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GUARANTEE AND COLLATERAL AGREEMENT
 
DATED AS OF MARCH 24, 2010
 
BY
 
APPLIED NATURAL GAS FUELS, INC.
 
NEW EARTH LNG, LLC
 
APPLIED LNG TECHNOLOGIES USA, L.L.C.
 
FLEET STAR, INC.
 
EARTH LEASING, INC.
 
AND
 
ARIZONA LNG, L.L.C.
 
AS GRANTORS,
 
IN FAVOR OF
 
FOURTH THIRD LLC,
 
AS AGENT

 

 
 

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TABLE OF CONTENTS

       
Page
 
Section 1.
 
Definitions
    1     1.01.  
Definition of Terms Used Herein Generally
    1     1.02.  
Definition of Certain Terms Used Herein
    1     1.03.  
Rules of Interpretation
    7  
Section 2.
 
Guarantee
    7     2.01.  
Guarantee
    7     2.02.  
Right of Contribution
    8     2.03.  
Subrogation
    8     2.04.  
Amendments, etc. with respect to the Borrower Obligations
    9     2.05.  
Guarantee Absolute and Unconditional
    9     2.06.  
Reinstatement
    10     2.07.  
Payments
    10     2.08.  
Waiver of Subrogation
    10  
Section 3.
 
Grant of Security Interest
    12  
Section 4.
 
Authorization to File Financing Statements
    13  
Section 5.
 
Relation to Other Security Documents
    14     5.01.  
Real Estate Documents
    14     5.02.  
Patent and Trademark Security Agreement Supplements
    14  
Section 6.
 
Representations and Warranties
    14     6.01.  
Grantors’ Legal Status
    14     6.02.  
Grantors’ Legal Names
    14     6.03.  
Grantors’ Locations
    14     6.04.  
Representations in the Credit Agreement
    14     6.05.  
Title to Collateral
    15     6.06.  
Nature of Collateral
    15     6.07.  
Compliance with Laws
    15     6.08.  
Validity of Security Interest
    15     6.09.  
Perfection Certificate; Intellectual Property Filings
    16     6.10.  
Investment Property
    16     6.11.  
Receivables
    16     6.12.  
Accounts
    17     6.13.  
Equipment and Inventory
    17  

 
 

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Section 7.
 
Covenants
    17     7.01.  
Grantors’ Legal Status
    17     7.02.  
Grantors’ Names
    17     7.03.  
Grantors’ Organizational Numbers
    17     7.04.  
Locations
    17     7.05.  
Covenants in Credit Agreement
    17     7.06.  
Promissory Notes and Tangible Chattel Paper
    17     7.07.  
Deposit Accounts
    18     7.08.  
Investment Property
    18     7.09.  
Collateral in the Possession of a Bailee
    20     7.10.  
Electronic Chattel Paper and Transferable Records
    20     7.11.  
Letter-of-Credit Rights
    21     7.12.  
Commercial Tort Claims
    21     7.13.  
Intellectual Property
    21     7.14.  
Maintenance of Collateral; Compliance with Laws
    24     7.15.  
Dispositions of Collateral
    24     7.16.  
Maintenance of Insurance
    24     7.17.  
Periodic Certification
    24     7.18.  
Other Actions as to any and all Collateral
    24  
Section 8.
 
Inspection and Verification
    25  
Section 9.
 
Collateral Protection Expenses; Preservation of Collateral
    25     9.01.  
Expenses Incurred by the Agent
    25     9.02.  
Agent’s Obligations and Duties
    26     9.03.  
Duties as to Pledged Securities
    26  
Section 10.
 
Securities and Deposits
    27  
Section 11.
 
Notification to Account Debtors and Other Persons Obligated on Collateral
    28  
Section 12.
 
Power of Attorney.
    28     12.01.  
Appointment and Powers of Agent
    28     12.02.  
Failure of Grantor to Perform
    30     12.03.  
Expenses of Attorney-in-Fact
    30     12.04.  
Ratification by Grantor
    30     12.05.  
No Duty on Agent
    30  

 
 

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Section 13.
 
Remedies
    30     13.01.  
Default
    30     13.02.  
Remedies Upon Default
    30     13.03.  
Grant of License to Use Intellectual Property
    32     13.04.  
Waivers by Grantors
    32     13.05.  
Application of Proceeds
    32     13.06.  
Surplus, Deficiency
    33     13.07.  
Information Related to the Collateral
    33     13.08.  
Sale Exempt from Registration
    33     13.09.  
Rights and Remedies Cumulative
    33     13.10.  
No Direct Enforcement by Secured Creditors
    34  
Section 14.
 
Standards for Exercising Remedies
    34     14.01.  
Commercially Reasonable Manner
    34     14.02.  
Standard of Care
    34  
Section 15.
 
Waivers by Grantor; Obligations Absolute
    35     15.01.  
Specific Waivers
    35     15.02.  
Obligations Absolute
    35  
Section 16.
 
Marshalling
    35  
Section 17.
 
Interest
    35  
Section 18.
 
Reinstatement
    36  
Section 19.
 
Miscellaneous
    36     19.01.  
Notices
    36     19.02.  
GOVERNING LAW; CONSENT TO JURISDICTION
    36     19.03.  
WAIVER OF JURY TRIAL, ETC.
    36     19.04.  
Counterparts
    37     19.05.  
Headings
    37     19.06.  
No Strict Construction
    37     19.07.  
Severability
    37     19.08.  
Survival of Agreement
    37     19.09.  
Fees and Expenses; Indemnification
    37     19.10.  
Binding Effect; Several Agreement
    38     19.11.  
Waivers; Amendment
    38  

 
 

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TABLE OF CONTENTS

  19.12.  
Set-Off
    38     19.13.  
Integration
    39     19.14.  
Acknowledgments
    39     19.15.  
Additional Grantors and Guarantors
    39     19.16.  
Releases
    39     19.17.  
Intercompany Debt
    40  

 
SCHEDULES
 
7.07(a)                      Deposit Accounts

 
EXHIBITS
 
A           Perfection Certificate
B           Form of Copyright Security Agreement Supplement
C           Form of Patent Security Agreement Supplement
D           Form of Trademark Security Agreement Supplement
E           Form of Control Agreement (Deposit Accounts)
F           Form of Control Agreement (Uncertificated Securities)
G           Form of Control Agreement (Securities Accounts)
H           Form of Control Agreement (Commodities Contracts)
I           Form of Control Agreement (Letter-of-Credit Rights)

ANNEXES
 
1           Form of Assumption Agreement
 

 
 
 

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GUARANTEE AND COLLATERAL AGREEMENT, dated as of March 24, 2010, by each of the
signatories hereto identified on the signature pages hereto as a grantor
(together with any other entity that may become a party hereto as a grantor as
provided herein, each a “Grantor” and collectively, jointly and severally, the
“Grantors”) in favor of FOURTH THIRD LLC as Collateral Agent (in such capacity,
the “Agent”) for itself in its capacity as the Agent and a Lender under the
Credit Agreement (as hereinafter defined) (the “Lender”), together with the
banks and other financial institutions or entities (collectively, the “Lenders”)
from time to time party to the Credit Agreement, dated as of March 24, 2010 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among APPLIED NATURAL GAS FUELS, INC., a Nevada corporation
(“Borrower”), the other Loan Parties named therein, the Lenders and the Agent,
and the other Secured Creditors (as hereinafter defined).
 
W I T N E S S E T H:
 
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make
extensions of credit to Borrower upon the terms and conditions set forth
therein; and
 
WHEREAS, it is a condition precedent to the obligations of the Lenders to make
their respective extensions of credit to Borrower under the Credit Agreement
that the Grantors shall have executed and delivered this Agreement to the Agent;
and
 
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
 
Section 1.                      Definitions.
 
1.01.           Definition of Terms Used Herein Generally.  Except as otherwise
provided herein, all capitalized terms used herein (including in the preamble
hereto) but not defined herein shall have the meanings set forth in the Credit
Agreement.  Except as specifically provided herein, all terms used herein and
defined in the NYUCC shall have the same definitions herein as specified therein
as of the date hereof; provided, however, that if a term is defined in Article 9
of the NYUCC differently than in another Article of the NYUCC, the term has the
meaning specified in Article 9 of the NYUCC as of the date hereof.
 
1.02.           Definition of Certain Terms Used Herein.  As used herein, the
following terms shall have the following meanings:
 
“After-Acquired Intellectual Property”:  as defined in Section 7.13.
 
“Agent”: as defined in the preamble.
 
“Agreement”:  this Guarantee and Collateral Agreement, as the same may be
amended, supplemented, replaced or otherwise modified from time to time.
 
“Borrower”:  as defined in the preamble.  Any references herein to “Earth LNG”
or to “each,” “either” or “such” Borrower or to the “applicable” Borrower, or to
the “Borrowers” shall mean and refer to Borrower.
 
“Borrower Obligations”:  the Obligations (as defined in the Credit Agreement).
 

 
 

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“Collateral”:  as defined in Section 3.
 
“Collateral Agent” means Fourth Third LLC in its capacity as agent for the
lenders under the Credit Agreement and the other Secured Creditors.
 
“Copyright License”:  any written agreement, now or hereafter in effect,
granting any right to any third party under any Copyright now or hereafter owned
by any Grantor or that the Grantor otherwise has the right to license, or
granting any right to any Grantor under any Copyright now or hereafter owned by
any third party, and all rights of any Grantor under any such agreement.
 
“Copyright Office”:  the United States Copyright Office.
 
“Copyrights”:  (i) all copyrights, whether or not the underlying works of
authorship have been published, and all works of authorship and other
intellectual property rights therein, all copyrights of works based on,
incorporated in, derived from or relating to works covered by such copyrights,
all right, title and interest to make and exploit all derivative works based on
or adopted from works covered by such copyrights, and all copyright
registrations and copyright applications, and any renewals or extensions
thereof, including, without limitation, each registration and application
identified in Schedule 7(b) to the Perfection Certificate, (ii) the rights to
print, publish and distribute any of the foregoing, (iii) the right to sue or
otherwise recover for any and all past, present and future infringements and
misappropriations thereof, (iv) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto (including,
without limitation, payments under all Copyright Licenses entered into in
connection therewith, and damages and payments for past, present or future
infringements thereof), and (v) all other rights of any kind whatsoever accruing
thereunder or pertaining thereto.
 
“Copyright Security Agreement Supplement”:  a supplement to this Agreement,
executed by one or more Grantors in favor of the Agent, substantially in the
form of Exhibit B hereto.
 
“Credit Agreement”:  as defined in the preamble.  Any references herein to
“each, “either” or “such” Credit Agreement, or the “applicable” Credit
Agreement, or to the “Credit Agreements” shall mean and refer to the Credit
Agreement.
 
“Disposition”:  with respect to any Property, and except as otherwise provided
in Sections 7.13(a)(x) and 7.15, any sale, lease, license, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof, but not including
the issuance of capital stock or other equity interests by either Borrower; and
the terms “Dispose” and “Disposed of” shall have correlative meanings.
 
“Event”:  as defined in Section 9.03 hereof.
 
“Event of Default”:  as defined in the Credit Agreement.
 
“Excluded Assets”:  collectively (a) any General Intangible to the extent that
(i) the terms of the agreement between the applicable Grantor and the account
debtor or other contract party with respect to such General Intangible
prohibits, restricts or requires the consent of the account debtor to, the
assignment or transfer of, or creation, attachment or perfection of a security
interest in, such General Intangible, or provides that the assignment or
transfer or creation, attachment or perfection of such security interest may
give rise to a default, breach, right of recoupment, claim,
 

 
 

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defense, termination, right of termination or remedy and (ii) such terms are
effective under Sections 9-406, 9-407 or 9-408 of the NYUCC, and (b) any
property that is subject to a Lien permitted under Section 7.2 of the Credit
Agreement pursuant to documents that prohibit the applicable Grantor from
granting other liens in such property.
 
“Excluded Foreign Subsidiary Voting Stock”:  the voting capital stock or other
equity interests of any Foreign Subsidiary owned by either Borrower or a
Domestic Subsidiary thereof.
 
“Fully Satisfied”:  with respect to the Secured Obligations, Guarantor
Obligations or Borrower Obligations, as the case may be, at any time that (a)
all principal constituting Secured Obligations, Guarantor Obligations or
Borrower Obligations, as the case may be, and all interest (including interest
that shall have accrued after the commencement of a bankruptcy proceeding with
respect to either Borrower or any Guarantor at the rate provided in the Loan
Documents) accrued to such time on such principal and on all other Secured
Obligations, Guarantor Obligations or Borrower Obligations, as the case may be,
shall have been paid in full in cash, (b) all fees, expenses and other amounts
(including contingent obligations, including those in respect of indemnification
provisions contained in the Loan Documents, but excluding obligations in respect
of such indemnification provisions for which no claim has been made and for
which no notice of claim has been given) unpaid as of such time which constitute
Secured Obligations, Guarantor Obligations or Borrower Obligations, as the case
may be, shall have been paid in full in cash, and (c) the Commitments shall have
expired or been terminated.
 
