Ex-10.4

 

 

 

GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

GENERAC HOLDINGS INC.

 

GENERAC ACQUISITION CORP.

 

GENERAC POWER SYSTEMS, INC.

 

and certain Subsidiaries of GENERAC POWER SYSTEMS, INC.

 

in favor of

 

BANK OF AMERICA, N.A., as Administrative Agent

 

Dated as of May 30, 2012

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

SECTION 1.

DEFINED TERMS

2

 

 

 

 

1.1.

Definitions

2

 

1.2.

Other Definitional Provisions

8

 

 

 

SECTION 2.

GUARANTEE

9

 

 

 

 

2.1.

Guarantee

9

 

2.2.

Rights of Reimbursement, Contribution and Subrogation

9

 

2.3.

Amendments, etc.

11

 

2.4.

Guarantee Absolute and Unconditional

12

 

2.5.

Reinstatement

12

 

2.6.

Payments

13

 

2.7.

Parent Representations

13

 

 

 

SECTION 3.

GRANT OF SECURITY INTEREST; CONTINUING LIABILITY UNDER COLLATERAL

13

 

 

 

SECTION 4.

REPRESENTATIONS AND WARRANTIES

15

 

 

 

 

4.1.

Title; No Other Liens

15

 

4.2.

Perfected First Priority Liens

15

 

4.3.

Name; Jurisdiction of Organization, etc.

16

 

4.4.

Inventory and Equipment

16

 

4.5.

Farm Products

16

 

4.6.

Investment Property

16

 

4.7.

Accounts

17

 

4.8.

Intellectual Property

17

 

4.9.

Letters of Credit and Letter of Credit Rights

19

 

 

 

SECTION 5.

COVENANTS

19

 

 

 

 

5.1.

Delivery and Control of Certain Collateral

19

 

5.2.

Maintenance of Perfected Security Interest; Further Documentation

20

 

5.3.

Changes in Locations, Name, Jurisdiction of Incorporation, etc.

20

 

5.4.

Investment Property

21

 

5.5.

Intellectual Property

22

 

5.6.

Commercial Tort Claims

23

 

5.7.

Deposit Accounts

23

 

 

 

SECTION 6.

REMEDIAL PROVISIONS

24

 

 

 

 

6.1.

Certain Matters Relating to Accounts

24

 

6.2.

Communications with Obligors; Grantors Remain Liable

24

 

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Page

 

 

 

 

6.3.

Pledged Collateral

25

 

6.4.

Proceeds to be Turned Over To Administrative Agent

26

 

6.5.

Application of Proceeds

26

 

6.6.

Code and Other Remedies

26

 

6.7.

Registration Rights

27

 

6.8.

Deficiency

28

 

 

 

SECTION 7.

THE ADMINISTRATIVE AGENT

28

 

 

 

 

7.1.

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

28

 

7.2.

Duty of Administrative Agent

30

 

7.3.

Execution of Financing Statements

30

 

7.4.

Authority of Administrative Agent

31

 

7.5.

Appointment of Co-Collateral Agents

31

 

 

 

SECTION 8.

MISCELLANEOUS

31

 

 

 

 

8.1.

Amendments in Writing

31

 

8.2.

Notices

31

 

8.3.

No Waiver by Course of Conduct; Cumulative Remedies

31

 

8.4.

Enforcement Expenses; Indemnification

32

 

8.5.

Successors and Assigns

32

 

8.6.

Set-Off

32

 

8.7.

Counterparts

33

 

8.8.

Severability

33

 

8.9.

Section Headings

33

 

8.10.

Integration

33

 

8.11.

APPLICABLE LAW

33

 

8.12.

Submission to Jurisdiction; Waivers

33

 

8.13.

Acknowledgments

34

 

8.14.

Additional Grantors

34

 

8.15.

Releases

34

 

8.16.

Intercreditor Agreement

35

 

8.17.

WAIVER OF JURY TRIAL

35

 

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SCHEDULE 3(A)

—

COMMERCIAL TORT CLAIMS

SCHEDULE 4.2

—

FILINGS; OTHER ACTIONS

SCHEDULE 4.3

—

NAME; JURISDICTION OF ORGANIZATION, ETC

SCHEDULE 4.4

—

INVENTORY AND EQUIPMENT

SCHEDULE 4.6

—

INVESTMENT PROPERTY

SCHEDULE 4.8

—

INTELLECTUAL PROPERTY

SCHEDULE 4.9

—

LETTERS OF CREDIT AND LETTERS OF CREDIT RIGHTS

SCHEDULE 8.2

—

NOTICES

 

 

 

EXHIBIT A

—

ACKNOWLEDGEMENT AND CONSENT

EXHIBIT B-1

—

INTELLECTUAL PROPERTY SECURITY AGREEMENT

EXHIBIT B-2

—

AFTER-ACQUIRED INTELLECTUAL PROPERTY SECURITY AGREEMENT

EXHIBIT D

—

ASSUMPTION AGREEMENT

 

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GUARANTEE AND COLLATERAL AGREEMENT, dated as of May 30, 2012, made by the
Borrowers (as defined below) and each of the signatories hereto (other than the
Administrative Agent, but together with any other entity that may become a party
hereto as provided herein, the “Guarantors”; and the Guarantors (other than
Parent) together with the Borrowers, the “Grantors”), in favor of BANK OF
AMERICA, N.A., as administrative agent (in such capacity and together with its
successors, the “Administrative Agent”) for (i) the banks and other financial
institutions or entities (the “Lenders”) from time to time parties to the Credit
Agreement, dated as of May 30, 2012,(as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among Generac Acquisition Corp., a Delaware corporation (“Holdings”), Generac
Power Systems, Inc., a Wisconsin corporation (the “Lead Borrower”), the Domestic
Subsidiaries of the Lead Borrower listed on the signature pages thereto, as
borrowers (and together with the Lead Borrower, collectively, the “Borrowers”),
the Lenders party thereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated ,
J.P. Morgan Securities LLC and Goldman Sachs Bank USA, as joint bookrunners and
joint lead arrangers (in each such capacity, the “Joint Lead Arrangers”),
Goldman Sachs Bank USA and JPMorgan Chase Bank, N.A., as syndication agents (in
such capacity, the “Syndication Agents”) and Wells Fargo, National Association,
as documentation agent (in such capacity, the “Documentation Agent”) and
(ii) the other Secured Parties (as hereinafter defined).

 

W I T N E S S E T H:

 

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

 

WHEREAS, the Borrowers are members of an affiliated group of companies that
includes each other Guarantor;

 

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

 

WHEREAS, the Administrative Agent and the Term Agent have entered into an
Intercreditor Agreement, acknowledged by the Borrowers and the other Loan
Parties, dated as of the date hereof (as amended, restated, amended and
restated, waived, supplemented or otherwise modified from time to time, the
“Intercreditor Agreement”);

 

WHEREAS, the Borrowers and the other Guarantors are engaged in related
businesses, and each Borrower and each Guarantor will derive substantial direct
and indirect benefit from the making of the extensions of credit under the
Credit Agreement; and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make
their respective extensions of credit to the Borrowers under the Credit
Agreement that each Borrower and each Guarantor shall have executed and
delivered this Agreement to the Administrative Agent for the benefit of the
Secured Parties;

 

NOW, THEREFORE, in consideration of the foregoing premises and to induce the
Joint Lead Arrangers, the Administrative Agent and the Lenders to enter into the
Credit

 

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Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrowers thereunder, each Borrower and each Guarantor hereby
agrees with the Administrative Agent, for the benefit of the Secured Parties, as
follows:

 

SECTION 1.         DEFINED TERMS

 

1.1.         Definitions.

 

(a)           Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement, and the following terms are used herein as defined in the New York
UCC (and if defined in more than one Article of the New York UCC, such terms
shall have the meanings given in Article 9 thereof): Accounts, Account Debtor,
Certificated Security, Chattel Paper, Commercial Tort Claim, Commodity Account,
Commodity Contract, Commodity Intermediary, Documents, Deposit Account,
Electronic Chattel Paper, Equipment, Farm Products, Financial Asset, Fixtures,
General Intangibles, Goods, Instruments, Inventory, Letter of Credit, Letter of
Credit Rights, Money, Payment Intangibles, Securities Account, Securities
Intermediary, Security, Security Entitlement, Supporting Obligations, Tangible
Chattel Paper and Uncertificated Security.

 

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

 

“Administrative Agent” shall have the meaning assigned to such term in the
preamble.

 

“After-Acquired Intellectual Property” shall mean any Collateral (excluding
Excluded Assets) consisting of any Intellectual Property acquired or obtained by
a Grantor on or after the Closing Date and which is not now a part of the Owned
Intellectual Property.

 

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

 

“Agreement Parties” shall mean the collective reference to the Borrowers and the
Guarantors.

 

“Borrowers” shall have the meaning assigned to such term in the preamble.

 

“Collateral” shall have the meaning assigned to such term in Section 3.

 

“Collateral Account” shall mean any collateral account subject to a Deposit
Account Control Agreement.

 

“Collateral Account Funds” shall mean, collectively, the following:  all funds
(including all trust monies) and investments (including all cash equivalents)
credited to, or purchased with funds from, any Collateral Account or the
Dominion Account, as the case may be, and all certificates and instruments from
time to time representing or evidencing such investments; all Money, notes,
certificates of deposit, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by the Administrative Agent for or
on behalf of any Grantor in substitution for, or in addition to, any or all of
the Collateral; and all interest, dividends,

 

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cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the items
constituting Collateral.

 

“Contracts” shall mean all contracts and agreements between any Grantor and any
other person (in each case, whether written or oral, or third party or
intercompany) as the same may be amended, assigned, extended, restated,
supplemented, replaced or otherwise modified from time to time including (i) all
rights of any Grantor to receive moneys due and to become due to it thereunder
or in connection therewith, (ii) all rights of any Grantor to receive proceeds
of any insurance, indemnity, warranty or guaranty with respect thereto,
(iii) all rights of any Grantor to damages arising thereunder and (iv) all
rights of any Grantor to terminate and to perform and compel performance of,
such Contracts and to exercise all remedies thereunder.

 

“Copyright Licenses” shall mean any written agreement naming any Grantor as
licensor or licensee (including those listed on Schedule 4.8(a) (as such
schedule may be amended or supplemented from time to time)), granting any right
in, to or under any Copyright, including the grant of rights to manufacture,
print, publish, copy, import, export, distribute, exploit and sell materials
derived from any Copyright.

 

“Copyrights” shall mean (i) all copyrights arising under the laws of the United
States, whether registered or unregistered and whether published or unpublished
(including those listed on Schedule 4.8(a) (as such schedule may be amended or
supplemented from time to time)), all registrations and recordings thereof, and
all applications in connection therewith and rights corresponding thereto
throughout the world, including all registrations, recordings and applications
in the United States Copyright Office, and (ii) the right to, and to obtain, all
extensions and renewals thereof.

 

“Credit Agreement” shall have the meaning assigned to such term in the preamble.

 

“Documentation Agents” shall have the meaning assigned to such term in the
preamble.

