Exhibit 10.2

GUARANTEE, SECURITY AND COLLATERAL AGENCY AGREEMENT

made by

VALASSIS COMMUNICATIONS, INC.

and certain of its Subsidiaries

in favor of

BEAR STEARNS CORPORATE LENDING INC.,

as Collateral Agent

Dated as of March 2, 2007

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TABLE OF CONTENTS

 

         Page SECTION 1. DEFINED TERMS    2

1.1.

 

Definitions

   2

1.2.

 

Other Definitional Provisions

   8 SECTION 2. GUARANTEE    8

2.1.

 

Guarantee

   8

2.2.

 

Right of Contribution

   9

2.3.

 

No Subrogation

   9

2.4.

 

Amendments, etc. with respect to the Borrower Obligations

   10

2.5.

 

Guarantee Absolute and Unconditional

   10

2.6.

 

Reinstatement

   11

2.7.

 

Payments

   11

2.8.

 

Representations in the Credit Agreement

   11

2.9.

 

Covevants in the Credit Agreement

   11

SECTION 3. GRANT OF SECURITY INTEREST

   12 SECTION 4. REPRESENTATIONS AND WARRANTIES    13

4.1.

 

Title; No Other Liens

   13

4.2.

 

Perfected Liens

   14

4.3.

 

Jurisdiction of Organization; Chief Executive Office

   14

4.4.

 

Inventory and Equipment

   14

4.5.

 

Farm Products

   14

4.6.

 

Investment Property

   14

4.7.

 

Receivables

   15

4.8.

 

Contracts

   15

4.9.

 

Intellectual Property

   16

4.10.

 

[Intentionally Omitted]

   16

4.11.

 

Commercial Tort Claims

   16 SECTION 5. COVENANTS    16

5.1.

 

Delivery of Instruments, Certificated Securities and Chattel Paper

   17

5.2.

 

Maintenance of Insurance

   17

5.3.

 

[Intentionally Omitted]

   17

5.4.

 

Maintenance of Perfected Security Interest; Further Documentation

   17

5.5.

 

Changes in Locations, Name, etc

   18

5.6.

 

Notices

   18

5.7.

 

Investment Property

   18

5.8.

 

Receivables

   19

5.9.

 

Contracts

   20

5.10.

 

Intellectual Property

   20

5.11.

 

Commercial Tort Claims

   21

 

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SECTION 6. REMEDIAL PROVISIONS    22

6.1.

 

Certain Matters Relating to Receivables

   22

6.2.

 

Communications with Obligors; Grantors Remain Liable

   22

6.3.

 

Pledged Stock

   23

6.4.

 

Proceeds to be Turned Over to Collateral Agent

   24

6.5.

 

Application of Proceeds

   24

6.6.

 

Code and Other Remedies

   25

6.7.

 

Registration Rights

   26

6.8.

 

Waiver; Deficiency

   27

6.9.

 

Default Notice

   27 SECTION 7. THE COLLATERAL AGENT    27

7.1.

 

Appointment, Powers and Immunities

   27

7.2.

 

Reliance by Collateral Agent

   28

7.3.

 

Indemnification

   28

7.4.

 

Non-Reliance on Collateral Agent and Other Secured Parties

   29

7.5.

 

Failure to Act

   29

7.6.

 

Agency for Perfection

   29

7.7.

 

Resignation

   29

7.8.

 

Concerning the Collateral and the Security Agreements

   29

7.9.

 

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

   30

7.10.

 

Duty of Collateral Agent

   32

7.11.

 

Execution of Financing Statements

   32

7.12.

 

Authority of Collateral Agent

   32 SECTION 8. MISCELLANEOUS    33

8.1.

 

Amendments in Writing

   33

8.2.

 

Notices

   33

8.3.

 

No Waiver by Course of Conduct; Cumulative Remedies

   33

8.4.

 

Enforcement Expenses; Indemnification

   34

8.5.

 

Successors and Assigns

   34

8.6.

 

Set-Off

   34

8.7.

 

Counterparts

   35

8.8.

 

Severability

   35

8.9.

 

Section Headings

   35

8.10.

 

Integration

   35

8.11.

 

Governing Law

   35

8.12.

 

Submission To Jurisdiction; Waivers

   35

8.13.

 

Acknowledgements

   36

8.14.

 

Additional Grantors

   36

8.15.

 

Releases

   36

8.16.

 

Waiver of Jury Trial

   37

 

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GUARANTEE, SECURITY AND COLLATERAL AGENCY AGREEMENT, dated as of March 2, 2007
(together with all amendments, supplements or other modifications, if any, from
time to time, this “Agreement”), by each of the parties signatory hereto as
grantors (together with any other entity that may become a party hereto as a
grantor as provided herein, the “Grantors”), in favor of BEAR STEARNS CORPORATE
LENDING INC. (“Bear Stearns”), in its capacity as collateral agent acting
pursuant to this Agreement for the benefit of the Secured Parties (in such
capacity, the “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to the Credit Agreement, dated as of March 2, 2007 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Valassis Communications, Inc., a Delaware corporation (the
“Borrower”), the banks and other financial institutions or entities from time to
time parties thereto (the “Lenders”), Bear, Stearns & Co. Inc. and Banc of
America Securities LLC, as joint bookrunners and as joint lead arrangers, Banc
of America, N.A., as syndication agent, The Royal Bank of Scotland plc, JPMorgan
Chase Bank, N.A. and General Electric Capital Corporation, as co-documentation
agents, and Bear Stearns in its capacity as administrative agent acting for and
on behalf of the banks and other financial institutions or entities from time to
time parties thereto (in such capacity, the “Administrative Agent”), the Lenders
have severally agreed to make extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;

WHEREAS, the Borrower and The Bank of New York Trust Company, N.A., in its
capacity as trustee (in such capacity, the “2009 Indenture Trustee”), have
entered into that certain Indenture, dated January 12, 1999 (as amended,
supplemented or otherwise modified from time to time, the “2009 Indenture”),
pursuant to which the Borrower has issued the 6 5/8% Senior Notes due 2009 (the
“2009 Senior Notes”) to the noteholders thereunder (the “2009 Noteholders”);

WHEREAS, the Borrower and BNY Midwest Trust, in its capacity as trustee (in such
capacity, the “2033 Indenture Trustee”; together with the 2009 Indenture
Trustee, collectively, the “Trustees”), have entered into that certain
Indenture, dated May 22, 2003 (as amended, supplemented or otherwise modified
from time to time, the “2033 Indenture”; together with the 2009 Indenture,
collectively, the “Indentures”), pursuant to which the Borrower has issued the
Senior Convertible Discount Notes due 2033 (the “2033 Convertible Notes”) to the
noteholders thereunder (the “2033 Noteholders”);

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

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

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WHEREAS, the Borrower and the other Grantors are engaged in related businesses,
and each Grantor will derive substantial direct and indirect benefit from the
making of the extensions of credit under the Credit Agreement and, to the extent
applicable, from the Specified Hedge Agreements;

WHEREAS, Borrower has currently outstanding the 2009 Senior Notes issued under
the 2009 Indenture and the 2033 Convertible Notes issued under the 2033
Indenture; and

WHEREAS, it is a condition precedent, among others, to the obligation of (i) the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement and, to the extent applicable, of Qualified Counterparties to
provide financial accommodations under Specified Hedge Agreements, (ii) the 2009
Indenture Trustee to execute and deliver the 2009 Supplemental Indenture (as
hereinafter defined) on behalf of the 2009 Noteholders and (iii) the 2033
Indenture Trustee to execute and deliver the 2033 Supplemental Indenture (as
hereinafter defined) on behalf of the 2033 Noteholders, that the Grantors shall
have executed and delivered this Agreement to the Collateral Agent for the
ratable benefit of the Secured Parties.

NOW, THEREFORE, in consideration of the foregoing premises and to induce the
Agents and the Lenders to enter into the Credit Agreement and to induce the
Lenders to make their respective extensions of credit to the Borrower thereunder
and to induce Qualified Counterparties to enter into Specified Hedge Agreements,
each Grantor hereby agrees with the Collateral Agent, for the ratable benefit of
the Secured Parties, as follows:

SECTION 1. DEFINED TERMS

1.1. Definitions. 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 which are defined in the Uniform Commercial
Code in effect in the State of New York on the date hereof are used herein as so
defined: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Farm Products, General Intangibles, Goods, Instruments,
Inventory, Letter-of-Credit Rights and Supporting Obligations.

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

“2009 Supplemental Indenture”: the Second Supplemental Indenture, dated as of
March 2, 2007, between the Borrower and the 2009 Indenture Trustee.

“2033 Supplemental Indenture”: the First Supplemental Indenture, dated as of
March 2, 2007, between the Borrower and the 2033 Indenture Trustee.

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

“Borrower Credit Agreement Obligations”: the collective reference to the unpaid
principal of and interest on the Loans and Reimbursement Obligations and all
other obligations and liabilities of the Borrower and its Subsidiaries
(including, without limitation, interest accruing at the then applicable rate
provided in the Credit Agreement

 

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

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

“Borrower Noteholder Obligations”: the collective reference to all obligations
and liabilities of the Borrower (including, without limitation, interest
accruing at the then applicable rate provided in the 2009 Senior Notes and the
2033 Convertible Notes after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to the 2009 Indenture Trustee or the 2033
Indenture Trustee on behalf of the 2009 Noteholders or the 2033 Noteholders,
respectively, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the 2009 Indenture, the 2033 Indenture, the 2009
Senior Notes, the 2033 Convertible Notes, this Agreement, or any other document
made, delivered or given in connection therewith, in each case whether on
account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the 2009 Indenture Trustee or the 2033 Indenture
Trustee that are required to be paid by the Borrower pursuant to the terms of
any of the foregoing agreements).

