Execution

 

 

 

AMENDED AND RESTATED GUARANTY AND COLLATERAL AGREEMENT

dated as of June 30, 2006

among

WESTELL TECHNOLOGIES, INC.,

WESTELL, INC.,

TELTREND LLC,

and

CONFERENCE PLUS, INC.

and

WESTELL TECHNOLOGIES, INC.,

as the Company Representative

and

THE OTHER PARTIES HERETO,

as Grantors,

and

LASALLE BANK NATIONAL ASSOCIATION,

as the Administrative Agent

 

 

 

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AMENDED AND RESTATED GUARANTY AND COLLATERAL AGREEMENT

THIS AMENDED AND RESTATED GUARANTY AND COLLATERAL AGREEMENT dated as of June 30,
2006 (this “Agreement”) is entered into among WESTELL TECHNOLOGIES, INC., a
Delaware corporation (“Technologies”), WESTELL, INC., an Illinois corporation
(“Westell”), TELTREND, LLC., a Delaware limited liability company and successor
by merger to Teltrend, Inc. (“Teltrend”), CONFERENCE PLUS, INC., a Delaware
corporation (“CPI,” and, together with Technologies, Westell, and Teltrend,
collectively, the “Companies” and each, individually, a “Company”), Westell
Technologies, Inc., as the representative for the Companies (the “Company
Representative”) and each other Person signatory hereto as a Grantor (together
with any other Person that becomes a party hereto as provided herein, the
“Grantors”) in favor of LASALLE BANK NATIONAL ASSOCIATION, as the Administrative
Agent for all the Lenders party to the Credit Agreement (as hereafter defined).

The Administrative Agent, the Lenders and the Companies are party to that
certain Amended and Restated Loan and Security Agreement dated as of August 31,
2000 (as the same has been amended, restated, supplemented or otherwise modified
as of the date hereof, the “Existing Credit Agreement”), pursuant to which the
Lenders have made certain loans, advances and other financial accommodations to
the Companies and the Companies have granted to the Administrative Agent, for
the benefit of the Lenders and any other lenders who from time to time may
become party to the Existing Credit Agreement, a lien on and a security interest
in all of the Companies’ real, personal and intellectual property to secure the
Companies’ “Obligations” under the Existing Credit Agreement (as defined
therein) (collectively, the “Existing Obligations”).

Pursuant to the Credit Agreement, the Administrative Agent, the Companies and
the Lenders amended and restated the Existing Credit Agreement in its entirety
to, among other things, (i) modify the termination date and increase the amount
of the revolving credit facility (which includes letters of credit), (ii) modify
certain financial covenants, and (iii) otherwise amend and restate the Existing
Credit Agreement.

It is the intention of the Companies, the Lenders and the Administrative Agent
that the amendment and restatement of the Existing Credit Agreement shall not
effect a refinancing or novation of the Existing Obligations which shall remain
outstanding under Credit Agreement (the “Restructured Obligations”), but rather
a modification of the terms governing repayment of such Restructured
Obligations, which Restructured Obligations shall remain outstanding as of the
date hereof and shall remain secured by the “Collateral” (as defined herein).

It is a condition precedent to each Lender’s obligation to extend credit under
the Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of all the Lenders
to amend and restate Section 4 of the Existing Credit Agreement and any pledge,
guaranty or security agreement executed by or on behalf of the Companies in
favor of the Administrative Agent in connection with the Existing Credit
Agreement.

 

 

 

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The Lenders have severally agreed to extend credit to the Companies pursuant to
the Credit Agreement. The Companies are affiliated with each other Grantor. The
proceeds of credit extended under the Credit Agreement will be used in part to
enable the Companies to make valuable transfers to the Grantors in connection
with the operation of their respective businesses. The Companies and the other
Grantors are engaged in interrelated businesses, and each Grantor will derive
substantial direct and indirect benefit from extensions of credit under the
Credit Agreement.

In consideration of the premises and to induce the Administrative Agent and the
Lenders to enter into the Credit Agreement and to induce the Lenders to extend
credit thereunder, each Grantor hereby agrees with the Administrative Agent, for
the ratable benefit of the Lenders, as follows:

SECTION 1 DEFINITIONS.

1.1          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 UCC:
Accounts, Certificated Security, Commercial Tort Claims, Deposit Accounts,
Documents, Electronic Chattel Paper, Equipment, Farm Products, Goods, Health
Care Insurance Receivables, Instruments, Inventory, Leases, Letter-of-Credit
Rights, Money, Payment Intangibles, Supporting Obligations, and Tangible Chattel
Paper.

 

1.2

When used herein the following terms shall have the following meanings:

Agreement has the meaning set forth in the preamble hereto.

Chattel Paper means all “chattel paper” as such term is defined in
Section 9-102(a)(11) of the UCC and, in any event, including with respect to any
Grantor, all Electronic Chattel Paper and Tangible Chattel Paper.

Collateral means (a) all of the personal property now owned or at any time
hereafter acquired by any Grantor or in which any Grantor now has or at any time
in the future may acquire any right, title or interest, including all of each
Grantor’s Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts,
Documents, Equipment, Fixtures, General Intangibles, Health Care Insurance
Receivables, Farm Products, Goods, Instruments, Intellectual Property,
Inventory, Investment Property, Leases, Letter-of-Credit Rights, Money,
Supporting Obligations and Identified Claims, (b) all books and records
pertaining to any of the foregoing, (c) all Proceeds and products of any of the
foregoing, and (d) all collateral security and guaranties given by any Person
with respect to any of the foregoing. Where the context requires, terms relating
to the Collateral or any part thereof, when used in relation to a Grantor, shall
refer to such Grantor’s Collateral or the relevant part thereof.

Company Obligations means all Obligations of the Companies.

Copyrights means all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished, including those listed on
Schedule 5, all registrations and recordings

 

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thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright
Office, and the right to obtain all renewals of any of the foregoing.

Copyright Licenses means all written agreements naming any Grantor as licensor
or licensee, including those listed on Schedule 5, granting any right under any
Copyright, including the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.

Credit Agreement means the Second Amended and Restated Credit Agreement of even
date herewith among the Companies, the Lenders and the Administrative Agent, as
amended, supplemented, restated or otherwise modified from time to time.

Fixtures means all of the following, whether now owned or hereafter acquired by
a Grantor: plant fixtures; business fixtures; other fixtures and storage
facilities, wherever located; and all additions and accessories thereto and
replacements therefor.

General Intangibles means all “general intangibles” as such term is defined in
Section 9-102(a)(42) of the UCC and, in any event, including with respect to any
Grantor, all Payment Intangibles and all contracts, agreements, instruments and
indentures in any form, and portions thereof, to which such Grantor is a party
or under which such Grantor has any right, title or interest or to which such
Grantor or any property of such Grantor is subject, as the same from time to
time may be amended, supplemented or otherwise modified, including, without
limitation, (a) all rights of such Grantor to receive moneys due and to become
due to it thereunder or in connection therewith, (b) all rights of such Grantor
to damages arising thereunder and (c) all rights of such Grantor to perform and
to exercise all remedies thereunder; provided, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any Receivable or any money or
other amounts due or to become due under any such Payment Intangible, contract,
agreement, instrument or indenture.