 

“Excluded Assets” shall mean: (i) the Excluded Foreign and Other Subsidiary
Equity Interests; (ii) any Equity Interests if, and to the extent that, and for
so long as doing so would violate applicable law or, other than in the case of
Wholly-Owned Subsidiaries, a contractual obligation binding on such Equity
Interests; (iii) any property subject to a Lien permitted under
Section 6.02(i) or 6.02(j) of the Credit Agreement, (iv) all leasehold real
property, (v) any asset (including any fee owned real property but excluding any
personal property in which a security interest may be created under the terms of
any existing Security Documents pursuant to the Uniform Commercial Code) that
has an individual fair market value in an amount less than $10.0 million (as
reasonably estimated by the Lead Borrower), (vi) Equity Interests of any
partnerships, joint ventures and any non-Wholly Owned Subsidiary which cannot be
pledged without the consent of one or more third parties, (vii) margin stock,
(viii) security interests to the extent the same would result in adverse tax
consequences as reasonably determined by the Lead Borrower, (ix) any property
and assets the pledge of which would require governmental consent, approval,
license or authorization, (x) all foreign intellectual property and any
“intent-to-use” trademark applications prior to the filing of a “Statement of
Use” or “Amendment to Allege Use”

 

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with respect thereto, to the extent, if any, that, and solely during the period,
if any, in which, the grant of a security interest therein would impair the
validity or enforceability of such intent-to-use trademark application under
applicable federal law, (xi) the Equity Interests of any Immaterial Subsidiary,
(xii) Trust Funds and (xiii) other assets which the Administrative Agent, in
consultation with the Lead Borrower, determines, in its reasonable discretion,
should be excluded taking into account the practical operations of the
Borrowers’ business and their client relationships.  Notwithstanding anything to
the contrary herein, (x) the Loan Parties shall not be required to grant a
security interest in any Collateral or perfect a security interest in any
Collateral to the extent (A) the burden or cost of obtaining or perfecting a
security interest therein outweighs the benefit of the security afforded thereby
as reasonably determined by the Lead Borrower and the Administrative Agent or
(B) if the granting of a security interest in such asset would be prohibited by,
other than to the extent prohibited by Section 6.09(d) of the Credit Agreement,
enforceable anti-assignment provisions of contracts or applicable law or with
respect to any assets to the extent such a pledge would violate the terms of any
contract with respect to such assets (in each case, after giving effect to the
applicable anti-assignment provisions of the Uniform Commercial Code or other
applicable law) or would trigger termination pursuant to any “change of control”
or similar provision in any contract and (y) no foreign law security or pledge
agreement shall be required.

 

“Excluded Foreign and Other Subsidiary Equity Interests” shall mean the
(A) Equity Interests in excess of 65% of the voting Equity Interests of (i) each
“first tier” Foreign Subsidiary owned by any Grantor and (ii) each Disregarded
Domestic Subsidiary; (B) any voting or non-voting Equity Interest of any Foreign
Subsidiary that is not a “first tier” Foreign Subsidiary owned by any Grantor
and (C) the Equity Interests of any Unrestricted Subsidiary, Immaterial
Subsidiary, Special Purpose Subsidiary (to the extent a pledge is not permitted
under the securitization agreements applicable to such Special Purpose
Subsidiary), Captive Insurance Subsidiary, and not-for-profit Subsidiary.

 

“Grantors” shall have the meaning assigned to such term in the preamble.

 

“Guarantors” shall have the meaning assigned to such term in the preamble.

 

“Holdings” shall have the meaning assigned to such term in the preamble.

 

“Insurance” shall mean (i) all insurance policies covering any or all of the
Collateral (regardless of whether the Administrative Agent is the loss payee
thereof) and (ii) any key man life insurance policies.

 

“Intellectual Property” shall mean the collective reference to all rights,
priorities and privileges relating to intellectual property arising under United
States laws, including the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets and
the Trade Secret Licenses.

 

“Intercompany Note” shall mean any promissory note evidencing loans made by any
Grantor to Holdings, a Borrower or any of the Subsidiaries, including the Global
Intercompany Note.

 

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“Investment Property” shall mean the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(a)(49) of the New York UCC
(other than any such investment property which is an Excluded Asset) including
all Certificated Securities and Uncertificated Securities and all Security
Entitlements, (ii) security entitlements, in the case of any United States
Treasury book-entry securities, as defined in 31 C.F.R. section 357.2, or, in
the case of any United States federal agency book-entry securities, as defined
in the corresponding United States federal regulations governing such book-entry
securities, and (iii) whether or not otherwise constituting “investment
property,” all Pledged Notes, all Pledged Equity Interests, all Pledged Security
Entitlements and all Pledged Commodity Contracts.

 

“Issuers” shall mean the collective reference to each issuer of Pledged
Collateral that is a Subsidiary.

 

“Joint Lead Arrangers” shall have the meaning assigned to such term in the
preamble.

 

“Lenders” shall have the meaning assigned to such term in the preamble.

 

“Licensed Intellectual Property” shall have the meaning assigned to such term in
Section 4.8(a).

 

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

 

“Owned Intellectual Property” shall have the meaning assigned to such term in
Section 4.8(a).

 

“Patent License” shall mean all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use, import,
export, distribute or sell any invention covered in whole or in part by a
Patent, including any of the foregoing listed on Schedule 4.8(a) (as such
schedule may be amended or supplemented from time to time).

 

“Patents” shall mean (i) all letters of patent of the United States, all
reissues and extensions thereof and all goodwill associated therewith, including
any of the foregoing listed in Schedule 4.8(a) (as such schedule may be amended
or supplemented from time to time), (ii) all applications for letters of patent
of the United States and all divisions, continuations and continuations-in-part
thereof, all improvements thereof, including any of the foregoing listed in
Schedule 4.8(a) (as such schedule may be amended or supplemented from time to
time), and (iii) all rights to, and to obtain, any reissues or extensions of the
foregoing.

 

“Pledged Alternative Equity Interests” shall mean all interests (other than any
such interests that are Excluded Assets) of any Grantor in participation or
other interests in any equity or profits of any business entity and the
certificates, if any, representing such interests and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such interests and
any other warrant, right or option to acquire any of the foregoing; provided,
however, that Pledged Alternative Equity Interests shall not include

 

5

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any Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests or
Pledged Trust Interests.

 

“Pledged Collateral” shall mean the collective reference to the Pledged Debt
Securities, the Pledged Notes and the Pledged Equity Interests.

 

“Pledged Debt Securities” shall mean all debt securities now owned or hereafter
acquired by any Grantor, (other than any such debt securities that are Excluded
Assets), including the debt securities listed on Schedule 4.6(b), (as such
schedule may be amended or supplemented from time to time), together with any
other certificates, options, rights or security entitlements of any nature
whatsoever in respect of the debt securities of any person that may be issued or
granted to, or held by, any Grantor while this Agreement is in effect.

 

“Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC Interests,
Pledged Partnership Interests, Pledged Trust Interests and Pledged Alternative
Equity Interests.

 

“Pledged LLC Interests” shall mean all interests of any Grantor now owned or
hereafter acquired in any limited liability company (other than any such
interests that are Excluded Assets), including all limited liability company
interests listed on Schedule 4.6(a) hereto under the heading “Pledged LLC
Interests” (as such schedule may be amended or supplemented from time to time)
and the certificates, if any, representing such limited liability company
interests and any interest of such Grantor on the books and records of such
limited liability company and all dividends, distributions, cash, warrants,
rights, options, instruments, securities and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such limited liability company interests and any
other warrant, right or option to acquire any of the foregoing.

 

“Pledged Notes” shall mean all promissory notes now owned or hereafter acquired
by any Grantor (other than any such promissory notes that are Excluded Assets),
including those listed on Schedule 4.6(b) (as such schedule may be amended or
supplemented from time to time) and all Intercompany Notes at any time issued to
or held by any Grantor (other than promissory notes issued in connection with
extensions of trade credit by any Grantor in the ordinary course of business).

 

“Pledged Partnership Interests” shall mean all interests of any Grantor now
owned or hereafter acquired in any general partnership, limited partnership,
limited liability partnership or other partnership (other than any such
interests that are Excluded Assets), including all partnership interests listed
on Schedule 4.6(a) hereto under the heading “Pledged Partnership Interests” (as
such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such partnership interests and any interest
of such Grantor on the books and records of such partnership and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such partnership
interests and any other warrant, right or option to acquire any of the
foregoing.

 

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“Pledged Security Entitlements” shall mean all security entitlements with
respect to the financial assets listed on Schedule 4.6(c) (as such schedule may
be amended from time to time) and all other security entitlements of any
Grantor.

 

“Pledged Stock” shall mean all shares of capital stock (other than any such
shares that are Excluded Assets) now owned or hereafter acquired by any Grantor,
including all shares of capital stock listed on Schedule 4.6(a) hereto under the
heading “Pledged Stock” (as such schedule may be amended or supplemented from
time to time), and the certificates, if any, representing such shares and any
interest of such Grantor in the entries on the books of the issuer of such
shares and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares and any other warrant, right or option to acquire any
of the foregoing.

 

“Pledged Trust Interests” shall mean all interests of any Grantor now owned or
hereafter acquired in a Delaware business trust or other trust (other than any
such interests that are Excluded Assets), including all trust interests listed
on Schedule 4.6(a) hereto under the heading “Pledged Trust Interests” (as such
schedule may be amended or supplemented from time to time) and the certificates,
if any, representing such trust interests and any interest of such Grantor on
the books and records of such trust or on the books and records of any
securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such trust interests
and any other warrant, right or option to acquire any of the foregoing.

 

“Proceeds” shall mean all “proceeds” as such term is defined in
Section 9-102(a)(64) of the New York UCC and, in any event, shall include all
dividends or other income from the Investment Property, collections thereon or
distributions or payments with respect thereto.

 

“Secured Obligations” shall have the meaning assigned to such term in the Credit
Agreemnt.

 

“Secured Parties” shall mean, collectively, the Joint Lead Arrangers, the
Administrative Agent, the Lenders, the Issuing Banks and, Secured Bank Product
Providers, to which Secured Obligations, as applicable, are owed.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Syndication Agent” shall have the meaning assigned to such term in the
preamble.

 

“Term Priority Collateral” shall have the meaning assigned to such term in the
Intercreditor Agreement.

 

“Trademark License” shall mean  any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right in, to or under any
Trademark, including any

 

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of the foregoing referred to on Schedule 4.8(a) (as such schedule may be amended
or supplemented from time to time).

 

“Trademarks” shall mean (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, in the United States Patent and Trademark Office or in any similar
office or agency of the United States or any State thereof and all common-law
rights related thereto, including any of the foregoing listed on
Schedule 4.8(a) (as such schedule may be amended or supplemented from time to
time), (ii) the right to, and to obtain, all renewals thereof, (iii) the
goodwill of the business symbolized by the foregoing and (iv) other source or
business identifiers, designs and general intangibles of a like nature.

 

“Trade Secret License” shall mean any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right in, to or under any
Trade Secret.

 

“Trade Secrets” shall mean all trade secrets and all other confidential or
proprietary information and know-how (all of the foregoing being collectively
called a “Trade Secret”), whether or not reduced to a writing or other tangible
form, including all documents and things embodying, incorporating or describing
such Trade Secret, the right to sue for past, present and future infringements
of any Trade Secret and all proceeds of the foregoing, including royalties,
income, payments, claims, damages and proceeds of suit.