 

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“Borrower Obligations”: the collective reference to (i) the Credit Facility
Obligations, (ii) the Borrower Noteholder Obligations and (iii) all other
obligations and liabilities of the Borrower, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this Agreement
(including, without limitation, all fees and disbursements of counsel to the
Secured Parties that are required to be paid by the Borrower pursuant to the
terms of this Agreement).

“Collateral”: as defined in Section 3.

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

“Contracts”: with respect to any Grantor any contracts or agreements of such
Grantor, including, without limitation, (i) all rights of such Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of such Grantor to damages arising thereunder and
(iii) all rights of such Grantor to perform and to exercise all remedies
thereunder.

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

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

“Credit Facility Indebtedness”: all Credit Facility Obligations owing by the
Borrower and its Subsidiaries to the Secured Credit Parties including, without
limitation, all obligations, liabilities and indebtedness of every kind, nature
and description arising under any of the Loan Documents, the Letters of Credit,
any Specified Hedge Agreement, any Cash Management Agreement, or any other
document made, delivered or given in connection herewith or therewith.

“Credit Facility Obligations”: (a) in the case of the Borrower, the collective
reference to (i) the Borrower Credit Agreement Obligations and (ii) the Borrower
Hedge Agreement Obligations, and (iii) all other obligations and liabilities of
the Borrower, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement (including, without limitation, all
fees and disbursements of counsel to the Secured Credit Parties that are
required to be paid by the Borrower pursuant to the terms of this Agreement),
and (b) in the case of each Guarantor, its Guarantor Obligations.

 

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“Default Notice”: (a) in the case of the 2009 Indenture Trustee, a written
notice from the 2009 Indenture Trustee of a declaration by the 2009 Indenture
Trustee of an Event of Default under and as defined in the 2009 Indenture, which
notice describes such Event of Default and states that such notice is a “Default
Notice”, (b) in the case of the 2033 Indenture Trustee, a written notice from
the 2033 Indenture Trustee of a declaration by the 2033 Indenture Trustee of an
Event of Default under and as defined in the 2033 Indenture, which notice
describes such Event of Default and states that such notice is a “Default
Notice” and (c) in the case of the Administrative Agent, a written notice from
the Administrative Agent of an Event of Default under and as defined in the
Credit Agreement, which notice describes such Event of Default and states that
such notice is a “Default Notice”.

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

“Event of Default”: any “Event of Default” under the Credit Agreement, any
“Event of Default” under the 2009 Indenture or any “Event of Default” under the
2033 Indenture (as such terms are defined in the Credit Agreement, the 2009
Indenture and the 2033 Indenture, respectively).

“Financing Agreements”: the collective reference to the Loan Documents, the
Indenture Documents and the Security Agreements.

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

“Foreign Subsidiary Voting Stock”: the voting Capital Stock of any Foreign
Subsidiary.

“Guarantor Obligations”: with respect to any Guarantor, all obligations and
liabilities of such Guarantor which may arise under or in connection with this
Agreement (including, without limitation, Section 2) or any other Loan Document
to which such Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Secured Credit Parties that are required to be paid by such Guarantor
pursuant to the terms of this Agreement or any other Loan Document or any
Specified Hedge Agreement).

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

“Indenture Documents”: collectively, the 2009 Indenture, the 2033 Indenture, the
Supplemental Indentures and all agreements, documents and instruments at any
time executed and/or delivered by any Grantor or any other Person to, or in
favor of the 2009 Indenture Trustee or the 2033 Indenture Trustee, as
applicable, in connection therewith or related thereto, as all of the foregoing
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated, refinanced or replaced.

 

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

“Intercompany Note”: any promissory note evidencing loans made by any Grantor to
any Group Member.

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

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

“Material Contract”: with respect to any Grantor, (i) the Acquisition
Documentation, (ii) any contract, purchase order, lease, instrument or other
written agreement to which such Grantor is a party involving aggregate
consideration payable to or by such Grantor of $2,500,000 or more and (iii) all
other contracts or agreements as to which the breach, termination, cancellation,
nonperformance or failure to renew would reasonably be expected to have a
Material Adverse Effect.

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

“Noteholders”: collectively, 2009 Noteholders and the 2033 Noteholders.

“Note Indebtedness”: all obligations, liabilities and indebtedness of every
kind, nature and description owing by the Borrower to the 2009 Noteholders and
the 2033 Noteholders arising under any of the Indenture Documents.

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

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

“Patent License”: all rights under any written agreements providing for the
grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in

 

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whole or in part by a Patent, including, without limitation, any of the
foregoing referred to in Schedule 6.

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

“Pledged Stock”: the shares of Capital Stock listed on Schedule 2(a), together
with any other shares, stock certificates, options, interests or rights of any
nature whatsoever in respect of the Capital Stock of any Person (other than each
Issuer set forth on Schedule 2(b)) that may be issued or granted to, or held by,
any Grantor while this Agreement is in effect; provided that in no event shall
more than 66% of the total outstanding Foreign Subsidiary Voting Stock of any
Foreign Subsidiary be required to be pledged hereunder.

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

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

“Required Debtholders”: at any time, the holders of more than 50% of the Total
Indebtedness.

“Secured Credit Parties”: the collective reference to the Lenders, the Agents,
the Qualified Counterparties, the Issuing Lender and the Swingline Lender; each
sometimes individually referred to herein as a “Secured Credit Party”.

“Secured Parties”: the collective reference to the Secured Credit Parties, the
2009 Noteholders, the 2033 Noteholders, the 2009 Indenture Trustee and the 2033
Indenture Trustee; each sometimes individually referred to herein as a “Secured
Party”.

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

“Security Agreements”: this Agreement and any other agreement at any time
executed and/or delivered by any Grantor to or in favor of the Collateral Agent
granting a Lien upon any Collateral of such Grantor, in each case as the same
now or may hereafter exist and may be amended, modified, supplemented, extended,
renewed, restated or replaced; each sometimes individually referred to herein as
a “Security Agreement”.

“Supplemental Indentures”: the collective reference to (i) the 2009 Supplemental
Indenture and (ii) the 2033 Supplemental Indenture; each sometimes individually
referred to herein as a “Supplemental Indenture”.

 

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“Total Indebtedness”: the collective reference to (i) the Credit Facility
Indebtedness and (ii) the Note Indebtedness.

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

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

“Unasserted Contingent Obligations”: at any time, Obligations for taxes, costs,
indemnifications, reimbursements, damages and other liabilities (excluding
(a) Obligations in respect of the principal of, and interest and premium (if
any) on, and fees and expenses relating to, any Obligation and (b) contingent
reimbursement obligations in respect of amounts that may be drawn under
outstanding letters of credit or contingent payments that may be payable upon
termination of a Specified Hedge Agreement) in respect of which no assertion of
liability (whether oral or written) and no claim or demand for payment (whether
oral or written) has been made (and, in the case of Obligations for
indemnification, no notice for indemnification has been issued by the
indemnitee) at such time.

1.2. Other Definitional Provisions

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

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

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

SECTION 2. GUARANTEE

2.1. Guarantee.

(a) Each of the Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantees to the Collateral Agent, for the ratable benefit of the
Secured Credit

 

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Parties and their respective successors, indorsees, transferees and assigns, the
prompt and complete payment and performance by the Borrower when due (whether at
the stated maturity, by acceleration or otherwise) of the Credit Facility
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 guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).

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

(d) The guarantee contained in this Section 2 shall remain in full force and
effect until all the Credit Facility Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Credit
Facility Obligations.

(e) No payment made by the Borrower, any of the Guarantors, any other guarantor
or any other Person or received or collected by any Secured Credit Party from
the Borrower, any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Credit Facility 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 Credit Facility Obligations or any payment received or
collected from such Guarantor in respect of the Credit Facility Obligations),
remain liable for the Credit Facility Obligations up to the maximum liability of
such Guarantor hereunder until the Credit Facility Obligations are paid in full,
no Letter of Credit shall be outstanding and the Commitments are terminated.

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 Secured Credit Parties, and each Guarantor shall remain
liable to the Secured Credit Parties for the full amount guaranteed 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 any Secured Credit
Party, no Guarantor shall be entitled to be subrogated to any of the rights of
any Secured Credit Party against the Borrower or any other Guarantor or any
collateral security or guarantee or right of

 

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offset held by any Secured Credit Party for the payment of the Credit Facility
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from the Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing to
the Secured Credit Parties by the Borrower on account of the Credit Facility
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 Credit Facility
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Secured Credit Parties, segregated from other funds
of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be
turned over to the Collateral Agent in the exact form received by such Guarantor
(duly indorsed by such Guarantor to the Collateral Agent, if required), to be
applied against the Credit Facility Obligations, whether matured or unmatured,
as the Collateral Agent may determine in accordance with Section 6.5.

