survive repayment of the
Secured Obligations and any other amounts payable under the Credit 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 each other Secured Party and their respective
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 and each Lender.
 
8.6           Set Off.  Each Grantor hereby irrevocably authorizes the
Administrative Agent and each other Secured Party and any Affiliate thereof at
any time and from time to time during the continuance of an Event of Default,
without notice to such Grantor or any other Grantor, any such notice being
expressly waived by each
 
 
 
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Grantor, to setoff and appropriate and apply any 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 or such Affiliate 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 Secured Obligations and liabilities of such Grantor to the
Administrative Agent or such Secured Party hereunder and under the other Loan
Documents and claims of every nature and description of the Administrative Agent
or such Secured Party against such Grantor, in any currency, whether arising
hereunder, under the Credit Agreement, any other Loan Document or otherwise, as
the Administrative Agent or such Secured Party may elect, whether or not the
Administrative Agent or any other Secured Party has made any demand for payment
and although such obligations, liabilities and claims may be contingent or
unmatured.  The rights of the Administrative Agent and each other Secured Party
under this Section 8.6 are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which the Administrative Agent or
such other 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 facsimile and/or electronic mail), and all of such counterparts taken
together shall be deemed to constitute one and the same instrument.  A set of
the copies of this Agreement signed by all the parties shall be lodged with
Borrower and the Administrative Agent.
 
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 entire agreement of the Grantors, the Administrative Agent and the
other 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 other Secured Party relative to the subject matter
hereof and thereof not expressly set forth or referred to herein or in the other
Loan Documents.
 
8.11           Governing Law; Submission to Jurisdiction; Jury Trial
Waiver.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO CONFLICTS OF
LAW PRINCIPLES.  THE PROVISIONS OF SECTION 10.14 OF THE CREDIT AGREEMENT
REGARDING SUBMISSION TO JURISDICTION AND JURY TRIAL WAIVER SHALL BE APPLICABLE
TO THIS AGREEMENT AND ARE HEREBY INCORPORATED HEREIN BY REFERENCE, MUTATIS
MUTANDIS, AS IF SUCH PROVISIONS WERE FULLY SET FORTH HEREIN.
 
8.12           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 other 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 the other 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 any
of the Secured Parties or among the Grantors and any of the Secured Parties.
 
 
 
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8.13           Additional Grantors.  Each Subsidiary of a Grantor that is
required to become a party to this Agreement pursuant to Section 6.12 of the
Credit 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, and each Grantor shall cause such Subsidiary to so execute
and deliver such Assumption Agreement in accordance with the provisions of this
Agreement and the other Loan Documents.
 
8.14           Releases.
 
(a)           Upon the Discharge of Obligations, the Collateral shall be
released from the Liens in favor of the Administrative Agent and the other
Secured Parties created hereby, this Agreement shall terminate with respect to
the Administrative Agent and the other Secured Parties, and all obligations
(other than those expressly stated to survive such termination) of each Grantor
to the Administrative Agent or any other Secured Party hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party.  At the sole expense of any Grantor following any such termination,
the Administrative Agent shall deliver 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 Section 7 of the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall promptly execute and deliver to such Grantor all releases or
other documents reasonably necessary or desirable for the release of the Liens
created hereby on such Collateral, as applicable.  At the request and sole
expense of Borrower, a Guarantor shall be released from its obligations
hereunder if all the Capital Stock of such Guarantor shall be sold, transferred
or otherwise disposed of to a Person other than a Grantor in a transaction
permitted by Section 7 of the Credit Agreement; provided that Borrower shall
have delivered to the Administrative Agent, at least thirty (30) days, or such
shorter period as the Administrative Agent may agree, prior to the date of the
proposed release, a written request for release identifying the relevant
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 Borrower stating that such transaction is in compliance
with terms and provisions of the Credit Agreement and the other Loan Documents.
 
[Remainder of page left blank intentionally]
 
 
 
27

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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.
 