Guarantor Obligations means, collectively, with respect to each Guarantor, all
Obligations of such Guarantor.

Guarantors means the collective reference to each Grantor other than the
Companies, if any.

Identified Claims means the Commercial Tort Claims described on Schedule 7 as
such schedule shall be supplemented from time to time.

Intellectual Property means the collective reference to all rights, priorities
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including the Copyrights,
the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the
Trademark Licenses, and all rights to sue at law or in equity for any
infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.

 

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Intercompany Note means any promissory note evidencing loans made by any Grantor
to any other Grantor.

Investment Property means the collective reference to (a) all “investment
property” as such term is defined in Section 9-102(a)(49) of the UCC (other than
the equity interest of any foreign Subsidiary excluded from the definition of
Pledged Equity), (b) all “financial assets” as such term is defined in Section
8-102(a)(9) of the UCC, and (c) whether or not constituting “investment
property” as so defined, all Pledged Notes and all Pledged Equity.

Issuers means the collective reference to each issuer of any Investment
Property.

Paid in Full means (a) the payment in full in cash and performance of all
Secured Obligations, (b) the termination of all Commitments and (c) either
(i) the expiration (so long as not giving rise to a right to), cancellation and
return to the Administrative Agent of all Letters of Credit or (ii) the cash
collateralization of all Letters of Credit in accordance with the Credit
Agreement.

Patents means (a) all letters patent of the United States, any other country or
any political subdivision thereof, all reissues and extensions thereof,
including any of the foregoing referred to in Schedule 5, (b) all applications
for letters patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including any of the foregoing
referred to in Schedule 5, and (c) all rights to obtain any reissues or
extensions of the foregoing.

Patent Licenses means all agreements, whether written or oral, providing for the
grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including any of the
foregoing referred to in Schedule 5.

Pledged Equity means the equity interests listed on Schedule 1, together with
any other equity interests, certificates, options or rights of any nature
whatsoever in respect of the equity interests of any Person that may be issued
or granted to, or held by, any Grantor while this Agreement is in effect.

Pledged Notes means all promissory notes listed on Schedule 1, all Intercompany
Notes at any time issued to any Grantor and all other promissory notes issued to
or held by any Grantor (other than promissory notes issued in connection with
extensions of trade credit by any Grantor in the ordinary course of business.

Proceeds means all “proceeds” as such term is defined in Section 9-102(a)(64) of
the 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.

Receivable means any right to payment for goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper and whether or not it has been earned by performance (including any
Accounts).

Secured Obligations means, collectively, the Company Obligations and Guarantor
Obligations.

 

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Securities Act means the Securities Act of 1933, as amended.

Trademarks means (a) all trademarks, trade names, corporate names, the company
names, business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related thereto,
including any of the foregoing referred to in Schedule 5, and (b) the right to
obtain all renewals thereof.

Trademark Licenses means, collectively, each agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark,
including any of the foregoing referred to in Schedule 5.

UCC means the Uniform Commercial Code as in effect on the date hereof and from
time to time in the State of Illinois, provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interests in any Collateral or the availability of any remedy
hereunder is governed by the Uniform Commercial Code as in effect on or after
the date hereof in any other jurisdiction, “UCC” means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non-perfection or
availability of such remedy.

SECTION 2 GUARANTY.

2.1          Guaranty. (a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, as a primary obligor and not only a surety,
guaranties to the Administrative Agent, for the ratable benefit of the Lenders
and their respective successors, indorsees, transferees and assigns, the prompt
and complete payment and performance by the Company when due (whether at the
stated maturity, by acceleration or otherwise) of the Company Obligations.

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

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

(d)          Subject to reinstatement pursuant to Section 8.19, the guaranty
contained in this Section 2 shall remain in full force and effect until all of
the Secured Obligations shall have been Paid in Full.

 

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(e)          No payment made by any of the Companies, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from any of the Companies, 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 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 Secured Obligations are Paid in
Full, subject to reinstatement pursuant Section 8.19.

2.2          Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor’s right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full
amount guarantied by such Guarantor hereunder.

2.3          No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Company or any other Guarantor or any collateral security or
guaranty or right of offset held by the Administrative Agent or any Lender for
the payment of the Secured Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Companies or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all of the Secured Obligations are Paid in Full, no Letter of Credit shall be
outstanding and the Commitments are terminated. If any amount shall be paid to
any Guarantor on account of such subrogation rights at any time when all of the
Secured Obligations shall not have been Paid in Full, such amount shall be held
by such Guarantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Administrative Agent in the exact form
received by such Guarantor (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Secured
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.

2.4          Amendments, etc. with respect to the Secured Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Secured
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Secured Obligations
continued, and the Secured Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guaranty therefor or
right of offset with respect

 

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thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Administrative Agent or any Lender, 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 the Lenders,
as the case may be) may deem advisable from time to time. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Secured Obligations or for the guaranty contained in this Section 2 or any
property subject thereto.

The Administrative Agent or any Lender may, from time to time, at its sole
discretion and without notice to any Guarantor (or any of them), take any or all
of the following actions without affecting any of the Secured Obligations:
(a) retain or obtain a security interest in any property to secure any of the
Secured Obligations or any obligation hereunder, (b) retain or obtain the
primary or secondary obligation of any obligor or obligors, in addition to the
Grantors, with respect to any of the Secured Obligations, (c) extend or renew
any of the Secured Obligations for one or more periods (whether or not longer
than the original period), alter or exchange any of the Secured Obligations, or
release or compromise any obligation of any of the Grantors hereunder or any
obligation of any nature of any other obligor with respect to any of the Secured
Obligations, (d) release any guaranty or right of offset or its security
interest in, or surrender, release or permit any substitution or exchange for,
all or any part of any property securing any of the Secured Obligations or any
obligation hereunder, fail to perfect or keep perfected or impair any such
security interest, or extend or renew for one or more periods (whether or not
longer than the original period) or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any such property, and
(e) resort to the Grantor (or any of them) for payment of any of the Secured
Obligations when due, whether or not the Administrative Agent or such Lender
shall have resorted to any property securing any of the Secured Obligations or
any obligation hereunder or shall have proceeded against any other of the
Grantor or any other obligor primarily or secondarily obligated with respect to
any of the Secured Obligations.

2.5          Waivers. Each Guarantor waives 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 the Administrative Agent or any Lender upon the guaranty
contained in this Section 2 or acceptance of the guaranty 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 guaranty contained in this Section 2,
and all dealings between any of the Companies and any of the Guarantors, on the
one hand, and the Administrative Agent and the Lenders, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon the guaranty contained in this Section 2. Each Guarantor waives
(a) diligence, presentment, protest, demand for payment and notice of default,
dishonor or nonpayment and all other notices whatsoever to or upon the any of
the Companies or any of the Guarantors with respect to the Secured Obligations,
(b) notice of the existence or creation or non-payment of all or any of the
Secured Obligations and (c) all diligence in collection or protection of or
realization upon any Secured Obligations or any security for or guaranty of any
Secured Obligations.