2.4. Amendments, etc. with respect to the Credit Facility 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 Credit Facility
Obligations made by any Secured Credit Party may be rescinded by such Secured
Credit Party and any of the Credit Facility Obligations continued, and the
Credit Facility Obligations, or the liability of any other Person upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by any Secured Credit Party, and the Credit Agreement
and the other Loan Documents, any Specified Hedge Agreement and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, in accordance with
their respective terms, and any collateral security, guarantee or right of
offset at any time held by any Secured Credit Party for the payment of the
Credit Facility Obligations may be sold, exchanged, waived, surrendered or
released. No Secured Credit Party shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Credit
Facility Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.

2.5. Guarantee Absolute and Unconditional. Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Credit
Facility Obligations and notice of or proof of reliance by any Secured Credit
Party upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Credit Facility Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the Borrower and
any of the Guarantors, on the one hand, and the Secured Credit Parties, on the
other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or any of the Guarantors with
respect to the Credit Facility Obligations. Each Guarantor understands and
agrees that the guarantee contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(1) the validity or enforceability of the Credit Agreement or any other Loan
Document or any Specified Hedge Agreement, any of the Credit Facility
Obligations or

 

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any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by any Secured Credit
Party, (2) any defense, set-off or counterclaim (other than a defense of payment
or performance) which may at any time be available to or be asserted by the
Borrower or any other Person against any Secured Credit Party, or (3) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Credit Facility
Obligations, or of such Guarantor under the guarantee contained in this
Section 2, in bankruptcy or in any other instance, other than termination of
this guarantee pursuant to the terms of this Section 2. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, any Secured Credit Party may, but shall be under no obligation to,
make a similar demand on or otherwise pursue such rights and remedies as it may
have against the Borrower, any other Guarantor or any other Person or against
any collateral security or guarantee for the Credit Facility Obligations or any
right of offset with respect thereto, and any failure by any Secured Credit
Party to make any such demand, to pursue such other rights or remedies or to
collect any payments from the Borrower, any other Guarantor or any other Person
or to realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of the Borrower, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset,
shall not relieve any Guarantor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of any Secured Credit Party against any Guarantor.
For the purposes hereof “demand” shall include the commencement and continuance
of any legal proceedings.

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

2.7. Payments. Each Guarantor hereby guarantees that payments hereunder will be
paid to the Collateral Agent without set-off or counterclaim in Dollars at the
Payment Office specified in the Credit Agreement.

2.8. Representations in Credit Agreement. Each Guarantor hereby represents and
warrants to each Secured Credit Party that, in the case of such Guarantor, the
representations and warranties set forth in Section 5 of the Credit Agreement as
they relate to such Guarantor or to the Loan Documents to which such Guarantor
is a party, each of which is hereby incorporated herein by reference, are true
and correct, and the Collateral Agent and each Secured Credit Party shall be
entitled to rely on each of them as if they were fully set forth herein;
provided, that each reference in each such representation and warranty to the
Borrower’s knowledge shall, for the purposes of this Section 2.8, be deemed to
be a reference to such Guarantor’s knowledge.

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

 

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SECTION 3. GRANT OF SECURITY INTEREST

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

(a) all Accounts;

(b) all Chattel Paper;

(c) all Contracts;

(d) all Deposit Accounts;

(e) all Documents (other than title documents with respect to Vehicles);

(f) all Equipment;

(g) all General Intangibles;

(h) all Instruments;

(i) all Intellectual Property;

(j) all Inventory;

(k) all Investment Property;

(l) all Letter-of-Credit Rights;

(m) all Commercial Tort Claims with a potential value in excess of $1,000,000,
including, without limitation, those identified on Schedule 7;

(n) all Goods and other property not otherwise described above (except for any
property specifically excluded from any clause in this section above, and any
property specifically excluded from any defined term used in any clause of this
section above);

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

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

 

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provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not constitute a grant of a security
interest in any property to the extent that such grant of a security interest is
prohibited by any Requirements of Law of a Governmental Authority, requires a
consent not obtained of any Governmental Authority pursuant to such Requirement
of Law or is prohibited by, or constitutes a breach or default under or results
in the termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property, Pledged Stock or
Pledged Note, any applicable shareholder or similar agreement, except to the
extent that such Requirement of Law or the term in such contract, license,
agreement, instrument or other document or shareholder or similar agreement
providing for such prohibition, breach, default or termination or requiring such
consent is ineffective under applicable law.

3.2. Acknowledgement of Liens; Pari Passu Basis. Each Secured Party hereby
acknowledges that the Collateral Agent, acting for and on behalf of the other
Secured Parties, (a) has been granted a Lien upon the Collateral and (b) holds
the Collateral as agent under this Agreement and the other Security Agreements
for the equal and ratable benefit of the Secured Parties as provided herein.
Notwithstanding the order or time of attachment, or the order, time or manner of
perfection, or the order or time of filing or recordation of any document or
instrument, or other method of perfecting a Lien in favor of the Collateral
Agent in any Collateral, and notwithstanding any conflicting provisions, terms
or conditions of the New York UCC or any other applicable law or the Loan
Documents or the Indenture Documents or any other circumstance whatsoever, each
of the Secured Parties expressly agrees that the Lien granted to the Collateral
Agent in the Collateral shall secure the Credit Facility Obligations and the
Borrower Noteholder Obligations on a pari passu basis for the benefit of the
respective Secured Parties.

SECTION 4. REPRESENTATIONS AND WARRANTIES

Each Grantor hereby represents and warrants to each Secured Party that:

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

 

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4.2. Perfected Liens. The security interests granted pursuant to this Agreement
create a valid security interest, and upon the filing of the appropriate
financing statements in the jurisdictions listed on Schedule 4, a perfected
security interest, in all of the Collateral in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties, as collateral security for such
Grantor’s Obligations with respect to which a security interest may be perfected
by filing pursuant to the UCC, enforceable in accordance with the terms hereof
against all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor and are prior to all other Liens on the Collateral
in existence on the date hereof except for Liens permitted under the Credit
Agreement.

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

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

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

4.6. Investment Property.

(a) The shares of Pledged Stock pledged by such Grantor hereunder constitute all
the issued and outstanding shares of all classes of the Capital Stock of each
Issuer owned by such Grantor, except (i) to the extent the pledge of any Foreign
Subsidiary Voting Stock by one or more Grantors owning the Foreign Subsidiary
Voting Stock of a Foreign Subsidiary would result in more than 66% of the total
outstanding Foreign Subsidiary Voting Stock of such Foreign Subsidiary being
pledged hereunder and (ii) with respect to each Issuer set forth on Schedule
2(b), the Capital Stock of which Issuer is not required to be pledged hereunder.

(b) All the shares of the Pledged Stock have been duly and validly issued and
are fully paid and nonassessable.

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

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

 

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the Credit Agreement, and stock options granted to employees or directors of any
Grantor and the qualifying shares of any Grantor’s directors.

4.7. Receivables.

(a) No 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 to
the Collateral Agent.

(b) None of the obligors on any Receivables is a Governmental Authority.

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

4.8. Contracts.

(a) No consent of any party (other than such Grantor) to any Material Contract
is required, or purports to be required, in connection with the execution,
delivery and performance of this Agreement, except as has been obtained.

(b) Each Material Contract is in full force and effect and constitutes a valid
and legally enforceable obligation of the parties thereto, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.

(c) No consent or authorization of, filing with or other act by or in respect of
any Governmental Authority is required in connection with the execution,
delivery, performance, validity or enforceability of any of the Material
Contracts by any party thereto other than those which have been duly obtained,
made or performed, are in full force and effect and do not subject the scope of
any such Material Contract to any material adverse limitation, either specific
or general in nature.

(d) Neither such Grantor nor (to such Grantor’s knowledge) any of the other
parties to the Material Contracts is in default in the performance or observance
of any of the terms thereof in any manner that, in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

(e) The right, title and interest of such Grantor in, to and under the Material
Contracts are not subject to any defenses, offsets, counterclaims or claims
that, in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

(f) Such Grantor has delivered to the Collateral Agent or otherwise provided the
Collateral Agent with access to a complete and correct copy of each Material
Contract, including all amendments, supplements and other modifications thereto.

 

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(g) No amount payable to such Grantor under or in connection with any Material
Contract is evidenced by any Instrument or Chattel Paper which has not been
delivered to the Collateral Agent.

(h) None of the parties to any Contract is a Governmental Authority.

4.9. Intellectual Property.

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

(b) On the date hereof, all material Intellectual Property of such Grantor
described on Schedule 6 is valid, subsisting, unexpired and enforceable, and has
not been abandoned.

(c) Except as set forth in Schedule 6, on the date hereof, none of the
Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.

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

4.10. [Intentionally Omitted.]

4.11. Commercial Tort Claims.

(a) On the date hereof, except to the extent listed in Section 3.1 above, no
Grantor has rights in any Commercial Tort Claim with potential value in excess
of $1,000,000.

(b) Upon the filing of a financing statement describing in reasonable detail any
Commercial Tort Claim referred to in Section 5.11 hereof against such Grantor in
the jurisdiction specified in Schedule 3 hereto, the security interest granted
in such Commercial Tort Claim will constitute a valid perfected security
interest in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, as collateral security for such Grantor’s Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase such Collateral from Grantor,
which security interest shall be prior to all other Liens on such Collateral
except for unrecorded liens permitted by the Credit Agreement which have
priority over the Liens on such Collateral by operation of law.