 

“Trust Funds” shall mean any cash or cash equivalents comprised of (i) funds
specifically and exclusively used for payroll taxes, payroll and other employee
benefit payments to or for the benefit of any Grantor’s employees, (ii) all
taxes required to be collected, remitted or withheld (including, without
limitation, federal and state withholding taxes (including the employer’s share
thereof)) and (iii) any other funds (A) which any Grantor holds on behalf of
another person and (B) which such Grantor holds as an escrow or fiduciary for
such person.

 

1.2.                            Other Definitional Provisions.

 

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

 

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

 

(c)                                  Where the context requires, terms relating
to the Collateral or any part thereof, when used in relation to a Grantor, shall
refer to the property or assets such Grantor has granted as Collateral or the
relevant part thereof.

 

(d)                                 The expressions “payment in full,” “paid in
full” and any other similar terms or phrases when used herein with respect to
the Secured Obligations shall mean the payment in full, in immediately

 

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available funds, of all of the Secured Obligations, as the case may be, in each
case, unless otherwise specified, other than indemnification and other
contingent obligations not then due and payable.

 

(e)                                  The words “include,” “includes” and
“including,” and words of similar import, shall not be limiting and shall be
deemed to be followed by the phrase “without limitation.”

 

SECTION 2.                            GUARANTEE

 

2.1.                            Guarantee.

 

(a)                                 Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the benefit of the Secured Parties and their respective successors,
indorsees and permitted transferees and assigns, the prompt and complete payment
and performance by the Borrowers when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations.

 

(b)                                 If and to the extent required in order for
the Secured Obligations of any Guarantor to be enforceable under applicable
federal, state and other laws relating to the insolvency of debtors, the maximum
liability of such Guarantor hereunder shall be limited to the greatest amount
which can lawfully be guaranteed by such Guarantor under such laws, after giving
effect to any rights of contribution, reimbursement and subrogation arising
under Section 2.2.

 

(c)                                  Each Guarantor agrees that the Secured
Obligations may at any time and from time to time be incurred or permitted in an
amount exceeding the maximum liability of such Guarantor hereunder without, to
the extent permitted by applicable law, impairing the guarantee contained in
this Section 2 or affecting the rights and remedies of any Secured Party
hereunder.

 

(d)                                 The guarantee contained in this Section 2
shall remain in full force and effect until the date when no Revolver
Commitments or Secured Obligations (other than (i) contingent obligations as to
which no claim or demand for payment has been made, or in the case of
indemnification obligations, no notice has been given, and (ii) Secured
Obligations have been Cash Collateralized, as applicable) are outstanding (the
“Termination Date”), notwithstanding that from time to time during the term of
the Credit Agreement the Borrowers may not then owe any Secured Obligations.

 

(e)                                  No payment made by any Borrower, any of the
Guarantors, any other guarantor or any other person or received or collected by
any Secured Party from any Borrower, any of the Guarantors, any other guarantor
or any other person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the 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
(including by means of setoff or appropriation) 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 Termination Date.

 

2.2.                            Rights of Reimbursement, Contribution and
Subrogation.  In case any payment is made on account of the Secured Obligations
by any Agreement Party or is received or collected on account of the Secured
Obligations from any Agreement Party or its property (other than the property of
Parent):

 

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(i)                                          If such payment is made by a
Borrower or from its property, then, if and to the extent such payment is made
on account of Secured Obligations arising from or relating to a Loan or other
extension of credit made to such Borrower, such Borrower shall not be entitled
(i) to demand or enforce reimbursement or contribution in respect of such
payment from any other Agreement Party or (ii) to be subrogated to any claim,
interest, right or remedy of any Secured Party against any other person,
including any other Agreement Party or its property (other than the property of
Parent).

 

(ii)                                       If such payment is made by a
Guarantor or from its property (other than the property of Parent), such
Guarantor shall be entitled, subject to and upon payment in full of the Secured
Obligations, (i) to demand and enforce reimbursement for the full amount of such
payment from a Borrower and (ii) to demand and enforce contribution in respect
of such payment from each other Guarantor that has not paid its fair share of
such payment, as necessary to ensure that (after giving effect to any
enforcement of reimbursement rights provided hereby) each Guarantor pays its
fair share of the unreimbursed portion of such payment. For this purpose, the
fair share of each Guarantor as to any unreimbursed payment shall be determined
based on an equitable apportionment of such unreimbursed payment among all
Guarantors based on the relative value of their assets and any other equitable
considerations deemed appropriate by a court of competent jurisdiction.

 

(iii)                                    Until the Termination Date,
notwithstanding Sections 2.2(a) and 2.2(b), no Agreement Party shall be
entitled, to be subrogated (equally and ratably with all other Agreement Parties
entitled to reimbursement or contribution from any other Agreement Party as set
forth in this Section 2.2) to any security interest that may then be held by the
Administrative Agent upon any Collateral granted to it in this Agreement nor
shall any Agreement Party seek or be entitled to seek any contribution or
reimbursement from a Borrower or any other Agreement Party in respect of
payments made by any Agreement Party hereunder.  Such right of subrogation shall
be enforceable solely against the Agreement Parties, and not against the Secured
Parties, and neither the Administrative Agent nor any other Secured Party shall
have any duty whatsoever to warrant, ensure or protect any such right of
subrogation or to obtain, perfect, maintain, hold, enforce or retain any
Collateral for any purpose related to any such right of subrogation.  If
subrogation is demanded by any Agreement Party, then (and only after the
Termination Date) the Administrative Agent shall deliver to the Agreement
Parties making such demand, or to a representative of such Agreement Parties or
of the Agreement Parties generally, an instrument reasonably satisfactory to the
Administrative Agent transferring, on a quitclaim basis without any recourse,
representation, warranty or obligation whatsoever, whatever security interest
the Administrative Agent then may hold in whatever Collateral may then exist
that was not previously released or disposed of by the Administrative Agent.

 

(iv)                                   All rights and claims arising under this
Section 2.2 or based upon or relating to any other right of reimbursement,
indemnification, contribution or subrogation that may at any time arise or exist
in favor of any Agreement Party as to any payment on account of the Secured
Obligations made by it or received or collected from its property shall be fully
subordinated in all respects prior to the Termination Date.  Until the
Termination Date, no Agreement Party shall demand or receive any collateral
security, payment or distribution whatsoever (whether in cash, property or
securities or otherwise) on account of any such right or claim.  If any such
payment or distribution is made or becomes available to any Agreement Party in
any bankruptcy case or receivership, insolvency or liquidation proceeding, such
payment or distribution shall be delivered by the person making such payment or
distribution directly to the Administrative Agent, for application to the
payment of the Secured Obligations.  If any such payment or distribution is
received

 

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by any Agreement Party, it shall be held by such Agreement Party in trust, as
trustee of an express trust for the benefit of the Secured Parties, and shall
promptly be transferred and delivered by such Agreement Party to the
Administrative Agent, in the exact form received and, if necessary, duly
endorsed, to be applied against any Secured Obligations then outstanding in
accordance with Section 6.5.

 

(v)                                      The obligations of the Agreement
Parties under the Loan Documents, including their liability for the Secured
Obligations and the enforceability of the security interests granted thereby
(which, for the avoidance of doubt, shall not be granted in respect of,
otherwise encumber or be enforceable against any property of Parent), are not
contingent upon the validity, legality, enforceability, collectability or
sufficiency of any right of reimbursement, contribution or subrogation arising
under this Section 2.2 and the provisions of this Section 2.2 shall in no
respect limit the obligations and liabilities of any Guarantor to the
Administrative Agent and Secured Parties, and each Guarantor shall remain liable
to the Administrative Agent and the Secured Parties for the full amount
guaranteed by such Guarantor hereunder.  The invalidity, insufficiency,
unenforceability or uncollectability of any such right shall not in any respect
diminish, affect or impair any such obligation or any other claim, interest,
right or remedy at any time held by any Secured Party against any Guarantor or
its property (other than the property of Parent).  The Secured Parties make no
representations or warranties in respect of any such right and shall have no
duty to assure, protect, enforce or ensure any such right or otherwise relating
to any such right.

 

(vi)                                   Each Agreement Party reserves any and all
other rights of reimbursement, contribution or subrogation at any time available
to it as against any other Agreement Party, but (i) the exercise and enforcement
of such rights shall be subject to Section 2.2(d) and (ii) neither the
Administrative Agent nor any other Secured Party shall ever have any duty or
liability whatsoever in respect of any such right, except as provided in the
last sentence of Section 2.2(c).

 

2.3.                            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 any Secured Party may be rescinded by 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 (which, for the avoidance of doubt, will not include any
property of Parent) or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, increased,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by any Secured Party, and the Credit Agreement and the other Loan
Documents and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Administrative Agent (or the Required Lenders or all Lenders, as the case
may be) and the applicable Loan Parties may deem advisable from time to time,
and any collateral security (which, for the avoidance of doubt, will not include
any property of Parent), guarantee or right of offset at any time held by any
Secured Party for the payment of the Secured Obligations may be sold, exchanged,
waived, surrendered or released.  No 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 (which, for the avoidance of doubt, will not include
any Lien on the property of Parent) or for the guarantee contained in this
Section 2 or any property (other than the property of Parent) subject thereto.

 

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2.4.                            Guarantee Absolute and Unconditional.  Each
Guarantor waives, to the extent permitted by applicable law, any and all notice
of the creation, renewal, extension or accrual of any of the Secured Obligations
and notice of or proof of reliance by any 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 any Borrower and any of the Guarantors, on the one
hand, and the Secured Parties, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Section 2.  Each Guarantor waives, to the extent permitted by
applicable law, diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon any Borrower or any of the Guarantors with
respect to the Secured Obligations.  Each Guarantor understands and agrees, to
the extent permitted by applicable law, that until the Termination Date the
guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment and performance without regard
to (a) the validity or enforceability of the Credit Agreement or any other Loan
Document, any of the Secured Obligations or any other collateral security
(which, for the avoidance of doubt, will not include any property of Parent)
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by any Secured Party, (b) any defense, set-off or
counterclaim (other than a defense of payment, performance or release of
guarantee hereunder) which may at any time be available to or be asserted by a
Borrower or any other person against any Secured Party, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrowers for the Secured Obligations, or of
such Guarantor under the guarantee contained in this Section 2, in bankruptcy or
in any other instance.  When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Guarantor, any Secured Party may,
but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against any Borrower, any other
Guarantor or any other person or against any collateral security (which, for the
avoidance of doubt, will not include any property of Parent) or guarantee for
the Secured Obligations or any right of offset with respect thereto, and any
failure by any Secured Party to make any such demand, to pursue such other
rights or remedies or to collect any payments from any Borrower, any other
Guarantor or any other person or to realize upon any such collateral security
(which, for the avoidance of doubt, will not include any property of Parent) or
guarantee or to exercise any such right of offset, or any release of any
Borrower, any other Guarantor or any other person or any such collateral
security (which, for the avoidance of doubt, will not include any property of
Parent), 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 any
Secured Party against any Guarantor, except to the extent of any such release. 
For the purposes hereof “demand” shall include the commencement and continuance
of any legal proceedings.