 

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

 

SECTION 3 GRANT OF SECURITY INTEREST.

3.1          Grant. Each Grantor hereby assigns and transfers to the
Administrative Agent, and hereby grants to the Administrative Agent, in each
case, for the ratable benefit of the Lenders and (to the extent provided herein)
their Affiliates, a continuing security interest in all of its Collateral, as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the Company
Obligations or the Guarantor Obligations, as the case may be. Notwithstanding
the foregoing, the Collateral shall not include: any Intellectual Property to
the extent (and only to the extent) the granting of a security interest pursuant
to this Agreement would render such Intellectual Property unenforceable or is
prohibited by, or would result in a breach of the terms of, or constitute a
default thereunder; provided that the foregoing exclusion shall not apply if:
(A) such prohibition has been waived or a security interest with respect thereto
has been consented to by the other party thereto or (B) such prohibition would
be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of
Article 9 of the UCC, as applicable and as then in effect in any relevant
jurisdiction, or pursuant to any other applicable law or principles of equity;
provided, further, immediately upon the ineffectiveness, lapse or termination of
any such provision, Grantors shall be deemed to have granted a security interest
in, all of their right, title and interest in and to such personal property and
fixtures of Grantors as if such provisions had never been in effect; and
provided, further, the foregoing exclusion shall in no way be construed so as to
limit, impair or otherwise affect the Agent’s unconditional, continuing security
interest in and to all rights, title and interests of Grantors in or to any
payment obligations or other rights to receive monies due or to become due under
any such personal property and fixtures. Grantors hereby represent and warrant
to the Agent that the property excluded from the Collateral pursuant to any of
the provisions of this paragraph is not material to the business, operations or
financial condition of Grantors or their Subsidiaries, taken as a whole. Upon
the Administrative Agent’s request therefor, each Grantor shall provide the
Administrative Agent with a schedule of the Intellectual Property that contain
any such restrictions of the type set forth in this paragraph. Each Grantor
shall give written notice to the Administrative Agent prior to entering into any
material license, contract, agreement, Intellectual Property or General
Intangible containing any such restriction on the grant of a security interest
therein. At Administrative Agent’s request, each Grantor hereby covenants to use
its commercially reasonable efforts to obtain any such consents or approvals to
the grant of a security interest therein.

 

SECTION 4 REPRESENTATIONS AND WARRANTIES.

To induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Companies thereunder, each Grantor jointly and severally hereby
represents and warrants to the Administrative Agent and each Lender that:

4.1          Title; No Other Liens. Each Grantor has good and marketable title
to, or a valid leasehold interest in each item of Collateral, in each case, free
and clear of any and all

 

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Liens other than Permitted Liens. No financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in any
public office, except filings evidencing Permitted Liens and filings for which
termination statements have been delivered to the Administrative Agent.

4.2          Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 2 (which, in the case of all filings and other documents
referred to on Schedule 2, have been delivered to the Administrative Agent in
completed and duly executed form, as applicable) will constitute valid perfected
security interests in all of the Collateral in favor of the Administrative
Agent, for the ratable benefit of the Lenders, as collateral security for each
Grantor’s Secured Obligations, enforceable in accordance with the terms hereof
against all creditors of each Grantor and any Persons purporting to purchase any
Collateral from each Grantor and (b) are prior to all other Liens on the
Collateral in existence on the date hereof except for Permitted Liens for which
priority is accorded under applicable law. The filings and other actions
specified on Schedule 2 constitute all of the filings and other actions
necessary to perfect all security interests granted hereunder.

4.3          Grantor Information. On the date hereof, Schedule 3 sets forth
(a) each Grantor’s jurisdiction of organization, (b) the location of each
Grantor’s chief executive office, (c) each Grantor’s exact legal name as it
appears on its organizational documents and (d) each Grantor’s organizational
identification number (to the extent a Grantor is organized in a jurisdiction
which assigns such numbers) and federal employer identification number.

4.4          Collateral Locations. On the date hereof, Schedule 4 sets forth
(a) each place of business of each Grantor (including its chief executive
office), (b) all locations where all Inventory and the Equipment owned by each
Grantor is kept, and (c) whether each such Collateral location and place of
business (including each Grantor’s chief executive office) is owned or leased
(and if leased, specifies the complete name and notice address of each lessor).
No Collateral is located outside the United States or in the possession of any
lessor, bailee, warehouseman or consignee, except as indicated on Schedule 4.

4.5          Certain Property. None of the Collateral constitutes, or is the
Proceeds of, (a) Farm Products, (b) Health Care Insurance Receivables or (c)
vessels, aircraft or any other property subject to any certificate of title or
other registration statute of the United States, any State or other
jurisdiction, except for personal vehicles owned by the Grantors and used by
employees of the Grantors in the ordinary course of business.

4.6          Investment Property. (a) The Pledged Equity pledged by each Grantor
hereunder constitutes all the issued and outstanding equity interests of each
Issuer owned by such Grantor.

(b)          To the extent applicable, all of the Pledged Equity has been duly
and validly issued and is fully paid and nonassessable.

(c)          Each of the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms (subject to

 

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the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing). No
obligor with respect to any Pledged Note has any defense, offset or counterclaim
with respect to payment of such Pledged Note.

(d)          Schedule 1 lists all Investment Property owned by each Grantor.
Each 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 Permitted
Liens.

4.7          Receivables. (a) No material amount payable to such Grantor under
or in connection with any Receivable is evidenced by any Instrument or Chattel
Paper which has not been delivered (and appropriately indorsed to) the
Administrative Agent.

 

(b)

No obligor on any Eligible Receivable is a governmental authority.

(c)          The amounts represented by such Grantor to the Lenders from time to
time as owing to such Grantor in respect of the Receivables (to the extent such
representations are required by any of the Loan Documents) will at all such
times be accurate.

4.8          Intellectual Property. (a) Schedule 5 lists all Copyrights, Patent
and Trademark registrations and applications and all material unregistered
Copyrights, Copyright Licenses, Patent Licenses, Trademarks and Trademark
Licenses owned by such Grantor in its own name on the date hereof.

(b)          On the date hereof, all material Intellectual Property owned by any
Guarantor is valid, subsisting, unexpired and enforceable and has not been
abandoned.

(c)          Except as set forth in Schedule 5, 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.

(d)          Each Grantor owns and possesses or has a license or other right to
use all Intellectual Property as is necessary for the conduct of the businesses
of such Grantor, without any infringement upon rights of others which could
reasonably be expected to have a Material Adverse Effect.

4.9          Depositary and Other Accounts. All depositary and other accounts
maintained by each Grantor are described on Schedule 6 hereto, which description
includes for each such account the name of the Grantor maintaining such account,
the name, address, telephone and fax numbers of the financial institution at
which such account is maintained, the account number and the account officer, if
any, of such account.

 

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SECTION 5 COVENANTS.