SECTION 5. COVENANTS

Each Grantor covenants and agrees with the Secured Parties that, from and after
the date of this Agreement until the Obligations shall have been paid in full,
no Letter of Credit shall be outstanding and the Commitments shall have
terminated:

 

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5.1. Delivery of Instruments, Certificated Securities and Chattel Paper. If any
amount in excess of $1,000,000 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 immediately delivered to the Collateral Agent, duly indorsed in a manner
reasonably satisfactory to the Collateral Agent, to be held as Collateral
pursuant to this Agreement.

5.2. Maintenance of Insurance.

(a) Such Grantor will maintain, with financially sound and reputable companies,
insurance policies (i) insuring the Inventory and Equipment against loss by
fire, explosion, theft and such other casualties as are usually insured against
in the same general area by companies engaged in the same or a similar business
and owning similar properties, or as may otherwise be reasonably satisfactory to
the Collateral Agent and (ii) insuring such Grantor, the Collateral Agent and
the Secured Parties against liability for personal injury and property damage
relating to such Inventory and Equipment, such policies to be in such form and
amounts and having such coverage as may be usual and customary for companies in
the same general area engaged in the same or a similar business and owning
similar properties, or as may otherwise be reasonably satisfactory to the
Collateral Agent.

(b) All such insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 10 days after receipt by the Collateral Agent of written notice
thereof, (ii) name the Collateral Agent as insured party or loss payee and
(iii) if reasonably requested by the Collateral Agent, include a breach of
warranty clause.

(c) The Borrower shall deliver to the Collateral Agent a report of a reputable
insurance broker with respect to such insurance substantially concurrently with
the delivery by the Borrower to the Collateral Agent of its audited financial
statements for each fiscal year and such supplemental reports with respect
thereto as the Collateral Agent may from time to time reasonably request.

5.3. [Intentionally Omitted.]

5.4. 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 (except as otherwise permitted under the
Credit Agreement and the other Loan Documents).

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

 

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(c) At any time and from time to time, upon the written request of the
Collateral Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Collateral Agent
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (1) the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(2) in the case of Investment Property, Deposit Accounts, Letter-of-Credit
Rights and any other relevant Collateral, taking any actions necessary to enable
the Collateral Agent to obtain “control” (within the meaning of the applicable
Uniform Commercial Code) with respect thereto.

5.5. Changes in Locations, Name, etc. Such Grantor will not, except upon 15
days’ prior written notice to the Collateral Agent and delivery to the
Collateral Agent of (1) all additional executed financing statements and other
documents reasonably requested by the Collateral Agent to maintain the validity,
perfection and priority of the security interests provided for herein and (2) if
applicable, a written supplement to Schedule 5 showing any additional location
at which Inventory or Equipment shall be kept:

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

change its name, identity or corporate structure to such an extent that any
financing statement filed by the Collateral Agent in connection with this
Agreement would become misleading.

5.6. Notices. Such Grantor will advise the Collateral Agent promptly, in
reasonable detail, of:

(a) any Lien (other than security interests created hereby or Liens permitted
under the Credit Agreement) on any of the Collateral which would adversely
affect the ability of the Collateral Agent to exercise any of its remedies
hereunder; and

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

5.7. Investment Property.

(a) If such Grantor shall become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the Capital Stock of any Issuer,
whether in addition to, in substitution of, as a conversion of, or in exchange
for, any shares of the Pledged Stock, or otherwise in respect thereof, such
Grantor shall accept the same as the agent of the Secured Parties, hold the same
in trust for the Secured Parties and deliver the same forthwith to the
Collateral Agent in the exact form received, duly indorsed by such Grantor to
the Collateral Agent, if required, together with an undated stock power covering

 

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such certificate duly executed in blank by such Grantor, to be held by the
Collateral Agent, subject to the terms hereof, as additional collateral security
for the Obligations. 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
Collateral Agent to be held by it hereunder as additional collateral security
for the Obligations, and in case any distribution of capital shall be made on or
in respect of the Investment Property or any property shall be distributed upon
or with respect to the Investment Property pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the reorganization
thereof, the property so distributed shall, unless otherwise subject to a
perfected security interest in favor of the Collateral Agent, be delivered to
the Collateral Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid or
distributed in respect of the Investment Property shall be received by such
Grantor, such Grantor shall, until such money or property is paid or delivered
to the Collateral Agent, hold such money or property in trust for the Secured
Parties, segregated from other funds of such Grantor, as additional collateral
security for the Obligations.

(b) Without the prior written consent of the Collateral Agent or except as
otherwise permitted under the Credit Agreement, such Grantor will not (i) vote
to enable, or take any other action to permit, any Issuer to issue any stock or
other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of any Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Investment Property or Proceeds thereof, (iii) create, incur or permit
to exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Investment Property or Proceeds thereof, or any interest therein,
except for the security interests created by this Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of such Grantor or
the Collateral Agent to sell, assign or transfer any of the Investment Property
or Proceeds thereof.

(c) In the case of each Grantor which is an Issuer, such Issuer agrees that
(i) it will be bound by the terms of this Agreement relating to the Investment
Property issued by it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Collateral Agent promptly in writing
of the occurrence of any of the events described in Section 5.7(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 it, mutatis mutandis, with respect to all actions that
may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Investment Property issued by it.

5.8. Receivables.

(a) Grantor may make the following adjustments to any Receivable in the ordinary
course of business consistent with its past practice or otherwise pursuant to
sound business judgment: (i) grant an extension of the time of payment of a
Receivable, (ii) compromise or settle a Receivable for less than the full amount
thereof, (iii) release, wholly or partially, any Person liable for the payment
of a Receivable, or (iv) allow a credit or discount on a Receivable.

 

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(b) Such Grantor will deliver to the Collateral 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.

5.9. Contracts. Such Grantor will deliver to the Collateral Agent a copy of each
material demand, notice or document received by it relating in any way to any
Material Contract that questions the validity or enforceability of such Material
Contract.

5.10. Intellectual Property.

(a) Such Grantor (either itself or through licensees) will (i) continue to use
each material Trademark on each and every trademark class of goods applicable to
its current line as reflected in its current catalogs, brochures and price lists
in order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain the quality of products and services
offered under such Trademark at least in a manner substantially consistent with
past business practice, (iii) use such Trademark with the appropriate notice of
registration and all other notices and legends required by applicable
Requirements of Law, (iv) not adopt or use any mark which is confusingly similar
or a colorable imitation of such Trademark unless the Collateral Agent, for the
ratable benefit of the Secured Parties, shall obtain a perfected security
interest in such mark pursuant to this Agreement, and (v) 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 material Patent may become forfeited, abandoned
or dedicated to the public.

(c) Such Grantor (either itself or through licensees) (i) will employ each
material Copyright 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 the Copyrights may become invalidated or otherwise impaired.
Such Grantor will not (either itself or through licensees) do any act whereby
any material portion of the Copyrights may fall into the public domain.

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

(e) Such Grantor will notify the Collateral Agent immediately if it knows 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, without limitation, the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any court or
tribunal in any country) regarding such Grantor’s ownership of, or the validity
of, any material Intellectual Property or such Grantor’s right to register the
same or to own and maintain the same.

 

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(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 Collateral Agent within five Business Days after the last day of
the fiscal quarter in which such filing occurs. Upon request of the Collateral
Agent, such Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Collateral Agent may
reasonably request to evidence the Secured Parties’ security interest in any
Copyright, Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby.

(g) Such Grantor will take all reasonable (taking into account the economic
value thereof) and necessary steps, including, without limitation, in any
proceeding before 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, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the material Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability.

(h) In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Collateral Agent after it learns thereof and, to the extent it is reasonable
based on sound business judgment, 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.

5.11. Commercial Tort Claims. If such Grantor shall obtain an interest in any
Commercial Tort Claim with a potential value in excess of $1,000,000, such
Grantor shall within 30 days of obtaining such interest sign and deliver
documentation reasonably acceptable to the Collateral Agent granting a security
interest under the terms and provisions of this Agreement in and to such
Commercial Tort Claim. Upon the filing of a financing statement describing in
reasonable detail such Commercial Tort Claim against such Grantor in the
jurisdiction specified in Schedule 3 hereto, the security interest granted in
such Commercial Tort Claim will constitute a valid perfected security interest
in favor of the Collateral Agent, for the ratable benefit of the Secured
Parties, as collateral security for such Grantor’s Obligations, enforceable in
accordance with the terms hereof against all creditors of such Grantor and any
Persons purporting to purchase such Collateral from Grantor, which security
interest shall be prior to all other Liens on such Collateral except for
unrecorded liens permitted by the Credit Agreement which have priority over the
Liens on such Collateral by operation of law.

 

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SECTION 6. REMEDIAL PROVISIONS

6.1. Certain Matters Relating to Receivables.

(a) The Collateral Agent shall have the right, no more than one (1) time in any
12-month period but at any time or times as Collateral Agent deems reasonably
necessary after the occurrence and during the continuance of an Event of
Default, to make test verifications of the Receivables in any manner and through
any medium that it reasonably considers advisable, and each Grantor shall
furnish all such assistance and information as the Collateral Agent may require
in connection with such test verifications. No more than one (1) time in any
12-month period but more frequently as Collateral Agent may reasonably require
after the occurrence and during the continuance of an Event of Default, upon the
Collateral Agent’s request and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others satisfactory to the
Collateral Agent to furnish to the Collateral Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Receivables.