ADMINISTRATIVE AGENT:   GRANTORS:          
EAST WEST BANK
 
ULTRA CLEAN HOLDINGS, INC.
                          By:  /s/ Alexis Coyle   By:  /s/ Kevin C. Eichler  
Name:
Alexis Coyle
  Name: Kevin C. Eichler   Title:
Managing Director
  Title: Chief Financial Officer, Executive
Vice President and Secretary
 

 
 

   
ULTRA CLEAN TECHNOLOGY SYSTEMS AND SERVICE, INC.
                                By: /s/ Kevin C. Eichler         Name: Kevin C.
Eichler         Title:
Secretary, Executive Vice President
and Chief Financial Officer

 
 

   
AMERICAN INTEGRATION TECHNOLOGIES LLC
                                By: /s/ Kevin C. Eichler         Name: Kevin C.
Eichler         Title: Chief Financial Officer, Executive
Vice President and Secretary

 

    UCT SIEGER ENGINEERING LLC                                 By: /s/ Kevin C.
Eichler         Name: Kevin C. Eichler         Title: Secretary and Chief
Financial Officer

 

   
INTEGRATED FLOW SYSTEMS, LLC
                                By: /s/ Kevin C. Eichler         Name: Kevin C.
Eichler         Title: Chief Financial Officer, Executive
Vice President and Secretary

 
 

    DRAKE ACQUISITION SUBSIDIARY, INC.                                 By: /s/
Kevin C. Eichler         Name: Kevin C. Eichler         Title: Treasurer and
Secretary

 
 
Signature Page to Guarantee and Collateral Agreement
 
 

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ANNEX I TO
GUARANTEE AND COLLATERAL AGREEMENT
 
FORM OF
ASSUMPTION AGREEMENT
 
This ASSUMPTION AGREEMENT (the “Assumption Agreement”), dated as of
[___________], is executed and delivered by [________________] (the “Additional
Grantor”), in favor of EAST WEST BANK, as administrative agent (in such
capacity, the “Administrative Agent”) for the banks and other financial
institutions or entities (the “Lenders”) from time to time parties to the Credit
Agreement, dated as of February __, 2015 (as amended, amended and restated,
supplemented, restructured or otherwise modified, renewed or replaced from time
to time, the “Credit Agreement”), among Ultra Clean Holdings, Inc., a Delaware
corporation (the “Borrower”), the Lenders and the Administrative Agent. All
capitalized terms not defined herein shall have the respective meanings ascribed
to such terms in such Credit Agreement.
 
WITNESSETH:
 
WHEREAS, in connection with the Credit Agreement, Borrower and certain of its
Affiliates have entered into the Guarantee and Collateral Agreement, dated as of
February __, 2015, in favor of the Administrative Agent for the benefit of the
Secured Parties defined therein (the “Guarantee and Collateral Agreement”);
 
WHEREAS, Borrower is required, pursuant to Section 6.12 of the Credit Agreement,
to cause the Additional Grantor to become a party to the Guarantee and
Collateral Agreement in order to grant in favor of the Administrative Agent (for
the ratable benefit of the Lenders) the Liens therein specified and provide its
guarantee of the Obligations as therein contemplated; and
 
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;
 
NOW, THEREFORE, IT IS AGREED:
 
1. Guarantee and Collateral Agreement. By executing and delivering this
Assumption Agreement, the Additional Grantor, as provided in Section 8.13 of the
Guarantee and Collateral Agreement, (a) becomes a party to the Guarantee and
Collateral Agreement as both a “Grantor” and a “Guarantor” thereunder with the
same force and effect as if originally named therein as a Grantor and a
Guarantor and, without limiting the generality of the foregoing, hereby
expressly assumes all obligations and liabilities of a Grantor and a Guarantor
thereunder, and (b) grants to the Administrative Agent, for the benefit of the
Secured Parties, as security for the Secured Obligations, a security interest in
all of the Additional Grantor’s right, title and interest in the Collateral of
the Additional Grantor, in each case whether now owned or hereafter acquired or
in which the Additional Grantor now has or hereafter acquires an interest and
wherever the same may be located, but subject in all respects to the terms,
conditions and exclusions set forth in the Guarantee and Collateral Agreement.
The information set forth in Schedule 1 hereto is hereby added to the
information set forth in the Schedules to the Guarantee and Collateral
Agreement. The Additional Grantor represents and warrants that each of the
representations and warranties contained in Section 4 of the Guarantee and
Collateral Agreement (x) that is qualified by materiality is true and correct,
and (y) that is not qualified by materiality, is true and correct in all
material respects, in each case, on and as the date hereof (after giving effect
to this Assumption Agreement) as if made on and as of such date (except to the
extent any such representation and warranty expressly relates to an earlier
date, in which case such representation and warranty was true and correct in all
material respects as of such earlier date).
 