Each Grantor covenants and agrees with the Administrative Agent and the Lenders
that, from and after the date of this Agreement until the Secured Obligations
shall have been Paid in Full:

5.1          Delivery of Instruments, Certificated Securities and Chattel Paper.
If any amount payable under or in connection with any of the Collateral shall be
or become evidenced by any Instrument, Certificated Security or Chattel Paper,
such Instrument, Certificated Security or Chattel Paper shall be promptly
delivered to the Administrative Agent, duly indorsed in a manner reasonably to
the Administrative Agent, to be held as Collateral pursuant to this Agreement.

5.2          Maintenance of Perfected Security Interest; Further Documentation.
(a)Such Grantor shall maintain the security interest created by this Agreement
as a perfected security interest having at least the priority described in
Section 4.2 and shall defend such security interest against the claims and
demands of all Persons whomsoever.

(b)          Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time (but in any event no more than two times per year
unless an Event of Default shall have occurred and is continuing) statements and
schedules further identifying and describing the assets and property of such
Grantor and such other reports in connection therewith as the Administrative
Agent may reasonably request, all in reasonable detail.

(c)          At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded or filed, as
applicable, 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) filing any financing or continuation statements
under the UCC (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 and any other relevant Collateral, taking any actions necessary to
enable the Administrative Agent to obtain “control” (within the meaning of the
applicable UCC) with respect thereto.

5.3          Changes in Locations, Name, etc. Such Grantor shall not, except
upon 30 days’ prior written notice to the Administrative Agent and delivery to
the Administrative Agent of (a) all additional financing statements, landlord
waivers and other documents reasonably requested by the Administrative Agent as
to the validity, perfection and priority of the security interests provided for
herein and (b) if applicable, a written supplement to Schedule 4 showing any
additional location at which Inventory or Equipment shall be kept:

(i)           change its jurisdiction of organization or the location of its
chief executive office from that specified on Schedule 3 or in any subsequent
notice delivered pursuant to this Section 5.3; or

(ii)          change its name, organizational identification number or
organizational type.

 

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5.4          Notices. Such Grantor will advise the Administrative Agent and the
Lenders promptly, in reasonable detail, of:

(a)          any Lien (other than Permitted Liens) on any of the Collateral
which would adversely affect the ability of the Administrative Agent to exercise
any of its remedies hereunder; and

(b)          the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the Liens created hereby.

5.5          Investment Property. (a) If such Grantor shall become entitled to
receive or shall receive any certificate, option or rights in respect of the
equity interests of any Issuer, whether in addition to, in substitution for, as
a conversion of, or in exchange for, any of the Pledged Equity, or otherwise in
respect thereof, such Grantor shall accept the same as the agent of the
Administrative Agent and the Lenders, hold the same in trust for the
Administrative Agent and the Lenders and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated instrument of
transfer covering such certificate duly executed in blank by such Grantor to be
held by the Administrative Agent, subject to the terms hereof, as additional
Collateral for the Secured Obligations. Upon the occurrence and during the
continuance of an Event of Default, (i) any sums paid upon or in respect of the
Investment Property upon the liquidation or dissolution of any Issuer shall be
paid over to the Administrative Agent to be held by it hereunder as additional
Collateral for the Secured Obligations, and (ii) in case any distribution of
capital shall be made on or in respect of the Investment Property or any
property shall be distributed upon or with respect to the Investment Property
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected Lien in favor of the
Administrative Agent, for the ratable benefit of the Lenders, be delivered to
the Administrative Agent to be held by it hereunder as additional Collateral for
the Secured Obligations. Upon the occurrence and during the continuance of an
Event of Default, if any sums of money or property so paid or distributed in
respect of the Investment Property shall be received by such Grantor, such
Grantor shall, until such money or property is paid or delivered to the
Administrative Agent, hold such money or property in trust for the Lenders,
segregated from other funds of such Grantor, as additional Collateral for the
Secured Obligations.

(b)          Without the prior written consent of the Administrative Agent, such
Grantor will not (i) vote to enable, or take any other action to permit, any
Issuer to issue any equity interests of any nature or to issue any other
securities or interests convertible into or granting the right to purchase or
exchange for any equity interests of any nature of any Issuer, except, in each
case, as permitted by the Credit Agreement, (ii) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Investment Property or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Credit Agreement) other than, with respect to
Investment Property not constituting Pledged Equity or Pledged Notes, any such
action which is not prohibited 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 Permitted Liens, or (iv) enter into

 

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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, except, with respect to such Investment Property,
shareholders’ agreements entered into by such Grantor with respect to Persons in
which such Grantor maintains an ownership interest of 50% or less in accordance
with the Credit Agreement.

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

5.6          Receivables. (a) Other than in the ordinary course of business
consistent with its past practice and in amounts which are not material to such
Grantor, or at any time during the occurrence and continuance of an Event of
Default, such Grantor will not (i) grant any extension of the time of payment of
any Receivable, (ii) compromise or settle any Receivable for less than the full
amount thereof, (iii) release, wholly or partially, any Person liable for the
payment of any Receivable, (iv) allow any credit or discount whatsoever on any
Receivable or (v) amend, supplement or modify any Receivable in any manner that
could adversely affect the value thereof.

(b)          Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Receivables for all Grantors.

5.7          Intellectual Property. (a) Such Grantor (either itself or through
licensees) will (i) continue to use each Trademark material to its business in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of products
and services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable law, and (iv) not (and not permit any licensee or sublicensee thereof
to) do any act or knowingly omit to do any act whereby such Trademark may become
invalidated or impaired in any way.

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

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

 

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

(e)          Such Grantor will notify the Administrative Agent and the Lenders
within 15 days if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any court or tribunal in any country)
regarding, such Grantor’s ownership of, or the validity of, any material
Intellectual Property or such Grantor’s right to register the same or to own and
maintain the same.

(f)           Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent concurrently with the next delivery of
financial statements of the Company pursuant to Section 10.1 of the Credit
Agreement. Upon the request of the Administrative Agent, such Grantor shall
execute and deliver, and have recorded, any and all agreements, instruments,
documents, and papers as the Administrative Agent may request to evidence the
Administrative Agent’s and the Lenders’ security interest in any Copyright,
Patent or Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby.

(g)          Except as noted in Schedule 5 of this Agreement, such Grantor will
take all reasonable and necessary steps to maintain and pursue each application
(and to obtain the relevant registration) and to maintain each registration of
all material Intellectual Property owned by it.

(h)          In the event that any material Intellectual Property is infringed
upon or misappropriated or diluted by a third party, such Grantor shall (i) take
such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and, to the extent, in its
reasonable judgment, such Grantor determines it appropriate under the
circumstances, sue for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.

 

5.8

Intentionally omitted.