“General Intangibles”:  all “general intangibles” as such term is defined in
Section 9-102(42) of the NYUCC as in effect on the date hereof and, in any
event, including, without limitation, with respect to any Grantor, all
contracts, agreements, instruments and indentures and all licenses and permits
issued by Governmental Authorities in any form, and portions thereof, to which
such Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is subject, as
the same may from time to time be amended, supplemented, replaced or otherwise
modified, 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 receive proceeds of any insurance,
indemnity, warranty or guaranty with respect thereto, (iii) all rights of such
Grantor to damages arising thereunder, (iv) all rights of such Grantor to
receive any tax refunds, and (v) all rights of such Grantor to terminate and to
perform, compel performance and to exercise all remedies thereunder.
 
“Grantor”: as defined in the preamble.
 
“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 any Secured Creditor that are required to be paid by such Guarantor pursuant
to the terms of this Agreement or any other Loan Document).
 
“Guarantor Payment”:  as defined in Section 2.11(a).
 
“Guarantors”:  the collective reference to each Grantor, other than Borrower.
 

 
 

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“Intellectual Property”:  all intellectual and similar property of any Grantor
of every kind and nature now owned or hereafter acquired by any Grantor,
including (i) all inventions, designs, Patents, Patent Licenses, Trademarks,
Trademark Licenses, Copyrights, Copyright Licenses, Trade Secrets, designs,
confidential or proprietary technical and business information, know how, show
how or other data or information, software and databases and all embodiments or
fixations thereof and related documentation, registrations and franchises,
licenses for any of the foregoing and all license rights and all additions,
improvements and accessions to, and books and records describing or used in
connection therewith, (ii)  all computer software and software systems
(including, without limitation, data, databases and related documentation), and
(iii) all Internet web sites and domain names.
 
“Intellectual Property Security Agreement”:  each of a Copyright Security
Agreement Supplement, a Patent Security Agreement Supplement and a Trademark
Security Agreement Supplement.
 
“Intercompany Debt”:  as defined in Section 19.17.
 
“Intercompany Note”:  any promissory note evidencing loans made by any Grantor
to any of its Subsidiaries or any loan made by any Grantor to another Grantor.
 
“Investment Property”:  the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(48) of the NYUCC on the date
hereof including, without limitation, all certificated securities and
uncertificated securities, all security entitlements, all securities accounts,
all commodity contracts and all commodity accounts (other than any Excluded
Foreign Subsidiary Voting Stock excluded from the definition of “Pledged
Stock”), (ii) security entitlements, in the case of any United States Treasury
book-entry securities, as defined in 31 C.F.R. section 357.2, or, in the case of
any United States federal agency book-entry securities, as defined in the
corresponding United States federal regulations governing such book-entry
securities, and (iii) whether or not constituting “investment property” as so
defined, all Pledged Notes, all Pledged Stock, all Pledged Security Entitlements
and all Pledged Commodity Contracts.
 
“Issuers”:  the collective reference to each issuer of a Pledged Security.
 
“Lease”:  any lease of personal property under which any Grantor is the lessee.
 
“NYUCC”:  the Uniform Commercial Code as in effect in the State of New York from
time to time.
 
“Patent License”:  any written agreement, now or hereafter in effect, granting
to any third party any right to make, use or sell any invention on which a
Patent, now or hereafter owned by any Grantor or that any Grantor otherwise has
the right to license, is in existence, or granting to any Grantor any right to
make, use or sell any invention on which a Patent, now or hereafter owned by any
third party, is in existence, and all rights of any Grantor under any such
agreement.
 
“Patents”:  all of the following now owned or hereafter acquired by any
Grantor:  (a) all letters patent of the United States or any other country, all
registrations and recordings thereof, and all pending applications for letters
patent of the United States or any other country, including registrations,
recordings and applications in the PTO or in any similar office or agency of the
United States, any State or Territory thereof, or any other country, including
those identified in
 

 
 

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Schedule 7(a) to the Perfection Certificate, and (b) all reissues,
continuations, divisions, continuations-in-part, renewals or extensions thereof
and the inventions disclosed or claimed therein, including the right to make,
use and/or sell inventions disclosed or claimed therein.
 
“Patent Security Agreement Supplement”:  a supplement to this Agreement,
executed by one or more Grantors in favor of Collateral Agent, substantially in
the form of Exhibit C hereto.
 
“Perfection Certificate”:  shall mean a certificate substantially in the form of
Exhibit A hereto, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by the Grantors.
 
“Perfection Supplement”:  shall have the meaning assigned to such term in
Section 7.17.
 
“Person”:  any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or
other entity.
 
“Pledged Commodity Contracts”:  all commodity contracts listed in Section 8 of
the Perfection Certificate, and all other commodity contracts to which any
Grantor is party from time to time.
 
“Pledged Debt Securities”:  the debt securities listed in Section 9 of the
Perfection Certificate, together with any other certificates, options, rights or
security entitlements of any nature whatsoever in respect of the debt securities
of any Person that may be issued or granted to, or held by, any Grantor while
this Agreement is in effect.
 
“Pledged Notes”:  all promissory notes listed in Section 9 of the Perfection
Certificate, 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 in an aggregate principal amount for all Grantors not to exceed $250,000
at any time outstanding issued in connection with extensions of trade credit by
any Grantor in the ordinary course of business).
 
“Pledged Securities”:  the collective reference to the Pledged Debt Securities,
the Pledged Notes and the Pledged Stock.
 
“Pledged Security Entitlements”:  all security entitlements with respect to the
financial assets listed on Section 8 of the Perfection Certificate and all other
security entitlements of any Grantor.
 
“Pledged Stock”:  the shares of capital stock or other equity interests owned at
any time or from time to time by any Grantor in any other Grantor, including,
without limitation, in the case of Borrower, all shares of capital stock, or
membership interests, as applicable, in all Grantors that are Subsidiaries of
Borrower, together with any other shares, stock certificates, options, rights or
security entitlements of any nature whatsoever in respect of the capital stock
or other equity interests of any Person 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 65% of the total outstanding voting capital stock of any
Foreign Subsidiary be required to be pledged hereunder or any capital stock of
any Foreign Subsidiary owned by a Foreign Subsidiary be required to be pledged
hereunder; provided, further, that in no event shall capital stock or other
equity interests of any Subsidiary of Borrower that is not a Loan Party be
required to be pledged hereunder.
 

 
 

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“Proceeds”:  all “proceeds” as such term is defined in Section 9-102(64) of the
NYUCC in effect on the date hereof and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Securities,
collections thereon or distributions or payments with respect thereto.
 
“Property”:  any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, including
capital stock or other equity interests.
 
“PTO”:  the United States Patent and Trademark Office.
 
“Receivable”:  any right to payment on account of any obligation that could
create any right to receive money, 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 or payment intangible).
 
“Secured Creditors”:  collectively, the Collateral Agent, Fourth Third LLC, as
agent under the Credit Agreement, and the Lenders under and as defined in the
Credit Agreement.
 
“Secured Obligations”:  the Borrower Obligations and the Guarantor Obligations.
 
“Securities Act”:  the Securities Act of 1933, as amended.
 
“Security Documents”:  this Agreement, the Intellectual Property Security
Agreements, all deposit account control agreements and similar agreements, all
landlord waivers, bailee letters and similar documents and all other pledge or
security agreements, “Mortgages” (as such term is defined in the Credit
Agreement), assignments or other similar agreements or instruments executed and
delivered by any Grantor pursuant to Section 6.8 or Section 6.9 of the Credit
Agreement or otherwise in connection with the transactions contemplated thereby,
in each case as amended, modified, restated or supplemented from time to time.
 
“Security Interest”:  the security interest granted pursuant to Section 3, as
well as all other security interests created or assigned as additional security
for the Secured Obligations pursuant to the provisions of this Agreement.
 
“Subsidiary Guarantor”: any Guarantor that is a Subsidiary of Borrower.
 
“Trade Secret License”:  any agreement, whether written or oral, providing for
the grant by or to any Grantor of any right to use any Trade Secret, including,
without limitation, any of the foregoing referred to on Schedule 7(a) to the
Perfection Certificate.
 
“Trade Secrets”:  (i) all trade secrets and all confidential and proprietary
information, including know-how, trade secrets, manufacturing and production
processes and techniques, inventions, research and development information,
technical data, financial, marketing and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information, including, without limitation, those identified in Schedule 7(a) to
the Perfection Certificate, (ii) the right to sue or otherwise recover for any
and all past, present and future infringements and misappropriations thereof,
(iii) all income, royalties, damages and other payments now and hereafter due
and/or payable with respect thereto (including, without limitation, payments
under all licenses entered into in connection therewith, and damages and
 

 
 

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payments for past, present or future infringements thereof), and (iv) all other
rights of any kind whatsoever of such Grantor accruing thereunder or pertaining
thereto.
 
“Trademark License”:  any written agreement, now or hereafter in effect,
granting to any third party any right to use any Trademark now or hereafter
owned by any Grantor or that any Grantor otherwise has the right to license, or
granting to any Grantor any right to use any Trademark now or hereafter owned by
any third party, and all rights of any Grantor under any such agreement.
 
“Trademark Security Agreement Supplement”:  a supplement to this Agreement,
executed by the Grantor in favor of Agent, substantially in the form of
Exhibit D hereto.
 
“Trademarks”:  (i) all trademarks, service marks, trade names, corporate names,
company names, business names, domain names, trade dress, trade styles, logos,
or other indicia of origin or source identification, trademark and service mark
registrations, and applications for trademark or service mark registrations and
any renewals thereof, including, without limitation, those identified in
Schedule 7(a) to the Perfection Certificate, (ii) the right to sue or otherwise
recover for any and all past, present and future infringements and
misappropriations thereof, (iii) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto (including,
without limitation, payments under all Trademark Licenses entered into in
connection therewith, and damages and payments for past, present or future
infringements thereof), and (iv) all other rights of any kind whatsoever
accruing thereunder or pertaining thereto, together in each case with the
goodwill of the business connected with the use of, and symbolized by, each of
the above.
 
“UCC”:  the Uniform Commercial Code as in effect in any jurisdiction (except as
otherwise contemplated in Section 7.18).  References to particular sections of
Article 9 of the UCC shall be, unless otherwise indicated, references to Revised
Article 9 of the UCC adopted and effective in certain jurisdictions on or after
July 1, 2001.
 
1.03.           Rules of Interpretation.  The rules of interpretation specified
in Section 1.2 of Credit Agreement shall be applicable to this
Agreement.  References to “Sections”, “Exhibits” and “Schedules” shall be to
Sections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided.  Any of the terms defined in this Section 1
may, unless the context otherwise requires, be used in the singular or the
plural depending on the reference.  All references to statutes and related
regulations shall include (unless otherwise specifically provided herein) any
amendments of same and any successor statutes and regulations.
 
Section 2.                      Guarantee
 
2.01.           Guarantee.  i)     Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Agent, for the
ratable benefit of the Secured Creditors and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower 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
 

 
 

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under applicable federal, state and other laws relating to the insolvency of
debtors (after giving effect to the right of contribution established in Section
2.02).
 
(c)      Each Guarantor agrees that the Borrower Obligations may at any time and
from time to time exceed the amount of the liability of such Guarantor hereunder
without impairing the guarantee contained in this Section 2 or affecting the
rights and remedies of any Secured Creditor hereunder.
 
(d)      The guarantee contained in this Section 2 shall remain in full force
and effect until all the Borrower Obligations and Guarantor Obligations shall
have been Fully Satisfied notwithstanding that from time to time during the term
of the Credit Agreement Borrower may be free from any Borrower Obligations.
 
(e)      No payment made by either Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by any Secured Creditor
from either Borrower, any of the Guarantors, any other guarantor or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of the
Secured Obligations or any payment received or collected from such Guarantor in
respect of the Secured Obligations), remain liable for the Borrower Obligations
up to the maximum liability of such Guarantor hereunder until the Borrower
Obligations are Fully Satisfied.
 
2.02.           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
at least its proportionate share of such payment.  Each Guarantor’s right of
contribution shall be subject to the terms and conditions of Section 2.03.  The
provisions of this Section 2.02 shall in no respect limit the obligations and
liabilities of any Guarantor to the Secured Creditors and each Guarantor shall
remain liable to the Secured Creditors for the full amount guaranteed by such
Guarantor hereunder.
 
2.03.           Subrogation.  Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by any Secured
Creditor, (i) no Guarantor shall be entitled to be subrogated to any of the
rights of any Secured Creditor against Borrower or any other Guarantor or
Grantor or any collateral security or guarantee or right of offset held by any
Secured Creditor for the payment of the Borrower Obligations, (ii) no Guarantor
shall seek or be entitled to seek any contribution or reimbursement from either
Borrower or any other Guarantor or Grantor in respect of payments made by such
Guarantor hereunder, and (iii) each Guarantor hereby expressly and irrevocably
waives any and all rights at law or in equity to subrogation, reimbursement,
exoneration, contribution, indemnification or set off and any and all defenses
available to a surety, guarantor or accommodation co-obligor, in each case,
until all Borrower Obligations are Fully Satisfied.  If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all of
the Borrower Obligations shall not have been Fully Satisfied, such amount shall
be held by such Guarantor in trust for the Secured Creditors, segregated from
other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Agent in the exact form received by such
Guarantor (duly endorsed by such Guarantor to the Agent, if required), to be
applied against the Borrower Obligations, whether matured or unmatured, in such
order as the Agent may determine.
 