 

2.5.                            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 any Secured Party upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or

 

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conservator of, or trustee or similar officer for, any Borrower or any Guarantor
or any substantial part of its property, or otherwise, all as though such
payments had not been made.

 

2.6.                            Payments.  Each Guarantor hereby guarantees that
payments hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars in immediately available funds at the office of the
Administrative Agent as specified in the Credit Agreement.

 

2.7.                            Parent Representations.

 

(a)                                 Parent (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted, (iii) is qualified to do
business and in good standing in each jurisdiction where such qualification is
required; except, in each case, to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

(b)                                 The execution, delivery and performance by
Parent of this Agreement (i) has been duly authorized by all corporate action
required to be obtained by Parent, and (ii) will not (A) violate (x) any
provision of (1) law, statute, rule or regulation applicable to Parent, or
(2) the certificate or articles of incorporation or other constitutive documents
or by-laws of Parent, (y) any applicable order of any court or any rule,
regulation or order of any Governmental Authority or (z) any provision of any
indenture, certificate of designation for preferred stock, agreement or other
instrument to which Parent is a party or by which it or any of its property is
or may be bound or (B) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under, give rise to a
right of or result in any cancellation or acceleration of any right or
obligation (including any payment) or to a loss of a material benefit under any
such indenture, certificate of designation for preferred stock, agreement or
other instrument, where any such conflict, violation, breach or default referred
to in clause (ii)(A)(x)(1), (ii)(A)(y), (ii)(A)(z) or (ii)(B) of this
Section 2.7 (b), could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

(c)                                  No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the execution, delivery or performance of
this Agreement by Parent, except for (i) such as have been made or obtained and
are in full force and effect and (ii) such actions, consents, approvals,
registrations or filings the failure to be obtained or made which could not
reasonably be expected to have a Material Adverse Effect.

 

(d)                                 This Agreement has been duly executed and
delivered on behalf of Parent and constitutes a legal, valid and binding
obligation of Parent enforceable against Parent in accordance with its terms,
subject to (i) the effects of bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or other similar laws relating to or
affecting creditors’ rights generally, (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and (iii) implied covenants of good faith and fair dealing.

 

SECTION 3.                            GRANT OF SECURITY INTEREST; CONTINUING
LIABILITY UNDER COLLATERAL

 

(a)                                 Each Grantor hereby assigns and transfers to
the Administrative Agent, and hereby grants to the Administrative Agent, for the
benefit of the Secured Parties, a security interest in all of the personal
property of such Grantor, including the following property, in each case,
wherever located and now owned or at any time hereafter acquired by such Grantor
or in which such Grantor now has or at any time in the future may acquire any
right, title or interest (collectively, the “Collateral”), as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of such Grantor’s Secured
Obligations:

 

(i)                                     all Accounts;

 

(ii)                                  all Chattel Paper;

 

(iii)                               all Collateral Accounts and all Collateral
Account Funds;

 

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(iv)                              all Commercial Tort Claims in excess of
$1,000,000, in each case, from time to time specifically described on
Schedule 3(a);

 

(v)                                 all Contracts;

 

(vi)                              all Documents;

 

(vii)                           all Equipment;

 

(viii)                        all Fixtures

 

(ix)                              all General Intangibles;

 

(x)                                 all Goods

 

(xi)                              all Instruments;

 

(xii)                           all Insurance;

 

(xiii)                        all Intellectual Property;

 

(xiv)                       all Inventory;

 

(xv)                          all Investment Property;

 

(xvi)                       all Letters of Credit and Letter of Credit Rights;

 

(xvii)                    all Money;

 

(xviii)                 all books, records, ledger cards, files, correspondence,
customer lists, blueprints, technical specifications, manuals, computer
software, computer printouts, tapes, disks and other electronic storage media
and related data processing software and similar items that at any time pertain
to or evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and

 

(xix)                       to the extent not otherwise included, all other
personal property, whether tangible or intangible, of the Grantor and all
Proceeds, products, accessions, rents and profits of any and all of the
foregoing and all collateral security, Supporting Obligations and guarantees
given by any person with respect to any of the foregoing;

 

provided that, notwithstanding any other provision set forth in this Agreement,
the term “Collateral” and the component definitions thereof shall not include,
and this Agreement shall not, at any time, constitute a grant of a security
interest in any property that is, at such time, an Excluded Asset.

 

(b)                                 Notwithstanding anything herein to the
contrary, (i) each Grantor shall remain liable for all obligations under and in
respect of the Collateral and nothing contained herein is intended or shall be a
delegation of duties to the Administrative Agent or any other Secured Party,
(ii) each Grantor shall remain liable under and each of the agreements included
in the Collateral, including any Accounts,

 

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any Contracts and any agreements relating to Pledged Partnership Interests or
Pledged LLC Interests, to perform all of the obligations undertaken by it
thereunder all in accordance with and pursuant to the terms and provisions
thereof and neither the Administrative Agent nor any other Secured Party shall
have any obligation or liability under any of such agreements by reason of or
arising out of this Agreement or any other document related hereto nor shall the
Administrative Agent nor any other Secured Party have any obligation to make any
inquiry as to the nature or sufficiency of any payment received by it or have
any obligation to take any action to collect or enforce any rights under any
agreement included in the Collateral, including any agreements relating to any
Accounts, any Contracts or any agreements relating to Pledged Partnership
Interests or Pledged LLC Interests and (iii) the exercise by the Administrative
Agent of any of its rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral, including any agreements relating to any Accounts, any Contracts and
any agreements relating to Pledged Partnership Interests or Pledged LLC
Interests.

 

SECTION 4.                            REPRESENTATIONS AND WARRANTIES

 

To induce the Joint Lead Arrangers, the Administrative Agent, the Syndication
Agent, the Documentation Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrowers thereunder, each Grantor hereby represents and warrants
to the Secured Parties that:

 

4.1.                            Title; No Other Liens.  Such Grantor owns each
item of the Collateral free and clear of any and all Liens, including Liens
arising as a result of such Grantor becoming bound (as a result of merger or
otherwise) as grantor under a security agreement entered into by another person,
except for Liens permitted by Section 6.02 of the Credit Agreement.

 

4.2.                            Perfected First Priority Liens.  This Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral of such Grantor, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally.  When (i) in the case
of the Pledged Stock and Pledged Notes, stock certificates and promissory notes
representing such Pledged Stock and Pledged Notes, respectively, together with
powers indorsed for transfer to the Administrative Agent or in blank, are
delivered to the Administrative Agent and (ii) financing statements and other
filings listed on Schedule 4.2 are filed in appropriate form in the offices
specified thereon, this Agreement shall create a fully perfected Lien on, and
security interest in, all right title and interest of such Grantor in such
Collateral and the proceeds thereof ((a) to the extent such security interest
may be perfected under the New York UCC by filing a financing statement, (b) in
the case of the Pledged Stock and Pledged Notes, to the extent such security
interest may be perfected under the New York UCC by possession thereof (and of
appropriate transfer powers) by the Administrative Agent, (c) with respect to
Patents and Trademarks, to the extent such security interest may be perfected
under the New York UCC by filing evidence of such security interest with the
United States Patent and Trademark Office, (d) with respect to Copyrights, to
the extent such security interest may be perfected under the New York UCC by
filing evidence of such security interest with the United States Copyright
Office and (e) except to the extent the actions to perfect such security
interest are not then required to have been taken under the terms of the Loan
Documents) as security for the Secured Obligations, in each case prior and
superior in right to any other person (except (A) in the case of Collateral
other than Pledged Stock and Pledged Notes,

 

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Liens permitted by Section 6.02 of the Credit Agreement and (B) in the case of
the Pledged Stock and Pledged Notes, non-consensual Liens arising by operation
of law).

 

4.3.                            Name; Jurisdiction of Organization, etc.  On the
date hereof, such Grantor’s exact legal name (as indicated on the public record
of such Grantor’s jurisdiction of formation or organization), jurisdiction of
organization, organizational identification number, if any, and the location of
such Grantor’s chief executive office or sole place of business are specified on
Schedule 4.3.  On the date hereof, except as otherwise described in the
Collateral Questionnaire, each Grantor is organized solely under the law of the
jurisdiction so specified and has not filed any certificates of domestication,
transfer or continuance in any other jurisdiction.  On the date hereof, except
as otherwise described in the Collateral Questionnaire, no such Grantor has
changed its name, jurisdiction of organization, chief executive office or sole
place of business in any way (e.g. by merger, consolidation, change in corporate
form or otherwise) within the past five years and has not within the last five
years become bound (whether as a result of merger or otherwise) as a grantor
under a security agreement (other than in respect of a Lien permitted by
Section 6.02 of the Credit Agreement) entered into by another person, which has
not heretofore been terminated.

 

4.4.                            Inventory and Equipment.  As of the Closing
Date, such Grantor does not maintain Equipment or Inventory (other than mobile
goods or Inventory or Equipment in transit or, out for repair) with a value in
excess of $5,000,000 at any location other than the locations set forth on
Schedule 4.4.

 

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

 

4.6.                            Investment Property.

 

(a)                                 Schedule 4.6(a) hereto (as such schedule may
be amended or supplemented from time to time by notice from one or more Grantors
to the Administrative Agent) sets forth under the headings “Pledged Stock,”
“Pledged LLC Interests,” “Pledged Partnership Interests” and “Pledged Trust
Interests,” respectively, all of the Pledged Stock, Pledged LLC Interests,
Pledged Partnership Interests and Pledged Trust Interests owned by any Grantor
and such Pledged Equity Interests constitute the percentage of issued and
outstanding shares of stock, percentage of membership interests, percentage of
partnership interests or percentage of beneficial interest of the respective
issuers thereof indicated on such schedule.  Schedule 4.6(b) (as such schedule
may be amended or supplemented from time to time by notice from one or more
Grantors to the Administrative Agent) sets forth under the heading “Pledged Debt
Securities” or “Pledged Notes” all of the Pledged Debt Securities and Pledged
Notes owned by any Grantor, and except as set forth on Schedule 4.6(b) (as such
schedule may be amended or supplemented from time to time by notice from one or
more Grantors to the Administrative Agent) all of the intercompany Pledged Debt
Securities and intercompany Pledged Notes have been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law and constitutes all of the issued and outstanding inter-company
indebtedness evidenced by an instrument or certificated security of the
respective issuers thereof owing to such Grantor.

 

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(b)                                 The Pledged Equity Interests issued by any
Subsidiary have been duly and validly issued and, if applicable, are fully paid
and nonassessable (except for shares of any unlimited liability company which
are assessable in certain circumstances).

 

(c)                                  None of the terms of any uncertificated
Pledged LLC Interests and Pledged Partnership Interests expressly provide that
they are securities governed by Article 8 of the Uniform Commercial Code in
effect from time to time in the “issuer’s jurisdiction” of each Issuer thereof
(as such term is defined in the Uniform Commercial Code in effect in such
jurisdiction).

 

(d)                                 All certificated Pledged LLC Interests and
Pledged Partnership Interests, if any, do not expressly provide that they are
“securities” for purposes of Section 8-103(c) of the Uniform Commercial Code as
in effect in any relevant jurisdiction.