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

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

6.2. Communications with Obligors; Grantors Remain Liable.

(a) Upon the occurrence and during the continuation of an Event of Default, the
Collateral Agent in its own name or in the name of others may communicate with
obligors under the Receivables and parties to the Contracts to verify with them
to the Collateral Agent’s satisfaction the existence, amount and terms of any
Receivables or Contracts.

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

(c) Anything herein to the contrary notwithstanding, each Grantor shall remain
liable under each of the Receivables and Contracts to observe and perform all
the

 

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conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. No Secured Party
shall have any obligation or liability under any Receivable (or any agreement
giving rise thereto) or Contract by reason of or arising out of this Agreement
or the receipt by any Secured Party of any payment relating thereto, nor shall
any Secured Party be obligated in any manner to perform any of the obligations
of any Grantor under or pursuant to any Receivable (or any agreement giving rise
thereto) or Contract, to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.

6.3. Pledged Stock.

(a) Unless an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have given notice to the relevant Grantor of the
Collateral Agent’s intent to exercise its corresponding rights pursuant to
Section 6.3(b), each Grantor shall be permitted to receive all cash dividends
paid in respect of the Pledged Stock and all payments made in respect of the
Pledged Notes, in each case paid in the normal course of business of the
relevant Issuer and consistent with past practice, to the extent not prohibited
in the Credit Agreement, and to exercise all voting and corporate rights with
respect to the Investment Property; provided, however, that no vote shall be
cast or corporate or other organizational right exercised or other action taken
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 Collateral
Agent shall give notice of its intent to exercise such rights to the relevant
Grantor or Grantors, (i) the Collateral Agent shall have the right to receive
any and all cash dividends, payments or other Proceeds paid in respect of the
Investment Property and make application thereof to the Obligations in the order
set forth in Section 6.5, and (ii) the Collateral Agent or its nominee may
thereafter solely exercise (1) all voting, corporate and other rights pertaining
to such Investment Property at any meeting of shareholders of the relevant
Issuer or Issuers or otherwise and (2) 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,
without limitation, 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 structure of any
Issuer, or upon the exercise by any Grantor or the Collateral 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 Collateral Agent
may determine), all without liability except to account for property actually
received by it, but the Collateral 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

 

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received by it from the Collateral Agent in writing that (1) states that an
Event of Default has occurred and is continuing and (2) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Investment Property directly to the Collateral Agent.

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

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

First, to pay incurred and unpaid fees and expenses of the Collateral Agent
under this Agreement and any other Security Agreement;

Second, to pay pro rata (i) incurred and unpaid fees and expenses of the Agents
under the Loan Documents and (ii) incurred and unpaid fees and expenses of the
Trustees under the Indentures;

Third, to the Collateral Agent, for application by it towards payment of amounts
then due and owing and remaining unpaid in respect of the Obligations, pro rata
among the Secured Parties in proportion to the outstanding Obligations then due
and owing and remaining unpaid to the Secured Parties; and

Fourth, any balance of such Proceeds remaining after the Obligations (other than
Unasserted Contingent Obligations) shall have been paid in full, no Letters of
Credit shall be outstanding, the Commitments shall have terminated and, except
as otherwise agreed by the affected Qualified Counterparties pursuant to the
applicable Specified Hedge Agreements, any Specified Hedge Agreement shall have
been terminated, shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive the same. For

 

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purposes of this Section, to the extent that any Obligation is unmatured,
unliquidated or contingent (other than Unasserted Contingent Obligations) at the
time any distribution is to be made pursuant to clause Third above, the
Collateral Agent shall allocate a portion of the amount to be distributed
pursuant to such clause for the benefit of the Secured Parties holding such
Obligations and shall hold such amounts for the benefit of such Secured Parties
until such time as such Obligations become matured, liquidated and/or payable at
which time such amounts shall be distributed to the holders of such Obligations
to the extent necessary to pay such Obligations in full (with any excess to be
distributed in accordance with this Section as if distributed at such time). In
making determinations and allocations required by this Section, the Collateral
Agent may conclusively rely upon information provided to it by the holder of the
relevant Obligations (which, in the case of the immediately preceding sentence
shall be a reasonable estimate of the amount of the Obligations) and shall not
be required to, or be responsible for, ascertaining the existence of or amount
of any Obligations.

6.6. Code and Other Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC or any other applicable law. Without limiting the generality of
the foregoing, the Collateral 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 to the fullest extent permitted by any Requirement of Law), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of any Secured Party or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk; provided,
that the Collateral Agent reserves the right to reject any and all bids at such
sales, which, based on commercially reasonably judgment, it shall deem
inadequate. The Collateral Agent 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 Collateral Agent’s
request, to assemble the Collateral and make it available to the Collateral
Agent at places designated by the Collateral Agent that are reasonably
convenient to such Grantor and the Collateral Agent, whether at such Grantor’s
premises or elsewhere. The Collateral Agent shall apply the net proceeds of any
action taken by it pursuant to this Section 6.6, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Secured Parties hereunder, including,
without limitation, reasonable attorneys’ fees and disbursements, to the payment
in whole or in part of the Obligations, in accordance with Section 6.5, and only
after such application and after the payment by the Collateral Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-615(a)(3) of the New York UCC, need the Collateral

 

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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 any Secured Party arising out of the exercise by them of any
rights hereunder. The Collateral Agent shall give each Grantor not less than 10
days’ prior notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market. Any such notice shall (i) in the case of a public sale, state
the time and place fixed for such sale, (ii) in the case of a private sale,
state the day after which such sale may be consummated, (iii) contain the
information specified in Section 9-613 of the UCC, (iv) be authenticated and
(v) be sent to the parties required to be notified pursuant to Section 9-611(c)
of the UCC; provided that, if the Collateral Agent fails to comply with this
sentence in any respect, its liability for such failure shall be limited to the
liability (if any) imposed on it as a matter of law under the UCC. The
Collateral Agent and each Grantor agree that such notice constitutes reasonable
notification within the meaning of Section 9-611 of the UCC.

6.7. Registration Rights.

(a) If the Collateral Agent shall determine to exercise its right to sell any or
all of the Pledged Stock pursuant to Section 6.6, and if in the opinion of the
Collateral Agent it is reasonably necessary or advisable to have the Pledged
Stock, or that portion thereof to be sold, registered under the provisions of
the Securities Act, the relevant Grantor will cause the Issuer thereof to
(i) execute and deliver, and cause the directors and officers of such Issuer to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of the Collateral Agent,
reasonably necessary or advisable to register the Pledged Stock, or that portion
thereof to be sold, under the provisions of the Securities Act, (ii) use
commercially reasonable efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of one year
from the date of the first public offering of the Pledged Stock, or that portion
thereof to be sold, and (iii) make all amendments thereto and/or to the related
prospectus which, in the opinion of the Collateral Agent, are reasonably
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 Collateral 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 Collateral Agent may be unable to effect a
public sale of any or all the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Grantor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Collateral Agent shall be under no
obligation to delay a sale of any of the Pledged Stock for the period of time
necessary

 

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to permit the Issuer thereof to register such securities for public sale under
the Securities Act, or under applicable state securities laws, even if such
Issuer would agree to do so.

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

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

6.9. Default Notice.

(a) If the Collateral Agent at any time receives a Default Notice, the
Collateral Agent will promptly provide a copy of such Default Notice to each of
the Administrative Agent, the 2009 Indenture Trustee and the 2033 Indenture
Trustee. Thereafter, the Collateral Agent may (and at the written request of
Required Debtholders shall) exercise and enforce the Collateral Agent’s
interest, rights, powers and remedies in respect of the Collateral or under this
Agreement or any other Security Agreement or applicable law. Unless it has been
directed to the contrary by Required Debtholders, the Collateral Agent in any
event may (but will not be obligated to) take or refrain from taking any such
action with respect to an Event of Default as it may deem reasonably advisable
and in the best interest of the Secured Parties.

(b) The Collateral Agent will not be required to inquire as to the occurrence or
absence of any Event of Default and will not be affected by or required to act
upon any notice or knowledge as to the occurrence of any Event of Default unless
and until it receives a Default Notice.

(c) In connection with any vote of Required Debtholders under this Agreement,
the votes of each Secured Party entitled to vote thereon shall be cast in the
manner provided by the terms of the corresponding Loan Documents or Indenture
Documents, as applicable. Each Secured Party entitled to vote shall have the
number of votes equal to the aggregate outstanding principal amount of Total
Indebtedness held by such Secured Party, as applicable.