 
 

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Each Guarantor acknowledges and agrees that this waiver is intended to benefit
the Secured Creditors and shall not limit or otherwise affect such Guarantor’s
liability hereunder or the enforceability of this Section 2.03, and that the
Secured Creditors and their respective successors and assigns are intended third
party beneficiaries of the waivers and agreements set forth in this Section
2.03, and their rights under this Section 2.03, shall survive payment in full of
the Obligations.
 
2.04.           Amendments, etc. with respect to the Borrower 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 Borrower
Obligations made by any Secured Creditor may be rescinded by such Secured
Creditor and any of the Borrower Obligations continued, and the Borrower
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 Creditor, and the Credit Agreement and the other Loan Documents and
any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the Agent
(or the Required Lenders under the Credit Agreement or all Lenders, as the case
may be) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by any Secured Creditor for the
payment of the Borrower Obligations may be sold, exchanged, waived, surrendered
or released.  No Secured Creditor shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Borrower
Obligations or for the guarantee contained in this Section 2 or any property
subject thereto.
 
2.05.           Guarantee Absolute and Unconditional.  Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by any Secured Creditor
upon the guarantee contained in this Section 2 or acceptance of the guarantee
contained in this Section 2; the Borrower Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee contained in this
Section 2; and all dealings between either Borrower and any of the Guarantors,
on the one hand, and the Secured Creditors, 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 Borrower or any of the Guarantors with respect to the Borrower
Obligations, except as required pursuant to the Credit Agreement.  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 and performance without regard to (a) the validity or enforceability of
the Credit Agreement or any other Loan Document (other than this Agreement), any
of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by any Secured Creditor, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance hereunder) which may at any time
be available to or be asserted by either Borrower or any other Person against
any Secured Creditor, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of Borrower or such Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of Borrower
for the Borrower Obligations, or of such Guarantor under the guarantee contained
in this Section 2, in bankruptcy or in any other instance.  When making any
demand hereunder or otherwise pursuing its rights and remedies hereunder against
any Guarantor, any Secured Creditor may, but shall be under no obligation to,
make a
 

 
 

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similar demand on or otherwise pursue such rights and remedies as it may have
against Borrower, any other Guarantor or any other Person or against any
collateral security or guarantee for the Borrower Obligations or any right of
offset with respect thereto, and any failure by any Secured Creditor to make any
such demand, to pursue such other rights or remedies or to collect any payments
from Borrower, any other Guarantor or any other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Secured Creditor against any Guarantor.  For the purposes
hereof, “demand” shall include the commencement and continuance of any legal
proceedings.
 
2.06.           Reinstatement.  The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by any Secured Creditor upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of either
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,
either Borrower or any Guarantor or any substantial part of its property, or
otherwise, all as though such payments had not been made.
 
2.07.           Payments.  Each Guarantor hereby guarantees that payments
hereunder will be paid to the Agent without set-off or counterclaim in Dollars
in immediately available funds to the deposit account of Agent specified in
Annex II to the Credit Agreement and that all such payments will be subject to
the provisions of Section 2.6 of the Credit Agreement.
 
2.08.           Waiver of Subrogation.  Notwithstanding anything to the contrary
in this Agreement or in any other Loan Document, and except as set forth in
Section 2.11, each Guarantor hereby expressly and irrevocably waives until all
Secured Obligations have been paid in full and the Commitments have been
terminated pursuant to the Credit Agreement any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor.  Each Guarantor acknowledges and agrees that this
waiver is intended to benefit the Secured Creditors and shall not limit or
otherwise affect such Guarantor’s liability hereunder or the enforceability of
this Section 2.08, and that the Secured Creditors and their respective
successors and assigns are intended third party beneficiaries of the waivers and
agreements set forth in this Section 2.08, and their rights under this Section
2.08, shall survive payment in full of the Obligations.  The foregoing waiver
shall not be deemed to limit or prohibit the payment of indebtedness or other
obligations of any Guarantor to any other Guarantor or other Person which is
incurred in the ordinary course of business and which is otherwise permitted
under this Agreement or any other Loan Document.
 
2.09.           Election of Remedies.  If any Secured Creditor may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving such Secured Creditor a Lien upon any Collateral, whether owned by any
Guarantor or by any other Person, either by judicial foreclosure or by non
judicial sale or enforcement, such Secured Creditor may, at its sole option,
determine which of its remedies or rights it may pursue without affecting any of
its rights and remedies under this Section 2.  If, in the exercise of any of its
rights and remedies, any Secured Creditor shall forfeit any of its rights or
remedies, including its right to enter a deficiency judgment against any
Guarantor or any other Person, whether because of any applicable laws pertaining
to “election of remedies” or the like, each Guarantor hereby consents
 

 
 

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to such action by such Secured Creditor and waives, to the extent permitted by
applicable law, any claim based upon such action, even if such action by such
Secured Creditor shall result in a full or partial loss of any rights of
subrogation that each Guarantor might otherwise have had but for such action by
such Secured Creditor.  Any election of remedies that results in the denial or
impairment of the right of any Secured Creditor to seek a deficiency judgment
against any Guarantor shall not impair any other Guarantor’s obligation to pay
the full amount of the Obligations.  In the event any Secured Creditor shall bid
at any foreclosure or trustee’s sale or at any private sale permitted by law or
the Loan Documents, such Secured Creditor may bid all or less than the amount of
the Obligations and the amount of such bid need not be paid by the such Secured
Creditor but shall be credited against the Obligations.  The amount of the
successful bid at any such public sale, whether such Secured Creditor or any
other party is the successful bidder, shall be conclusively deemed to be the
fair market value of the Collateral and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be
the amount of the Obligations guaranteed under this Section 2, notwithstanding
that any present or future law or court decision or ruling may have the effect
of reducing the amount of any deficiency claim to which any Secured Creditor
might otherwise be entitled but for such bidding at any such sale.
 
2.10.           Limitation.  Notwithstanding any provision herein contained to
the contrary, each Guarantor’s liability under this Section 2 (which liability
is in any event in addition to amounts for which such Guarantor is primarily
liable under Section 2 of the Credit Agreement) shall be limited to an amount
not to exceed as of any date of determination the greater of:
 
(a)           the net amount of any portion of the Loan advanced to any other
Grantor and then re-loaned or otherwise transferred to, or for the benefit of,
such Guarantor; and
 
(b)           the amount that could be claimed by the Agent and the Lenders from
such Guarantor under this Section 2.10 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Guarantor’s right of contribution and indemnification from each
other Guarantor under Section 2.11.
 
2.11.           Contribution with Respect to Guaranty Obligations.
 
(a)           To the extent that any Guarantor shall make a payment under this
Section 2.11 of all or any of the Obligations which it has agreed to guarantee
pursuant hereto (a “Guarantor Payment”) that, taking into account all other
Guarantor Payments then previously or concurrently made by any other Guarantor,
exceeds the amount that such Guarantor would otherwise have paid if each
Guarantor had paid the aggregate Obligations satisfied by such Guarantor Payment
in the same proportion that such Guarantor’s “Allocable Amount” (as defined
below) (as determined immediately prior to such Guarantor Payment) bore to the
aggregate Allocable Amounts of each of the Guarantors as determined immediately
prior to the making of such Guarantor Payment, then, following indefeasible
payment in full in cash of the Obligations and termination of the Commitments,
such Guarantor shall be entitled to receive contribution and indemnification
payments from, and be reimbursed by, each other Guarantor for the amount of such
excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment.
 

 
 

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(b)           As of any date of determination, the “Allocable Amount” of any
Guarantor shall be equal to the maximum amount of the claim that could then be
recovered from such Guarantor under this Section 2 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
 
(c)           This Section 2.11 is intended only to define the relative rights
of Guarantors and nothing set forth in this Section 2.11 is intended to or shall
impair the obligations of Guarantors, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 2.1.  Nothing contained in this Section
2.11 shall limit the liability of Borrower to pay the Loan and accrued interest,
fees and expenses with respect thereto for which Borrower shall be primarily
liable.
 
(d)           The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Guarantor to which such
contribution and indemnification is owing.
 
(e)           The rights of the indemnifying Guarantors against other Loan
Parties under this Section 2.11 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
 
Section 3.                      Grant of Security Interest.
 
Each Grantor hereby grants to the Agent, for the ratable benefit of the Secured
Creditors, a security interest in and mortgage on, 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 the Secured Obligations:
 
a.           all accounts, including health-care receivables;
 
b.           all chattel paper, whether tangible or electronic;
 
c.           all goods;
 
d.           all documents;
 
e.           all equipment;
 
f.           all fixtures;
 
g.           all general intangibles, including all payment intangibles;
 
h.           all instruments;
 
i.           all Intellectual Property;
 
j.           all inventory;
 
k.           all Investment Property;
 

 
 

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    l.           all Leases;
 
m.           all letter-of-credit rights;
 
n.           all money;
 
o.           all supporting obligations;
 
p.           all tort claims;
 
q.           all other property not otherwise described above;
 
r.           all deposit accounts, all claims now or hereafter arising
therefrom, all funds now or hereafter held therein, all amounts now or hereafter
credited thereto and all certificates and instruments, if any, from time to time
representing or evidencing such bank accounts;
 
s.           all books and records pertaining to the Collateral; and
 
t.           to the extent not otherwise included, all Proceeds 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.
 
Notwithstanding the foregoing, none of the Excluded Assets shall, to the extent
and for so long as they are Excluded Assets, constitute Collateral.  If at any
time, by reason of any change in law or the receipt of any required consent or
otherwise, any General Intangible that was an Excluded Asset ceases to meet the
conditions set forth in the definition of “Excluded Assets” found in Section 1
of this Agreement, then such general intangible shall immediately and
automatically cease to be an Excluded Asset and the security interest herein
granted shall immediately and automatically attach thereto without necessity of
any further act or deed by any Grantor.
 
Section 4.                      Authorization to File Financing
Statements.  Each Grantor hereby irrevocably authorizes the Agent at any time
and from time to time to file in any jurisdiction in which the UCC has been
adopted any initial financing statements and amendments thereto that
(a) indicate the Collateral (i) as “all assets” of such Grantor or words of
similar effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the NYUCC or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) contain any other information required by part 5 of Article 9 of
the UCC for the sufficiency or filing office acceptance of any initial financing
statement or amendment, including (i) whether such Grantor is an organization,
the type of organization and any organization identification number issued to
such Grantor and, (ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as timber to be cut or as-extracted collateral,
a sufficient description of real property to which such Collateral
relates.  Each Grantor agrees to furnish any such information to the Agent
promptly upon request.  Each Grantor also ratifies its authorization for the
Agent to have filed in any UCC jurisdiction any like initial financing
statements or amendments thereto if filed prior to the date hereof.
 

 
 

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Section 5.                      Relation to Other Security Documents.
 
5.01.           Real Estate Documents.  The provisions of this Agreement
supplement the provisions of any real estate mortgage or deed of trust granted
by any Grantor to the Agent and securing the payment or performance of any of
the Secured Obligations.  Nothing contained in any such real estate mortgage or
deed of trust shall derogate from any of the rights or remedies of the Agent or
any Secured Creditor hereunder.
 
5.02.           Patent and Trademark Security Agreement
Supplements.  Concurrently herewith certain of the Grantors are executing and
delivering to the Agent for recording in the PTO or the Copyright Office, as
applicable, the Patent Security Agreement Supplement, the Trademark Security
Agreement Supplement and the Copyright Security Agreement Supplement.  The
provisions of any current or any future Patent Security Agreement Supplement,
Trademark Security Agreement Supplement or Copyright Security Agreement
Supplement are supplemental to the provisions of this Agreement.  Nothing
contained in any current or future Patent Security Agreement Supplement,
Trademark Security Agreement Supplement or Copyright Security Agreement
Supplement shall derogate from any of the rights or remedies of any Secured
Creditor hereunder, nor shall anything contained in any such current or future
Patent Security Agreement Supplement, Trademark Security Agreement Supplement or
Copyright Security Agreement Supplement be deemed to prevent or extend the time
of attachment or perfection of any Security Interest in such Collateral created
hereby.
 
Section 6.                      Representations and Warranties.  To induce the
Agent 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, each Grantor hereby represents and warrants to the Secured Creditors
that:
 
6.01.           Grantors’ Legal Status.  (a) Such Grantor is an organization as
set forth in the Perfection Certificate; (b) such organization is of the type,
and is organized in the jurisdiction, set forth in the Perfection Certificate;
and (c) the Perfection Certificate sets forth such Grantor’s correct
organizational identification number or states that such Grantor has none.
 
6.02.           Grantors’ Legal Names.  Such Grantor’s exact legal name is that
set forth on the Perfection Certificate and on the signature page hereof.
 
6.03.           Grantors’ Locations. The Perfection Certificate sets forth such
Grantor’s place of business or (if it has more than one place of business) its
chief executive office, as well as its mailing address if different.  Such
Grantor’s place of business or (if it has more than one place of business) its
chief executive office (if such Grantor is an organization) is located in a
jurisdiction that has adopted the UCC or whose laws generally require that
information concerning the existence of nonpossessory security interests be made
generally available in a filing, recording or registration system as a condition
or result of the security interest obtaining priority over the rights of a lien
creditor with respect to the collateral.
 
6.04.           Representations in the Credit Agreement.  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 in all
material respects, and the Secured Creditors shall be entitled to rely on each
of them as if they were fully set forth herein, provided that each reference
 

 
 

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in each such representation and warranty to the applicable Borrower’s knowledge
shall, for the purposes of this Section 6.04, be deemed to be a reference to
such Grantor’s knowledge.
 