 

(e)                                  Such Grantor is the record and beneficial
owner of, and has good and marketable title to, the Investment Property pledged
by it hereunder, free of any and all Liens or options in favor of, or claims of,
any other person, except the security interests created by this Agreement and
Liens permitted by Section 6.02 of the Credit Agreement, and there are no
outstanding warrants, options or other rights to purchase, or shareholder,
voting trust or similar agreements outstanding with respect to, or property that
is convertible into, or that requires the issuance or sale of, any Pledged
Equity Interests.

 

(f)                                   Each Issuer that is not a Grantor
hereunder has executed and delivered to the Administrative Agent an
Acknowledgment and Consent, in substantially the form of Exhibit A, to the
pledge of the Pledged Collateral pursuant to this Agreement.

 

4.7.                            Accounts.  No amount payable to such Grantor
under or in connection with any Account that is included in the Collateral is
evidenced by any Instrument or Tangible Chattel Paper with a value in excess of
$1,000,000 which has not been delivered to the Administrative Agent to the
extent required under Section 5.2.

 

4.8.                            Intellectual Property.

 

(a)                                 As of the Closing Date,
Schedule 4.8(a) lists all (i) Intellectual Property which is registered with a
Governmental Authority or is the subject of an application for registration and
all material unregistered Intellectual Property (other than unregistered
Copyrights), in each case which is owned by such Grantor in its own name on the
date hereof (collectively, the “Owned Intellectual Property”) and (ii) licenses
of United States Intellectual Property applications or registrations in which
such Grantor is an exclusive licensee.  As of the Closing Date, except as set
forth in Schedule 4.8(a) and except as would not reasonably be expected to have
a Material Adverse Effect,  each such Grantor is the exclusive owner of the
entire and unencumbered right, title and interest in and to all such Owned
Intellectual Property and is otherwise entitled to use, and grant to others the
right to use, all such Owned Intellectual Property subject only to the license
terms of the licensing or franchise agreements referred to in paragraph
(c) below.  Such Grantor has the right to use all Intellectual Property which it
uses in its business, but does not own (collectively, the “Licensed Intellectual
Property”).

 

(b)                                 As of the Closing Date, all Owned
Intellectual Property and, to such Grantor’s knowledge, all Licensed
Intellectual Property (collectively, the “Material Intellectual Property”), is
subsisting, unexpired and has not been abandoned, except as would not reasonably
be expected to have a Material Adverse Effect.  Neither the operation of such
Grantor’s business as currently conducted or as contemplated to be conducted nor
the use of the Intellectual Property in connection therewith conflicts with,

 

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infringes, misappropriates, dilutes, misuses or otherwise violates the
intellectual property rights of any other person, except in each case as would
not reasonably be expected to have a Material Adverse Effect.

 

(c)                                  As of the Closing Date, except as set forth
in Schedule 4.8(c), on the date hereof (i) none of the Material Intellectual
Property is the subject of any licensing or franchise agreement pursuant to
which such Grantor is the licensor or franchisor and (ii) there are no other
agreements, obligations, orders or judgments which materially affect the use of
any Material Intellectual Property.

 

(d)                                 The rights of such Grantor in or to the
Material Intellectual Property do not conflict with or infringe upon the rights
of any third party, and no claim has been asserted in writing that the use of
such Intellectual Property does or may infringe upon the rights of any third
party except in each case as would not reasonably be expected to have a Material
Adverse Effect.

 

(e)                                  As of the Closing Date, no action or
proceeding is pending, or, to such Grantor’s knowledge, threatened  in writing
(i) seeking to limit, cancel or question any Owned Intellectual Property,
(ii) alleging that any services provided by, processes used by, or products
manufactured or sold by such Grantor infringe any patent, trademark, copyright,
or any other right of any other person or (iii) alleging that any Material
Intellectual Property is being licensed, sublicensed or used in violation of any
intellectual property or any other right of any other person, in each case,
which would reasonably be expected to have a material adverse effect on the
value of the Collateral, taken as a whole.  On the date hereof, to such
Grantor’s knowledge, except as set forth on Schedule 4.8(e) no person is
engaging in any activity that infringes upon, or is otherwise an unauthorized
use of, any Material Intellectual Property or upon the rights of such Grantor
therein.  Except as set forth in Schedule 4.8(e) as of the date hereof, such
Grantor has not granted any license, release, covenant not to sue, non-assertion
assurance, or other right to any person with respect to any part of the Material
Intellectual Property.  The consummation of the transactions contemplated by
this Agreement (including the enforcement of remedies) will not result in the
termination or impairment of any of the Material Intellectual Property the loss
of which would be reasonably likely to have a Material Adverse Effect.

 

(f)                                   To such Grantor’s knowledge, with respect
to each Copyright License, Trademark License, Trade Secret License and Patent
License which relates to Material Intellectual Property or the loss of which
could otherwise have a Material Adverse Effect: (i) such license is in full
force and effect and represents the entire agreement between the respective
licensor and licensee with respect to the subject matter of such license;
(ii) such license will not cease to be valid and binding and in full force and
effect on terms identical to those currently in effect as a result of the rights
and interests granted herein, nor will the grant of such rights and interests
constitute a breach or default under such license or otherwise give the licensor
or licensee a right to terminate such license; (iii) such Grantor has not
received any notice of termination or cancellation under such license; (iv) such
Grantor has not received any notice of a breach or default under such license,
which breach or default has not been cured; (v) such Grantor has not granted to
any other person any rights, adverse or otherwise, under such license; and
(vi) such Grantor is not in breach or default in any material respect, and no
event has occurred that, with notice and/or lapse of time, would constitute such
a breach or default or permit termination, modification or acceleration under
such license, except in each case as would not have a material adverse effect on
the value of the Collateral, taken as a whole.

 

(g)                                  Except in each case as would not reasonably
be expected to have a Material Adverse Effect, (i) none of the Trade Secrets of
such Grantor that are material to its business have been used, divulged,
disclosed or appropriated to the detriment of such Grantor for the benefit of
any other person; (ii) no employee, independent contractor or agent of such
Grantor has misappropriated any trade secrets of any other person in the course
of the performance of his or her duties as an employee, independent contractor

 

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or agent of such Grantor; and (iii) no employee, independent contractor or agent
of such Grantor is in default or breach of any term of any employment agreement,
non-disclosure agreement, assignment of inventions agreement or similar
agreement or contract relating in any way to the protection, ownership,
development, use or transfer of such Grantor’s Intellectual Property.

 

(h)                                 Such Grantor has made all filings and
recordations necessary to adequately protect (in its reasonable business
judgment) its interest in its Material Intellectual Property, including
recordation of its interests in the Patents and Trademarks with the United
States Patent and Trademark Office, and recordation of any of its interests in
the Copyrights with the United States Copyright Office.

 

(i)                                     Except as would not reasonably be
expected to have a Material Adverse Effect, such Grantor has taken all
commercially reasonable steps to use consistent standards of quality in the
manufacture, distribution and sale of all products sold and provision of all
services provided under or in connection with any item of Intellectual Property
and has taken all commercially reasonable steps to ensure that all licensed
users of any kind of Intellectual Property use such consistent standards of
quality.

 

(j)                                    Except as would not reasonably be
expected to have a Material Adverse Effect, no Grantor is subject to any
settlement or consents, judgment, injunction, order, decree, covenants not to
sue, non-assertion assurances or releases that would impair the validity or
enforceability of, or such Grantor’s rights in, any Material Intellectual
Property.

 

4.9.                            Letters of Credit and Letter of Credit Rights. 
No Grantor is a beneficiary or assignee under any letter of credit with a face
amount in excess of $1,000,000 (including any “Letter of Credit”) other than the
letters of credit described on Schedule 4.9 (as such schedule may be amended or
supplemented from time to time).

 

SECTION 5.                            COVENANTS

 

Each Grantor covenants and agrees with the Secured Parties that, until the
Termination Date:

 

5.1.                            Delivery and Control of Certain Collateral.

 

(a)                                 If any of the Collateral is or shall become
evidenced or represented by any Certificated Security or Tangible Chattel Paper,
such Certificated Security or Tangible Chattel Paper shall be delivered promptly
to the Administrative Agent, duly endorsed, if applicable, in a manner
reasonably satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement, and all of such property owned by any Grantor as of
the Closing Date shall be delivered on the Closing Date.  Any Pledged Collateral
evidenced or represented by any Instrument or Negotiable Document shall be
delivered promptly to the Administrative Agent, duly endorsed, if applicable, in
a manner reasonably satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement, and all of such property owned by any
Grantor as of the Closing Date shall be delivered on the Closing Date.
Notwithstanding the foregoing, no Instrument, Tangible Chattel Paper, Pledged
Debt Security constituting a Certificated Security or Negotiable Document shall
be required to be delivered to the Administrative Agent pursuant to this clause
(a) if the value thereof is less than $1,000,000 individually or $5,000,000 in
the aggregate.

 

(b)                                 If any of the Collateral is or shall
constitute “Electronic Chattel Paper” (under Article 9 of the UCC) such Grantor
shall ensure (to the Administrative Agent’s reasonable satisfaction) that (i) a
single authoritative copy exists which is unique, identifiable, unalterable
(except as provided in

 

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clauses (iii), (iv) and (v) of this paragraph), (ii) such authoritative copy
identifies the Administrative Agent as the assignee and is communicated to and
maintained by the Administrative Agent or its designee, (iii) copies or
revisions that add or change the assignee of the authoritative copy can only be
made with the participation of the Administrative Agent, (iv) each copy of the
authoritative copy and any copy of a copy is readily identifiable as a copy and
not the authoritative copy and (v) any revision of the authoritative copy is
readily identifiable as an authorized or unauthorized revision; provided that
such actions shall not be required to be taken until the aggregate face amount
of the Electronic Chattel Paper included in the Collateral exceeds $1,000,000.

 

(c)                                  If any Collateral with a value in excess of
$1,000,000 shall become evidenced or represented by an Uncertificated Security,
such Grantor shall cause the Issuer thereof either (i) to register the
Administrative Agent as the registered owner of such Uncertificated Security,
upon original issue or registration of transfer or (ii) to agree in writing with
such Grantor and the Administrative Agent that such Issuer will comply with
instructions with respect to such Uncertificated Security originated by the
Administrative Agent without further consent of such Grantor, such agreement to
be in substantially the form of Exhibit C, or such other form as may be
reasonably agreed to by the Administrative Agent, and such actions shall be
taken on or prior to the Closing Date with respect to any Uncertificated
Securities owned as of the Closing Date by any Grantor.

 

5.2.                            Maintenance of Perfected Security Interest;
Further Documentation.

 

(a)                                 Except as otherwise permitted by the Credit
Agreement, such Grantor shall maintain each of the security interests created by
this Agreement as a security interest having at least the perfection and
priority described in Section 4.2 and shall defend such security interest
against the claims and demands of all persons whomsoever except as otherwise
permitted by Section 6.02 of the Credit Agreement, subject to the provisions of
Section 8.15.