2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES. THE PROVISIONS OF SECTION 10.14 OF
THE CREDIT AGREEMENT REGARDING SUBMISSION TO JURISDICTION AND JURY TRIAL WAIVER
SHALL BE APPLICABLE TO THIS AGREEMENT AND ARE HEREBY INCORPORATED HEREIN BY
REFERENCE, MUTATIS MUTANDIS.
 
 
 
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3. Loan Document. This Assumption Agreement shall constitute a Loan Document
under the Credit Agreement.
 
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered as of the date first above written.
 

 
[ADDITIONAL GRANTOR]
                By:         Name:       Title:  

 
 
 
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Schedule 1 to the Assumption Agreement
 
Supplement to Schedule 1 of the Guarantee and Collateral Agreement
 
Supplement to Schedule 2 of the Guarantee and Collateral Agreement
 
Supplement to Schedule 3 of the Guarantee and Collateral Agreement
 
Supplement to Schedule 4 of the Guarantee and Collateral Agreement
 
Supplement to Schedule 5 of the Guarantee and Collateral Agreement
 
Supplement to Schedule 6 of the Guarantee and Collateral Agreement
 
Supplement to Schedule 7 of the Guarantee and Collateral Agreement
 
Supplement to Schedule 8 of the Guarantee and Collateral Agreement
 
 
 
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ANNEX 2 TO
GUARANTEE AND COLLATERAL AGREEMENT
 
FORM OF
PLEDGE SUPPLEMENT
 

To: East West Bank, as Administrative Agent           Re: Guarantee and
Collateral Agreement referenced below           Date:      

 
Ladies and Gentlemen:
 
This Pledge Supplement (this “Pledge Supplement”) is made and delivered pursuant
to Section 3.3(g) of the Guarantee and Collateral Agreement, dated as of
February __, 2015 (as amended, modified, renewed or extended from time to time,
the “Guarantee and Collateral Agreement”), among each Grantor party thereto
(each a “Grantor” and collectively, the “Grantors”), and East West Bank (in its
capacity as administrative agent for the Secured Parties defined therein, the
“Administrative Agent”). All capitalized terms used in this Pledge Supplement
and not otherwise defined herein shall have the meanings assigned to them in
either the Guarantee and Collateral Agreement or the Credit Agreement (as
defined in the Guarantee and Collateral Agreement), as the context may require.
 
The undersigned, ____________________________ [insert name of Grantor], a
____________________________ [corporation, partnership, limited liability
company, etc], confirms and agrees that all Pledged Collateral of the
undersigned, including the property described on the supplemental schedule
attached hereto, shall be and become part of the Pledged Collateral and shall
secure the Secured Obligations.
 
Schedule 2 to the Guarantee and Collateral Agreement is hereby amended by adding
to such Schedule 2 the information set forth in the supplement attached hereto.
This Pledge Supplement shall constitute a Loan Document under the Credit
Agreement.
 
THIS PLEDGE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO
CONFLICTS OF LAW PRINCIPLES. THE PROVISIONS OF SECTION 10.14 OF THE CREDIT
AGREEMENT REGARDING SUBMISSION TO JURISDICTION AND JURY TRIAL WAIVER SHALL BE
APPLICABLE TO THIS AGREEMENT AND ARE HEREBY INCORPORATED HEREIN BY REFERENCE,
MUTATIS MUTANDIS.
 
IN WITNESS WHEREOF, the undersigned has executed this Pledge Supplement as of
the date first above written.
 
 

  [NAME OF APPLICABLE GRANTOR]                 By:       Name:       Title:    

 
 
 
 
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SUPPLEMENT TO ANNEX 2
TO THE SECURITY AGREEMENT
 
 
Name of Subsidiary
Number of
Units/Shares Owned
Certificates(s)
Numbers
Date Issued
Class or Type of
Units or Shares
Percentage of
Subsidiary’s
total Equity
Interests Owned
           

 
 
 
 
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