6.05.           Title to Collateral. The Collateral of such Grantor is owned by
such Grantor free and clear of any Lien, except for Liens expressly permitted
pursuant to the Credit Agreement.  Such Grantor has not filed or consented to
the filing of (a) any financing statement or analogous document under the UCC or
any other applicable laws covering any of its Collateral, (b) any assignment in
which such Grantor assigns any Collateral or any security agreement or similar
instrument covering any Collateral with the PTO or the Copyright Office or (c)
any assignment in which such Grantor assigns any Collateral or any security
agreement or similar instrument covering any Collateral with any foreign
governmental, municipal or other office, which financing statement or analogous
document, assignment, security agreement or similar instrument is still in
effect, except, in each case, with respect to Liens expressly permitted pursuant
to the Credit Agreement.
 
6.06.           Nature of Collateral.  None of the Collateral of such Grantor
constitutes, or is the proceeds of, farm products and none of the Collateral has
been purchased or will be used by such Grantor primarily for personal, family or
household purposes, and as of the Closing Date, except as indicated in the
Perfection Certificate and as of any date of any Perfection Supplement, except
as indicated in such Perfection Supplement or in the Perfection Certificate:
 
(a)      none of the account debtors or other persons obligated on any of the
Collateral of such Grantor is a governmental authority subject to the Federal
Assignment of Claims Act or like federal, state or local statute or rule in
respect of such Collateral;
 
(b)      such Grantor holds no commercial tort claims;
 
(c)      such Grantor has no deposit accounts or other bank accounts;
 
(d)      such Grantor owns no motor vehicles;
 
(e)      such Grantor has no securities accounts or securities entitlements or
commodities accounts or commodities contracts;
 
(f)      such Grantor holds no interest in, title to or power to transfer, any
Patents, Patent Licenses, Trademarks, Trademark Licenses, Trade Secrets, Trade
Secret Licenses, Copyrights or Copyright Licenses; and
 
(g)      such Grantor holds no interest in, title to or power to transfer any
Intellectual Property that is eligible for registration in the PTO or the
Copyright Office.
 
6.07.           Compliance with Laws.  Such Grantor has at all times operated
its business in compliance with all laws, except as could not reasonably be
expected to have a Material Adverse Effect.
 
6.08.           Validity of Security Interest. Except with respect to assets
which in the aggregate for all Grantors do not have a value exceeding $250,000,
(a) the Security Interest granted by such Grantor constitutes a legal and valid
security interest in all of the Collateral of such Grantor securing the payment
and performance of the Secured Obligations and (b) upon the giving of value, the
filing of financing statements describing the Collateral in the offices listed
on
 

 
 

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the Perfection Certificate, the recording in the PTO of the Trademark Security
Agreement Supplement and the Patent Security Agreement Supplement and in the
Copyright Office of the Copyright Security Agreement Supplement, and the taking
of all applicable actions in respect of perfection contemplated by Sections
7.06, 7.07, 7.08, 7.09, 7.10, 7.11 and 7.12 in respect of Collateral (in which a
security interest cannot be perfected by the filing of a financing statement or
such recordings in the PTO or the Copyright Office), the Security Interest will
be valid, enforceable and perfected in all Collateral of such Grantor.  The
Security Interest is and shall be prior to any other Lien on the Collateral,
other than Liens expressly permitted to be prior to the Security Interest under
the Credit Agreement.
 
6.09.           Perfection Certificate; Intellectual Property Filings.
 
(a)      All information set forth on the Perfection Certificate is, and all
information set forth on each Perfection Supplement shall be, accurate and
complete.
 
(b)      A fully executed Patent Security Agreement Supplement, Trademark
Security Agreement Supplement and a Copyright Security Agreement Supplement
containing a description of all Collateral of such Grantor consisting of United
States Patents and United States registered Trademarks (and Trademarks for which
United States registration applications are pending) and United States
registered Copyrights have been delivered to the Agent for recording by the PTO
and the Copyright Office, as necessary, pursuant to 35 U.S.C. § 261, 15 U.S.C. §
1060 or 17 U.S.C. § 205 and the regulations thereunder, as applicable.
 
6.10.           Investment Property.
 
(a)      The shares of Pledged Stock pledged by such Grantor hereunder
constitute all of the issued and outstanding shares of all classes of the
capital stock or other equity interests of each Issuer owned by such Grantor or,
in the case of any Excluded Foreign Subsidiary Voting Stock, 65% of the
outstanding Excluded Foreign Subsidiary Voting Stock of each relevant Issuer.
 
(b)      All the shares of the Pledged Stock pledged by such Grantor have been
duly and validly issued and are fully paid and nonassessable.
 
(c)      The terms of any uncertificated limited liability company interests and
partnership interests included in the Pledged Stock expressly provide that they
are securities governed by Article 8 of the Uniform Commercial Code in effect
from time to time in the “issuer’s jurisdiction” of each Issuer thereof (as such
term is defined in the UCC in effect in such jurisdiction).
 
(d)      Such Grantor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Securities 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.
 
6.11.           Receivables.  No amount exceeding $50,000 and 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 Agent.
 

 
 

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     6.12.           Accounts.  (i) Each account of such Grantor is genuine and
in all material respects what they purport to be, (ii) each account arises out
of (A) a bona fide sale of goods sold and delivered by such Grantor (or is in
the process of being delivered) or (B) services theretofore actually rendered or
to be rendered by such Grantor to the account debtor named therein, (iii) no
material account of such Grantor is evidenced by any instrument or chattel paper
unless such instrument or chattel paper has been theretofore endorsed over and
delivered to, or submitted to the control of, the Agent and (iv) no surety bond
was required or given in connection with any account of such Grantor or the
contracts or purchase orders out of which they arose and the right to receive
payment under each account is assignable.
 
6.13.           Equipment and Inventory.  With respect to any material equipment
and/or material inventory of such Grantor, each such Grantor has exclusive
possession and control of such equipment and inventory of such Grantor except
for (i) equipment leased by such Grantor as a lessor or (ii) equipment or
inventory in transit with common or other carriers. No material inventory is
held by such Grantor pursuant to consignment, sale or return, sale on approval
or similar arrangement.
 
Section 7.                      Covenants.  Each Grantor covenants and agrees
with the Agent, in each case at such Grantor’s own cost and expense, as follows.
 
7.01.           Grantors’ Legal Status.  Such Grantor shall not change its type
of organization, jurisdiction of organization or other legal structure except,
upon not less than twenty (20) days’ prior written notice to the Agent.
 
7.02.           Grantors’ Names.  Such Grantor shall not change its name, except
upon not less than twenty (20) days’ prior written notice to the Agent.
 
7.03.           Grantors’ Organizational Numbers.  Without providing at least
twenty (20) days’ prior written notice to the Agent, such Grantor shall not
change its organizational identification number if it has one.  If such Grantor
does not have an organizational identification number and later obtains one,
such Grantor shall forthwith notify the Agent of such organizational
identification number promptly upon obtaining such identification number.
 
7.04.           Locations.  Without providing at least twenty (20) days’ prior
written notice to the Agent, such Grantor shall not (a) change its place of
business or (if it has more than one place of business) its chief executive
office and shall promptly notify the Agent of any new location of Collateral
owned by Borrower or a Domestic Subsidiary thereof that is not set forth on a
Perfection Certificate or Perfection Supplement.
 
7.05.           Covenants in Credit Agreement.  Each 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.
 
7.06.           Promissory Notes and Tangible Chattel Paper.  If such Grantor,
together with the other Grantors, shall at any time hold or acquire any
promissory notes or tangible chattel paper in an aggregate principal amount of
more than $50,000, such Grantor shall forthwith endorse, assign and deliver the
same to the Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Agent may from time to time specify to be held by
the Agent as Collateral pursuant to this Agreement.
 

 
 

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     7.07.           Deposit Accounts.  For each deposit account that such
Grantor at any time opens or maintains, such Grantor shall, at the Agent’s
request and option, either (a) cause the depository bank to enter into a written
agreement or other authenticated record with the Agent, in form and substance
reasonably satisfactory to the Agent, pursuant to which such depository bank
shall agree, among other things, to comply at any time with instructions from
the Agent to such depository bank directing the disposition of funds from time
to time credited to such deposit account, without further consent of the Grantor
such agreement to be substantially in the form of Exhibit E or such other form
as the Agent shall approve, or (b) arrange for the Agent to become the customer
of the depository bank with respect to the deposit account; provided, however,
that notwithstanding the foregoing, the requirements of this Section 7.07 shall
not apply to (i) any zero balance payroll or similar disbursement account
maintained by any Grantor (and each Grantor agrees not to deposit in any payroll
account or similar disbursement account maintained by it any funds, except funds
needed at the time of deposit (or within three days thereafter) to meet payroll
needs of such Grantor), (ii) any deposit account maintained by any Grantor as of
the Closing Date and listed on Schedule 7.07(a) until the date sixty (60) days
following the Closing Date.
 
7.08.           Investment Property.
 
(a)      If any of the Collateral shall be or become evidenced or represented by
an uncertificated security, such Grantor shall cause the Issuer thereof either
(i) to register the Agent as the registered owner of such uncertificated
security, upon original issue or registration of transfer or (ii) to agree in
writing with such Grantor and the Agent that such Issuer will comply with
instructions with respect to such uncertificated security originated by the
Agent without further consent of such Grantor, such agreement to be in
substantially the form of Exhibit F or such other form as the Agent shall
approve.
 
(b)      If any of the Collateral shall be or become evidenced or represented by
a security entitlement, such Grantor shall cause the securities intermediary
with respect to such security entitlement either (i) to identify in its records
the Agent as having such security entitlement against such securities
intermediary or (ii) to agree in writing with such Grantor and the Agent that
such securities intermediary will comply with entitlement orders originated by
the Agent without further consent of such Grantor, such agreement to be in
substantially the form of Exhibit G or such other form as the Agent shall
approve.
 
(c)      If any of the Collateral shall be or become evidenced or represented by
a commodity contract, such Grantor shall cause the commodity intermediary with
respect to such commodity contract to agree in writing with such Grantor and the
Agent that such commodity intermediary will apply any value distributed on
account of such commodity contract as directed by the Agent without further
consent of such Grantor, such agreement to be in substantially the form of
Exhibit H or such other form as the Agent shall approve.
 
(d)      If any of the Collateral shall be or become evidenced or represented by
or held in a securities account or a commodity account, such Grantor shall, in
the case of a securities account, comply with subsection (b) of this Section
7.08 with respect to all security entitlements carried in such securities
account and, in the case of a commodity account, comply with subsection (c) of
this Section 7.08 with respect to all commodity contracts carried in such
commodity account.
 

 
 

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        (e)           If such Grantor shall receive any stock or other ownership
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 or other
equity interests of any Issuer, whether in addition to, in substitution of, as a
conversion of, or in exchange for, any shares of or other ownership interests in
the Pledged Stock, or otherwise in respect thereof, such Grantor shall accept
the same as the agent of the Secured Creditors, hold the same in trust for the
Secured Creditors and deliver the same forthwith to the Agent in the exact form
received, duly endorsed by such Grantor to the Agent, if required, together with
an undated stock power covering such certificate duly executed in blank by such
Grantor and with, if the Agent so requests, signature guaranteed, to be held by
the Agent, subject to the terms hereof, as additional collateral security for
the Secured Obligations.
 
(f)      Subject to Section 7.08(h) hereof, such Grantor shall be entitled:
 
(i)           to exercise, as it shall think fit, but in a manner not
inconsistent with the terms hereof and of the Credit Agreement, the voting power
with respect to the Pledged Stock of such Grantor, and for that purpose the
Agent shall (if any Pledged Stock shall be registered in the name of the Agent
or its nominee) execute or cause to be executed from time to time, at the
expense of such Grantor, such proxies or other instruments in favor of such
Grantor or its nominee, in such form and for such purposes as shall be
reasonably required by such Grantor and shall be specified in a written request
therefor, to enable it to exercise such voting power with respect to the Pledged
Stock; and
 
(ii)           except as otherwise provided in paragraphs (g) and (h) of this
Section 7.08, to receive and retain for its own account any and all payments
made in respect of the Pledged Securities to the extent such are permitted
pursuant to the terms of the Credit Agreement.
 
(g)      Any sums paid upon or in respect of the Pledged Securities upon the
liquidation or dissolution of any Issuer shall be paid over to the Agent to be
held by it hereunder as additional collateral security for the Secured
Obligations, and in case any distribution of capital shall be made on or in
respect of the Pledged Securities or any property shall be distributed upon or
with respect to the Pledged Securities 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 Agent, be delivered to the Agent to
be held by it hereunder as additional collateral security for the Secured
Obligations.  If any sums of money or property so paid or distributed in respect
of the Pledged Securities shall be received by such Grantor, such Grantor shall,
until such money or property is paid or delivered to the Agent, hold such money
or property in trust for the Secured Creditors, segregated from other funds of
such Grantor, as additional collateral security for the Secured Obligations.
 
(h)      Upon the occurrence and during the continuance of any Event of Default,
all rights of such Grantor to exercise or refrain from exercising the voting and
other consensual rights that it would otherwise be entitled to exercise pursuant
to Section 7.08(f)(i) hereof and to receive the payments pursuant to
Section 7.08(f)(ii) hereof shall cease, and thereupon the Agent shall be
entitled to exercise all voting power with respect to the Pledged Securities and
to receive and retain, as additional collateral hereunder, any and all such
payments any time declared or paid upon any of the Pledged Securities during
such an Event of Default and otherwise to act with respect to the Pledged
Securities as outright owner thereof.
 

 
 

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        (i)           At any time and from time to time with respect to Pledged
Securities other than Pledged Stock either Borrower or a Subsidiary of either
Borrower and at any time and from time to time during the continuance of an
Event of Default with respect to Pledged Stock of a Subsidiary of either
Borrower, the Agent may cause all or any of the Pledged Securities to be
transferred to or registered in its name or the name of its nominee or nominees.
 
(j)      Without the prior written consent of the Agent, such Grantor will not
(i) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, any of the Investment Property or Proceeds thereof or
any interest therein (except pursuant to a transaction permitted by the Credit
Agreement), (ii) 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 and except for non-consensual Liens permitted by the
Credit Agreement, or (iii) enter into any agreement or undertaking expressly
restricting the foreclosure of the Agent’s Security Interest in any of the
Investment Property or Proceeds thereof or any interest therein.
 
(k)      In the case of each Grantor which is an Issuer, such Issuer agrees that
(i) it will be bound by the terms of this Agreement relating to the Pledged
Securities issued by it and will comply with such terms insofar as such terms
are applicable to it, (ii) it will notify the Agent promptly in writing of the
occurrence of any of the events described in Section 7.08(e) or Section 7.08(g)
with respect to the Pledged Securities issued by it and (iii) the terms of
Section 13.04(c) shall apply to it, mutatis mutandis, with respect to all
actions that may be required of it with respect to the Pledged Securities issued
by it.  Each Grantor which is an Issuer consents to the grant of a Security
Interest in capital stock or other equity interests of such Issuer the exercise
of rights by the Agent in respect of such capital stock or other equity
interests, including (to the extent permitted hereunder) the foreclosure thereon
and the Agent, its nominee or transferee becoming a partner or member of any
such Issuer that is a partnership or limited liability company.
 
7.09.           Collateral in the Possession of a Bailee.  If any goods with a
value in excess of $50,000 are at any time in the possession of a bailee, such
Grantor shall promptly notify the Agent thereof and, if requested by the Agent,
shall promptly obtain an acknowledgement from such bailee, in form and substance
reasonably satisfactory to the Agent, that such bailee holds such Collateral for
the benefit of the Secured Creditors, provided, that, notwithstanding the
foregoing, this Section 7.09 shall not apply to any goods constituting.
 
7.10.           Electronic Chattel Paper and Transferable Records. If such
Grantor, together with the other Grantors, shall at any time hold or acquire
interests in any electronic chattel paper or any “transferable record,” as that
term is defined in Section 201 of the federal Electronic Signatures in Global
and National Commerce Act, or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction, in excess of
$250,000 in the aggregate, such Grantor shall promptly notify the Agent thereof
and, at the request of the Agent, shall take such action as the Agent may
reasonably request to vest in the Agent control, under Section 9-105 of the UCC,
of such electronic chattel paper or control under Section 201 of the federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in
such jurisdiction, of such transferable record.  The Agent agrees with such
Grantor that the Agent shall arrange, pursuant to procedures reasonably
satisfactory to the Agent and so long as such procedures will not result in the
Agent’s loss of control, for such Grantor to make alterations to the electronic
chattel paper or transferable record permitted under Section 9-105 of the UCC
or, as the case may be, Section 201
 

 
 

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of the federal Electronic Signatures in Global and National Commerce Act or
Section 16 of the Uniform Electronic Transactions Act, unless an Event of
Default has occurred and is continuing or would occur after taking into account
any action by such Grantor with respect to such electronic chattel paper or
transferable record.
 
7.11.           Letter-of-Credit Rights. If such Grantor, together with the
other Grantors, shall at any time be beneficiaries under one or more letters of
credit, now or hereafter issued, having aggregate undrawn amounts of more than
$250,000, such Grantor shall promptly notify the Agent thereof and, at the
request and option of the Agent, such Grantor shall either (a) arrange, for the
issuer and any nominated person with respect to such letter of credit to
consent, pursuant to an agreement or other authenticated record with and in the
form of Exhibit I or in such other form and in substance satisfactory to the
Agent, to an assignment to the Agent of the proceeds of any drawing under the
letter of credit or (b) arrange for the Agent to become the transferee
beneficiary of the letter of credit.
 
7.12.           Commercial Tort Claims.  If such Grantor shall at any time hold
or acquire a commercial tort claim, such Grantor shall immediately notify the
Agent in a writing signed by such Grantor of the brief details thereof and grant
to the Agent for the benefit of the Secured Creditors in such writing a security
interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably satisfactory
to the Agent.
 
7.13.           Intellectual Property.
 
(a)      Except in any respect that would not materially impair the right,
power, authority and ability of any Grantor to use its intellectual property as
necessary or convenient for the profitable conduct of their businesses and would
not reasonably be expected to have a Material Adverse Effect:
 
(i)           Such Grantor (either itself or through licensees) will
(A) continue to use each material Trademark on each and every trademark class of
goods in the ordinary course of business in order to maintain such Trademark in
full force free from any claim of abandonment for non-use in any class of goods
for which registration was obtained, (B) maintain in the ordinary course of
business the quality of products and services offered under such Trademark and
take all necessary steps to ensure that all licensed users of such Trademark
maintain as in the past such quality, (C) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (D) not adopt or use any mark which is
confusingly similar or a colorable imitation of such Trademark unless the Agent,
for the ratable benefit of the Secured Creditors, shall obtain a perfected
security interest in such mark pursuant to this Agreement and the Intellectual
Property Security Agreement, and (E) 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.
 
(ii)           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.
 
(iii)           Such Grantor (either itself or through licensees) (A) will
employ each material Copyright and (B) will not (and will not permit any
licensee or sublicensee
 

 
 

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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.
 
(iv)           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.
 
(v)           Such Grantor (either itself or through licensees) will use proper
statutory notice in connection with the use of each material Patent, Trademark
and Copyright included in the Intellectual Property.
 
(vi)           Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the PTO, the 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 material
Intellectual Property, including, without limitation, the payment of required
fees and taxes, the filing of responses to office actions issued by the PTO and
the Copyright Office, the filing of applications for renewal or extension, the
filing of affidavits of use and affidavits of incontestability, the filing of
divisional, continuation, continuation-in-part, reissue, and renewal
applications or extensions, the payment of maintenance fees, and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings.
 
(vii)           Such Grantor (either itself or through licensees) will not,
without the prior written consent of the Agent, discontinue use of or otherwise
abandon any Intellectual Property or abandon any right to file an application
for letters patent, trademark, or copyright, unless such Grantor shall have
previously determined that such use or the pursuit or maintenance of such
Intellectual Property is no longer desirable in the conduct of such Grantor’s
business and that the loss thereof could not reasonably be expected to have a
Material Adverse Effect and, in which case, such Grantor shall give prompt
notice of any such abandonment to the Agent in accordance herewith.
 
(viii)           In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (A)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (B) if such Intellectual
Property is of material economic value, promptly notify the Agent after it
learns thereof and 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.
 
(ix)           Such Grantor will do all things that are necessary and proper
within such Grantor’s power and control to keep each license of Intellectual
Property held by such Grantor as licensee or licensor in full force and effect
except to the extent that (A) such Grantor has reasonably determined that the
failure to keep any such license in full force and effect could not be
reasonably expected to have a Material Adverse Effect or (B) any such license
would expire by its terms or is terminable at will by a Person other than
Grantor.
 

 
 

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             (x)           In the event that such Grantor shall create any
nonexclusive license in any Trademark, Copyright, Patent or other Intellectual
Property or General Intangible, in each case owned by or licensed to such
Grantor (whether pursuant to a local marketing agreement, time broadcasting
agreement or otherwise) and such license is (x) for a duration of more than
eighteen (18) months, (y) not terminable at the option of such Grantor and (z)
not by its terms expressly subject and subordinate to the Security Interest,
then, and in any such event, such license shall constitute a Disposition of the
licensed property. In the event such Grantor creates any license in Trademark,
Copyright, Patent, other Intellectual Property or General Intangible owned by or
licensed to such Grantor that does not meet the requirements of the immediately
preceding sentence, such license shall not constitute a Disposition of such
Trademark, Copyright, Patent, other Intellectual Property or General Intangible.
 
(xi)           Such Grantor shall maintain all of its rights to its domain names
in full force and effect, other than any, the loss of which could not reasonably
be expected to result in a Material Adverse Effect.
 
(b)      Such Grantor will notify the Agent immediately if it knows, or has
reason to know, that any registration relating to any material Intellectual
Property has been or could reasonably be expected to be 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 PTO, the 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.
 
(c)      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 PTO, the 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 Agent within five Business Days after
the last day of the fiscal quarter in which such filing occurs.  Upon request of
the Agent, such Grantor shall execute and deliver, and have recorded, any and
all agreements, instruments, documents, and papers as the Agent may request to
evidence the Secured Creditors’ Security Interest in any Copyright, Patent,
Trademark or other Intellectual Property and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby.
 
(d)      Such Grantor agrees that, should it obtain an ownership interest in any
item of Intellectual Property which is not now a part of the Intellectual
Property Collateral (the “After-Acquired Intellectual Property”), (i) the
provisions of Section 3 shall automatically apply thereto, (ii) any such
After-Acquired Intellectual Property, and in the case of trademarks, the
goodwill of the business connected therewith or symbolized thereby, shall
automatically become part of the Collateral, (iii) it shall give prompt (and, in
any event within twenty (20) days after the date of such acquisition) written
notice thereof to the Agent in accordance herewith, and (iv) it shall provide
the Agent promptly (and, in any event within twenty (20) days after the date of
such acquisition) with an amended Perfection Certificate and amended schedules
to the applicable Intellectual Property Security Agreement reflecting the
acquisition of such After-Acquired Intellectual Property.  Such Grantor
authorizes the Agent to modify this Agreement by amending the Perfection
Certificate and to modify the schedules to the applicable Intellectual Property
Security Agreement if such Grantor fails to provide the Agent with satisfactory
amended schedules hereto or thereto within the time period required hereunder
(and will cooperate with the Agent in effecting any such amendment) to include
any After-Acquired Intellectual Property
 

 
 

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which becomes part of the Intellectual Property Collateral under this Section,
and to record any such modified agreement with the PTO, the Copyright Office, or
any other applicable Governmental Authority.
 
(e)      Such Grantor assumes all responsibility and liability arising from the
use of the Intellectual Property and hereby indemnifies and holds the Secured
Creditors harmless from and against any claim, suit, loss, damage or expense
(including reasonable attorneys’ fees arising out of any alleged defect in any
product manufactured, promoted or sold by such Grantor (or any affiliate or
subsidiary thereof) in connection with such Intellectual Property or out of the
manufacture, promotion, labeling, sale or advertisement of any such product by
such Grantor (or any affiliate or subsidiary thereof), except for any claim,
suit, loss, damage or expense arising solely from the gross negligence or
willful misconduct of a Secured Creditor as finally determined by a court of
competent jurisdiction.
 
(f)      Such Grantor agrees to execute one or more applicable Intellectual
Property Security Agreements with respect to its Intellectual Property in order
to record the Security Interest granted herein to the Agent for the ratable
benefit of the Secured Creditors with the PTO, the Copyright Office, and any
other applicable Governmental Authority.
 
7.14.           Maintenance of Collateral; Compliance with Laws.  (a) Such
Grantor shall keep the Collateral provided by it in good order and repair and
shall not use the same in violation of any law to the extent that such violation
could reasonably be expected to have a Material Adverse Effect.
 
7.15.           Dispositions of Collateral.  Such Grantor shall not sell or
otherwise dispose, or offer to sell or otherwise dispose, of the Collateral
provided by it or any interest therein except for dispositions permitted by the
Credit Agreement.  In the event that such Grantor shall create any lease of any
personal property owned by or leased to such Grantor and such lease is (x) for a
duration of more than eighteen (18) months, (y) not terminable at the option of
such Grantor and (z) not by its terms expressly subject and subordinate to the
Security Interest, then, and in any such event, such lease shall constitute a
Disposition of the leased property.  In the event such Grantor creates any lease
in any personal property owned by or leased to such Grantor that does not meet
the requirements of the immediately preceding sentence, such lease shall not
constitute a Disposition of such personal property.
 
7.16.           Maintenance of Insurance.  Such Grantor, at its sole cost and
expense, shall maintain or cause to be maintained insurance covering physical
loss or damage to the Collateral provided by it in accordance with the Credit
Agreement.
 
7.17.           Periodic Certification.  From time to time on demand (which
demand, absent an Event of Default, shall be no more frequent that once every
four months) from the Agent, but in no event less frequently than annually, such
Grantor shall deliver to the Agent a supplemental perfection certificate (each,
a “Perfection Supplement”) executed by such Grantor setting forth the
information required pursuant to the Perfection Certificate or confirming that
there has been no change in such information since the date of such certificate
or the date of the most recent certificate delivered pursuant to this   Section
7.17.
 
7.18.           Other Actions as to any and all Collateral.  Such Grantor
further agrees to take any other action reasonably requested by the Agent to
insure the attachment, perfection and, first priority of, and the ability of the
Agent to enforce, the Security Interest in any and all of
 

 
 

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the Collateral provided by such Grantor including, without limitation,
(a) executing, delivering and, where appropriate, filing financing statements
and amendments relating thereto under the UCC, to the extent, if any, that such
Grantor’s signature thereon is required therefor; (b) causing the Agent’s name
to be noted as secured party on any certificate of title for a titled good if
such notation is a condition to attachment, perfection or priority of, or
ability of the Agent to enforce, the Security Interest in such Collateral;
(c) complying with any provision of any statute, regulation or treaty of the
United States of America as to any Collateral if compliance with such provision
is a condition to the attachment, perfection or priority of, or the ability of
the Agent to enforce, the Security Interest in such Collateral; (d) obtaining
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other person obligated on such
Collateral; (e) obtaining waivers from mortgagees, bailees, landlords and any
other person who has possession of or any interest in any Collateral or any real
property on which any such Collateral may be located, in form and substance
satisfactory to the Agent; (f) providing to the Agent “control” over such
Collateral, to the extent that perfection can only be achieved under the UCC by
control or where obtaining perfection by control provides more protection to the
Secured Creditors that perfection by filing a financing statement; and
(g) taking all actions required by the UCC or by other law, as applicable in any
relevant UCC jurisdiction, or by other law as applicable in any foreign
jurisdiction; provided, however, that nothing contained in paragraphs (d) or (e)
shall require such Grantor to pay any consideration (other than any governmental
application, processing, filing or recording fees) in order to obtain any
consent or waiver referred to in such paragraphs.
 
7.19.           Treatment of Accounts. No Grantor shall grant or extend the time
for payment of any material account, or compromise or settle any account for
less than the full amount thereof, or release any person or property, in whole
or in part, from payment thereof, or allow any credit or discount thereon, other
than as normal and customary in the ordinary course of a Grantor’s business.
 
Section 8.                      Inspection and Verification.  The Agent and such
Persons as the Agent may designate shall have the right, at each Grantor’s own
cost and expense, to inspect the Collateral of such Grantor, all records related
thereto (and to make extracts and copies from such records) and the premises
upon which any of the Collateral of such Grantor is located, to discuss such
Grantor’s affairs with the officers of such Grantor (i) in the absence of an
Event of Default, upon reasonable prior notice and during regular operating
hours for such Grantor and (ii) otherwise, at any time as the Agent shall decide
in its sole discretion.
 
Section 9.                      Collateral Protection Expenses; Preservation of
Collateral.
 
9.01.           Expenses Incurred by the Agent.  In its discretion, the Agent
may, if the relevant Grantor fails to do so, discharge taxes and other
encumbrances at any time levied or placed on any material portion of the
Collateral, make repairs thereto and pay any necessary filing fees or insurance
premiums.  Each Grantor agrees to reimburse the Agent on demand for any and all
expenditures so made, and all sums disbursed by the Agent in connection with
this Section 9.01, including reasonable attorneys’ fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by such
Grantor to the Agent shall bear interest at the per annum rate specified in
Section 17 and shall constitute additional Secured Obligations.  The Agent shall
have no obligation to any Grantor to make any such expenditures, nor shall the
making thereof relieve any Grantor of any default.
 

 
 

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    9.02.           Agent’s Obligations and Duties.
 
(a)      Anything herein to the contrary notwithstanding, each Grantor shall
remain liable under each contract or agreement comprised in the Collateral
provided by it to be observed or performed by such Grantor thereunder.  Neither
the Agent nor any other Secured Creditor shall have any obligation or liability
under any such contract or agreement by reason of or arising out of this
Agreement or the receipt by the Agent or any other Secured Creditor of any
payment relating to any of the Collateral, nor shall the Agent or any other
Secured Creditor be obligated in any manner to perform any of the obligations of
any Grantor under or pursuant to any such contract or agreement, to make inquiry
as to the nature or sufficiency of any payment received by the Agent or any
other Secured Creditor in respect of the Collateral or as to the sufficiency of
any performance by any party under any such contract or agreement, 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 the Agent or any other
Secured Creditor or to which the Agent or any other Secured Creditor may be
entitled at any time or times.
 
(b)      The Agent’s sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the NYUCC or otherwise, shall be to deal with such Collateral in the same
manner as the Agent deals with similar property for its own account.
 
(c)      Neither the Agent, nor any other Secured Creditor nor any of their
respective officers, directors, partners, employees, agents, attorneys and other
advisors, attorneys-in-fact or affiliates shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.  The powers
conferred on the Secured Creditors hereunder are solely to protect the Secured
Creditors’ interests in the Collateral and shall not impose any duty upon any
Secured Creditor to exercise any such powers.  The Secured Creditors shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
partners, employees, agents, attorneys and other advisors, attorneys-in-fact or
affiliates shall be responsible to any Grantor for any act or failure to act
hereunder, except to the extent that any such act or failure to act is found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from their respective gross negligence or willful misconduct.
 
(d)      Each Grantor acknowledges that the rights and responsibilities of the
Agent under this Agreement with respect to any action taken by the Agent or the
exercise or non-exercise by the Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Agent and the other Secured
Creditors, 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
Agent and the Grantors, the Agent shall be conclusively presumed to be acting as
agent for the Secured Creditors 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.
 
9.03.           Duties as to Pledged Securities.
 
(a)      With respect to any calls, conversions, exchanges, redemptions, offers,
tenders or similar matters relating to any such Pledged Securities (herein
called “Events”),
 

 
 

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any duty in connection therewith imposed on the Agent by applicable law shall be
fully satisfied if:
 
(i)           the Agent exercises reasonable care to ascertain the occurrence
and to give reasonable notice to the applicable Grantor of any Events applicable
to any Pledged Securities that are registered and held in the name of Agent or
its nominee;
 
(ii)           the Agent gives the applicable Grantor reasonable notice of the
occurrence of any Events of which the Agent has received actual knowledge, which
Events are applicable to any securities that are in bearer form or are not
registered and held in the name of the Agent or its nominee (each Grantor
agreeing to give the Agent reasonable notice of the occurrence of any Events of
which such Grantor has knowledge, which Events are applicable to any securities
in the possession of the Agent); and
 
(iii)           the Agent endeavors to take such action with respect to any of
the Events as the applicable Grantor may reasonably and specifically request in
writing in sufficient time for such action to be evaluated and taken or, if the
Agent reasonably believes that the action requested would adversely affect the
value of the Pledged Securities as collateral or the collection of the Secured
Obligations, or would otherwise prejudice the interests of any Secured Creditor,
the Agent gives reasonable notice to such Grantor that any such requested action
will not be taken and, if the Agent makes such determination or if such Grantor
fails to make such timely request, the Agent takes such other action as it
reasonably deems advisable in the circumstances.
 
(b)      Except as hereinabove specifically set forth, neither the Agent nor any
other Secured Creditor shall have any further obligation to ascertain the
occurrence of, or to notify any Grantor with respect to, any Events and shall
not be deemed to assume any such further obligation as a result of the
establishment by the Agent or any other Secured Creditor of any internal
procedures with respect to any securities in its possession, nor shall the Agent
or any other Secured Creditor be deemed to assume any other responsibility for,
or obligation or duty with respect to, any Pledged Securities or its use of any
nature or kind, or any matter or proceedings arising out of or relating thereto,
including, without limitation, any obligation or duty to take any action to
collect, preserve or protect its or any Grantor’s rights in the Pledged
Securities or against any prior parties thereto, but the same shall be at such
Grantor’s sole risk and responsibility at all times.
 
(c)      Nothing contained in this Section 9.03 shall be deemed to create any
obligation in respect of Events on the Agent, the purpose of this Section 9.03
being solely to provide standards, in the event that applicable law imposes any
obligations on the Agent as to Events.
 
Section 10.                      Securities and Deposits.  Without limitation of
Section 7.08, but subject to Section 7.08(i), the Agent may at any time at its
option, transfer to itself or any nominee any securities constituting
Collateral, and, subject to Section 7.08(f)(ii), receive any income thereon and
hold such income as additional Collateral or apply it to the Secured
Obligations.  The Agent may after the occurrence and during the continuance of
an Event of Default demand, sue for, collect, or make any settlement or
compromise which it deems desirable with respect to the Collateral.  Regardless
of the adequacy of Collateral or any other security for the Secured Obligations,
any deposits or other sums at any time credited by or due from the
 

 
 

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Agent or any other Secured Creditor to any Grantor may at any time be applied to
or set off against any of the Secured Obligations whether or not due and owing.
 
Section 11.                      Notification to Account Debtors and Other
Persons Obligated on Collateral.  If an Event of Default shall have occurred and
be continuing, each Grantor shall, at the request of the Agent, notify account
debtors and other persons obligated on any of the Collateral of such Grantor of
the Security Interest in any account, chattel paper, general intangible,
instrument or other claims constituting Collateral that payment thereof is to be
made directly to the Agent or to any financial institution designated by the
Agent as the Agent’s agent therefor, and the Agent may itself, if an Event of
Default shall have occurred and be continuing, without notice to or demand upon
any Grantor, so notify account debtors and other persons obligated on
Collateral.  After the making of such a request or the giving of any such
notification, each Grantor shall hold any proceeds of collection of accounts,
chattel paper, general intangibles, instruments and other claims constituting
Collateral received by the Grantor as trustee for the Secured Creditors without
commingling the same with other funds of the Grantor and shall turn the same
over to the Agent in the identical form received, together with any necessary
endorsements or assignments.  The Agent shall have no liability or
responsibility to any Grantor for acceptance of a check, draft or other order
for payment of money bearing the legend “payment in full” or words of similar
import or any other restrictive legend or endorsement or be responsible for
determining the correctness of any remittance.  Without limitation of the
foregoing, during the continuation of an Event of Default (1) the Agent shall
have the right, but not the obligation, to make test verifications of the
accounts in any manner and through any medium that it reasonably considers
advisable, and the Grantors shall furnish all such assistance and information as
the Agent may require in connection with such test verifications, and (2) the
Agent in its own name or in the name of others may communicate with account
debtors on the accounts to verify with them to the Agent’s satisfaction the
existence, amount and terms of any accounts.  The Agent may apply the proceeds
of collection of accounts, chattel paper, general intangibles, instruments and
other claims constituting Collateral received by the Agent or any other Secured
Creditor to the Secured Obligations or hold such proceeds as additional
Collateral, at the option of the Agent.  The provisions of Section 9-209 of the
NYUCC shall not apply to any account, chattel paper or payment intangible as to
which notification of assignment has been sent to the account debtor or other
person obligation on the Collateral, whether under this Section 11, Section 12
or Section 13.
 
Section 12.                      Power of Attorney.
 
12.01.           Appointment and Powers of Agent. Each Grantor hereby
irrevocably constitutes and appoints the 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 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:
 
(a)           in the name of such Grantor or its own name, or otherwise, take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any Receivable or with
respect to any other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise
 

 
 

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deemed appropriate by the Agent for the purpose of collecting any and all such
moneys due under any Receivable or with respect to any other Collateral whenever
payable;
 
(b)      in the case of any Intellectual Property, execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the Agent
may request to evidence the Security Interest in such Intellectual Property and
the goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
 
(c)      pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repairs or provide any insurance and pay all
or any part of the premiums therefor and the costs thereof;
 
(d)      execute, in connection with any sale provided for in Section 13, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral;
 
(e)      exercise all rights of such Grantor as owner of the Pledged Securities
or as party to any partnership, limited liability company or similar agreement,
including, without limitation, the right to sign any and all amendments,
instruments, certificates, proxies, and other writings and exercise all voting
and consent rights with respect to the Pledged Securities;
 
(f)      (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 Agent or as the Agent shall direct; (2) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and other amounts
due or to become due at any time in respect of or arising out of any Collateral;
(3) sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of any Collateral;
(5) defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (6) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or
releases as the Agent may deem appropriate; (7) assign any Copyright, Patent or
Trademark (along with the goodwill of the business to which any such Copyright,
Patent or Trademark pertains) throughout the world for such term or terms, on
such conditions, and in such manner, as the 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 Agent were the absolute owner thereof for all purposes, and do, at
the Agent’s option and such Grantor’s expense, at any time, or from time to
time, all acts and things which the Agent deems necessary to protect, preserve
or realize upon the Collateral and the Security Interest therein and to effect
the intent of this Agreement, all as fully and effectively as such Grantor might
do; and
 
(g)      to the extent that such Grantor’s authorization given in Section 4 is
not sufficient, to file such financing statements or similar documents under the
laws of any jurisdiction with respect hereto, with or without such Grantor’s
signature, or a photocopy of this Agreement in substitution for a financing
statement or such other document, as the Agent may deem appropriate and to
execute in such Grantor’s name such financing statements, other such documents
and amendments thereto and continuation statements which may require such
Grantor’s signature.
 

 
 

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Anything in this Section 12.01 to the contrary notwithstanding, the Agent agrees
that it will not exercise any rights under the power of attorney provided for in
this Section 12.01 (other than under paragraph (g) of this Section 12.01) unless
an Event of Default shall have occurred and be continuing.
 
12.02.           Failure of Grantor to Perform.  If any Grantor fails to perform
or comply with any of its agreements contained herein, the Agent, at its option,
but without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
 
12.03.           Expenses of Attorney-in-Fact. The expenses of the Agent
incurred in connection with actions undertaken as provided in this Section 12,
together with interest thereon at a rate per annum equal to the Default Rate,
from the date of payment by the Agent to the date reimbursed by the relevant
Grantor, shall be payable by such Grantor to the Agent on demand.
 
12.04.           Ratification by Grantor.  To the extent permitted by law, each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue of this Section 12.  This power of attorney is a power coupled
with an interest and is irrevocable.
 
12.05.           No Duty on Agent.  The powers conferred on the Agent, its
directors, officers and agents pursuant to this Section 12 are solely to protect
the Secured Creditors’ interests in the Collateral and shall not impose any duty
upon any of them to exercise any such powers.  Each Secured Creditor shall be
accountable only for the amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act, except for such Secured Creditor’s own gross negligence or willful
misconduct.
 
Section 13.                      Remedies.
 
13.01.           Default.  Grantors shall be in default under this Agreement (a)
whenever any Event of Default has occurred and is continuing (and each of the
Grantors shall thereupon be in default hereunder without regard to whether or to
what degree any Grantor individually may have caused, participated in, or had
any knowledge of the occurrence of such Event of Default) and (b) at all times
after any Loan has become due and payable and remains unpaid beyond any
applicable grace period, whether at maturity, upon acceleration pursuant to the
Credit Agreement or otherwise.
 
13.02.           Remedies Upon Default.  At any time when any Grantor is in
default under this Agreement as set forth in Section 13.01, the Agent may
exercise and enforce, in any order, (i) each and all of the rights and remedies
available to a secured party upon default under the NYUCC or any other
applicable UCC or other applicable law, (ii) each and all of the rights and
remedies available to it under the Credit Agreement or any other Loan Document
and (iii) each and all of the following rights and remedies:
 
(a)      Collection Rights.  Without notice to any Grantor or any other Loan
Party, the Agent may notify any or all account debtors and obligors on any
accounts, instruments, general intangibles or other claims constituting
Collateral of the Secured Creditors’ Security Interests therein and may direct,
demand and enforce payment thereof directly to the Agent.  The provisions of
Section 9-209 of the NYUCC shall not apply to any account, chattel paper or
payment intangible as to which notification of assignment has been sent to the
account debtor.
 

 
 

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        (b)           Taking Possession.  The Agent may (i) enter upon any and
all premises owned or leased by any Grantor where Collateral is located (or
believed by the Agent to be located), with or (to the fullest extent permitted
by law) without judicial process and without any obligation to pay rent, (ii)
prior to the disposition of the Collateral, store, process, repair or
recondition the Collateral or otherwise prepare the Collateral for disposition
in any manner to the extent the Agent deems appropriate, (iii) take possession
of any Grantor’s premises or place custodians in exclusive control thereof,
remain on such premises and use the same and any Grantor’s equipment for the
purpose of completing any work in process or otherwise preparing the Collateral
for sale or selling or otherwise transferring the Collateral, (iv) take
possession of all items of Collateral that are not then in its possession,
either upon such premises or by removal from such premises, and (v) require any
Grantor or the Person in possession thereof to deliver such Collateral to the
Agent at one or more locations designated by the Agent and reasonably convenient
to it and each Grantor owning an interest therein.
 
(c)      Foreclosure.  The Agent may sell, lease, license or otherwise dispose
of or transfer any or all of the Collateral or any part thereof in one or more
parcels at public sale or in private sale or transaction, on any exchange or
market or at the Agent’s offices or on any Grantor’s premises or at any other
location, for cash, on credit or for future delivery, and may enter into all
contracts necessary or appropriate in connection therewith, without any notice
whatsoever unless required by law.  Where permitted by law, one or more of the
Secured Creditors may be the purchasers at any such sale and in such event, if
such bid is made by all of the Lenders or otherwise whenever a credit bid is
expressly permitted under the Credit Agreement or approved in writing by the
Agent and the Required Lenders, the Secured Creditors bidding at such sale may
bid part or all of the Obligations owing to them without necessity of any cash
payment on account of the purchase price, even though any other purchaser at
such sale is required to bid a purchase price payable in cash.  Each Grantor
agrees that at least ten (10) calendar days’ written notice to such Grantor of
the time and place of any public sale of Collateral owned by it (or, to the
extent such Grantor is entitled by law to notice thereof, the public sale of any
other Collateral), or the time after which any private sale of Collateral owned
by it (or, to the extent such Grantor is entitled by law to notice thereof, the
private sale of any other Collateral) is to be made, shall be commercially
reasonable.  For purposes of such notice, to the fullest extent permitted by law
(i) each Grantor waives notice of any sale of Collateral owned by any other
Grantor and (ii) each Grantor agrees that notice given to either Borrower shall
constitute notice given to such Grantor.  The giving of notice of any such sale
or other disposition shall not obligate the Agent to proceed with the sale or
disposition, and any such sale or disposition may be postponed or adjourned from
time to time, without further notice.
 
(d)      Voting Rights.  The Agent may exercise any and all rights of any
Grantor as the owner of any Pledged Securities, including, without limitation,
voting rights, rights to give or withhold consent under any agreement under
which any Pledged Security is issued and all other rights referred to in Section
12.01(e).
 
(e)      Use of Intellectual Property.  The Agent may, on a royalty-free basis,
use and license use of any Trademark, Trade Secret, trade name, trade style,
Copyright, Patent, technical knowledge or process or other Intellectual Property
owned, held or used by any Grantor in respect of any Collateral as to which any
right or remedy of the Agent is exercised or enforced.  In addition, the Agent
may exercise and enforce such rights and remedies for collection as may be
available to it by law or agreement.  Each Grantor grants a license pursuant to
Section 13.03 in connection therewith.
 

 
 

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        (f)           Use of Collateral.  With respect to any Collateral in the
possession of the Agent or any other Secured Creditor, or a bailee or other
third party holding on its behalf, the Agent or such other Secured Creditor may
use or operate such Collateral in any manner and to the extent determined by the
Agent or such Secured Creditor.
 
13.03.           Grant of License to Use Intellectual Property.  For the purpose
of enabling the Agent to exercise rights and remedies under this Section 13 at
such time as the Agent shall be lawfully and otherwise entitled to exercise such
rights and remedies, each Grantor hereby grants to the Agent an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, license or sub-license any of the
Collateral consisting of Intellectual Property now owned or hereafter acquired
by the Grantor to the extent that such Grantor is not legally or contractually
prohibited from doing so (Grantor agreeing to use commercially reasonable
efforts not to enter into, after the Closing Date, any such contractual
prohibition), and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof.  The use of such license by the Agent shall be
exercised, at the Agent’s option, only upon the occurrence and during the
continuation of an Event of Default; provided that any license, sub-license or
other transaction entered into by the Agent in accordance herewith shall be
binding upon each Grantor notwithstanding any subsequent cure, waiver or other
termination of an Event of Default.
 
13.04.           Waivers by Grantors.  Each Grantor hereby irrevocably waives
(a) all rights of redemption from any foreclosure sale, (b) the benefit of all
valuation, appraisal, exemption and moratorium laws, (c) to the fullest extent
permitted by law, all rights to notice or a hearing prior to the exercise by the
Agent of its right to take possession of any Collateral, whether by self-help or
by legal process and any right to object to the Agent taking possession of any
Collateral by self-help, and (d) if the Agent seeks to obtain possession of any
Collateral by replevin, claim and delivery, attachment, levy or other legal
process, (i) any notice or demand for possession prior to the commencement of
legal proceedings, (ii) the posting of any bond or security in any such
proceedings, and (iii) any requirement that the Agent retain possession and not
dispose of any Collateral until after a trial or final judgment in such
proceedings.
 
13.05.           Application of Proceeds.  Except as expressly provided
elsewhere in this Agreement, all proceeds received by the Agent in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Agent, be held by the Agent as
Collateral for, or then, or at any other time thereafter, applied in full or in
part by the Agent against, the Secured Obligations in the following order of
priority:
 
FIRST:  to the payment of all reasonable costs and expenses of such sale,
collection or other realization, including reasonable compensation to the Agent
and its agents and counsel, and all other reasonable expenses, liabilities and
advances made or incurred by the Agent in connection therewith, and all amounts
for which the Agent is entitled to indemnification hereunder and all reasonable
advances made by the Agent hereunder for the account of any Grantor, and to the
payment of all reasonable costs and expenses paid or incurred by the Agent in
connection with the exercise of any right or remedy hereunder, all in accordance
with Section 19.09;
 
SECOND:  to the payment of all other Secured Obligations (for the ratable
benefit of the holders thereof) then due and payable in the manner and order
provided in the Credit  Agreement;
 

 
 

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THIRD:  to any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of
the NYUCC; and
 
FOURTH, to the payment to or upon the order of the Grantor entitled thereto, or
to whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
 
13.06.           Surplus, Deficiency.  Any surplus proceeds of any sale or other
disposition by the Agent of any Collateral remaining after discharge of the
Credit Agreement and after all Secured Obligations are paid in full and in cash
and any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the NYUCC
are paid in full shall be paid over to the Grantor entitled thereto, or to
whomever may be lawfully entitled to receive such surplus or as a court of
competent jurisdiction may direct, but prior to termination and discharge of the
Credit Agreement, such surplus proceeds may be retained by the Agent and held as
Collateral until termination and discharge of the Credit Agreement.  The
Borrower and each Guarantor shall be and remain liable for any deficiency.
 
13.07.           Information Related to the Collateral.  If, during the
continuance of an Event of Default, the Agent determines to sell or otherwise
transfer any Collateral, each Grantor shall, and shall cause any Person
controlled by it to, furnish to the Agent all information the Agent may request
that pertains or could pertain to the value or condition of the Collateral or
that would or might facilitate such sale or transfer.  The Agent shall have the
right, notwithstanding any confidentiality obligation or agreement otherwise
binding upon it, freely (but not in violation of any law, including federal
securities laws) to disclose such information, and any and all other information
(including confidential information) pertaining in any manner to the Collateral
or the assets, liabilities, results of operations, business or prospects of any
Secured Creditors, freely to any Person that the Agent in good faith believes to
be a potential or prospective purchaser in such sale or transfer, without
liability for any disclosure, dissemination or use that may be made as to such
information by any such Person.
 
13.08.           Sale Exempt from Registration.  The Agent shall be entitled at
any such sale or other transfer, if it deems it advisable to do so, to restrict
the prospective bidders or purchasers to Persons who will provide assurances
satisfactory to the Agent that the Collateral may be offered and sold to them
without registration under the Securities Act, and without registration or
qualification under any other applicable state or federal law.  Upon the
consummation of any such sale, the Agent shall have the right to assign,
transfer and deliver to the purchaser or purchasers thereof the Collateral so
sold.  The Agent may solicit offers to buy the Collateral, or any part of it,
from a limited number of investors deemed by the Agent, in its good faith
judgment or in good faith reliance upon advice of its counsel, to meet the
requirements to purchase securities under Regulation D promulgated under the
Securities Act (or any other regulation of similar import).  If the Agent
solicits such offers from such investors, then the acceptance by the Agent of
the highest offer obtained from any of them shall be deemed to be a commercially
reasonable method of disposition of the Collateral.
 
13.09.           Rights and Remedies Cumulative.  The rights provided for in
this Agreement and the other Loan Documents are cumulative and are not exclusive
of any other rights, powers or privileges or remedies provided by law or in
equity, or under any other instrument, document or agreement.  The Agent may
exercise and enforce each right and remedy available to it either before or
concurrently with or after, and independently of, any exercise or enforcement of
any other right or remedy of the Agent or any other Secured Creditor against any
 

 
 

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Person or property.  All such rights and remedies shall be cumulative, and no
one of them shall exclude or preclude any other.
 
13.10.           No Direct Enforcement by Secured Creditors.  The Agent may
freely exercise and enforce any and all of its rights and remedies hereunder,
for the benefit of the Secured Creditors.  No Secured Creditor, other than the
Agent, shall have any independent right to collect, take possession of,
foreclose against or otherwise enforce the Security Interests granted hereby.
 
Section 14.                      Standards for Exercising Remedies.
 
14.01.           Commercially Reasonable Manner.  To the extent that applicable
law imposes duties on the Agent to exercise remedies in a commercially
reasonable manner, each Grantor acknowledges and agrees that it is not
commercially unreasonable for the Agent (a) to fail to incur expenses reasonably
deemed significant by the Agent to prepare Collateral for disposition or
otherwise to complete raw material or work in process into finished goods or
other finished products for disposition or to postpone any such disposition
pending any such preparation or processing; (b) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of Collateral to be collected or disposed of;
(c) to fail to exercise collection remedies against account debtors or other
persons obligated on Collateral or to remove any Lien on or any adverse claims
against Collateral; (d) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists; (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature; (f) to contact other
persons, whether or not in the same business as such Grantor, for expressions of
interest in acquiring all or any portion of the Collateral; (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature; (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets; (i) to dispose of assets
in wholesale rather than retail markets; (j) to disclaim disposition warranties;
(k) to purchase insurance or credit enhancements to insure the Agent against
risks of loss, collection or disposition of Collateral or to provide to the
Agent a guaranteed return from the collection or disposition of Collateral; or
(l) to the extent deemed appropriate by the Agent, to obtain the services of
other brokers, investment bankers, consultants and other professionals to assist
the Agent in the collection or disposition of any of the Collateral.  Each
Grantor acknowledges that the purpose of this Section 14 is to provide
non-exhaustive indications of what actions or omissions by the Agent would not
be commercially unreasonable in the Agent’s exercise of remedies against the
Collateral and that other actions or omissions by the Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 14.  Without limiting the foregoing, nothing contained in this Section
14 shall be construed to grant any rights to any Grantor or to impose any duties
on the Agent that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section 14.
 
14.02.           Standard of Care.  The powers conferred on the Agent hereunder
are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers.  Except for the exercise of reasonable
care in the custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
 

 
 

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prior parties or to protect, preserve, vote or exercise any rights pertaining to
any Collateral.  The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which the Agent accords its
own property or if it selects, with reasonable care, a custodian to hold such
Collateral on its behalf.
 
Section 15.                      Waivers by Grantor; Obligations Absolute.
 
15.01.           Specific Waivers.  Each Grantor waives demand, notice, protest,
notice of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description other than those required
pursuant to the Credit Agreement or any other Loan Documents to which such
Grantor is a party.
 
15.02.           Obligations Absolute.  All rights of the Agent hereunder, the
Security Interest and all obligations of the Grantors hereunder shall be
absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any agreement
with respect to any of the Secured Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Secured
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document, or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from or any acceptance of partial payment thereon and or settlement,
compromise or adjustment of any Secured Obligation or of any guarantee, securing
or guaranteeing all or any of the Secured Obligations, or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Secured Obligations or this
Agreement other than the prompt and complete performance and payment in full of
the Secured Obligations.
 
Section 16.                      Marshalling.  The Agent shall not be required
to marshal any present or future collateral security (including but not limited
to this Agreement and the Collateral) for, or other assurances of payment of,
the Secured Obligations or any of them or to resort to such collateral security
or other assurances of payment in any particular order, and all of its rights
hereunder and in respect of such collateral security and other assurances of
payment shall be cumulative and in addition to all other rights, however
existing or arising.  To the extent that it lawfully may, each Grantor hereby
agrees that it shall not invoke any law relating to the marshalling of
collateral which might cause delay in or impede the enforcement of the Agent’s
rights under this Agreement or under any other instrument creating or evidencing
any of the Secured Obligations or under which any of the Secured Obligations is
outstanding or by which any of the Secured Obligations is secured or payment
thereof is otherwise assured, and, to the extent that it lawfully may, each
Grantor hereby irrevocably waives the benefits of all such laws.
 
Section 17.                      Interest.  Until paid, all amounts due and
payable by each Grantor hereunder shall be a debt secured by the Collateral and
shall bear, whether before or after judgment, interest at a rate per annum equal
to the Default Rate, from the date of payment by the Agent to the date
reimbursed by such Grantor, and such interest shall be payable by such Grantor
to the Agent on demand.
 

 
 

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Section 18.                      Reinstatement. The obligations of each Grantor
pursuant to this Agreement shall continue to be effective or automatically be
reinstated, as the case may be, if at any time payment of any of the Secured
Obligations is rescinded or otherwise must be restored or returned by the Agent
or any other Secured Creditor upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of such Grantor or any other obligor or otherwise,
all as though such payment had not been made.
 
Section 19.                      Miscellaneous.
 
19.01.           Notices.  All notices, requests and demands to or upon the
Agent or any Grantor hereunder shall be effected in the manner provided for in
Section 10.2 of the Credit Agreement.
 
19.02.           GOVERNING LAW; CONSENT TO JURISDICTION.  THIS AGREEMENT
SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW). ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE
OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH PARTY
HERETO HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE.  EACH PARTY HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF NEW YORK.  EACH PARTY HERETO HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
 
19.03.           WAIVER OF JURY TRIAL, ETC.  EACH PARTY HERETO HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
 

 
 

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    19.04.           Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.
 
19.05.           Headings.  The headings of each section of this Agreement are
for convenience only and shall not define or limit the provisions thereof.
 
19.06.           No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement.  In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
 
19.07.           Severability.  The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
 
19.08.           Survival of Agreement. All representations, warranties and
agreements made by or on behalf of any Grantor or any other Loan Party in this
Agreement and in the other Loan Documents shall survive the execution and
delivery hereof or thereof and the making and repayment of the Loans.  In
addition, notwithstanding anything herein or under applicable law to the
contrary, the provisions of this Agreement and the other Loan Documents relating
to indemnification or payment of costs and expenses, including, without
limitation, the provisions of Sections 3.1, 3.2, 3.3 and 10.5 of the Credit
Agreement, shall survive the payment in full of the Loans, the termination of
the Commitments and any termination of this Agreement or any of the other Loan
Documents.
 
19.09.           Fees and Expenses; Indemnification.
 
(a)      The Grantors, jointly and severally, agree to pay upon demand the
amount of any and all reasonable expenses, including the fees, disbursements and
other charges of counsel and of any experts or agents, which (i) any Secured
Creditor may incur in connection with (x) collecting against any Grantor under
the guarantee contained in Section 2 or otherwise enforcing or preserving any
rights under this Agreement and the other Loan Documents, (y) the exercise,
enforcement or protection of any of the rights of such Secured Creditor
hereunder or (z) the failure of any Grantor to perform or observe any of the
provisions hereof, and (ii) the Agent may incur in connection with (x) the
administration of this Agreement (including the customary fees and charges of
such Secured Creditor for any audits conducted by it or on its behalf with
respect to the accounts receivable or inventory) or (y) the custody or
preservation of, or the sale of, collection from or other realization upon any
of the Collateral.
 
(b)      Each Grantor agrees to pay, and to save the Secured Creditors 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 10.5 of the Credit Agreement.
 

 
 

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        (c)           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.
 
(d)      Each Grantor agrees that the provisions of Section 3.1 of the Credit
Agreement are hereby incorporated herein by reference, mutatis mutandis, and
each Secured Creditor shall be entitled to rely on each of them as if they were
fully set forth herein.
 
19.10.           Binding Effect; Several Agreement.  This Agreement is binding
upon each Grantor and the Secured Creditors and their respective successors and
permitted (in accordance with Section 10.8.1 of the Credit Agreement) assigns,
and shall inure to the benefit of the Grantors, the Secured Creditors and their
respective successors and permitted (in accordance with Section 10.8.1 of the
Credit Agreement) assigns, except that no Grantor shall have any right to assign
or transfer its rights or obligations hereunder or any interest herein, except
as specifically permitted by the Credit Agreement, without the prior written
consent of the Agent (and any such assignment or transfer shall be void).
 
19.11.           Waivers; Amendment.
 
(a)      No failure or delay of the Agent in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power.  The rights and remedies of
the Secured Creditors hereunder and of the Secured Creditors under the Credit
Agreement and other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have.  No waiver of any provisions
of this Agreement or consent to any departure by any Grantor therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.  No notice to or demand on any
Grantor in any case shall entitle such or any other Grantor to any other or
further notice or demand in similar or other circumstances.
 
(b)      Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Agent and each affected Grantor; provided, that any provision of
this Agreement imposing obligations on any Grantor may be waived by the Agent in
a written instrument executed by the Agent in accordance with Section 10.1 of
the Credit Agreement.
 
19.12.           Set-Off.  Each Grantor hereby irrevocably authorizes each
Secured Creditor at any time and from time to time while an Event of Default
shall have occurred and be continuing, without notice to such Grantor or any
other Grantor, any such notice being expressly waived by each Grantor, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Secured Creditor to or for the credit or the account of such
Grantor, or any part thereof in such amounts as such Secured Creditor may elect,
against and on account of the obligations and liabilities of such Grantor to
such Secured Creditor hereunder and claims of every nature and description of
such Secured Creditor against such Grantor, in any currency, whether arising
hereunder, under the Credit Agreement, any other Loan Document or otherwise, as
such Secured Creditor may elect, whether or not any Secured Creditor has made
any demand for payment and although such obligations,
 

 
 

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liabilities and claims may be contingent or unmatured.  Each Secured Creditor
shall notify such Grantor promptly of any such set-off and the application made
by such Secured Creditor 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 Creditor under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Secured Creditor may have.
 
19.13.           Integration.  This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof (except for the Fee Letter).
 
19.14.           Acknowledgments.  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 Creditor 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 Creditors, 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 Creditors or among the Grantors and the Secured Creditors.
 
19.15.           Additional Grantors and Guarantors.  Each Subsidiary of the
Borrower that is required to become a party to this Agreement pursuant to
Section 6.8 of the Credit Agreement shall become a Grantor and Guarantor for all
purposes of this Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex 1 hereto.
 
19.16.           Releases.
 
(a)      Notwithstanding anything to the contrary contained in the Credit
Agreement, herein or in any other Loan Document, upon request of Borrower in
connection with any Disposition of Property permitted by the Loan Documents, the
Agent shall (without notice to or vote or consent of any other Secured Creditor)
take such actions as shall be required to release the Security Interest in any
Collateral being Disposed of in such Disposition, to the extent necessary to
permit consummation of such Disposition in accordance with the Loan Documents,
provided that the Borrower shall have delivered to the Agent, at least five (5)
Business Days prior to the date of the proposed release, a written request for
release identifying the relevant Collateral being Disposed of in such
Disposition and the terms of such Disposition in reasonable detail, including
the date thereof, the price thereof and any estimated expenses in connection
therewith, together with a certification by Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents and that the proceeds of such Disposition will be applied in
accordance with the Credit Agreement and the other Loan Documents.
 

 
 

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        (b)           At the request and sole expense of Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the capital stock or other equity interests of such Subsidiary Guarantor shall
be Disposed of in a transaction permitted by the applicable Credit Agreement;
provided that such Borrower shall have delivered to the Agent, at least five (5)
Business Days prior to the date of the proposed release, a written request for
release identifying the relevant Subsidiary Guarantor and the terms of the
Disposition in reasonable detail, including the price thereof and any expenses
in connection therewith, together with a certification by Borrower stating that
such transaction is in compliance with the Credit Agreement and the other Loan
Documents and that the Proceeds of such Disposition will be applied in
accordance therewith.
 
19.17.           Intercompany Debt.
 
(a)      Each Grantor hereby agrees that any intercompany Debt or other
intercompany payables or receivables directly or indirectly made by or owed to
such Grantor by any other Grantor (collectively, “Intercompany Debt”), of
whatever nature at any time outstanding shall be subordinate and subject in
right of payment to the prior payment in full in cash of the Borrower
Obligations.  Each Grantor hereby agrees that following a single written notice
to Borrower, such Grantor will not, while any Event of Default is continuing,
accept any payment, including by offset, on any Intercompany Debt until all
Secured Obligations have been paid in full and the Commitments have been
terminated, in each case, except with the prior written consent of the Agent.
 
(b)      In the event that any payment on any Intercompany Debt shall be
received by a Grantor other than as permitted by this Section 19.17 before all
Secured Obligations have been paid in full, the Commitments have been terminated
pursuant to the Credit Agreement, such Grantor shall receive such payments and
hold the same in trust for, segregate the same from its own assets and shall
immediately pay over to, the Agent for the benefit of the Agent and Lenders all
such sums to the extent necessary so that the Agent and the Lenders shall have
been paid in full, in cash, all Borrower Obligations owed or which may become
owing.
 
(c)      Upon any payment or distribution of any assets of any Grantor of any
kind or character, whether in cash, property or securities by set-off,
recoupment or otherwise, to creditors in any liquidation or other winding-up of
such Grantor or in the event of any case, proceeding or other action described
in Section 8.1.3 of the Credit Agreement, the Agent and Lenders shall first be
entitled to receive payment in full in cash, in accordance with the terms of the
Borrower Obligations and of this Agreement, of all amounts payable under or in
respect of such Borrower Obligations, before any payment or distribution is made
on, or in respect of, any Intercompany Debt, in any such case, proceeding or
other action, any distribution or payment, to which the Agent or any Lender
would be entitled except for the provisions hereof shall be paid by such
Grantor, or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution directly to the Agent (for
the benefit of the Agent and the Lenders) to the extent necessary to pay all
such Borrower Obligations in full in cash, after giving effect to any concurrent
payment or distribution to the Agent and Lenders (or to the Agent for the
benefit of the Agent and Lenders).
 

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

APPLIED NATURAL GAS FUELS,
INC.                                                                           ARIZONA
LNG, L.L.C.

By:  New Earth LNG, LLC,
By:    /s/ Cem
Hacioglu                                                                 its
sole member
Name:              Cem Hacioglu
Title:              President, CEO
By:   /s/ Cem
Hacioglu                                                                
Name:  Cem Hacioglu
NEW EARTH LNG,
LLC                                                                     Title:           President,
CEO

By:    /s/ Cem
Hacioglu                                                          
Name:              Cem Hacioglu
Title:              President, CEO

APPLIED LNG TECHNOLOGIES USA, L.L.C.

By:  New Earth LNG, LLC, its sole member

By:    /s/ Cem
Hacioglu                                                          
Name:              Cem Hacioglu
Title:              President, CEO

FLEET STAR, INC.

By:    /s/ Cem
Hacioglu                                                          
Name:              Cem Hacioglu
Title:              President, CEO

EARTH LEASING, INC.

By:    /s/ Cem
Hacioglu                                                          
Name:              Cem Hacioglu
Title:              President, CEO

 
 

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Accepted:  as to Sections 9.02 and
9.03                                                 
FOURTH THIRD LLC,
as Agent
 
By:    /s/ Seth B. Taube   
 
 

 Name:  Seth B. Taube
 Title:  Authorized Signatory
 
 

 
 

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