 

(b)                                 At any time and from time to time, upon the
reasonable written request of the Administrative Agent, and at the sole expense
of such Grantor, such Grantor shall promptly and duly authorize, 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, (i) the filing of 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 subject to the
requirements of Section 5.1, any Deposit Accounts subject to the requirements of
Section 5.12 of the Credit Agreement and clause (j) of the definition of
“Collateral and Guarantee Requirement,” set forth therein, and any other
relevant Collateral, taking any actions necessary to enable the Administrative
Agent to obtain “control” (within the meaning of the applicable Uniform
Commercial Code) with respect thereto.

 

5.3.                            Changes in Locations, Name, Jurisdiction of
Incorporation, etc.

 

(a)                                 Such Grantor shall give 10 days’ written
notice to the Administrative Agent and delivery to the Administrative Agent of
duly authorized and, where required, executed copies of all additional financing
statements and other documents reasonably requested in writing by the
Administrative Agent to maintain the validity, perfection and priority of the
security interests provided for herein after any of the following:

 

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

 

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(ii)                                  a change in its legal name, identity or
structure that would render any financing statement filed by the Administrative
Agent in connection with this Agreement “seriously misleading” (as such term is
used in Section 907(b) of the New York UCC).

 

5.4.                            Investment Property.

 

(a)                                 If such Grantor shall receive any
Certificated Security (including any certificate representing a stock dividend
or a distribution in connection with any reclassification, increase or reduction
of capital or any certificate issued in connection with any reorganization),
options or rights in respect of the Equity Interests in any Issuer, whether in
addition to, in substitution of, as a conversion of, or in exchange for, any
shares of or other ownership interests in the Pledged Equity Interests, or
otherwise in respect thereof, such Grantor shall accept the same as the agent of
the Secured Parties, hold the same in trust for the Secured Parties and deliver
the same promptly to the Administrative Agent in the exact form received, duly
endorsed by such Grantor to the Administrative Agent, if required, together with
an undated stock power or similar instrument of transfer covering such
Certificated Security duly executed in blank by such Grantor, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Secured Obligations.

 

(i)                                     Without the prior written consent of the
Administrative Agent, such Grantor shall not (i) vote to enable, or take any
other action to permit, any issuer of Pledged Equity Interests to issue any
stock, partnership interests, limited liability company interests or other
equity securities of any nature or to issue any other securities convertible
into or granting the right to purchase or exchange for any stock, partnership
interests, limited liability company interests or other equity securities of any
nature of any such issuer (except, in each case, pursuant to a transaction
expressly permitted by the Credit Agreement), (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, any of
the Investment Property constituting Collateral or Proceeds thereof or any
interest therein (except, in each case, pursuant to a transaction permitted by
the Credit Agreement), (iii) create, incur or permit to exist any Lien or option
in favor of, or any claim of any person with respect to, any of the Investment
Property or Proceeds thereof, or any interest therein, except for the security
interests created by this Agreement or any Lien permitted thereon pursuant to
Section 6.02 of the Credit Agreement, (iv) enter into any agreement or
undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Investment Property
or Proceeds thereof or any interest therein or except as permitted by the Credit
Agreement, or (v) cause or permit any Issuer of any Pledged Partnership
Interests or Pledged LLC Interests which are not securities (for purposes of the
New York UCC) on the date hereof to elect or otherwise take any action to cause
such Pledged Partnership Interests or Pledged LLC Interests to be treated as
securities for purposes of the New York UCC; provided, however, notwithstanding
the foregoing, if any Issuer of any Pledged Partnership Interests or Pledged LLC
Interests takes any such action in violation of the provisions in this clause
(v), such Grantor shall promptly notify the Administrative Agent in writing of
any such election or action and, in such event, shall take all steps necessary
or advisable to establish the Administrative Agent’s “control” thereof.

 

(ii)                                  In the case of each Grantor which is an
Issuer, such Issuer agrees that (i) it shall be bound by the terms of this
Agreement relating to the Pledged Collateral issued by it and shall comply with
such terms insofar as such terms are applicable to it, (ii) it shall notify the
Administrative Agent concurrently with delivery of the financial statements
required under Section 5.04(b) of the Credit Agreement in writing of the
occurrence of any of the events described in Section 5.4(a) with respect to the
Pledged Collateral issued by it and (iii) the terms of Sections 6.3(c) and 6.7
shall apply to it, mutatis mutandis, with respect to all actions that may be
required

 

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of it pursuant to Section 6.3(c) or 6.7 with respect to the Pledged Collateral
issued by it.  In addition, each Grantor which is either an Issuer or an owner
of any Pledged Collateral hereby consents to the grant by each other Grantor of
the security interest hereunder in favor of the Administrative Agent and to the
transfer of any Pledged Collateral to the Administrative Agent or its nominee
following an Event of Default and to the substitution of the Administrative
Agent or its nominee as a partner, member or shareholder of the Issuer of the
related Pledged Collateral.

 

5.5.                            Intellectual Property.

 

(a)                                 Except as would not reasonably be expected
to have a Material Adverse Effect or in connection with a transaction permitted
by the Credit Agreement, such Grantor shall (i) to the extent commercially
reasonable, continue to use each Trademark owned by such Grantor material to its
business on each and every trademark class of goods applicable to its current
line as reflected in its current catalogs, brochures and price lists,
(ii) maintain as in the past the quality of products and services offered under
such Trademark at least at the level of quality of such products and services in
the past, (iii) where commercially reasonable and feasible, use such Trademark
with the appropriate notice of registration and all other notices and legends
required by law, and (iv) not (and not permit any licensee or sublicensee of
such Grantor to) knowingly do any act or knowingly omit to do any act whereby
such Trademark is likely to become invalidated or materially impaired in any
way, unless, in the case of each of the foregoing, such Grantor shall have
determined, in its reasonable business judgment, that such Trademark is no
longer necessary for, or desirable in the conduct of, such Grantor’s business.

 

(b)                                 Except as could not reasonably be expected
to have a Material Adverse Effect or in connection with a transaction permitted
by the Credit Agreement, such Grantor shall not knowingly do any act, or omit to
do any act, whereby any Patent owned by such Grantor material to its business
could reasonably be expected to become forfeited, abandoned or dedicated to the
public unless such Grantor shall have determined, in its reasonable business
judgment, that such Patent is no longer necessary for, or desirable in the
conduct of, such Grantor’s business.

 

(c)                                  Except as could not reasonably be expected
to have a Material Adverse Effect or in connection with a transaction permitted
by the Credit Agreement, such Grantor shall not knowingly do any act or
knowingly omit to do any act whereby any material portion of any material
Copyright owned by such Grantor is likely to become invalidated or otherwise
materially impaired, unless, in the case of each of the foregoing, such Grantor
shall have determined, in its reasonable business judgment, that such Copyright
is no longer necessary for, or desirable in, the conduct of, such Grantor’s
business.  Such Grantor shall not knowingly do any act whereby any material
portion of such Copyright is likely to fall into the public domain, unless such
Grantor shall have determined, in its reasonable business judgment, that such
Copyright or portion thereof is no longer necessary for, or desirable in the
conduct of, such Grantor’s business.

 

(d)                                 Except as could not reasonably be expected
to have a Material Adverse Effect or in connection with a transaction permitted
by the Credit Agreement, such Grantor shall not knowingly do any act that
knowingly uses any Material Intellectual Property to infringe, misappropriate or
violate the Intellectual Property rights of any other person in any material
respect.

 

(e)                                  Except as could not reasonably be expected
to have a Material Adverse Effect or in connection with a transaction permitted
by the Credit Agreement, such Grantor shall use proper statutory notice in
connection with the use of the Material Intellectual Property.

 

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(f)                                   Whenever such Grantor, either by itself or
through any agent, employee, licensee or designee, shall acquire or become an
exclusive licensee of any United States Intellectual Property application or
registration or file an application for the registration of any Intellectual
Property with the United States Patent and Trademark Office or the United States
Copyright Office, such Grantor shall report such event to the Administrative
Agent together with the delivery by the Lead Borrower of the financial
statements pursuant to Section 5.04(b) of the Credit Agreement.  Upon the
reasonable written request of the Administrative Agent, such Grantor shall
execute and deliver, and have recorded, any of the foregoing items.

 

(g)                                  Except as could not reasonably be expected
to have a Material Adverse Effect or in connection with a transaction permitted
by the Credit Agreement, such Grantor shall take all reasonable and necessary
steps, in any proceeding before the United States Patent and Trademark Office or
the United States Copyright Office to maintain and pursue each application (for
registration) and to maintain each registration of Intellectual Property
material to its business, including the payment of required fees and taxes, the
filing of responses to office actions issued by the United States Patent and
Trademark Office and the United States Copyright Office, the filing of
applications for renewal or extension, the filing of affidavits of use and
affidavits of incontestability, the filing of divisional, continuation,
continuation-in-part, reissue, and renewal applications or extensions, the
payment of maintenance fees, and the participation in interference,
reexamination, opposition, cancellation, infringement and misappropriation
proceedings , unless such Grantor shall have determined, in its reasonable
business judgment, that any such application or registration of material
Intellectual Property is no longer necessary for, or desirable in the conduct
of, such Grantor’s business.

 

(h)                                 Such Grantor agrees to execute an
Intellectual Property Security Agreement with respect to its Intellectual
Property in substantially the form of Exhibit B-1 in order to record the
security interest granted in such Intellectual Property herein to the
Administrative Agent for the benefit of the Secured Parties with the United
States Patent and Trademark Office and the United States Copyright Office.

 

(i)                                     Upon the reasonable written request of
the Administrative Agent, such Grantor agrees to execute an After-Acquired
Intellectual Property Security Agreement with respect to its After-Acquired
Intellectual Property in substantially the form of Exhibit B-2 in order to
record the security interest granted herein to the Administrative Agent for the
benefit of the Secured Parties with the United States Patent and Trademark
Office and the United States Copyright Office, as applicable.

 

(j)                                    Except as could not reasonably be
expected to have a Material Adverse Effect or in connection with a transaction
permitted by the Credit Agreement, such Grantor shall take all commercially
reasonable steps necessary to protect the secrecy of all Trade Secrets material
to its business.

 

5.6.                            Commercial Tort Claims.  Such Grantor shall
advise the Administrative Agent concurrently with delivery of the financial
statements required under Section 5.04(b) of the Credit Agreement of any
Commercial Tort Claim held by such Grantor in excess of $1,000,000 and shall
promptly thereafter, upon written request by the Administrative Agent, execute a
supplement to this Agreement in form and substance reasonably satisfactory to
the Administrative Agent to grant a security interest in such Commercial Tort
Claim to the Administrative Agent for the benefit of the Secured Parties.

 

5.7.                            Deposit Accounts.  The Grantors shall enter into
Deposit Account Control Agreements with respect to each Deposit Account
maintained by them (other than any Excluded

 

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Deposit Account) to the extent provided in Section 5.12 of the Credit Agreement
and clause (j) of the definition of “Collateral and Guarantee Requirement” set
forth therein.

 

SECTION 6.                            REMEDIAL PROVISIONS

 

6.1.                            Certain Matters Relating to Accounts.

 

(a)                                 At any time after the occurrence and during
the continuation of an Event of Default after written notice is delivered to the
Grantor, the Administrative Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and each Grantor shall use commercially
reasonable efforts to furnish all such assistance and information as the
Administrative Agent may reasonably require in connection with such test
verifications.  The Administrative Agent shall have the absolute right to share
any information it gains from such inspection or verification with any Secured
Party; provided that the provisions of Section 9.16 of the Credit Agreement
shall apply to such information.