5.9          Depositary and Other Deposit Accounts. Each Grantor shall maintain
all of its principal deposit accounts with the Administrative Agent. No Grantor
shall open any depositary or other deposit accounts unless such Grantor shall
have given the Administrative Agent 10 days’ prior written notice of its
intention to open any such new deposit accounts. The Grantors shall deliver to
the Administrative Agent a revised version of Schedule 6 showing any changes
thereto within 30 days of any such change. Each Grantor hereby authorizes the
financial

 

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institutions at which such Grantor maintains a deposit account to provide the
Administrative Agent with such information with respect to such deposit account
as the Administrative Agent may from time to time reasonably request, and each
Grantor hereby consents to such information being provided to the Administrative
Agent. Subject to the terms of the Credit Agreement, each Grantor will, upon the
Administrative Agent’s request, cause each financial institution at which such
Grantor maintains a depositary or other deposit account to enter into a bank
agency or other similar agreement with the Administrative Agent and such
Grantor, in form and substance reasonably to the Administrative Agent, in order
to give the Administrative Agent “control” (as defined in the UCC) of such
account.

 

5.10

Other Matters.

(a)          Each of the Grantors shall cause to be delivered to the
Administrative Agent a Collateral Access Agreement with respect to (a) each
bailee with which such Grantor keeps Inventory or other assets as of the Closing
Date and (b) each landlord which leases real property (and the accompanying
facilities) to any of the Grantors as of the Closing Date. If any Grantor shall
cause to be delivered Inventory or other property to any bailee after the
Closing Date, such Grantor shall use reasonable efforts to cause such bailee to
sign a Collateral Access Agreement. Such requirement may be waived at the option
of the Administrative Agent. If any Grantor shall lease any real property or
facilities after the Closing Date, such Grantor shall use reasonable efforts to
cause the landlord in respect of such leased property or facilities to sign a
Collateral Access Agreement. Such requirement may be waived at the option of the
Administrative Agent.

(b)          Each Grantor authorizes the Administrative Agent to, at any time
and from time to time, file financing statements, continuation statements, and
amendments thereto that describe the Collateral as “all assets” of each Grantor,
or words of similar effect, and which contain any other information required
pursuant to the UCC for the sufficiency of filing office acceptance of any
financing statement, continuation statement, or amendment, and each Grantor
agrees to furnish any such information to the Administrative Agent promptly upon
request. Any such financing statement, continuation statement, or amendment may
be filed at any time in any jurisdiction as the Administrative Agent may
reasonably deem necessary or desirable.

(c)          Each Grantor shall, at any time and from time and to time, take
such steps as the Administrative Agent may reasonably request for the
Administrative Agent (i) to obtain an acknowledgement, in form and substance
reasonably satisfactory to the Administrative Agent, of any bailee having
possession of any of the Collateral, stating that such bailee holds such
Collateral for the Administrative Agent, (ii) to obtain “control” of any
letter-of-credit rights, or electronic chattel paper (as such terms are defined
by the UCC with corresponding provisions thereof defining what constitutes
“control” for such item of Collateral), with any agreements establishing control
to be in form and substance reasonably satisfactory to the Administrative Agent,
and (iii) otherwise to insure the continued perfection and priority of the
Administrative Agent’s security interest in any of the Collateral and of the
preservation of its rights therein. If any Grantor shall at any time, acquire a
“commercial tort claim” (as such term is defined in the UCC), such Grantor shall
promptly notify the Administrative Agent thereof in writing and supplement
Schedule 7, therein providing a reasonable description and summary thereof, and
upon delivery thereof to the Administrative Agent, such Grantor shall be deemed
to thereby

 

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grant to the Administrative Agent (and such Grantor hereby grants to the
Administrative Agent, in each case, for the ratable benefit of the Lenders) a
security interest and lien in and to such commercial tort claim and all proceeds
thereof, all upon the terms of and governed by this Agreement.

(d)          Without limiting the generality of the foregoing, if any Grantor at
any time holds or acquires an interest in any electronic chattel paper or any
“transferable record”, as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in §16 of the
Uniform Electronic Transactions Act as in effect in any relevant jurisdiction,
such Grantor shall promptly notify the Administrative Agent thereof and, at the
request of the Administrative Agent, shall take such action as the
Administrative Agent may reasonably request to vest in the Administrative Agent
“control” under Section 9-105 of the UCC of such electronic chattel paper or
control under Section 201 of the federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, §16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable
record. The Administrative Agent agrees with the Grantors that the
Administrative Agent will arrange, pursuant to procedures reasonably
satisfactory to the Administrative Agent and so long as such procedures will not
result in the Administrative Agent’s loss of control, for the Grantors to make
alterations to the electronic chattel paper or transferable record permitted
under Section 9-105 of the UCC or, as the case may be, Section 201 of the
federal Electronic Signatures in Global and National Commerce Act or §16 of the
Uniform Electronic Transactions Act for a party in control to make without loss
of control, unless an Event of Default has occurred and is continuing or would
occur after taking into account any action by any Grantor with respect to such
electronic chattel paper or transferable record.

SECTION 6 REMEDIAL PROVISIONS.

6.1          Certain Matters Relating to Receivables. (a) At any time and from
time to time, the Administrative Agent in such Grantor’s name or, following the
occurrence and during the continuance of an Event of Default, in its own name or
in the name of others, shall have the right to make test verifications of the
existence, amount and terms of any Receivables or otherwise communicate with the
Account Debtors in any manner and through any medium that it reasonably
considers advisable, and each Grantor shall furnish all such assistance and
information as the Administrative Agent may require in connection with such test
verifications and other communications. At any time and from time to time during
the existence of a Borrowing Base Reporting Period or following the occurrence
and during the continuance of an Event of Default upon the Administrative
Agent’s request and at the expense of the relevant Grantor, such Grantor shall
cause independent public accountants or others reasonably satisfactory to the
Administrative Agent to furnish to the Administrative Agent reports showing
reconciliations, agings and test verifications of, and trial balances for, the
Receivables.

(b)          The Administrative Agent hereby authorizes each Grantor to collect
such Grantor’s Receivables, and the Administrative Agent may curtail or
terminate such authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time during the occurrence and continuance of an Event of Default, any
payments of Receivables, when collected by any Grantor, (i) shall be forthwith
(and, in any event, within 2 Business Days) deposited by such Grantor in the
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received, duly indorsed by such Grantor to the Administrative Agent if required,
in a collateral account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Lenders only as provided in Section 6.5, and (ii) until so turned
over, shall be held by such Grantor in trust for the Administrative Agent and
the Lenders, segregated from other funds of such Grantor. Each such deposit of
Proceeds of Receivables shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the deposit.

(c)          At any time and from time to time during the occurrence and
continuance of an Event of Default, at the Administrative Agent’s request, each
Grantor shall deliver to the Administrative Agent all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Receivables, including all original orders, invoices and
shipping receipts.

 

6.2

Communications with Obligors; Grantors Remain Liable.

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

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

(c)          For the purpose of enabling the Administrative Agent to exercise
rights and remedies under this Agreement, each Grantor hereby grants to the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, an irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to such Grantor) to, at any time after the
occurrence and during the continuance of an Event of Default, use, license or
sublicense any Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof.