SECTION 7. THE COLLATERAL AGENT

7.1. Appointment, Powers and Immunities. Each Secured Party hereby irrevocably
designates, appoints and authorizes Bear Stearns Corporate Lending Inc. to act
as Collateral Agent hereunder and under the Security Agreements with such powers
as are specifically delegated to the Collateral Agent by the terms of this
Agreement and any Security Agreement,

 

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together with such other powers as are reasonably incidental thereto. The
Collateral Agent (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement, and shall not by reason of this Agreement
or any Security Agreement be a trustee or fiduciary for any Secured Party;
(b) shall not be responsible to the Secured Parties for any recitals,
statements, representations or warranties contained in this Agreement or in any
of the Security Agreement, or in any certificate or other document referred to
or provided for in, or received by any of them under this Agreement or any
Security Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any Security Agreement or any
other document referred to or provided for herein or therein or for any failure
by any Grantor or any other Person to perform any of its obligations hereunder
or thereunder; and (c) shall not be responsible to the Secured Parties for any
action taken or omitted to be taken by it hereunder or under any Security
Agreement or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith, except for its own
gross negligence or willful misconduct as determined by a final non-appealable
order of a court of competent jurisdiction. The Collateral Agent may employ
agents and attorneys-in-fact selected by it in good faith. Without limiting the
generality of the foregoing, the Collateral Agent may, at its option, delegate
any of its rights and powers under any Security Agreement with respect to
Collateral located outside the United States to an affiliate of the Collateral
Agent having offices outside the United States.

7.2. Reliance by Collateral Agent. The Collateral Agent shall be entitled to
rely upon any certification, notice or other communication (including any
thereof by telephone, telecopy, telex, telegram or cable) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, without inquiry or investigation and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Collateral Agent. As to any matters not expressly provided for by this
Agreement or any other Security Agreement, the Collateral Agent shall be fully
protected in acting, or in refraining from acting, hereunder or thereunder in
accordance with instructions given by the Administrative Agent, the 2009
Indenture Trustee or the 2033 Indenture Trustee, and such instructions of the
Administrative Agent, the 2009 Indenture Trustee or the 2033 Indenture Trustee,
as the case may be, and any action taken or failure to act pursuant thereto
shall be binding on all Secured Parties.

7.3. Indemnification. The Secured Credit Parties agree to indemnify the
Collateral Agent (to the extent not reimbursed by the Borrower and without
limiting the obligations of the Grantors) ratably, in accordance with their pro
rata share, for any and all claims of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Collateral Agent (including by
any Secured Credit Party) arising out of or by reason of any investigation in or
in any way relating to or arising out of this Agreement or any other Security
Agreement or any other documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby (including the
reasonable costs and expenses that the Collateral Agent is obligated to pay) or
the enforcement of any of the terms hereof or thereof or of any such other
documents; provided, that, no Secured Credit Party shall be liable for any of
the foregoing to the extent it arises from the gross negligence or willful
misconduct of the Collateral Agent as determined by a final non-appealable
judgment of a court of competent jurisdiction.

 

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7.4. Non-Reliance on Collateral Agent and other Secured Parties. Each Secured
Party agrees that it has independently and without reliance on the Collateral
Agent or any other Secured Party, and based on such documents and information as
it has deemed appropriate, made its own credit analysis of the Borrower and the
other Grantors and has made its own decision to enter into its Financing
Agreements and that it will, independently and without reliance upon the
Collateral Agent or any other Secured Party, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under its Financing
Agreements. The Collateral Agent shall not be required to keep itself informed
as to the performance or observance by any Grantor of any term or provision of
this Agreement or any other Security Agreement or any other document referred to
or provided for herein or therein or to inspect the properties or books of any
Grantor. The Collateral Agent shall not have any duty or responsibility to
provide any Secured Party with any credit or other information concerning the
affairs, financial condition or business of any Grantor that may come into the
possession of the Collateral Agent.

7.5. Failure to Act. Except for any action expressly required of the Collateral
Agent hereunder, the Collateral Agent shall in all cases be fully justified in
failing or refusing to act hereunder and under any Security Agreement unless it
shall receive further assurances to its satisfaction from the Secured Parties of
their indemnification obligations under Section 7.3 hereof against any and all
liability and reasonable expense that may be incurred by it by reason of taking
or continuing to take any such action.

7.6. Agency for Perfection. The Collateral Agent and each Secured Party hereby
appoints each other Secured Party as agent for the purpose of perfecting the
security interests in and liens upon the Collateral, which, in accordance with
the Uniform Commercial Code as from time to time in effect can be perfected only
by possession. Should any Secured Party obtain possession of any Collateral,
such Secured Party shall promptly notify the Collateral Agent thereof, and
promptly upon the Collateral Agent’s request therefore shall deliver such
Collateral to the Collateral Agent or in accordance with the Collateral Agent’s
instructions.

7.7. Resignation. Upon prior written notice to each of the Borrower, the
Administrative Agent, the 2009 Indenture Trustee and the 2033 Indenture Trustee,
the Collateral Agent may resign at any time. In the event of any such
resignation, the Collateral Agent shall have the right to appoint a successor
agent reasonably acceptable to each of the Administrative Agent, the 2009
Indenture Trustee and the 2033 Indenture Trustee (and, so long as no Event of
Default has occurred and is continuing, the Borrower whose consent shall not be
unreasonably withheld). Upon the acceptance of any appointment as agent
hereunder by a successor agent, the successor agent shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent and the retiring Collateral Agent shall have no further duties
and obligations hereunder. After any retiring Collateral Agent’s resignation
hereunder, the provisions of this Section 7 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Collateral Agent.

7.8. Concerning the Collateral and the Security Agreements.

(a) Each Secured Party ratifies and confirms the Collateral Agent entering into
this Agreement and authorizes and directs the Collateral Agent to enter into
such additional Security Agreements as the Collateral Agent may determine to
enter into from time to time. Each Secured Party agrees that any action taken by
the Collateral Agent in accordance with the

 

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terms of this Agreement or any other Security Agreements relating to the
Collateral, and the exercise by the Collateral Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Secured Parties.

(b) The Collateral Agent shall have no obligation whatsoever to any Secured
Party or any other Person to investigate, confirm or assure that the Collateral
exists or is owned by the Borrower or any Grantor or is cared for, protected or
insured or has been encumbered, or that the Liens granted to the Collateral
Agent under the Security Agreements or otherwise have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity (except as otherwise
expressly set forth in this Agreement), or to continue exercising, any of the
rights, authorities and powers granted or available to the Collateral Agent in
this Agreement or in any of the other Security Agreements, it being understood
and agreed that in respect of the Collateral, or any act, omission or event
related thereto, the Collateral Agent, subject to the express provisions of this
Agreement, may act in any manner it may deem appropriate, in its discretion, and
that the Collateral Agent shall have no duty or liability whatsoever to any
Secured Party, except for any liability to a Secured Party as a result of any
action by the Collateral Agent that is determined to constitute gross negligence
or willful misconduct pursuant to a final, non-appealable order of a court of
competent jurisdiction.

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

(a) Each Grantor hereby irrevocably constitutes and appoints the Collateral
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 Collateral Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of the
following:

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

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

 

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

(iv) execute, in connection with any sale provided for in Section 6.6 or 6.7,
any indorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral; 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 Collateral Agent or as the Collateral Agent shall direct; (2) ask or demand
for, collect, and receive payment of and receipt for, any and all moneys, claims
and other amounts due or to become due at any time in respect of or arising out
of any Collateral; (3) sign and indorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Collateral; (4) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect of
any Collateral; (5) defend any suit, action or proceeding brought against such
Grantor with respect to any Collateral; (6) settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Collateral Agent may reasonably deem appropriate;
(7) assign any Copyright, Patent or Trademark (along with the goodwill of the
business to which any such Copyright, Patent or Trademark pertains), throughout
the world for such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall in its sole discretion determine; and (8) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Collateral
Agent were the absolute owner thereof for all purposes, and do, at the
Collateral Agent’s option and such Grantor’s reasonable expense, at any time, or
from time to time, all acts and things which the Collateral Agent deems
necessary to protect, preserve or realize upon the Collateral and the Secured
Parties’ security interests therein and to effect the intent of this Agreement,
all as fully and effectively as such Grantor might do.

Anything in this Section 7.9(a) to the contrary notwithstanding, the Collateral
Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Section 7.9(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 Collateral Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.

 

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(c) The reasonable expenses of the Collateral Agent incurred in connection with
actions undertaken as provided in this Section 7.9, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Revolving Loans, Swingline Loans, Tranche B Term
Loans and Delayed Draw Term Loans that are Base Rate Loans under the Credit
Agreement, from the date of payment by the Collateral Agent to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Collateral Agent on demand.

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

7.10. Duty of Collateral Agent. The Collateral Agent’s sole duty with respect to
the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the New York UCC or otherwise, shall be to
deal with it in the same manner as the Collateral Agent deals with similar
property for its own account. No Secured Party nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Secured Parties hereunder are solely to protect the Secured
Parties’ interests in the Collateral and shall not impose any duty upon any
Secured Party to exercise any such powers. The Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.

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

7.12. Authority of Collateral Agent. Each Grantor acknowledges that the rights
and responsibilities of the Collateral Agent under this Agreement with respect
to any action taken by the Collateral Agent or the exercise or non-exercise by
the Collateral 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 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 Collateral Agent and the Grantors, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.

 

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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 11.1 of the Credit Agreement; provided that no such waiver
amendment, supplement or modification shall require the consent of any Qualified
Counterparty except as expressly provided in Section 11.1 of the Credit
Agreement.

8.2. Notices. All notices, requests and demands to or upon any Grantor hereunder
shall be effected in the manner provided for in Section 11.2 of the Credit
Agreement; provided, that any such notice, request or demand to or upon any
Guarantor shall be addressed to such Guarantor at its notice address set forth
on Schedule 1; and provided, further, that any such notices, requests and
demands to or upon the Collateral Agent, 2009 Indenture Trustee and/or the 2033
Indenture Trustee shall be addressed to such trustees at their notice addresses
set forth below:

If to Collateral Agent:

Bear Stearns Corporate Lending, Inc.