 

(b)                                 Subject to Section 5.12(d) of the Credit
Agreement, the Administrative Agent hereby authorizes each Grantor to collect
such Grantor’s Accounts, and each Grantor hereby agrees to continue to collect
all amounts due or to become due to such Grantor under the Accounts and any
Supporting Obligation and diligently exercise each material right it may have
under any Account and any Supporting Obligation, in each case, at its own
expense; provided, however, that the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default or a Liquidity Period. Each such deposit of
Proceeds of Accounts shall be accompanied by a report identifying in reasonable
detail the nature and source of the payments included in the deposit.

 

(c)                                  At the Administrative Agent’s reasonable
written request after the occurrence and during the continuance of any Event of
Default, each Grantor shall, at such Grantor’s expense, deliver to the
Administrative Agent all (to the extent existing and available) original and
other documents evidencing, and relating to, the agreements and transactions
which gave rise to the Accounts, including 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 after the occurrence and during the
continuance of an Event of Default, communicate with obligors under the Accounts
and parties to the Contracts to verify with them to the Administrative Agent’s
reasonable satisfaction the existence, amount and terms of any Accounts or
Contracts.  The Administrative Agent shall have the absolute right to share any
information it gains from such inspection or verification with any Secured
Party; provided, that the provisions of Section 9.16 of the Credit Agreement
shall apply to such information.

 

(b)                                 Upon reasonable written request of the
Administrative Agent, at any time after the occurrence and during the
continuance of any Event of Default, the Administrative Agent may at any time
notify, or require any Grantor to so notify, the Account Debtor or counterparty
on any Account or Contract of the security interest of the Administrative Agent
therein.  In addition, the Administrative Agent may upon written notice to the
applicable Grantor, notify, or require any Grantor to notify, the Account Debtor
or counterparty to make all payments under the Accounts (other than, prior to
the occurrence of an Event of Default that is continuing, Accounts with balances
less than $1 million) and/or Contracts directly to the Administrative Agent.

 

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

 

6.3.                            Pledged Collateral.

 

(a)                                 Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent’s intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Equity Interests
and all payments made in respect of the Pledged Notes, to the extent permitted
in the Credit Agreement, and to exercise all voting and corporate rights with
respect to the Pledged Collateral.

 

(b)                                 If an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given notice to the
relevant Grantor of the Administrative Agent’s intent to exercise its rights
pursuant to this Section 6.3(b): (i) all rights of each Grantor to exercise or
refrain from exercising the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant hereto shall cease and all such
rights shall thereupon become vested in the Administrative Agent who shall
thereupon have the sole right, but shall be under no obligation, to exercise or
refrain from exercising such voting and other consensual rights, (ii) the
Administrative Agent shall have the right, without notice to any Grantor, to
transfer all or any portion of the Investment Property to its name or the name
of its nominee or agent and (iii) the Administrative Agent shall have the right
to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the Secured
Obligations in accordance with Section 6.5.  In addition, the Administrative
Agent shall have the right at any time after the occurrence and during the
continuance of any Event of Default, without notice to the relevant Grantor, to
exchange any certificates or instruments representing any Investment Property
for certificates or instruments of smaller or larger denominations.  In order to
permit the Administrative Agent to exercise the voting and other consensual
rights which it may be entitled to exercise pursuant hereto after the occurrence
and during the continuance of any Event of Default and to receive all dividends
and other distributions which it may be entitled to receive hereunder each
Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to the Administrative Agent all proxies, dividend payment orders and
other instruments as the Administrative Agent may from time to time reasonably
request in writing and each Grantor acknowledges that the Administrative Agent
may utilize the power of attorney set forth herein.

 

(c)                                  If an Event of Default shall have occurred
and be continuing, each Grantor hereby authorizes and instructs each Issuer of
any Pledged Collateral pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that
(x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that

 

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each Issuer shall be fully protected in so complying, and (ii) pay any dividends
or other payments with respect to the Investment Property, including Pledged
Collateral, directly to the Administrative Agent.

 

6.4.                            Proceeds to be Turned Over To Administrative
Agent.  In addition to the rights of the Administrative Agent and the other
Secured Parties specified in Section 6.1 and 5.12(d) of the Credit Agreement
with respect to payments of Accounts and other Current Asset Collateral, if an
Event of Default shall occur and be continuing, all Proceeds received by any
Grantor consisting of cash, cash equivalents, checks 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,
promptly upon demand, be turned over to the Administrative Agent in the exact
form received by such Grantor (duly endorsed 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 the Dominion
Account or in a Collateral Account.  All Proceeds while held by the
Administrative Agent in the Dominion Account or 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 shall have occurred and be continuing, at any time at
the Administrative Agent’s election, the Administrative Agent may apply all or
any part of the net Proceeds (after deducting fees and expenses as provided in
Section 6.6) constituting Collateral realized through the exercise by the
Administrative Agent of its remedies hereunder, whether or not held in the
Dominion Account or in a Colllateral Account, and any proceeds of the guarantee
set forth in Section 2, in payment of the Secured Obligations in the manner
provided in Section 7.02 of the Credit Agreement.

 

6.6.                            Code and Other Remedies.

 

(a)                                 If an Event of Default shall have occurred
and be continuing, 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 New York UCC (whether or not the New York UCC applies to the affected
Collateral) or its rights under any other applicable law or in equity.  Without
limiting the generality of the foregoing, the Administrative Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below, by the
Credit Agreement, this Agreement or any other Loan Document) 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, license, 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
any Secured Party or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk.  Each 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

 

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equity is hereby waived and released.  Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
any Grantor, and each Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.  Each Grantor agrees that, to the extent notice
of sale shall be required by law, at least ten days notice to such Grantor of
the time and place of any public sale or the time after which any private sale
is to be made shall, to the extent permitted by law, constitute reasonable
notification.  The Administrative Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given.  The
Administrative Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.  The
Administrative Agent may sell the Collateral without giving any warranties as to
the Collateral.  The Administrative Agent may specifically disclaim or modify
any warranties of title or the like.  This procedure will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
Each Grantor agrees that it would not be commercially unreasonable for the
Administrative Agent to dispose of the Collateral or any portion thereof by
using Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets.  Each Grantor hereby waives any
claims against the Administrative Agent arising by reason of the fact that the
price at which any Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale, even if the
Administrative Agent accepts the first offer received and does not offer such
Collateral to more than one offeree.  Each Grantor further agrees, at the
Administrative Agent’s reasonable written request, to assemble the Collateral
and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Grantor’s premises
or elsewhere upon the occurrence and during the continuance of any Event of
Default.  The Administrative Agent shall have the right to enter onto the
property where any Collateral is located and take possession thereof with or
without judicial process.

 

(b)                                 The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6, 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 Secured Parties hereunder,
including reasonable attorneys’ fees and disbursements to the extent required to
be paid in accordance with the Credit Agreement, to the payment in whole or in
part of the Secured Obligations in accordance with Section 6.5 and only after
such application and after the payment by the Administrative Agent of any other 
amount required by any provision of law, including Section 9-615(a) of the New
York UCC, need the Administrative Agent account for the surplus, if any, to any
Grantor.  If the Administrative Agent sells any of the Collateral upon credit,
the Grantor will be credited only with payments actually made by the purchaser
and received by the Administrative Agent and applied to indebtedness of the
purchaser.  In the event the purchaser fails to pay for the Collateral, the
Administrative Agent may resell the Collateral and the Grantor shall be credited
with proceeds of the sale.  To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands it may acquire against any
Secured Party arising out of the exercise by them of any rights hereunder.

 

6.7.                            Registration Rights.

 

(a)                                 If the Administrative Agent shall determine
to exercise its right to sell any or all of the Pledged Equity Interests or the
Pledged Debt Securities pursuant to Section 6.6, and if in the reasonable
opinion of the Administrative Agent it is necessary or advisable to have the
Pledged Equity Interests or the Pledged Debt Securities, or that portion thereof
to be sold, registered under the provisions of the Securities Act, the relevant
Grantor shall use commercially reasonable efforts to cause the Issuer thereof

 

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to (i) execute and deliver, and cause the directors and officers of such Issuer
to execute and deliver, all such instruments and documents, and do or cause to
be done all such other acts as may be, in the reasonable opinion of the
Administrative Agent, necessary or advisable to register the Pledged Equity
Interests or the Pledged Debt Securities, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) cause the registration
statement relating thereto to become effective and to remain effective for a
period of one year from the date of the first public offering of the Pledged
Equity Interests or the Pledged Debt Securities, or that portion thereof to be
sold, and (iii) make all amendments thereto and/or to the related prospectus
which, in the reasonable opinion of the Administrative Agent, are reasonably
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the SEC applicable thereto. 
Each Grantor agrees to use commercially reasonable efforts to cause such Issuer
to comply with the provisions of the securities or “Blue Sky” laws of any and
all jurisdictions which the Administrative Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings statement
(which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.

 

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

 

(c)                                  Each Grantor agrees to use its 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 Equity
Interests or the Pledged Debt Securities pursuant to Section 6.6 valid and
binding and in compliance with any and all other applicable law.  Each Grantor
further agrees that a breach of any of the covenants contained in this
Section 6.7 will cause irreparable injury to the Secured Parties, that the
Secured Parties have no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this Section 6.7 shall
be specifically enforceable against such Grantor, and such Grantor hereby waives
and agrees, to the extent permitted by applicable law, not to assert any
defenses against an action for specific performance of such covenants except for
a defense that no Event of Default has occurred or is continuing under the
Credit Agreement, that the applicable Grantor has been released from its
obligations hereunder, that the Termination Date has occurred or a defense of
payment.

 

6.8.                            Deficiency.  Each Grantor shall remain liable
for any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay its Secured Obligations.

 

SECTION 7.                            THE ADMINISTRATIVE AGENT

 

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

 

(a)                                 Each Grantor hereby irrevocably constitutes
and appoints the Administrative Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-

 

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fact with full irrevocable (until the Termination Date) power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:

 

(i)      in the name of such Grantor or its own name, or otherwise, take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any Account or Contract 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 reasonably
appropriate by the Administrative Agent for the purpose of collecting any and
all such moneys due under any Account or Contract or with respect to any other
Collateral whenever payable;

 

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

 

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

 

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

 

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

 

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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) unless an Event of Default shall
have occurred and be continuing.

 

(b)           If an Event of Default has occurred and is continuing and 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; provided, however if a Default has occurred and is continuing, and 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
(except as otherwise provided herein) solely to cause the Collateral and
Guarantee Requirement to be, or remain, satisfied.

 

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

 

7.2.         Duty of Administrative Agent.  The Administrative Agent’s sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account.  Neither the
Administrative Agent, nor any other Secured Party nor any of their respective
officers, directors, partners, employees, agents, attorneys and other advisors,
attorneys-in-fact or affiliates 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 Secured Parties hereunder are solely to protect the Secured
Parties’ interests in the Collateral and shall not impose any duty upon any
Secured Party to exercise any such powers.  The Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
partners, employees, agents, attorneys and other advisors, attorneys-in-fact or
affiliates shall be responsible to any Grantor for any act or failure to act
hereunder, except from their own gross negligence or willful misconduct or
breach of a duty owed to such Grantor.

 

7.3.         Execution of Financing Statements.  Each Grantor acknowledges that
pursuant to Section 9-509(b) of the New York UCC and any other applicable law,
each Grantor authorizes the Administrative Agent to file or record financing or
continuation statements, and amendments thereto, and other filing or recording
documents or instruments with respect to the Collateral, in such form and in
such offices as the Administrative Agent reasonably determines appropriate to
perfect or maintain the perfection of the security interests of the
Administrative Agent under this Agreement.  Each Grantor agrees that such
financing statements may describe the collateral in the same manner as described
in the Security Documents or as “all assets” or “all personal property,” whether
now owned or hereafter existing or acquired or such other description

 

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as the Administrative Agent, in its sole judgment, reasonably determines is
necessary or advisable.  A photographic or other reproduction of this Agreement
shall be sufficient as a financing statement or other filing or recording
document or instrument for filing or recording in any jurisdiction.

 

7.4.         Authority of Administrative Agent.  Each Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the 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.

 

7.5.         Appointment of Co-Collateral Agents.  At any time or from time to
time, in order to comply with any applicable requirement of law, the
Administrative Agent may appoint another bank or trust company or one of more
other persons, either to act as co-agent or agents on behalf of the Secured
Parties with such power and authority as may be reasonably necessary for the
effectual operation of the provisions hereof and which may be specified in the
instrument of appointment (which may, in the discretion of the Administrative
Agent, include provisions for indemnification and similar protections of such
co-agent or separate agent).

 

SECTION 8.         MISCELLANEOUS

 

8.1.         Amendments in Writing.  None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 9.08 of the Credit Agreement; provided that any
provision of this Agreement imposing obligations on any Grantor may be waived by
the Administrative Agent in a written instrument executed by the Administrative
Agent.

 

8.2.         Notices.  All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 9.01 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 8.2.

 

8.3.         No Waiver by Course of Conduct; Cumulative Remedies.  No Secured
Party shall by any act (except by a written instrument pursuant to Section 8.1),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default.  No
failure to exercise, nor any delay in exercising, on the part of any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof.  No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  A waiver by any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which such Secured Party would otherwise have on any

 

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future occasion.  The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

 

8.4.         Enforcement Expenses; Indemnification.

 

(a)           Each Agreement Party agrees to pay or reimburse each Secured Party
for all its reasonable costs and expenses incurred in collecting against such
Agreement Party under the guarantee contained in Section 2 or otherwise in
enforcing or preserving any rights under this Agreement and the other Loan
Documents to which such Agreement Party is a party (but limited in the case of
legal fees and expenses, to the reasonable out-of-pocket documented fees,
disbursements and charges of one counsel of the Administrative Agent and the
Secured Parties, taken as a whole, and if necessary, of one local counsel in any
relevant material jurisdiction to such persons, taken as a whole).

 

(b)           Each Agreement Party agrees to pay, and to hold the Secured
Parties harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement.

 

(c)           Each Agreement Party agrees to pay, and to hold the Secured
Parties harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 9.05 of the Credit Agreement.

 

(d)           The agreements in this Section shall survive the Termination Date.

 

8.5.         Successors and Assigns.  This Agreement shall be binding upon the
successors and assigns of each Agreement Party and shall inure to the benefit of
the Secured Parties and their respective permitted successors and assigns;
provided that, except as otherwise permitted by the Credit Agreement, no
Agreement Party may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent, and any attempted assignment without such consent shall be
null and void.

 

8.6.         Set-Off.  Each Agreement Party hereby irrevocably authorizes each
Secured Party at any time and from time to time while an Event of Default shall
have occurred and be continuing, without notice to such Agreement Party or any
other Agreement Party, any such notice being expressly waived by each Agreement
Party to the extent permitted by applicable law, to set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Secured Party to or for
the credit or the account of such Agreement Party, or any part thereof in such
amounts as such Secured Party may elect, against and on account of the
obligations and liabilities of such Agreement Party to such Secured Party
hereunder and claims of every nature and description of such Secured Party
against such Agreement Party, in any currency, whether arising hereunder, under
the Credit Agreement, any other Loan Document or otherwise, as such Secured
Party may elect, whether or not any Secured Party

 

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has made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured.  Each Secured Party shall notify such
Agreement Party promptly of any such set-off and the application made by such
Secured Party of the proceeds thereof, provided that the failure to give such
notice shall not affect the validity of such set-off and application.  The
rights of each Secured Party under this Section are in addition to other rights
and remedies (including other rights of set-off) which such Secured Party may
have.

 

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

 

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

 

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

 

8.10.       Integration.  This Agreement and the other Loan Documents represent
the agreement of the Agreement Parties, 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 any Secured
Party relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.

 

8.11.       APPLICABLE LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

8.12.       Submission to Jurisdiction; Waivers.  Each Agreement Party and the
Administrative Agent hereby irrevocably and unconditionally:

 

(a)           submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or the
other Loan Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
federal court.  Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. 
Nothing in this Agreement shall affect any right that any Lender, the
Administrative Agent or any Issuing Bank may otherwise have to bring any action
or proceeding relating to this Agreement or the other Loan Documents

 

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against Holdings, the Borrowers or any Loan Party or their properties in the
courts of any jurisdiction;

 

(b)           waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or federal court.  Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court; and

 

(c)           agrees that service of all process in any such proceeding  in any
such court may be made by registered or certified mail, return receipt requested
at its address provided in Section 8.2 agrees that service as so provided in is
sufficient to confer personal jurisdiction over the applicable credit party in
any such proceeding in any such court, and otherwise constitutes effective and
binding service in every respect; and agrees that agents and lenders retain the
right to serve process in any other manner permitted by law or to bring
proceedings against any credit party in the courts of any other jurisdiction.

 

8.13.       Acknowledgments.  Each Agreement Party 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)           no Secured Party has any fiduciary relationship with or duty to
any Agreement Party arising out of or in connection with this Agreement or any
of the other Loan Documents, and the relationship between the Agreement Parties,
on the one hand, and the Secured Parties, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

 

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

 

8.14.       Additional Grantors.  Each Subsidiary of the Lead Borrower that is
required to become a party to this Agreement pursuant to Section 5.09 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 Exhibit D hereto.

 

8.15.       Releases.

 

(a)           On the Termination Date, the Collateral shall be released from the
Liens created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Agreement Party hereunder shall automatically terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors.  At the request and sole
expense of any Grantor on or following the Termination Date, the Administrative
Agent shall deliver to such Grantor any Collateral held by the Administrative
Agent hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.

 

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(b)           The obligations of Guarantors that are Subsidiaries and the
security interests created hereunder shall be subject to release in accordance
with Section 9.17 of the Credit Agreement.

 

(c)           Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement originally filed in connection herewith without the prior
written consent of the Administrative Agent, subject to such Grantor’s rights
under Section 9-509(d)(2) of the New York UCC.

 

8.16.       Intercreditor Agreement.  Notwithstanding anything herein to the
contrary, the Collateral granted to the Administrative Agent pursuant to this
Agreement or any other Loan Document and the exercise of any of the relative
rights and remedies of the Administrative Agent hereunder shall be subject to,
and governed by the terms and conditions of, the Intercreditor Agreement at any
time the Intercreditor Agreement is in effect.  In the event of any conflict or
inconsistency between the terms and conditions hereof and the terms and
conditions of the Intercreditor Agreement, the terms and conditions of the
Intercreditor Agreement shall govern and control at any time the Intercreditor
Agreement is in effect.  Notwithstanding anything to the contrary contained in
this Agreement or the Loan Documents, but subject to the Intercreditor Agreement
in all respects, until the Discharge of Term Obligations (as defined in the
Intercreditor Agreement): (i) any covenant hereunder or under the Credit
Agreement requiring (or any representation or warranty hereunder or under the
Credit Agreement to the extent it would have the effect of requiring) the
delivery and/or arrangement for possession of Collateral that constitutes Term
Priority Collateral or delivery and/or arrangement for control of any
certificated securities that constitute Term Priority Collateral to or with the
Administrative Agent shall be deemed satisfied or complied with (or in the case
of any representation or warranty, shall be deemed to be true and correct) if
such delivery and/or arrangement for possession of Collateral that constitutes
Term Priority Collateral is made to, or such control of certificated securities
is with the Term Agent pursuant to the Term Documents; (ii) any covenant
hereunder or under the Credit Agreement requiring (or any representation or
warranty hereunder or under the Credit Agreement to the extent it would have the
effect of requiring ) the payment or other transfer of Collateral that
constitutes Term Priority Collateral to the Administrative Agent shall be deemed
to have been satisfied (or, in the case of any representation or warranty, shall
be deemed to be true and correct) if such payment or transfer shall have been
made to the Term Agent; (iii) any covenant hereunder or under the Credit
Agreement requiring (or any representation or warranty hereunder or under the
Credit Agreement to the extent it would have the effect of requiring) the
endorsement of any Collateral that constitutes Term Priority Collateral or
related document to the Administrative Agent shall be deemed to have been
satisfied (or, in the case of any representation or warranty, shall be deemed to
be true and correct) if such endorsement shall have been made to the Term Agent;
and (iv) any covenant requiring that a Grantor receive and/or hold any
Collateral that constitutes Term Priority Collateral in trust for the benefit of
the Administrative Agent shall be deemed to have been satisfied to the extent
that such Grantor receives or holds (as applicable) such Collateral in trust for
the benefit of the Term Agent and the Administrative Agent.

 

8.17.       WAIVER OF JURY TRIAL.  EACH AGREEMENT PARTY AND THE ADMINISTRATIVE
AGENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER
LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF

 

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THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS.  EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 8.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS HERETO OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER.  IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

 

[Remainder of page intentionally left blank]

 

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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.

 

 

GENERAC HOLDINGS INC.

 

 

 

 

 

 

 

By:

/s/ York A. Ragen

 

 

Name: York A. Ragen

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

 

GENERAC ACQUISITION CORP.

 

 

 

 

 

 

 

By:

/s/ York A. Ragen

 

 

Name: York A. Ragen

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

 

GENERAC POWER SYSTEMS, INC.

 

 

 

 

 

 

 

By:

/s/ York A. Ragen

 

 

Name: York A. Ragen

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

 

PRO POWER SOLUTIONS, LLC

 

 

 

 

 

 

 

By:

/s/ York A. Ragen

 

 

Name: York A. Ragen

 

 

Title: Secretary and Treasurer

 

 

 

 

 

 

 

MAGNUM POWER PRODUCTS, LLC

 

 

 

 

 

 

 

By:

/s/ York A. Ragen

 

 

Name: York A. Ragen

 

 

Title: Secretary and Treasurer

 

[Signature Page to the Collateral Agreement]

 

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BANK OF AMERICA, N.A.,

 

as Administrative Agent

 

 

 

 

 

 

 

By:

/s/ Jason Riley

 

 

Name: Jason Riley

 

 

Title: Senior Vice President

 

[Signature Page to the Collateral Agreement]

 

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