 

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6.3          Investment Property. (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 and distributions paid in respect of the Pledged
Equity and all payments made in respect of the Pledged Notes, to the extent
permitted in the Credit Agreement, and to exercise all voting and other rights
with respect to the Investment Property; provided, that no vote shall be cast or
other right exercised or action taken which could reasonably be expected to
impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, this Agreement or any other
Loan Document.

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

(c)          Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying and (ii) unless otherwise expressly
permitted hereby, pay any dividends, distributions or other payments with
respect to the Investment Property 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 Lenders specified in Section 6.1
with respect to payments of Receivables, if an Event of Default shall occur and
be continuing, all Proceeds received by any Grantor consisting of cash, checks
and other cash equivalent items shall be held by such Grantor in trust for the
Administrative Agent and the Lenders, segregated from other

 

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funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Administrative Agent in the exact form received by such
Grantor (duly indorsed by such Grantor to the Administrative Agent, if
required). All Proceeds received by the Administrative Agent hereunder shall be
held by the Administrative Agent in a collateral account maintained under its
sole dominion and control. All Proceeds, while held by the Administrative Agent
in any collateral account (or by such Grantor in trust for the Administrative
Agent and the Lenders) established pursuant hereto, shall continue to be held as
collateral security for the Secured Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.

6.5          Application of Proceeds. At such intervals as may be agreed upon by
the Company Representative and the Administrative Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the Administrative
Agent’s election, the Administrative Agent may apply all or any part of Proceeds
from the sale of, or other realization upon, all or any part of the Collateral
in payment of the Secured Obligations in such order as the Administrative Agent
shall determine in its discretion. Any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral
security for the Secured Obligations shall be paid over from time to time by the
Administrative Agent to the applicable Grantor or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Secured Obligations shall have been Paid in Full shall be paid over to the
applicable Grantor or to whomsoever may be lawfully entitled to receive the
same. In the absence of a specific determination by the Administrative Agent,
the Proceeds from the sale of, or other realization upon, all or any part of the
Collateral in payment of the Secured Obligations shall be applied in the
following order:

FIRST, to the payment of all fees, costs, expenses and indemnities of the
Administrative Agent (in its capacity as such), including Attorney Costs, and
any other Secured Obligations owing to the Administrative Agent in respect of
sums advanced by the Administrative Agent to preserve the Collateral or to
preserve its security interest in the Collateral, until paid in full;

SECOND, to the payment of all fees, costs, expenses and indemnities of the
Lenders, pro-rata, until paid in full;

THIRD, to the payment of all of the Secured Obligations (other than Bank Product
Obligations and Hedging Obligations) consisting of accrued and unpaid interest
owing to any Lender, pro-rata, until paid in full;

FOURTH, to the payment of all Secured Obligations (other than Bank Product
Obligations and Hedging Obligations) consisting of principal owing to any
Lender, pro-rata, until paid in full;

FIFTH, to the payment of the Administrative Agent an amount equal to all Secured
Obligations in respect of outstanding Letters of Credit to be held as cash
collateral in respect of such obligations;

SIXTH, to the payment of all Bank Products Obligations and Hedging Obligations
owing to any Lender or its Affiliates, pro-rata, until paid in full;

 

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SEVENTH, to the payment of all other Secured Obligations owing to each Lender,
pro-rata, until paid in full; and

EIGHTH, to the payment of any remaining Proceeds, if any, to the applicable
Grantor or to whomever may be lawfully entitled to receive such amounts.

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

6.7          Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Equity
pursuant to Section 6.6, and if in the opinion of the Administrative Agent it is
necessary or advisable to have the Pledged Equity, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or

 

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cause to be done all such other acts as may be, in the opinion of the
Administrative Agent, necessary or advisable to register the Pledged Equity, or
that portion thereof to be sold, under the provisions of the Securities Act,
(ii) use its best efforts to cause the registration statement relating thereto
to become effective and to remain effective for a period of one year from the
date of the first public offering of the Pledged Equity, or that portion thereof
to be sold, and (iii) make all amendments thereto and/or to the related
prospectus which, in the opinion of the Administrative Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto. Each Grantor agrees to cause such Issuer to comply with the provisions
of the securities or “Blue Sky” laws of 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, 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
for the period of time necessary to permit the Issuer thereof to register such
securities or other interests for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.

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

6.8          Waiver; Deficiency. Each Grantor waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-626 of the UCC.
Each Grantor shall remain liable for any deficiency if the proceeds of any sale
or other disposition of the Collateral are insufficient to pay the Secured
Obligations in full and the fees and disbursements of any attorneys employed by
the Administrative Agent or any Lender to collect such deficiency.

 

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SECTION 7 THE ADMINISTRATIVE AGENT.

7.1          Administrative Agent’s Appointment as Attorney-in-Fact, etc. (a)
Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may 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
and at the expense of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:

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

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

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

(iv)         execute, in connection with any sale provided for in Section 6.6 or
6.7, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; 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 indorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral; (4) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (5) defend any suit, action or
proceeding brought against such Grantor with respect to any Collateral; (6)
settle, compromise or adjust any such suit, action or

 

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proceeding and, in connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate; (7) assign any Copyright, Patent or
Trademark, 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; (8) vote any right or interest with respect to any Investment
Property; (9) order good standing certificates and conduct lien searches in
respect of such jurisdictions or offices as the Administrative Agent may deem
appropriate; and (10) generally sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Administrative Agent were the absolute owner thereof
for all purposes, and do, at the Administrative Agent’s option and such
Grantor’s expense, at any time, or from time to time, all acts and things which
the Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Administrative Agent’s security interests therein and to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.

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

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

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

7.2          Duty of Administrative Agent. The Administrative Agent’s sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession 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 or any Lender nor any of their respective officers,
directors, employees or agents shall be liable for any failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent’s and the Lenders’ interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder.

7.3          Authority of Administrative Agent. Each Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative

 

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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 Lenders, 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 Lenders with full and valid authority so to act or refrain from
acting, and no Grantor shall be under any obligation, or entitlement, to make
any inquiry respecting such authority.

SECTION 8 MISCELLANEOUS.

8.1          Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 15.1 of the Credit Agreement.

8.2          Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be addressed to the Company
and effected in the manner provided for in Section 15.3 of the Credit Agreement
and each Grantor hereby appoints the Company as its agent to receive notices
hereunder.