383 Madison Avenue

New York, New York 10179

Attention: Kevin Cullen

If to 2009 Indenture Trustee:

The Bank of New York Trust Company, N.A.

2 North La Salle Street, Suite 1020

Chicago, IL 60602

Attention: Corporate Trust Administration

If to 2033 Indenture Trustee:

BNY Midwest Trust Company

2 North La Salle Street, Suite 1020

Chicago, IL 60602

Attention: Corporate Trust Administration

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

 

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8.4. Enforcement Expenses; Indemnification.

(a) Each Guarantor agrees to pay, or reimburse each Secured Credit Party for,
all its reasonable out-of-pocket costs and expenses incurred in collecting
against such Guarantor under the guarantee contained in Section 2, and each
Grantor agrees to pay, or reimburse each Secured Party for all its reasonable
out-of-pocket costs and expenses incurred in connection with enforcing or
preserving any rights under this Agreement and the other Loan Documents or
Indenture Documents to which such Grantor is a party, including, without
limitation, the reasonable out-of-pocket fees and disbursements of counsel
(including the allocated reasonable fees and expenses of in house counsel) to
the Secured Parties and of counsel to the Collateral Agent.

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

(c) Each Grantor (other than the Borrower) agrees to pay, and to save the
Secured Parties harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the
Borrower would be required to do so pursuant to Section 11.5 of the Credit
Agreement, Section 7.07 of the 2033 Indenture and Section 607 of the 2009
Indenture.

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

8.5. Successors and Assigns. This Agreement shall be binding upon the successors
and assigns of each Grantor and shall inure to the benefit of the Collateral
Agent and the other Secured Parties and their successors and assigns; provided
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Collateral Agent. By accepting the benefits of the Loan Documents, each
Qualified Counterparty agrees to be bound by all of the applicable provisions
thereof. Without limiting the foregoing, no Qualified Counterparty shall be
entitled to the benefits of this Agreement unless such Qualified Counterparty
shall have executed and delivered to the Collateral Agent a written instrument
substantially in the form of Annex III hereto or in such other form as shall be
satisfactory to the Collateral Agent with respect to its obligations under the
Loan Documents and any Specified Hedge Agreement.

8.6. Set-Off. Each Grantor hereby irrevocably authorizes each Secured Credit
Party at any time and from time to time while an Event of Default pursuant to
Section 9(a) of the Credit Agreement, shall have occurred and be continuing,
without notice to such Grantor or any other Grantor, any such notice being
expressly waived by each Grantor, to set-off and appropriate and

 

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apply any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Secured Credit Party to
or for the credit or the account of such Grantor, or any part thereof in such
amounts as such Secured Credit Party may elect, against and on account of the
obligations and liabilities due and payable by such Grantor to such Secured
Credit Party hereunder and due and payable claims of every nature and
description of such Secured Credit Party against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as such Secured Credit Party may elect, whether or not any Secured
Credit Party has made any demand for payment. Each Secured Credit Party shall
notify such Grantor promptly of any such set-off and the application made by
such Secured Credit Party of the proceeds thereof, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Secured Credit Party under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Secured Party may have.

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

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

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

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

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

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

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the

 

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Courts of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;

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

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

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

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

8.13. Acknowledgements. Each Grantor hereby acknowledges that:

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

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

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

8.14. Additional Grantors. Each Subsidiary of the Borrower that is required to
become a party to this Agreement pursuant to Section 7.10(a) of the Credit
Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.

8.15. Releases.

(a) At such time as (i) the Loans, the Reimbursement Obligations and the other
Obligations (other than Unasserted Contingent Obligations and obligations (other
than Unasserted Contingent Obligations) under or in respect of Hedge
Agreements), whether under the Credit Agreement, the 2009 Indenture, the 2033
Indenture, or any other Loan Document or Indenture Document, shall have been
paid in full (or cash collateralized in a manner satisfactory to the Collateral
Agent), (ii) the Commitments have been terminated and no Letters of Credit shall
be outstanding and (iii) the net termination liability under or in respect of,
and other

 

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amounts due and payable under, Specified Hedge Agreements at such time shall
have been paid or secured in the manner provided in such Specified Hedge
Agreements or by a collateral arrangement reasonably satisfactory to the
relevant Qualified Counterparties, 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 Collateral 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 Collateral Agent shall deliver to such Grantor any
Collateral held by the Collateral Agent hereunder, and execute and deliver to
such Grantor such documents as such Grantor shall 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
Collateral Agent, at the request and sole expense of such Grantor, shall execute
and deliver to such Grantor all releases or other documents necessary or
desirable for the release of the Liens created hereby on such Collateral. At the
request and sole expense of the Borrower, a Guarantor shall be released from its
obligations hereunder in the event that all the Capital Stock of such Guarantor
shall be sold, transferred or otherwise disposed of in a transaction permitted
by the Credit Agreement; provided that the Borrower shall have delivered to the
Collateral Agent, prior to the date of the proposed release, a written
certification by the Borrower stating that such transaction is in compliance
with the Credit Agreement and the other Loan Documents.

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

8.17. Relative Rights. This Agreement defines the relative rights of the
Noteholders, on the one hand, and the Secured Credit Parties, on the other hand.
Nothing in this Agreement shall (a) impair, as between any Grantor and any
Noteholder, the Obligations of such Grantor, which are absolute and
unconditional, to pay the Note Indebtedness, as and when the same shall become
due and payable in accordance with the terms of the applicable Indenture
Documents; (b) impair, as between any Grantor and any Secured Credit Party, the
Obligations of such Grantor, which are absolute and unconditional, to pay the
Credit Facility Indebtedness, as and when the same shall become due and payable
in accordance with the terms of the applicable Loan Documents; (c) prevent any
Noteholder from exercising its available remedies upon a default or event of
default under the Indenture Documents to which such Noteholder is a party; or
(d) prevent any Secured Credit Party from exercising its available remedies upon
a default or event of default under the Loan Documents to which such Secured
Credit Party is a party.

8.18. LLC Membership Interests.

(a) VCI Direct Mail, Inc. (“VCI Direct”) and Relationship Marketing Systems, LLC
(“RMS”; together with VCI Direct, collectively, the “VRMS Members”), each as a
member of Valassis Relationship Marketing Systems, LLC (“VRMS”) hereby consents,
in accordance with Section 5.1(a) of the Amended and Restated Limited Liability
Company

 

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Agreement of VRMS (the “VRMS LLC Agreement”), to the assignment by each other
VRMS Member of such VRMS Member’s Membership Interests (as such term is defined
in the VRMS LLC Agreement) to the Collateral Agent, and that upon the exercise
of the Collateral Agent rights and remedies pursuant to the terms and conditions
of this Agreement, the Collateral Agent may become and exercise any rights or
powers of a VRMS Member without any further consent, approval, or authorization
from any other VRMS Member.

(b) NuWorld Marketing Limited (“NuWorld”) and Coupon Select, Inc. (“Coupon”;
together with NuWorld, collectively, the “NCH Members”), each as a member of NCH
NuWorld, L.L.C. (“NCH”) hereby consents, in accordance with Section 13.1 of the
Limited Liability Company Operating Agreement of NCH (the “NCH LLC Agreement”),
to the assignment by each other NCH Member of such NCH Member’s Units (as such
term is defined in the VRMS LLC Agreement) and other interests in NCH to the
Collateral Agent, and that upon the exercise of the Collateral Agent rights and
remedies pursuant to the terms and conditions of this Agreement, the Collateral
Agent may become and exercise any rights or powers of a NCH Member.

 

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IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.

 

VALASSIS COMMUNICATIONS, INC. By:   /s/ Barry P. Hoffman Name:   Barry P.
Hoffman Title:   Executive Vice President VALASSIS COUPON CLEARING, INC. By:  
/s/ Todd Wiseley Name:   Todd Wiseley Title:   Vice President VALASSIS
INTERNATIONAL, INC. By:   /s/ Todd Wiseley Name:   Todd Wiseley Title:   Vice
President NCH MARKETING SERVICES, INC. By:   /s/ Michelle Carey Jones Name:  
Michelle Carey Jones Title:   Vice President NCH NUWORLD SPAIN INC. By:   /s/
Todd Wiseley Name:   Todd Wiseley Title:   Vice President

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NCH NUWORLD, L.L.C.