8.3          Indemnification by Grantors. THE GRANTORS, JOINTLY AND SEVERALLY,
HEREBY AGREE TO INDEMNIFY, EXONERATE AND HOLD EACH LENDER PARTY FREE AND
HARMLESS FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES, INCURRED BY THE
LENDER PARTIES OR ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO
(A) ANY TENDER OFFER, MERGER, PURCHASE OF EQUITY INTERESTS, PURCHASE OF ASSETS
(INCLUDING THE RELATED TRANSACTIONS) OR OTHER SIMILAR TRANSACTION FINANCED OR
PROPOSED TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE
PROCEEDS OF ANY OF THE LOANS, (B) THE USE, HANDLING, RELEASE, EMISSION,
DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY GRANTOR, (C) ANY VIOLATION OF
ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR
LEASED BY ANY GRANTOR OR THE OPERATIONS CONDUCTED THEREON, (D) THE
INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY LOAN
PARTY OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR
INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE EXECUTION, DELIVERY,
PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY ANY
OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED LIABILITIES ARISING ON
ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION. IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE
UNENFORCEABLE FOR ANY REASON, EACH GRANTOR HEREBY AGREES TO MAKE THE MAXIMUM
CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED

 

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LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW. ALL OBLIGATIONS PROVIDED
FOR IN THIS SECTION 8.3 SHALL SURVIVE REPAYMENT OF ALL (AND SHALL BE) SECURED
OBLIGATIONS (AND TERMINATION OF ALL COMMITMENTS UNDER THE CREDIT AGREEMENT), ANY
FORECLOSURE UNDER, OR ANY MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF
THE COLLATERAL DOCUMENTS AND TERMINATION OF THIS AGREEMENT.

8.4          Enforcement Expenses. (a) Each Grantor agrees, on a joint and
several basis, to pay or reimburse on demand each Lender and the Administrative
Agent for all reasonable out-of-pocket costs and expenses (including Attorney
Costs) incurred in collecting against any Guarantor under the guaranty contained
in Section 2 or otherwise enforcing or preserving any rights under this
Agreement and the other Loan Documents.

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

(c)          The agreements in this Section 8.4 shall survive repayment of all
(and shall be) Secured Obligations (and termination of all commitments under the
Credit Agreement), any foreclosure under, or any modification, release or
discharge of, any or all of the Collateral Documents and termination of this
Agreement.

8.5          Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.

8.6          Nature of Remedies. All Secured Obligations of each Grantor and
rights of the Administrative Agent and the Lenders expressed herein or in any
other Loan Document shall be in addition to and not in limitation of those
provided by applicable law. No failure to exercise and no delay in exercising,
on the part of the Administrative Agent or any Lender, any right, remedy, power
or privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.

8.7          Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. Receipt
by telecopy of any executed signature page to this Agreement or any other Loan
Document shall constitute effective delivery of such signature page.

8.8          Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.

 

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8.9          Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto and supersedes all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof and any prior arrangements made with respect to the payment by any
Grantor of (or any indemnification for) any fees, costs or expenses payable to
or incurred (or to be incurred) by or on behalf of the Administrative Agent or
the Lenders.

8.10       Successors; Assigns. This Agreement shall be binding upon Grantors,
the Lenders and the Administrative Agent and their respective successors and
assigns, and shall inure to the benefit of Grantors, Lenders and the
Administrative Agent and the successors and assigns of the Lenders and the
Administrative Agent. No other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents. No Grantor
may assign or transfer any of its rights or Obligations under this Agreement
without the prior written consent of the Administrative Agent.

8.11       Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES.

8.12       Forum Selection; Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH GRANTOR HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

8.13       Waiver of Jury Trial. EACH GRANTOR, THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN

 

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CONNECTION HEREWITH AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.

8.14       Set-off. Each Grantor agrees that the Administrative Agent and each
Lender have all rights of set-off and bankers’ lien provided by applicable law,
and in addition thereto, each Grantor agrees that at any time any Event of
Default exists, the Administrative Agent and each Lender may apply to the
payment of any Secured Obligations, whether or not then due, any and all
balances, credits, deposits, accounts or moneys of such Grantor then or
thereafter with the Administrative Agent or such Lender.

 

8.15

Acknowledgements. Each Grantor hereby acknowledges that:

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

(b)          neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Grantors, on the one hand, and the Administrative Agent and the Lenders, 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
Lenders or among the Grantors and the Lenders.

8.16       Additional Grantors. Each Loan Party that is required to become a
party to this Agreement pursuant to Section 10.9 of the Credit Agreement shall
become a Grantor for all purposes of this Agreement upon execution and delivery
by such Loan Party of a joinder agreement in the form of Annex I hereto.

8.17       Releases. (a) At such time as the Secured Obligations have been Paid
in Full, the Collateral shall be released from the Liens created hereby, and
this Agreement and all obligations (other than those expressly stated to survive
such termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Administrative Agent shall promptly deliver to the Grantors any Collateral held
by the Administrative Agent hereunder, and execute and deliver to the Grantors
such documents as the Grantors shall reasonably request to evidence such
termination.

(b)          If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall promptly execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral. At the request and sole expense of the Companies, a
Guarantor shall be released from its obligations hereunder in the event that all
the equity interests of such Guarantor shall be sold, transferred or otherwise
disposed of in a transaction permitted by the Credit Agreement; provided that
the Company Representative shall have delivered to the

 

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Administrative Agent, with reasonable notice prior to the date of the proposed
release, a written request for release identifying the relevant Guarantor and
the terms of the sale or other disposition in reasonable detail, including the
price thereof and any expenses in connection therewith, together with a
certification by the Company Representative stating that such transaction is in
compliance with the Credit Agreement and the other Loan Documents.

8.18       Obligations and Liens Absolute and Unconditional. Each Grantor
understands and agrees that the obligations of each Grantor under this Agreement
shall be construed as a continuing, absolute and unconditional without regard to
(a) the validity or enforceability of any Loan Document, any of the Secured
Obligations or any other collateral security therefor or guaranty or right of
offset with respect thereto at any time or from time to time held by the
Administrative Agent or any Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by any Grantor or any other Person against the
Administrative Agent or any Lender, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of any Grantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of any Grantor
for the Secured Obligations, in bankruptcy or in any other instance. When making
any demand hereunder or otherwise pursuing its rights and remedies hereunder
against any Grantor, the Administrative Agent or any Lender 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 other Grantor or any other Person or
against any collateral security or guaranty for the Secured Obligations or any
right of offset with respect thereto, and any failure by the Administrative
Agent or any Lender to make any such demand, to pursue such other rights or
remedies or to collect any payments from any other Grantor or any other Person
or to realize upon any such collateral security or guaranty or to exercise any
such right of offset, or any release of any other Grantor or any other Person or
any such collateral security, guaranty or right of offset, shall not relieve any
Grantor of any obligation or liability hereunder, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of
law, of the Administrative Agent or any Lender against any Grantor. For the
purposes hereof “demand” shall include the commencement and continuance of any
legal proceedings.

8.19       Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against Grantor
or any Issuer for liquidation or reorganization, should Grantor or any Issuer
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of Grantor’s or
any Issuer’s assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a “voidable preference”, “fraudulent conveyance”, or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.

 

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8.20       Effect on Existing Agreement; No Novation. The Companies, the Lenders
and the Administrative Agent hereby agree that as of the Closing Date: (i) the
terms and provisions of Section 4 the Existing Credit Agreement and any pledge,
guaranty or security agreement executed by or on behalf of the Companies in
favor of the Administrative Agent in connection with the Existing Credit
Agreement shall be and hereby are amended, superseded and restated in their
entirety by the terms and provisions of this Agreement; (ii) the Lenders and the
Administrative Agent shall not have any obligations under Section 4 of the
Existing Credit Agreement or such pledge, guaranty or security agreements,
except to the extent that any such obligations may be restated in this Agreement
or in the other Loan Documents, and (iii) the execution and delivery of this
Agreement shall not constitute or effect, or be deemed to constitute or effect a
novation, refinancing, discharge, extinguishment or refunding of any of the
“Obligations” (as defined in the Existing Credit Agreement) or that portion of
the existing Obligations which remain outstanding under this Agreement.

 

[signature page follows]

 

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Each of the undersigned has caused this Guaranty and Collateral Agreement to be
duly executed and delivered as of the date first above written.

WESTELL TECHNOLOGIES, INC.

 

By:

 

 

Name:

 

Title:

 

WESTELL, INC.

 

By:

 

 

Name:

 

Title:

 

TELTREND LLC

 

By:

 

 

Name:

 

Title:

 

CONFERENCE PLUS, INC.

 

By:

 

 

Name:

 

Title:

 

 

 

[Signature Page to Guaranty and Collateral Agreement]

 

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LASALLE BANK NATIONAL ASSOCIATION, as Administrative Agent

 

By:                                                                    

Name:                                                                

Title:                                                                  

 

 

 

 

 

[Signature Page to Guaranty and Collateral Agreement]

 

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SCHEDULE 1

INVESTMENT PROPERTY

 

A.

PLEDGED EQUITY

Grantor (owner of Record of such Pledged Equity)

Issuer

Pledged Equity Description

Percentage of Issuer

Certificate (Indicate No.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B.

PLEDGED NOTES

Grantor (owner of Record of such Pledged Notes)

Issuer

Pledged Notes Description

 

 

 

 

 

 

 

 

 

 

C.

OTHER INVESTMENT PROPERTY

Grantor

Investment Property Description

 

 

 

 

 

 

 

 

 

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SCHEDULE 2

FILINGS AND PERFECTION

 

GRANTOR

FILING REQUIREMENT

OR OTHER ACTION

FILING OFFICE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE 3

GRANTOR INFORMATION

 

GRANTOR

(exact legal name)

STATE OF ORGANIZATION

FEDERAL EMPLOYER IDENTIFICATION NUMBER

ORG.
ID #

CHIEF EXECUTIVE OFFICE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE 4

A.    COLLATERAL LOCATIONS

 

GRANTOR

COLLATERAL

COLLATERAL

LOCATION

OR PLACE OF BUSINESS (INCLUDING CHIEF EXECUTIVE OFFICE)

OWNER/LESSOR

(IF LEASED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B.     COLLATERAL IN POSSESSION OF LESSOR,

                BAILEE, CONSIGNEE OR WAREHOUSEMAN

 

GRANTOR

COLLATERAL

LESSOR/BAILEE/CONSIGNEE/WAREHOUSEMAN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE 5

INTELLECTUAL PROPERTY

Patents and Patent Licenses

Grantor

Patent Number

Patent Application Number

Date Patent Issued

Date Patent Applied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademarks and Trademark Licenses

Grantor

Trademark Number

Trademark Application Number

Trademark Registration Number

Date of Application

Date of Registration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Copyrights

Grantor

Copyright Title

Copyright Application

Copyright Registration Number

Copyright Application Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE 6

DEPOSITARY AND OTHER DEPOSIT ACCOUNTS

 

GRANTOR

FINANCIAL INSTITUTION

ACCOUNT NUMBER

CONTACT INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE 7

COMMERCIAL TORT CLAIMS

 

 

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ANNEX I

FORM OF JOINDER TO GUARANTY AND COLLATERAL AGREEMENT

 

This JOINDER AGREEMENT (this “Agreement”) dated as of [______] is executed by
the undersigned for the benefit of LaSalle Bank National Association, as the
Administrative Agent (the “Administrative Agent”) in connection with that
certain Amended and Rested Guaranty and Collateral Agreement dated as of June
30, 2006 among WESTELL TECHNOLOGIES, INC., a Delaware corporation, WESTELL,
INC., an Illinois corporation, TELTREND, LLC., a Delaware limited liability
company and successor by merger to Teltrend, Inc., and CONFERENCE PLUS, INC., a
Delaware corporation, and each of the other Grantors party thereto and the
Administrative Agent (as amended, restated, supplemented or modified from time
to time, the “Guaranty and Collateral Agreement”). Capitalized terms not
otherwise defined herein are being used herein as defined in the Guaranty and
Collateral Agreement.

Each Person signatory hereto is required to execute this Agreement pursuant to
Section 8.16 of the Guaranty and Collateral Agreement.

In consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each signatory hereby
agrees as follows:

1.            Each such Person assumes all the obligations of a Grantor and a
Guarantor under the Guaranty and Collateral Agreement and agrees that such
person or entity is a Grantor and a Guarantor and bound as a Grantor and a
Guarantor under the terms of the Guaranty and Collateral Agreement, as if it had
been an original signatory to such agreement. In furtherance of the foregoing,
such Person hereby assigns, pledges and grants to the Administrative Agent a
security interest in all of its right, title and interest in and to the
Collateral owned thereby to secure the Secured Obligations.

 

2.           Schedules 1, 2, 3, 4, 5, 6 and 7 of the Guaranty and Collateral
Agreement are hereby amended to add the information relating to each such Person
set out on Schedules 1, 2, 3, 4, 5, 6 and 7 respectively, hereof. Each such
Person hereby makes to the Administrative Agent the representations and
warranties set forth in the Guaranty and Collateral Agreement applicable to such
Person and the applicable Collateral, except to the extent that such
representations and warranties refer to an earlier date, and confirms that such
representations and warranties are true and correct after giving effect to such
amendment to such Schedules.

3.          In furtherance of its obligations under Section 5.2 of the Guaranty
and Collateral Agreement, each such Person agrees to deliver to the
Administrative Agent an appropriately complete UCC financing statement naming
such person or entity as debtor and the Administrative Agent as secured party,
and describing its Collateral and such other documentation as the Administrative
Agent (or its successors or assigns) may require to evidence, protect and
perfect the Liens created by the Guaranty and Collateral Agreement, as modified
hereby. Each such Person acknowledges the authorizations given to the
Administrative Agent under the Section 5.10(b) of the Guaranty and Collateral
Agreement and otherwise.

 

 

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4.          Each such Person’s address for notices under the Guaranty and
Collateral Agreement shall be the address of the Company Representative set
forth in the Credit Agreement and each such Person hereby appoints the Company
Representative as its agent to receive notices hereunder.

5.            This Agreement shall be deemed to be part of, and a modification
to, the Guaranty and Collateral Agreement and shall be governed by all the terms
and provisions of the Guaranty and Collateral Agreement, with respect to the
modifications intended to be made to such agreement, which terms are
incorporated herein by reference, are ratified and confirmed and shall continue
in full force and effect as valid and binding agreements of each such person or
entity enforceable against such person or entity. Each such Person hereby waives
notice of the Administrative Agent’s acceptance of this Agreement. Each such
Person will deliver an executed original of this Agreement to the Administrative
Agent.

[add signature block for each new Grantor]