By: NCH Marketing Services, Inc., its Manager

By:   /s/ Michelle Carey Jones Name:   Michelle Carey Jones Title:   Vice
President RELATIONSHIP MARKETING GROUP, INC. By:   /s/ Todd Wiseley Name:   Todd
Wiseley Title:   Vice President VCI DIRECT MAIL, INC. By:   /s/ Todd Wiseley
Name:   Todd Wiseley Title:   Vice President VALASSIS RELATIONSHIP MARKETING
SYSTEMS, LLC By:   /s/ Todd Wiseley Name:   Todd Wiseley Title:   General
Manager VALASSIS MANUFACTURING COMPANY By:   /s/ William F. Hogg, Jr. Name:  
William F. Hogg, Jr. Title:   President

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VALASSIS SALES & MARKETING SERVICES, INC. By:   /s/ Todd Wiseley Name:   Todd
Wiseley Title:   Vice President VALASSIS DATA MANAGEMENT, INC. By:   /s/ Todd
Wiseley Name:   Todd Wiseley Title:   Vice President PROMOTION WATCH, INC. By:  
/s/ Todd Wiseley Name:   Todd Wiseley Title:   Vice President VCI ELECTRONIC
COUPONS, INC. By:   /s/ Todd Wiseley Name:   Todd Wiseley Title:   Vice
President MBV, INC. By:   /s/ Todd Wiseley Name:   Todd Wiseley Title:   Vice
President

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ADVO, INC. By:   /s/ Todd Wiseley Name:   Todd Wiseley Title:   Vice President
ADVO INVESTMENT COMPANY, INC. By:   /s/ Todd Wiseley Name:   Todd Wiseley Title:
  Vice President VALUE FAIR, INC. By:   /s/ Todd Wiseley Name:   Todd Wiseley
Title:   Vice President MAILCOUPS DIRECT, INC. By:   /s/ Todd Wiseley Name:  
Todd Wiseley Title:   Vice President COUPON DISTRIBUTORS, INC. By:   /s/ Todd
Wiseley Name:   Todd Wiseley Title:   Vice President SHOPWISE.COM, INC. By:  
/s/ Todd Wiseley Name:   Todd Wiseley Title:   Vice President

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MAIL MARKETING SYSTEMS, INC. By:   /s/ Todd Wiseley Name:   Todd Wiseley Title:
  Vice President MAILCOUPS, INC. By:   /s/ Todd Wiseley Name:   Todd Wiseley
Title:   Vice President VCI ENTERPRISES, INC. By:   /s/ Todd Wiseley Name:  
Todd Wiseley Title:   Vice President COUPON SELECT, INC. By:   /s/ Todd Wiseley
Name:   Todd Wiseley Title:   Vice President

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BEAR STEARNS CORPORATE LENDING INC., as Collateral Agent By:   /s/ Victor
Bulzacchelli Name:   Victor Bulzacchelli Title:   Vice President

ACKNOWLEDGED AND AGREED TO:

 

BEAR STEARNS CORPORATE

LENDING INC., as Administrative Agent

By:   /s/ Victor Bulzacchelli Name:   Victor Bulzacchelli Title:   Vice
President THE BANK OF NEW YORK TRUST COMPANY, N.A.,
as 2009 Indenture Trustee By:   /s/ Roxane Ellwanger Name:   Roxane Ellwanger
Title:   Assistant Vice President

BNY MIDWEST TRUST,

as 2033 Indenture Trustee

By:   /s/ Roxane Ellwanger Name:   Roxane Ellwanger Title:   Assistant Vice
President

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Annex I

to

Guarantee, Security and Collateral Agency Agreement

ASSUMPTION AGREEMENT

ASSUMPTION AGREEMENT, dated as of                     , 200    , made by
                                        
                                             , a
                                         corporation (the “Additional Grantor”),
in favor of BEAR STEARNS CORPORATE LENDING INC., as Collateral Agent. All
capitalized terms not defined herein shall have the meaning ascribed to them in
the Guarantee, Security and Collateral Agency Agreement referred to below.

W I T N E S S E T H :

WHEREAS, VALASSIS COMMUNICATIONS, INC., a Delaware corporation (the “Borrower”),
the Lenders and the Collateral Agent have entered into a Credit Agreement, dated
as of March                     , 2007 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”);

WHEREAS, in connection with the Credit Agreement, the Borrower and certain of
its Affiliates (other than the Additional Grantor) have entered into the
Guarantee, Security and Collateral Agency Agreement, dated as of March __, 2007
(as amended, supplemented or otherwise modified from time to time, the
“Agreement”) in favor of the Collateral Agent for the benefit of the Secured
Parties;

WHEREAS, the Credit Agreement requires the Additional Grantor to become a party
to the Agreement; and

WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Agreement;

NOW, THEREFORE, IT IS AGREED:

1. Guarantee, Security and Collateral Agency Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 8.15 of the Agreement, hereby becomes a party to the Agreement as a
Grantor thereunder with the same force and effect as if originally named therein
as a Grantor and, without limiting the generality of the foregoing, hereby
expressly assumes all obligations and liabilities of a Grantor thereunder. The
information set forth in Annex 1-A hereto is hereby added to the information set
forth in Schedules                     * to the Agreement. The Additional
Grantor hereby represents and warrants that each of the representations and
warranties contained in Section 4 of the Agreement is true and correct on and as
the date hereof (after giving effect to this Assumption Agreement) as if made on
and as of such date.

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* Refer to each Schedule which needs to be supplemented.

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

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

 

[ADDITIONAL GRANTOR] By:        Name:   Title:

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Annex II

to

Guarantee, Security and Collateral Agency Agreement

ACKNOWLEDGEMENT AND CONSENT

The undersigned hereby acknowledges receipt of a copy of the Guarantee, Security
and Collateral Agency Agreement dated as of March                     , 2007
(the “Agreement”), made by the Grantors parties thereto for the benefit of BEAR
STEARNS CORPORATE LENDING INC., as Collateral Agent. The undersigned agrees for
the benefit of the Secured Parties as follows:

1. The undersigned will be bound by the terms of the Agreement and will comply
with such terms insofar as such terms are applicable to the undersigned.

2. The undersigned will notify the Collateral Agent promptly in writing of the
occurrence of any of the events described in Section 5.7(a) of the Agreement.

3. The terms of Sections 6.3(a) and 6.7 of the Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 6.3(a) or 6.7 of the Agreement.

 

[NAME OF ISSUER] By      Title      Address for Notices:       Fax:     

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Annex III

to

Guarantee, Security and Collateral Agency Agreement

DESIGNATION NOTICE

DESIGNATION NOTICE, dated as of                     , 200    , made by
                                        
                                                     , a
                                 corporation (the “Qualified Swap
Counterparty”), in favor of BEAR STEARNS CORPORATE LENDING INC., as Collateral
Agent. All capitalized terms not defined herein shall have the meaning ascribed
to them in the Guarantee, Security and Collateral Agency Agreement referred to
below.

W I T N E S S E T H :

WHEREAS, VALASSIS COMMUNICATIONS, INC. (the “Borrower”), the Lenders and the
Collateral Agent have entered into a Credit Agreement, dated as of March
__, 2007 (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”);

WHEREAS, in connection with the Credit Agreement, the Borrower and the Qualified
Counterparty are permitted to designate the Hedge Agreement described herein as
a “Specified Hedge Agreement” under the Credit Agreement and the Guarantee,
Security and Collateral Agency Agreement, dated as of March __, 2007 (as
amended, supplemented or otherwise modified from time to time, the “Agreement”)
in favor of the Collateral Agent for the benefit of the Secured Parties;

WHEREAS, the Credit Agreement and the Agreement require that the Borrower and
the Qualified Counterparty deliver this Designation Notice to the Collateral
Agent; and

WHEREAS, the Qualified Counterparty has agreed to execute and deliver this
Designated Notice in order to become a Qualified Counterparty and Secured Party
under the Agreement and the other Loan Documents;

NOW, THEREFORE, IT IS AGREED:

1. Designation and Agreement. The Borrower and the Qualified Counterparty hereby
designate that the Hedge Agreement described on Schedule 1 hereto to be a
“Specified Hedge Agreement” and hereby represent and warrant to the Collateral
Agent that such Hedge Agreement satisfies all the requirements under the Loan
Documents to be so designated. By executing and delivering this Designation
Notice, the Qualified Swap Counterparty, as provided in Section 8.5 of the
Agreement, hereby agrees to be bound by all of the provisions of Loan Documents
which are applicable to it as a Qualified Counterparty or a Secured Party
thereunder and hereby (a) confirms that it has received a copy of the Loan
Documents and such other documents and information as it has deemed appropriate
to make its own decision to enter into Designation Notice, (b) appoints and
authorizes the Agents to take such action as agent on its

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behalf and to exercise such powers and discretion under the Credit Agreement,
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto as are delegated to the Agents by the terms thereof, together
with such powers as are incidental thereto, and (d) agrees that it will be bound
by the provisions of the Loan Documents and will perform in accordance with its
terms all the obligations which by the terms of the Loan Documents are required
to be performed by it as a Qualified Counterparty or Secured Party. Without
limiting the foregoing, the Qualified Counterparty agrees to indemnify each
Agent as contemplated by Section 10.7 of the Credit Agreement with respect to
any action taken by it in respect of the Collateral or any breach by it of this
Agreement or the Loan Documents and, with respect to all other matters covered
by Section 10.7 of the Credit Agreement which relate to the Collateral, agrees
to undertake a portion of the liability of the Lenders thereunder (without
relieving the Lenders of their obligations) determined based on net termination
liability (if any) of the Loan Party to the Qualified Counterparty under the
applicable Specified Hedge Agreement in lieu of the Aggregate Exposure.

2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. In
addition, the provisions of Section 8.7, 8.8, 8.10 and 8.12 of the Agreement are
incorporated herein by reference mutatis mutandis.

IN WITNESS WHEREOF, the undersigned has caused this Designation Notice to be
duly executed and delivered as of the date first above written.

 

[                    ] By:        Name:   Title: