EXHIBIT 10.26

EXECUTION COPY

 
 

GUARANTEE AND COLLATERAL AGREEMENT

dated as of December 23, 2003

as amended and restated as of December 24, 2004

made by

NRG ENERGY, INC.,

NRG POWER MARKETING INC.

and certain of the Subsidiaries of NRG Energy, Inc.

in favor of

DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Priority Collateral Trustee, Parity Collateral Trustee
and Account Collateral Trustee

CREDIT SUISSE FIRST BOSTON,
as Administrative Agent

and

LAW DEBENTURE TRUST COMPANY OF NEW YORK,
as Trustee

 
 

 

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TABLE OF CONTENTS

                                      Page SECTION 1.   DEFINED TERMS     2  
 
                   

    1.1.     Definitions     2  

    1.2.     Other Definitional Provisions     19  
 
                    SECTION 2.   GUARANTEE     19  
 
                   

    2.1.     Guarantee     19  

    2.2.     Rights of Reimbursement, Contribution and Subrogation     21  

    2.3.     Amendments, etc. with respect to the Borrower Obligations     23  

    2.4.     Guarantee Absolute and Unconditional     23  

    2.5.     Reinstatement     24  

    2.6.     Payments     25  
 
                    SECTION 3.   GRANT OF SECURITY INTEREST; CONTINUING
LIABILITY UNDER COLLATERAL     25  
 
                    SECTION 4.   REPRESENTATIONS AND WARRANTIES     28  
 
                   

    4.1.     Representations in Secured Debt Documents     28  

    4.2.     Title; No Other Liens     28  

    4.3.     Perfected First Priority Liens     28  

    4.4.     Name; Jurisdiction of Organization, etc.     29  

    4.5.     Inventory and Equipment     29  

    4.6.     Condition and Maintenance of Equipment     30  

    4.7.     Farm Products     30  

    4.8.     Investment Property     30  

    4.9.     Receivables     31  

    4.10.     Contracts     31  

    4.11.     Intellectual Property     32  

    4.12.     Letters of Credit and Letter of Credit Rights     34  

    4.13.     Commercial Tort Claims     35  
 
                    SECTION 5.   COVENANTS     35  
 
                   

    5.1.     Covenants in Secured Debt Documents     35  

    5.2.     Delivery and Control of Instruments, Certificated Securities,
Chattel Paper, Negotiable Documents, Investment Property and Letter of Credit
Rights     37  

    5.3.     Maintenance of Insurance     37  

    5.4.     Payment of Secured Obligations     38  

    5.5.     Maintenance of Perfected Security Interest; Further Documentation  
  38  

    5.6.     Changes in Location, Name, Jurisdiction of Incorporation, etc    
39  

    5.7.     Notices.     39  

    5.8.     Investment Property     39  

    5.9.     Receivables     41  

    5.10.     Contracts     42  

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                                      Page

    5.11.     Intellectual Property     43  

    5.12.     Commercial Tort Claims     45  

    5.13.     Deposit and Securities Accounts     45  

    5.14.     Collections     46  
 
                    SECTION 6.   REMEDIAL PROVISIONS     46  
 
                   

    6.1.     Certain Matters Relating to Receivables     46  

    6.2.     Communications with Obligors; Grantors Remain Liable     47  

    6.3.     Pledged Securities     48  

    6.4.     Intellectual Property; Grant of License     49  

    6.5.     Intellectual Property Litigation and Protection     49  

    6.6.     Proceeds to be Turned Over To Collateral Trustee     50  

    6.7.     Application of Proceeds     50  

    6.8.     Code and Other Remedies.     50  

    6.9.     Registration Rights     52  

    6.10.     Deficiency     53  

    6.11.     Separate Liens     53  
 
                    SECTION 7.   THE COLLATERAL TRUSTEE     53  
 
                   

    7.1.     Collateral Trustee’s Appointment as Attorney-in-Fact, etc.     53  

    7.2.     Duty of Collateral Trustee     54  

    7.3.     Execution of Financing Statements     55  

    7.4.     Authority of Collateral Trustee     55  

    7.5.     Access to Collateral, Books and Records; Other Information     56  

    7.6.     Appointment of Co-Collateral Agents     56  
 
                    SECTION 8.   MISCELLANEOUS     56  
 
                   

    8.1.     Amendments in Writing     56  

    8.2.     Notices     57  

    8.3.     No Waiver by Course of Conduct; Cumulative Remedies     57  

    8.4.     Enforcement Expenses; Indemnification     57  

    8.5.     Successors and Assigns     58  

    8.6.     Set-Off     58  

    8.7.     Counterparts     58  

    8.8.     Severability     58  

    8.9.     Section Headings     58  

    8.10.     Integration     59  

    8.11.     APPLICABLE LAW     59  

    8.12.     Submission to Jurisdiction; Waivers     59  

    8.13.     Acknowledgments     59  

    8.14.     Additional Grantors     60  

    8.15.     Releases     60  

    8.16.     Conflicts     60  

    8.17.     WAIVER OF JURY TRIAL     60  

    8.18.     Additional Guaranteed Secured Debt Representatives     60  

    8.19.     Rights and Immunities of Secured Debt Representatives     60  

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          Exhibits:    
 
       

  Exhibit A   Form of Pledged Deposit Account Control Agreement

  Exhibit B   Form of Pledged Securities Account Control Agreement

  Exhibit C   Form of Commodity Account Control Agreement

  Exhibit D   Form of Acknowledgment and Consent

  Exhibit E   Form of Intellectual Property Security Agreement

  Exhibit F   Form of After-Acquired Intellectual Property Security Agreement
 
        Annex:    
 
       

  Annex 1   Assumption Agreement

          Schedules:          

  Schedule 1.1(a)   Excluded Foreign Subsidiaries

  Schedule 1.1(b)   Excluded Project Subsidiaries

  Schedule 1.1(c)   Immaterial Subsidiaries

  Schedule 4.3(a)   Filings and Other Actions Required to Perfect Security
Interests

  Schedule 4.4   Organizational Information

  Schedule 4.5(a)   Location of Inventory and Equipment

  Schedule 4.5(b)   Bailees and Warehousemen

  Schedule 4.8(a)   Description of Equity Instruments

  Schedule 4.8(b)   Description of Pledged Debt Instruments

  Schedule 4.8(c)   Description of Pledged Accounts

  Schedule 4.10(a)   Material Contracts

  Schedule 4.10(b)   Non-Assignable Contracts

  Schedule 4.11(a)   Intellectual Property

  Schedule 4.11(c)   Licenses, etc.

  Schedule 4.11(e)   Releases, etc.

  Schedule 4.12   Letter of Credit Rights

  Schedule 4.13   Commercial Tort Claims

  Schedule 8.2   Notice Addresses of Guarantors

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          GUARANTEE AND COLLATERAL AGREEMENT, dated as of December 23, 2003, as
amended and restated as of December 24, 2004, made by each of the signatories
hereto, in favor of Deutsche Bank Trust Company Americas, (i) in its capacity as
Priority Collateral Trustee for Credit Suisse First Boston, as administrative
agent (in such capacity and together with its successors, the “Administrative
Agent”) and as collateral agent (in such capacity and together with its
successors, the “Collateral Agent”) and for the banks and other financial
institutions or entities (the “Lenders”) from time to time parties to the Credit
Agreement dated as of December 23, 2003, as amended and restated on December 24,
2004 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among NRG Energy, Inc., a Delaware corporation
(the “Company”), NRG Power Marketing Inc., a Delaware corporation (“NRG Power
Marketing” and, together with the Company, the “Credit Agreement Borrowers”),
the Lenders, Credit Suisse First Boston, and Goldman Sachs Credit Partners L.P.,
as joint lead book runners and joint lead arrangers (in such capacity, the
“Arrangers”) and as co-documentation agents, Goldman Sachs Credit Partners L.P.,
as syndication agent (in such capacity, the “Syndication Agent”) and the other
Priority Lien Secured Parties thereunder, (ii) in its capacity as Parity
Collateral Trustee for Law Debenture Trust Company of New York, as trustee (in
such capacity and together with its successors, the “Trustee”) under the
Indenture, dated as of December 23, 2003 (as amended, restated, supplemented, or
otherwise modified from time to time, the “Indenture”), among the Company,
certain of its subsidiaries, the Trustee and the other Parity Lien Secured
Parties thereunder, (iii) in its capacity as Account Collateral Trustee, for the
Priority Lien Secured Parties and the Parity Lien Secured Parties and (iv) in
its capacity as Priority Collateral Trustee, Parity Collateral Trustee and/or
Account Collateral Trustee, as applicable, for any other Secured Parties (as
hereinafter defined) from time to time entitled to the benefits of the
Collateral Trust Agreement, dated as of December 23, 2003, as amended and
restated as of December 24, 2004 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Collateral Trust
Agreement”), among the Company, the other Grantors, the Administrative Agent,
the Trustee, the Collateral Trustee and the other parties from time to time
party thereto; and, for purposes of Section 2, in favor of the Administrative
Agent and the Trustee and any other future Guaranteed Secured Debt
Representative (as hereinafter defined) with respect to any Series of Guaranteed
Secured Debt (as hereinafter defined) that becomes entitled to the benefits of
the Collateral Trust Agreement.

WITNESSETH:

          WHEREAS, on the Closing Date, the parties thereto entered into the
Original Guarantee and Collateral Agreement and on the Restatement Date, this
Agreement will be amended and restated in the form hereof;

          WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Credit Agreement Borrowers upon the
terms and subject to the conditions set forth therein, and, pursuant to the
Indenture, the Company has issued $1,725,000,000 in aggregate principal amount
of Second Priority Senior Secured Notes due 2013 (the “Notes”);

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

 

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          WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used, and the proceeds of the offering of the Notes have been
used, in part to enable the Credit Agreement Borrowers or the Company, as the
case may be, to make valuable transfers to one or more of the other Grantors in
connection with the operation of their respective businesses;

          WHEREAS, the Credit Agreement Borrowers and the other Grantors are
engaged in related businesses, and each Grantor will derive (or has derived)
substantial direct and indirect benefit from the making of the extensions of
credit under the Credit Agreement and the offering of the Notes;

          WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Credit Agreement Borrowers
under the Credit Agreement and it was a condition precedent to the obligation of
the initial purchasers to purchase the Notes that the Grantors shall have
executed and delivered, with respect to the Credit Agreement, this Agreement,
and the Notes, the Original Guarantee and Collateral Agreement to the Collateral
Trustee for the benefit of the applicable Secured Parties; and

          WHEREAS, the Credit Agreement Borrowers and the other Grantors have
entered into the Collateral Trust Agreement which sets forth the terms on which
each Secured Party has appointed the Collateral Trustee as trustee for the
present and future holders of the Secured Obligations (as hereinafter defined)
to receive, hold, maintain, administer and distribute the Collateral at any time
delivered to the Collateral Trustee and to enforce the Security Documents,
including this Agreement, and all interests, rights, powers and remedies of the
Collateral Trustee in respect thereto or thereunder and the proceeds thereof;

          NOW, THEREFORE, in consideration of the premises and to induce the
Secured Parties to enter into the Secured Debt Documents and to induce such
Secured Parties to make their respective extensions of credit to the applicable
Grantors thereunder, each Grantor hereby agrees with the Collateral Trustee, for
the benefit of the applicable Secured Parties, as follows:

SECTION 1. DEFINED TERMS

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

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

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

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     “After-Acquired Intellectual Property” shall have the meaning assigned to
such term in Section 5.11(k).

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

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

     “Borrower” shall mean (i) in the case of the Revolving Loans, Revolving
Credit Commitments and Revolving Letters of Credit (each as defined in the
Credit Agreement) and all related obligations under the Credit Agreement, the
Credit Agreement Borrowers, (ii) in the case of the Term Loans, Credit-Linked
Deposits, Term Loan Commitments and Funded Letters of Credit (as defined in the
Credit Agreement) and all related obligations under the Credit Agreement, the
Company, (iii) in the case of the Notes issued under the Indenture and all
related obligations under the Indenture, the Company and (iv) in the case of the
obligations in respect of any future Series of Guaranteed Secured Debt, the
Company and any other applicable Grantor who shall act as the borrower or issuer
under the applicable Secured Debt Documents with respect to such Series of
Guaranteed Secured Debt.

     “Borrower Obligations” shall mean, without duplication, the collective
reference to the unpaid principal of and interest on the loans (or other
extensions of credit), notes (or other debt securities), credit-linked deposits
(or other similar deposits) and all other obligations and liabilities of any
Borrower in each case with respect to any Series of Guaranteed Secured Debt
(including interest accruing at the then applicable rate provided in any
applicable Secured Debt Document after the maturity of such loans (or other
extensions of credit), notes (or other debt securities) or credit-linked
deposits (or other similar deposits) and interest accruing at the then
applicable rate provided in any applicable Secured Debt Document after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the applicable Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding) to any applicable Secured Party (including, in the case of any
Specified Hedging Agreement, any Lender, the Administrative Agent, the
Collateral Agent, any Arranger or the Syndication Agent or, in each case, any
Affiliate thereof, regardless of whether or not such Lender thereafter continues
to be a Lender or such Person continues to have such capacity with respect to
the Credit Agreement), whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with this Agreement, the Credit Agreement (if
applicable), the Indenture (or the Notes) (if applicable) or any other
applicable Secured Debt Documents (including any letters of credit, any
Specified Hedging Agreement or any other document made, delivered or given in
connection with any of the foregoing), in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including all fees and disbursements of counsel to the
Secured Parties that are required to be paid by the applicable Borrower pursuant
to the terms of any of the foregoing agreements).

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     “Business Day” shall mean any day other than a Saturday, Sunday or day on
which commercial banks in New York City are authorized or required by law to
close.

          “Capital Stock” shall mean (a) in the case of a corporation, corporate
stock; (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (c) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership interests; and
(d) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person, but excluding from all of the foregoing any debt securities
convertible into Capital Stock, whether or not such debt securities include any
right of participation with Capital Stock.

     “ Closing Date” shall mean December 23, 2003.

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

     “Collateral Account” shall mean any collateral account established by the
Collateral Trustee as provided in Section 6.1 or 6.6.

     “Collateral Account Funds” shall mean, collectively, the following from
time to time on deposit in a Collateral Account: all funds (including all trust
monies), investments (including all cash equivalents) credited to, or purchased
with funds from, any Collateral Account and all certificates and instruments
from time to time representing or evidencing such investments; all notes,
certificates of deposit, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by the Collateral Trustee for or
on behalf of any Grantor in substitution for, or in addition to, any or all of
the Collateral; and all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the items constituting Collateral.

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

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

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

     “control” shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms “controlling” and

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“controlled” shall have meanings correlative thereto; provided that when used in
connection with the Collateral Trustee’s rights with respect to, or security
interest in, any Collateral, “control” shall have the meaning specified in the
UCC with respect to that type of Collateral.

     “Control Agreement (Deposit and Securities Accounts)” shall mean a Control
Agreement in the form of Exhibit A, to be executed and delivered by the
applicable Grantor and the other party or parties thereto with respect to each
Deposit Account or Securities Account of such Grantor except to the extent that
the same constitutes an Excluded Perfection Asset at any time.

     “Control Agreement (Commodities Contracts)” shall mean a Control Agreement
in the form of Exhibit B, to be executed and delivered by the applicable Grantor
and the other party or parties thereto with respect to each Commodity Contract
of such Grantor as required by Section 5.2(e).

     “Copyright Licenses” shall mean any agreement, whether written or oral,
naming any Grantor as licensor or licensee (including those listed in
Schedule 4.11 (as such schedule may be amended or supplemented from time to
time)), granting any right in, to or under any Copyright, including the grant of
rights to manufacture, distribute, exploit and sell materials derived from any
Copyright.

     “ Copyrights” shall mean (i) all copyrights arising under the laws of the
United States, any other country, or union of countries, or any political
subdivision of any of the foregoing, whether registered or unregistered and
whether published or unpublished (including those listed in Schedule 4.11 (as
such schedule may be amended or supplemented from time to time)), all
registrations and recordings thereof, and all applications in connection
therewith and rights corresponding thereto throughout the world, including all
registrations, recordings and applications in the United States Copyright
Office, (ii) the right to, and to obtain, all extensions and renewals thereof,
and the right to sue for past, present and future infringements of any of the
foregoing, (iii) all proceeds of the foregoing, including licenses, royalties,
income, payments, claims, damages, and proceeds of suit and (v) all other rights
of any kind whatsoever accruing thereunder or pertaining thereto.

     “ Core Collateral” shall mean all Equity Interests in, and property and
assets of, NRG Mid-Atlantic, NRG Northeast and NRG South Central and their
respective subsidiaries (other than NRG Sterlington Power LLC, Bayou Cove
Peaking Power LLC and Big Cajun I Peaking Power LLC for so long as such entities
shall constitute Excluded Project Subsidiaries), whether now owned or hereafter
acquired.

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

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

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     “Credit Agreement Guarantors” shall mean the Revolving Loan Guarantors and
the Term Loan Guarantors.

     “Deposit Account” shall mean (i) all “deposit accounts” as defined in
Article 9 of the New York UCC, (ii) all other accounts maintained with any
financial institution (other than Securities Accounts or Commodity Accounts) and
(iii) shall include all of the accounts listed on Schedule 4.8(c) under the
heading “Deposit Accounts” (as such schedule may be amended or supplemented from
time to time) together, in each case, with all funds held therein and all
certificates or instruments representing any of the foregoing.

     “Depositary Bank” shall mean a financial institution that has delivered to
the Collateral Trustee an executed Control Agreement (Deposit and Securities
Accounts).

     “ Domestic Subsidiaries” shall mean all Subsidiaries incorporated, formed
or organized under the laws of the United States of America, any State thereof
or the District of Columbia.

     “dollars” or “$” shall mean lawful money of the United States of America.

     “Equity Interests” shall mean Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

     “Excluded Assets” shall mean (i) any lease, license, contract, property
right or agreement to which any Grantor is a party or any of such Grantor’s
rights or interests thereunder if and only for so long as the grant of a
security interest therein under the Security Documents shall constitute or
result in a breach, termination or default or invalidity under any such lease,
license, contract, property right or agreement (other than to the extent that
any such term would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC of any relevant jurisdiction or any other applicable
law or principles of equity); provided that such lease, license, contract,
property right or agreement shall be an Excluded Asset only to the extent and
for so long as the consequences specified above shall result and shall cease to
be an Excluded Asset and shall become subject to the security interest granted
under the Security Documents, immediately and automatically, at such time as
such consequences shall no longer result; (ii) any interests in real property
owned or leased by any Grantor only for so long as such interest represents an
Excluded Perfection Asset; (iii) any Equity Interests in any Excluded Project
Subsidiary the pledge of which pursuant to the Security Documents would
constitute a default under the applicable Non-Recourse Indebtedness in respect
of which it is an obligor and any voting Equity Interests in excess of 66% (or,
in the case of NRG International Holdings GmbH, NRG International Holdings
(No.2) GmbH and NRGenerating International BV, 65%) of the total outstanding
voting Equity Interests in any Excluded Foreign Subsidiary; (iv) any Deposit
Account, Securities Account or Commodities Account (and all cash, cash
equivalents permitted by the terms of the Secured Debt Documents and Commodity
Contracts held therein) if and only for so long as such Deposit Account,
Securities Account or Commodities Account is subject to a

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Lien under clause (r) of the definition of “Permitted Liens” set forth in the
Credit Agreement and the other parallel exceptions provided for in the Secured
Debt Documents; (v) the Equity Interests in, and all properties and assets of,
NRG Energy Insurance Ltd. (Cayman Islands); (vi) the Equity Interests in, and
all properties and assets of, NRGenerating III (Gibraltar), NRGenerating IV
Gibraltar, NRG Pacific Corporate Services Pty Ltd., Coniti Holding BV (only for
so long as such entity shall own no assets other than the Equity Interests in
Tosli (Gibraltar) BV) and Tosli (Gibraltar) BV (only for so long as such entity
shall own no assets); (vii) the Equity Interests in, and all properties and
assets of, NRG Latin America Inc., Sterling Luxembourg (No. 4) S.a.r.l,
NRGenerating Luxembourg (No. 6) and S.a.r.l., NRGenerating Holdings (No. 21) BV
(only for so long as such entity shall own no assets other than the stock of its
subsidiaries owned on the Closing Date); (viii) any Equity Interest of a Person
(other than a Subsidiary) held by any Grantor if and for so long as the pledge
thereof under the Security Documents shall constitute or result in a breach,
termination or default under any joint venture, stockholder or partnership
agreement between such Grantor and one or more other holders of Equity Interests
of such Person; provided that (A) such Grantor shall have used reasonable
efforts to obtain the consent or waiver of such other holders of Equity
Interests of such Person to such a pledge and such consent or waiver shall not
have been obtained and (B) such Equity Interest shall be an Excluded Asset only
to the extent and for so long as the consequences specified above shall result
and shall cease to be an Excluded Asset and shall become subject to the security
interest granted under the Security Documents, immediately and automatically, at
such time as such consequences shall no longer result; (ix) all properties and
assets of the Company’s resource recovery facility located at North Newport, MN
and all properties and assets of the Company’s resource recovery facility
located at Elk River, MN if and for so long as the grant of a security interest
therein under the Security Documents shall constitute or result in a breach,
termination or default under any service agreement with the applicable
municipalities in which such facilities reside; provided that (A) the Company
shall have used reasonable efforts to obtain the consent or waiver of such
municipalities to the grant of such security interests and such consent or
waiver shall not have been obtained and (B) such properties and assets shall be
an Excluded Asset only to the extent and for so long as the consequences
specified above shall result and shall cease to be an Excluded Asset and shall
become subject to the security interest granted under the Security Documents,
immediately and automatically, at such time as such consequences shall no longer
result; (x) any Account of NRG Power Marketing solely to the extent that
(x) such Account relates to the sale by NRG Power Marketing of power or capacity
that was purchased by NRG Power Marketing from a Subsidiary that is an Excluded
Project Subsidiary and (y) the grant of a security interest in such Account
under the Security Documents shall constitute or result in a breach, termination
or default under any agreement or instrument governing the applicable Existing
Non-Recourse Indebtedness of such Subsidiary (as such agreement or instrument
was in effect on the Closing Date); (xi) the Equity Interests in either of the
NEO Companies to the extent that a grant of a security interest in such Equity
Interests under the Security Documents shall constitute or result in a breach,
termination or default under any agreement or instrument governing the
applicable Existing Non-Recourse Indebtedness of their subsidiaries (as such
agreement or instrument was in effect on the Closing Date); and (xii) the
Deposit Account established

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by the Company pursuant to the NRG Plan in respect of the Consolidated Edison
dispute and all cash held therein not to exceed (x) $11,700,000 as of the
Closing Date plus (y) any amounts required by the NRG Plan to be deposited
therein in respect of invoices owing to Consolidated Edison; provided that such
Deposit Account (and all cash therein) shall automatically cease to be an
Excluded Asset from and after the date that such dispute is resolved.

     “Excluded Foreign Subsidiaries” shall mean, at any time, any Foreign
Subsidiary that is (or is treated as) for United States federal income tax
purposes either (a) a corporation or (b) a pass-through entity owned directly or
indirectly by another Foreign Subsidiary that is (or is treated as) a
corporation; provided that (i) none of NRG Mid-Atlantic, NRG Northeast or NRG
South Central or any of their respective subsidiaries may at any time be an
Excluded Foreign Subsidiary and (ii) notwithstanding the foregoing, the
following entities will be deemed to be “Excluded Foreign Subsidiaries”:
Sterling Luxembourg (No. 4) S.a.r.l., Tosli Acquisition BV, NRGenerating
Luxembourg (No. 6) S.a.r.l., NRGenerating Holdings (No. 4) GmbH (only for so
long as such entity shall remain a direct subsidiary of NRG International LLC
and shall have no assets other than those owned on the Closing Date),
NRGenerating Holdings (No. 3) Gibraltar, NRGenerating Holdings (No. 23) BV, NRG
Pacific Corporate Services Pty Ltd., NRGenerating III (Gibraltar), NRGenerating
IV (Gibraltar), Coniti Holding BV (only for so long as such entity shall own no
assets other than the Equity Interests in Tosli (Gibraltar) BV) and Tosli
(Gibraltar) BV (only for so long as such entity shall own no assets). The
Excluded Foreign Subsidiaries on the Restatement Date are set forth on
Schedule 1.1(a).

     “Excluded Foreign Subsidiary Voting Stock” shall mean the voting Equity
Interests in any Excluded Foreign Subsidiary.

     “Excluded Neo Companies” shall mean any of the Neo Companies to the extent
that the guarantee of the Note Borrower Obligations by such company would
constitute or result in a breach, termination or default under any agreement or
instrument governing the applicable Existing Non-Recourse Indebtedness of such
Neo Company (as such agreement or instrument is in effect on the Closing Date);
provided that such company shall cease to be an Excluded Neo Company and shall
automatically be subject to the guarantee in Section 2 to the extent that such
guarantee shall not constitute or result in such a breach, termination or
default.

     “Excluded Perfection Assets” shall mean any property or assets (other than
any Core Collateral except (a) the lease of Dunkirk Power LLC relating to 347
Seneca Street, Buffalo, NY, (b) the lease of Astoria Gas Turbine Power LLC
relating to the Consolidated Edison site located at 31-02 20th Avenue, Astoria,
NY, (c) the lease of Astoria Gas Turbine Power LLC relating to the A-11 dock
located at 31-02 20th Avenue, Astoria, NY, (d) the lease of NRG New Roads
Holding LLC relating to the turbine storage facilities located at GTS Duratek,
1790 Dock Street, Memphis, TN, (e) the lease of NRG New Roads Holding LLC
relating to the turbine storage facilities located at Liebherr American Inc.,
4100 Chestnut, Newport News, VA and (f) the lease of NRG New Roads Holding LLC
relating to the warehouse facilities for turbine storage located

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at Tidewater Warehouses, Bay 3, 814 Childs Avenue, Hampton, VA) in which a
security interest cannot be perfected by the filing of a financing statement
under the UCC of the relevant jurisdiction or, in the case of Equity Interests,
either the filing of a financing statement under the UCC of the relevant
jurisdiction or the possession of certificates representing such Equity
Interests; provided that such property or assets shall not have a fair market
value at any time exceeding $2,000,000 (or, if such property or asset is a
Deposit Account or Securities Account, $250,000) individually or $20,000,000 in
the aggregate and, to the extent that the fair market value of any such property
or asset shall exceed $2,000,000 (or, if such property or asset is a Deposit
Account or Securities Account, $250,000) individually, such property or asset
shall cease to be an Excluded Perfection Asset and, to the extent that the fair
market value of such property or assets shall exceed $20,000,000 in the
aggregate at any time, such property or assets shall cease to be Excluded
Perfection Assets to the extent of such excess fair market value.

     “Excluded Project Subsidiaries” shall mean, at any time, (a) any Subsidiary
existing as of the Restatement Date that is an obligor with respect to Existing
Non-Recourse Indebtedness outstanding at such time and (b) any Subsidiary that
is set forth on Schedule 1.1(b) as of the Restatement Date (so long as such
Subsidiary does not become (and remain for a period of 365 days or more) a
Guarantor after the Restatement Date) or any Subsidiary that becomes a
Subsidiary after the Restatement Date that is an obligor with respect to
Additional Non-Recourse Indebtedness outstanding at such time, in each case if
and for so long as the grant of a security interest in the property or assets of
such Subsidiary or the pledge of the Equity Interests of such Subsidiary, in
each case in favor of the Collateral Trustee for the benefit of the Secured
Parties, shall constitute or result in a breach, termination or default under
the agreement or instrument governing the applicable Non-Recourse Indebtedness;
provided that such Subsidiary shall be an Excluded Project Subsidiary only to
the extent that and for so long as the requirements and consequences above shall
exist; provided further that none of NRG Mid-Atlantic, NRG Northeast or NRG
South Central or any of their respective subsidiaries (other than NRG
Sterlington Power LLC, Bayou Cove Peaking Power LLC and Big Cajun I Peaking
Power LLC for so long as such entities shall constitute Excluded Project
Subsidiaries) may at any time be an Excluded Project Subsidiary. The Excluded
Project Subsidiaries on the Restatement Date are set forth on Schedule 1.1(b).

     “Excluded Project Subsidiary Stock” shall mean the Equity Interests in any
Excluded Project Subsidiary.

     “Existing Non-Recourse Indebtedness” shall mean secured indebtedness for
borrowed money outstanding as of the Closing Date of a Subsidiary (or of
Cadillac Renewable Energy LLC) existing as of the Closing Date and any
refinancing indebtedness in respect of such indebtedness that is permitted by
each of the Secured Debt Documents that was incurred to finance the development,
construction or acquisition of or by, or repairs, improvements or additions to,
fixed or capital assets of such Subsidiary (including power generation
facilities); provided that, except as set forth on Schedule 1.01(d) to the
Credit Agreement, (a) such indebtedness is without recourse to the Company or
any other Subsidiary or to any property or assets of the Company or any other
Subsidiary (other than, in each such case, another Subsidiary (x) which is the

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direct parent or a direct or indirect Subsidiary of the Subsidiary that incurred
or issued such indebtedness (other than any such indebtedness constituting a
guarantee) or (y) that is a Subsidiary that itself has Non-Recourse Indebtedness
(as defined in the Credit Agreement) (other than any such indebtedness
constituting a guarantee) or is the direct parent or a direct or indirect
Subsidiary of a Subsidiary that itself has Non-Recourse Indebtedness (as defined
in the Credit Agreement) (other than any such indebtedness constituting a
guarantee)), (b) neither the Company nor any other Subsidiary (other than
another Subsidiary (x) which is the direct parent or a direct or indirect
Subsidiary of the Subsidiary that incurred or issued such indebtedness (other
than any such indebtedness constituting a guarantee) or (y) that is a Subsidiary
that itself has Non-Recourse Indebtedness (as defined in the Credit Agreement)
(other than any such indebtedness constituting a guarantee) or is the direct
parent or a direct or indirect Subsidiary of a Subsidiary that itself has
Non-Recourse Indebtedness (as defined in the Credit Agreement) (other than any
such indebtedness constituting a guarantee)) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
indebtedness) or is directly or indirectly liable as a guarantor or otherwise in
respect of such indebtedness or in respect of the business or operations of the
applicable Subsidiary that is the obligor on such indebtedness or any of its
subsidiaries (other than (i) any such credit support or liability consisting of
reimbursement obligations in respect of letters of credit issued under, and
subject to the terms of, the Credit Agreement to support obligations of such
applicable subsidiary and (ii) any investments in such applicable subsidiary
made in accordance with each of the Secured Debt Documents), (c) neither the
Company nor any other Subsidiary or Affiliate of any thereof constitutes the
lender of such indebtedness, (d) no default with respect to such Indebtedness
(including any rights that the holders of such Indebtedness may have to take
enforcement action against a Subsidiary that is not a Credit Agreement
Guarantor) would permit upon notice, lapse of time or both any holder of any
other Indebtedness of the Company or any Credit Agreement Guarantor (other than
indebtedness permitted pursuant to Section 6.01(b)(i), (ii), (iii) or (xi) of
the Credit Agreement) to declare a default on such other indebtedness or cause
the payment of the indebtedness to be accelerated or payable prior to its stated
maturity and (e) the Liens securing such indebtedness shall exist only on
(i) the property and assets of any Subsidiary that is not a Credit Agreement
Guarantor and (ii) the Equity Interests in any Subsidiary that is not a Credit
Agreement Guarantor (and shall not apply to any other property or assets of the
Company or any other Subsidiary that is a Credit Agreement Guarantor), except,
in the case of each of clauses (a) and (b) for (x) agreements of the Company or
any other Subsidiary to provide corporate or management services or operation
and maintenance services to such Subsidiary, (y) guarantees of the Company or
any other Subsidiary with respect to debt service reserves established with
respect to such Subsidiary to the extent that such guarantee shall result in the
immediate payment of funds, pursuant to dividends or otherwise, in the amount of
such guarantee to the Company or such other Subsidiary and (z) contingent
obligations of the Company or any other Subsidiary to make capital contributions
to such Subsidiary, in the case of each of clauses (x), (y) and (z), which are
otherwise permitted under each of the Secured Debt Documents.

     “Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic
Subsidiary.

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     “Future Debt Borrower Obligations” shall mean the Borrower Obligations of
the applicable Borrower under, and in respect of, the applicable Secured Debt
Documents governing such future Series of Guaranteed Secured Debt.

     “Future Debt Guarantors” shall mean the collective reference to each
Subsidiary that is or becomes a party hereto as provided herein, except to the
extent that any such Subsidiary is not required to guarantee the Future Debt
Borrower Obligations under such future Series of Guaranteed Secured Debt
pursuant to the terms of the Secured Debt Documents that govern such Series of
Guaranteed Secured Debt.

     “Good Utility Practices” shall mean any of those practices, methods,
standards and acts (including the practices, methods, standards and acts engaged
in or approved by a significant portion of the electric power generation
industry in the United States) that, at a particular time, in the exercise of
reasonable judgment in light of the facts known or that should have reasonably
been expected to have been known at the time a decision was made, could have
reasonably been expected to accomplish the desired result consistent with good
business practices, reliability, economy, safety and expedition, and which
practices, methods, standards and acts conform in all material respects to
applicable law, permits and other governmental approvals.

     “Governmental Authority” shall mean the government of the United States of
America or any other nation, any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

     “Grantors” shall mean (i) in the case of the Secured Obligations under, or
in respect of, the Credit Agreement, any Specified Hedging Agreement permitted
thereunder and the other Secured Debt Documents relating thereto, the Company
and the Credit Agreement Guarantors, (ii) in the case of the Secured Obligations
under, or in respect of, the Indenture and the Notes and the other Secured Debt
Documents relating thereto, the Company and the Note Guarantors and (iii) in the
case of the Secured Obligations under, or in respect of, the Secured Debt
Documents governing any future Series of Guaranteed Secured Debt, the Company
and the applicable Future Debt Guarantors.

     “Guaranteed Secured Debt Representative” shall mean each Secured Debt
Representative with respect to each Series of Guaranteed Secured Debt.

     “Guaranteed Secured Parties” shall mean any Secured Party who is holding a
Secured Obligation with respect to a Series of Guaranteed Secured Debt
(including any Guaranteed Secured Debt Representative and the Collateral
Trustee), at any time.

     “Guarantor Obligations” shall mean with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including Section 2) or any other Secured Debt
Document to which such Guarantor is a party, in each case whether on account of
guarantee obligations,

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reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including all fees and disbursements of counsel to any Secured Party that are
required to be paid by such Guarantor pursuant to the terms of this Agreement or
any other Secured Debt Document).

     “Guarantors” shall mean, as applicable, the Future Debt Guarantors, the
Note Guarantors, the Revolving Loan Guarantors and the Term Loan Guarantors.

     “Immaterial Subsidiary” shall mean, at any time, any Restricted Subsidiary
that is designated by the Company as an “Immaterial Subsidiary” if and for so
long as such Restricted Subsidiary, together with all other Immaterial
Subsidiaries, has (a) total assets at such time not exceeding 5% of the
Company’s consolidated assets as of the most recent fiscal quarter for which
balance sheet information is available and (b) total revenues and operating
income for the most recent 12-month period for which income statement
information is available not exceeding 5% of the Company’s consolidated revenues
and operating income, respectively; provided that (i) such Restricted Subsidiary
shall be an Immaterial Subsidiary only to the extent that and for so long as all
of the above requirements are satisfied and (ii) none of NRG Mid-Atlantic or its
subsidiaries, NRG Northeast or its subsidiaries or NRG South Central or its
subsidiaries may at any time be an Immaterial Subsidiary hereunder. The
Immaterial Subsidiaries on the Restatement Date are set forth on
Schedule 1.1(c).

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

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

     “Intercompany Note” shall mean any promissory note evidencing loans made by
any Grantor to the Company or any of the Subsidiaries.

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

     “Investment Property” shall mean the collective reference to (i) all
“investment property” as such term is defined in Section 9-102(a)(49) of the New
York UCC (other than any Excluded Foreign Subsidiary Voting Stock and any
Excluded Project Subsidiary Stock, in each case excluded from the definition of
“Pledged Equity Interests”) including all Certificated Securities and
Uncertificated Securities, all Security Entitlements, all Securities Accounts,
all Commodity Contracts and all Commodity Accounts, (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

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securities, as defined in the corresponding United States federal regulations
governing such book-entry securities and (iii) whether or not otherwise
constituting “investment property”, all Pledged Notes, all Pledged Equity
Interests, all Pledged Security Entitlements and all Pledged Commodity
Contracts.

     “Issuers” shall mean the collective reference to each issuer of a Pledged
Security.

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

     “Licensed Intellectual Property” shall have the meaning assigned to such
term in Section 4.11.

     “Material Adverse Effect” shall mean a material adverse change in or
material adverse effect on (a) the condition (financial or otherwise), results
of operations, assets, liabilities or prospects of the Company and the
Subsidiaries, taken as a whole, or (b) the validity or enforceability of any of
the Secured Debt Documents or the rights and remedies of the Collateral Trustee
or any of the other Secured Parties thereunder.

     “ Material Contract” shall mean any agreement, contract or license or other
arrangement (other than an agreement, contract or arrangement representing
indebtedness for borrowed money) to which any Grantor is a party that is
material to the Grantors and their subsidiaries, taken as a whole, and for which
breach, nonperformance, cancellation or failure to renew could reasonably be
expected to have a Material Adverse Effect.

     “Material Intellectual Property” shall have the meaning assigned to such
term in Section 4.11.

     “Neo Companies” shall mean NEO Hackensack, LLC and NEO Prima Deshecha LLC.

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

     “Non-Assignable Contract” shall mean any Contract that by its terms
purports to restrict or prevent the assignment thereof or granting of a security
interest therein (either by its terms or by any federal or state statutory
prohibition or otherwise, irrespective of whether such prohibition or
restriction is enforceable under Sections 9-407 through 409 of the New York
UCC).

     “Note Borrower Obligations” shall mean the Borrower Obligations of the
Company under, or in respect of, the Notes and the Indenture, any Specified
Hedging Agreements permitted thereunder and each other Secured Debt Document
relating thereto or in respect thereof.

     “Note Guarantors” shall mean the collective reference to each Subsidiary
(other than the Immaterial Subsidiaries and the Excluded Neo Companies) that is
or becomes a party hereto as provided herein.

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     “Notes” shall have the meaning assigned to such term in the recitals.

     “NRG Mid-Atlantic” shall mean NRG Mid-Atlantic Generating LLC, a Delaware
limited liability company that is a wholly owned Subsidiary.

     “NRG Northeast” shall mean NRG Northeast Generating LLC, a Delaware limited
liability company that is a wholly owned Subsidiary.

     “NRG Power Marketing” shall have the meaning assigned to such term in the
preamble.

     “NRG South Central” shall mean NRG South Central Generating LLC, a Delaware
limited liability company that is a wholly owned Subsidiary.

          “Original Credit Agreement” shall mean the Credit Agreement, including
all amendments thereto and waivers thereof effective prior to the Restatement
Date.

          “Original Guarantee and Collateral Agreement” shall mean this
Agreement as in effect immediately prior to the Restatement Date.

     “Owned Intellectual Property” shall have the meaning assigned to such term
in Section 4.11.

     “Patent License” shall mean all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, use or
sell any invention covered in whole or in part by a Patent, including any of the
foregoing listed in Schedule 4.11 (as such schedule may be amended or
supplemented from time to time).

     “Patents” shall mean (i) all letters patent of the United States, any other
country, union of countries or any political subdivision of any of the
foregoing, all reissues and extensions thereof and all goodwill associated
therewith, including any of the foregoing listed in Schedule 4.11 (as such
schedule may be amended or supplemented from time to time), (ii) all
applications for letters patent of the United States or any other country or
union of countries or any political subdivision of any of the foregoing and all
divisions, continuations and continuations-in-part thereof, including any of the
foregoing listed in Schedule 4.11 (as such schedule may be amended or
supplemented from time to time), (iii) all rights to, and to obtain, any
reissues or extensions of the foregoing and (iv) all proceeds of the foregoing,
including licenses, royalties, income, payments, claims, damages and proceeds of
suit.

     “Person” shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.

     “Pledged Accounts” shall have the meaning assigned to such term in Section
5.13.

     “Pledged Alternative Equity Interests” shall mean all interests of any
Grantor in participation or other interests in any equity or profits of any
business entity and the

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certificates, if any, representing such interests and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such interests and
any other warrant, right or option to acquire any of the foregoing; provided,
however, that Pledged Alternative Equity Interests shall not include any Pledged
Stock, Pledged Partnership Interests, Pledged LLC Interests or Pledged Trust
Interests.

     “Pledged Commodity Contracts” shall mean all commodity contracts listed on
Schedule 4.8(c) (as such schedule may be amended or supplemented from time to
time) and all other commodity contracts to which any Grantor is party from time
to time.

     “Pledged Debt Securities” shall mean all debt securities now owned or
hereafter acquired by any Grantor, including the debt securities listed on
Schedule 4.8(b) (as such schedule may be amended or supplemented from time to
time), together with any other certificates, options, rights or security
entitlements of any nature whatsoever in respect of the debt securities of any
Person that may be issued or granted to, or held by, any Grantor while this
Agreement is in effect.

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

     “Pledged LLC Interests” shall mean all interests of any Grantor now owned
or hereafter acquired in any limited liability company (other than those
interests described in clauses (iii), (v), (vi), (vii), (viii) and (ix) of the
definition of “Excluded Assets”), including all limited liability company
interests listed on Schedule 4.8(a) under the heading “Pledged LLC Interests”
(as such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such limited liability company interests and
any interest of such Grantor on the books and records of such limited liability
company and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such limited liability company interests and any other warrant,
right or option to acquire any of the foregoing.

     “Pledged NEO Notes” shall mean the promissory notes listed under subsection
VI of Schedule 4.8(b) hereto as in effect on the Closing Date.

     “Pledged Notes” shall mean all promissory notes now owned or hereafter
acquired by any Grantor including those listed on Schedule 4.8(b) (as such
schedule may be amended or supplemented from time to time) and all Intercompany
Notes at any time issued to or held by any Grantor (other than promissory notes
in an aggregate principal amount 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).

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     “Pledged Partnership Interests” shall mean all interests of any Grantor now
owned or hereafter acquired in any general partnership, limited partnership,
limited liability partnership or other partnership (other than those interests
described in clauses (iii), (v), (vi), (vii), (viii) and (ix) of the definition
of “Excluded Assets”), including all partnership interests listed on
Schedule 4.8(a) under the heading “Pledged Partnership Interests” (as such
schedule may be amended or supplemented from time to time) and the certificates,
if any, representing such partnership interests and any interest of such Grantor
on the books and records of such partnership and all dividends, distributions,
cash, warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such partnership interests and any
other warrant, right or option to acquire any of the foregoing.

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

     “Pledged Security Entitlements” shall mean all security entitlements with
respect to the financial assets listed on Schedule 4.8(c) (as such schedule may
be amended or supplemented from time to time) and all other security
entitlements of any Grantor.

     “Pledged Stock” shall mean all shares of capital stock now owned or
hereafter acquired by any Grantor (other than those shares of capital stock
described in clauses (iii), (v), (vi), (vii), (viii) and (ix) of the definition
of “Excluded Assets”), including all shares of capital stock listed on
Schedule 4.8(a) under the heading “Pledged Stock” (as such schedule may be
amended or supplemented from time to time) and the certificates, if any,
representing such shares and any interest of such Grantor in the entries on the
books of the issuer of such shares and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares and any other warrant,
right or option to acquire any of the foregoing; provided, however, that in no
event shall more than 66% of the total outstanding Excluded Foreign Subsidiary
Voting Stock or any Excluded Project Subsidiary Stock be required to be pledged
hereunder.

     “Pledged Trust Interests” shall mean all interests of any Grantor now owned
or hereafter acquired in a Delaware business trust or other trust (other than
those interests described in clauses (iii), (v), (vi), (vii), (viii) and (ix) of
the definition of “Excluded Assets”), including all trust interests listed on
Schedule 4.8(a) under the heading “Pledged Trust Interests” (as such schedule
may be amended or supplemented from time to time) and the certificates, if any,
representing such trust interests and any interest of such Grantor on the books
and records of such trust or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such trust interests and any other
warrant, right or option to acquire any of the foregoing.

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

     “Receivable” shall mean all Accounts and any other any right to payment for
goods or other property sold, leased, licensed or otherwise disposed of or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper or classified as a Payment Intangible and whether or not it has
been earned by performance. References herein to Receivables shall include any
Supporting Obligation or collateral securing such Receivable.

     “Requirement of Law” shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person and any law, treaty, rule or regulation or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject, or which pertains to or governs the legality,
validity, perfection, performance or enforcement of the Secured Debt Documents
or the Liens thereunder.

     “Restatement Date” shall mean December 24, 2004.

     “Revolving Loan Borrower Obligations” shall mean the Borrower Obligations
of the Credit Agreement Borrowers under, or in respect of, the Credit Agreement,
any Specified Hedging Agreements permitted thereunder and each other Secured
Debt Document relating thereto, including in respect of the Revolving Loans,
Revolving Credit Commitments and Revolving Letters of Credit (each as defined in
the Credit Agreement).

     “Revolving Loan Guarantors” shall mean the collective reference to each
Subsidiary (other than NRG Power Marketing) that is or becomes a party hereto as
provided herein.

     “Secured Obligations” shall mean (i) in the case of any Borrower, the
applicable Borrower Obligations and (ii) in the case of each Guarantor, the
applicable Borrower Obligations and its Guarantor Obligations.

     “Secured Parties” shall mean any Person who is holding a Secured Obligation
(including any Secured Debt Representative and the Collateral Trustee) at any
time.

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

     “Series of Guaranteed Secured Debt” shall mean each Series of Secured Debt
that pursuant to the terms of the Secured Debt Documents governing such Series
of Secured Debt is guaranteed by the Guarantors pursuant to Section 2 hereof and
shall include, in the case of the Credit Agreement and any other Credit Facility
the Indebtedness under which constitutes Priority Lien Debt, any obligations in
respect of Specified Hedging Agreements that are permitted by the terms of the
Priority Lien Documents relating to the

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Credit Agreement or such other Credit Facilities to be secured equally and
ratably with the Priority Lien Obligations thereunder.

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

     “Subsidiary” shall mean any subsidiary of the Company.

     “subsidiary” shall mean, with respect to any Person (herein referred to as
the “parent”), any corporation, partnership, limited liability company,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or more than 50% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held, or (b) that is, at the
time any determination is made, otherwise controlled by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.

     “Term Loan Borrower Obligations” shall mean the Borrower Obligations of the
Company under, or in respect of, the Credit Agreement, and Specified Hedging
Agreements permitted thereunder and each other Secured Debt Document relating
thereto, including in respect of the Term Loans, Credit-Linked Deposits, Term
Loan Commitments and Funded Letters of Credit (each as defined in the Credit
Agreement).

     “Term Loan Guarantors” shall mean the collective reference to each
Subsidiary that is or becomes a party hereto as provided herein.

     “Trademark License” shall mean any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right in, to or under any
Trademark, including any of the foregoing listed in Schedule 4.11 (as such
schedule may be amended or supplemented from time to time).

     “Trademarks” shall mean (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country, union of countries, or any political subdivision of any of the
foregoing, or otherwise, and all common-law rights related thereto, including
any of the foregoing listed in Schedule 4.11 (as such schedule may be amended or
supplemented from time to time), (ii) the right to, and to obtain, all renewals
thereof, (iii) the goodwill of the business symbolized by the foregoing,
(iv) other source or business identifiers, designs and general intangibles of a
like nature and (v) the right to sue for past, present and future infringements
or dilution of any of the foregoing or for any injury to goodwill, and all
proceeds of the foregoing, including royalties, income, payments, claims,
damages and proceeds of suit.

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     “Trade Secret License” shall mean any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right in, to or under any
Trade Secret, including any of the foregoing listed in Schedule 4.11 (as such
schedule may be amended or supplemented from time to time).

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

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

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

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

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

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

          (e) All references to the Lenders herein shall, where appropriate,
include any Lender, the Administrative Agent, the Collateral Agent, any Arranger
or the Syndication Agent or, in each case, any Affiliate thereof that is party
to a Specified Hedging Agreement.

SECTION 2. GUARANTEE

          2.1. Guarantee.

          (a) Each of the Revolving Loan Guarantors, jointly and severally,
unconditionally and irrevocably, affirms that it has guaranteed with respect to
the Original Credit Agreement, and hereby guarantees to the Administrative
Agent, for the ratable benefit of the Secured Parties identified (and defined
in) in the Credit Agreement and their respective successors, indorsees,
transferees and assigns, the prompt and complete payment and performance by each
Credit Agreement Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Revolving Loan Borrower Obligations. Each of
the Term Loan Guarantors, jointly and severally, unconditionally and
irrevocably, affirms that it has guaranteed

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with respect to the Original Credit Agreement, and hereby guarantees to the
Administrative Agent, for the ratable benefit of the Secured Parties identified
(and defined in) in the Credit Agreement and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by each Credit Agreement Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Revolving Loan Borrower
Obligations. Each of the Term Loan Guarantors, jointly and severally,
unconditionally and irrevocably, affirms that it has guaranteed with respect to
the Original Credit Agreement, and hereby guarantees to the Administrative
Agent, for the ratable benefit of the Secured Parties identified (and defined
in) in the Credit Agreement and their respective successors, indorsees,
transferees and assigns, the prompt and complete payment and performance by the
Company when due (whether at the stated maturity, by acceleration or otherwise)
of the Term Loan Borrower Obligations. Each of the Note Guarantors, jointly and
severally, unconditionally and irrevocably, affirms that it has guaranteed with
respect to the Notes, and hereby guarantees to the Trustee, for the ratable
benefit of each holder of Notes (and the Trustee) and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Company when due (whether at the stated maturity, by
acceleration or otherwise) of the Note Borrower Obligations. Each of the Future
Debt Guarantors hereby, jointly and severally, unconditionally and irrevocably,
guarantees to the applicable future Guaranteed Secured Debt Representative, for
the ratable benefit of the holders of the applicable obligations (and the
applicable future Guaranteed Secured Debt Representatives) thereunder and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the applicable Borrower when due (whether at
the stated maturity, by acceleration or otherwise) of the applicable Future Debt
Borrower Obligations. Notwithstanding anything to the contrary contained herein,
the guarantee by any of the Neo Companies of the Revolving Loan Borrower
Obligations and the Term Loan Borrower Obligations and, if applicable, any
Future Debt Borrower Obligations shall be limited to the extent that such
guarantee does not constitute or result in a breach, termination or default
under any agreement or instrument governing the applicable Existing Non-Recourse
Indebtedness of such Neo Company (as such agreement or instrument is in effect
on the Closing Date).

          (b) If and to the extent required in order for the Guarantor
Obligations of any Guarantor to be enforceable under applicable federal, state
and other laws relating to the insolvency of debtors, the maximum liability of
such Guarantor hereunder shall be limited to the greatest amount which can
lawfully be guaranteed by such Guarantor under such laws, after giving effect to
any rights of contribution, reimbursement and subrogation arising under
Section 2.2. Each Guarantor acknowledges and agrees that, to the extent not
prohibited by applicable law, (i) such Guarantor (as opposed to its creditors,
representatives of creditors or bankruptcy trustee, including such Guarantor in
its capacity as debtor in possession exercising any powers of a bankruptcy
trustee) has no personal right under such laws to reduce, or request any
judicial relief that has the effect of reducing, the amount of its liability
under this Agreement, (ii) such Guarantor (as opposed to its creditors,
representatives of creditors or bankruptcy trustee, including such Guarantor in
its capacity as debtor in possession exercising any powers of a bankruptcy
trustee) has no personal right to enforce the limitation set forth in this
Section 2.1(b) or to reduce, or request judicial relief reducing, the amount of
its liability under this Agreement and (iii) the limitation set forth in this
Section 2.1(b) may be enforced only to the extent required under such laws in
order for the obligations of such Guarantor under this Agreement to be
enforceable under such laws and only by or for the benefit of a creditor,
representative of creditors or bankruptcy trustee of such Guarantor or other
Person entitled, under such laws, to enforce the provisions thereof.

          (c) Each Guarantor agrees that the applicable Borrower Obligations may
at any time and from time to time be incurred or permitted in an amount
exceeding the maximum

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liability of such Guarantor under Section 2.1(b) without impairing the guarantee
contained in this Section 2 or affecting the rights and remedies of any Secured
Party hereunder.

          (d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full in cash (other than indemnification and other
contingent obligations not then due and payable), no letter of credit shall be
outstanding and all commitments to extend credit under any Secured Debt
Documents shall have been terminated or expired, notwithstanding that from time
to time during the term of the Secured Debt Documents any Borrower may be free
from any or all of its Borrower Obligations.

          (e) No payment made by any applicable Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by any Secured
Party from any applicable 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 Borrower Obligations or any payment received or
collected from such Guarantor in respect of the Borrower Obligations), remain
liable for the Borrower Obligations up to the maximum liability of such
Guarantor hereunder until the Borrower Obligations are paid in full (other than
indemnification and other contingent obligations not then due and payable), no
letter of credit shall be outstanding and all commitments to extend credit under
any Secured Debt Documents shall have been terminated or expired.

          2.2. Rights of Reimbursement, Contribution and Subrogation. In case
any payment is made on account of the Secured Obligations by any Grantor or is
received or collected on account of the Secured Obligations from any Grantor or
its property:

          (a) If such payment is made by the applicable Borrower or from its
respective property, then, if and to the extent such payment is made on account
of Secured Obligations arising from or relating to a loan or other extension of
credit made to such Borrower or a letter of credit issued for the account of
such Borrower, such Borrower shall not be entitled (i) to demand or enforce
reimbursement or contribution in respect of such payment from any other Grantor
or (ii) to be subrogated to any claim, interest, right or remedy of any Secured
Party against any other Person, including any other Grantor or its property; and

          (b) If such payment is made by a Guarantor or from its property, such
Guarantor shall be entitled, subject to and upon payment in full of the Secured
Obligations (other than indemnification and other contingent obligations not
then due and payable), (i) to demand and enforce reimbursement for the full
amount of such payment from the applicable Borrower and (ii) to demand and
enforce contribution in respect of such payment from each other applicable
Guarantor that has not paid its fair share of such payment, as necessary to
ensure that (after giving effect to any enforcement of reimbursement rights
provided hereby) each applicable Guarantor pays its fair share of the
unreimbursed portion of such payment. For this purpose, the fair share of each
Guarantor as to any unreimbursed payment shall be determined based on an

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equitable apportionment of such unreimbursed payment among all applicable
Guarantors based on the relative value of their assets and any other equitable
considerations deemed appropriate by a court of competent jurisdiction.

          (c) If and whenever (after payment in full of the Secured Obligations
(other than indemnification and other contingent obligations not then due and
payable) and delivery of notification thereof to the Collateral Trustee in
accordance with Article 4 of the Collateral Trust Agreement) any right of
reimbursement or contribution becomes enforceable by any Grantor against any
other Grantor under Sections 2.2(a) or 2.2(b), such Grantor shall be entitled,
subject to and upon payment in full of the Secured Obligations (other than
indemnification and other contingent obligations not then due and payable), to
be subrogated (equally and ratably with all other Grantors entitled to
reimbursement or contribution from any other Grantor as set forth in this
Section 2.2) to any security interest that may then be held by the Collateral
Trustee upon any Collateral granted to it in this Agreement. Such right of
subrogation shall be enforceable solely against the Grantors, and not against
the Collateral Trustee or any other Secured Party, and neither the Collateral
Trustee nor any other Secured Party shall have any duty whatsoever to warrant,
ensure or protect any such right of subrogation or to obtain, perfect, maintain,
hold, enforce or retain any Collateral for any purpose related to any such right
of subrogation. If subrogation is demanded by any Grantor, then (after payment
in full in cash of the Secured Obligations and, if applicable, the termination
of all commitments to extend credit thereunder, the discharge or cash
collateralization (at 100% of the aggregate undrawn amount) of all outstanding
letters of credit issued thereunder and the return of any Credit-Linked Deposit
(or similar deposit) made thereunder) the Collateral Trustee shall deliver to
the Grantors making such demand, or to a representative of such Grantors or of
the Grantors generally, an instrument reasonably satisfactory to the Collateral
Trustee transferring, on a quitclaim basis without any recourse, representation,
warranty or obligation whatsoever, whatever security interest the Collateral
Trustee then may hold in whatever Collateral may then exist that was not
previously released or disposed of by the Collateral Trustee (provided that such
Grantors shall prepare and deliver the initial draft of such instrument to the
Collateral Trustee).

          (d) All rights and claims arising under this Section 2.2 or based upon
or relating to any other right of reimbursement, indemnification, contribution
or subrogation that may at any time arise or exist in favor of any Grantor as to
any payment on account of the Secured Obligations made by it or received or
collected from its property shall be fully subordinated in all respects to the
prior payment in full in cash of all of the Secured Obligations (other than
indemnification and other contingent obligations not then due and payable) and,
if applicable, the termination of all commitments to extend credit thereunder,
the discharge or cash collateralization (at 100% of the aggregate undrawn
amount) of all outstanding letters of credit issued thereunder and the return of
any Credit-Linked Deposit (or similar deposit) made thereunder. Until payment in
full in cash of the Secured Obligations and, if applicable, the termination of
all commitments to extend credit thereunder, the discharge or cash
collateralization (at 100% of the aggregate undrawn amount) of all outstanding
letters of credit issued thereunder and the return of any Credit-Linked Deposit
(or similar deposit) made thereunder, no Grantor shall demand or receive any
collateral security, payment or distribution whatsoever (whether in cash,
property or securities or otherwise) on account of any such right or claim. If
any such payment or distribution is made or becomes available to any Grantor in
any bankruptcy case or receivership, insolvency or liquidation proceeding, such
payment or

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distribution shall be delivered by the Person making such payment or
distribution directly to the applicable Guaranteed Secured Debt Representative,
for application to the payment of the Secured Obligations. If any such payment
or distribution is received by any Grantor, it shall be held by such Grantor in
trust, as trustee of an express trust for the benefit of the Guaranteed Secured
Parties, and shall forthwith be transferred and delivered by such Grantor to the
Collateral Trustee, in the exact form received and, if necessary, duly endorsed.

          (e) The obligations of the Grantors under the Secured Debt Documents,
including their liability for the Secured Obligations and the enforceability of
the security interests granted thereby, are not contingent upon the validity,
legality, enforceability, collectibility or sufficiency of any right of
reimbursement, contribution or subrogation arising under this Section 2.2. The
invalidity, insufficiency, unenforceability or uncollectibility of any such
right shall not in any respect diminish, affect or impair any such obligation or
any other claim, interest, right or remedy at any time held by the Collateral
Trustee or any other Secured Party against any Grantor or its property. The
Secured Parties make no representations or warranties in respect of any such
right and shall have no duty to assure, protect, enforce or ensure any such
right or otherwise relating to any such right.

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

          2.3. 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 Guaranteed Secured Debt Representative or any other
Guaranteed Secured Party may be rescinded by such Guaranteed Secured Debt
Representative or such other Guaranteed Secured Party 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, increased, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any Guaranteed
Secured Debt Representative or any other Guaranteed Secured Party, and the other
Secured Debt 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 requisite parties thereto may deem advisable from time
to time, and any collateral security, guarantee or right of offset at any time
held by any Secured Party for the payment of the Borrower Obligations may be
sold, exchanged, waived, surrendered or released. No Guaranteed Secured Debt
Representative or any other Guaranteed Secured Party 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.

          2.4. 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

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notice of or proof of reliance by any Guaranteed Secured Debt Representative or
any other Guaranteed Secured Party 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 the applicable Borrower and any of the Guarantors, on the one hand, and
the Guaranteed Secured Debt Representative and the other Guaranteed Secured
Parties, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Section 2.
Each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon the applicable Borrower or any of the
Guarantors with respect to the Borrower Obligations. Each Guarantor understands
and agrees that the guarantee contained in this Section 2 shall be construed as
a continuing, absolute and unconditional guarantee of payment and performance
without regard to (a) the validity or enforceability of any Secured Debt
Document, 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 Guaranteed Secured Debt Representative or any
other Guaranteed Secured Party, (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 the applicable Borrower or any other Person
against any Guaranteed Secured Debt Representative or any other Guaranteed
Secured Party, or (c) any other circumstance whatsoever (with or without notice
to or knowledge of the applicable Borrower or such Guarantor) which constitutes,
or might be construed to constitute, an equitable or legal discharge of the
applicable 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 Guaranteed Secured Debt Representative or
any other Guaranteed Secured Party may, but shall be under no obligation to,
make a similar demand on or otherwise pursue such rights and remedies as it may
have against the applicable 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 Guaranteed Secured
Party to make any such demand, to pursue such other rights or remedies or to
collect any payments from the applicable Borrower, any other Guarantor or any
other Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the applicable 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 Guaranteed
Secured Debt Representative or any other Guaranteed Secured Party against any
Guarantor. For the purposes hereof “demand” shall include the commencement and
continuance of any legal proceedings.

          2.5. Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by any Guaranteed Secured Debt
Representative or any other Guaranteed Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the applicable
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator

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

          2.6. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to each Guaranteed Secured Debt Representative without
set-off or counterclaim in dollars in immediately available funds at the office
of such Guaranteed Secured Debt Representative specified in the applicable
Secured Debt Documents as the office for payments thereunder.

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

          (a) (x) Each Grantor hereby (i) affirms that is has assigned and
transferred to the Priority Collateral Trustee, and has granted to the Priority
Collateral Trustee, for the ratable benefit of the Priority Lien Secured
Parties, a lien on and, except as set forth in Section 4.2 or 4.3, a first
priority security interest in all of the personal property of such Grantor,
including, in any event, the property described in items (i) through
(xxi) below, in each case, wherever located and now owned or at any time
hereafter acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (collectively, the
“Collateral”), as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Priority Lien Obligations and (ii) affirms that it has
assigned and transferred to the Parity Collateral Trustee, and has granted to
the Parity Collateral Trustee, for the ratable benefit of the Parity Lien
Secured Parties, a lien on and, except as set forth in Section 4.2 or 4.3, a
second priority security interest in all of 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 Parity Lien
Obligations, and (y) each Grantor hereby (i) assigns and transfers to the
Priority Collateral Trustee, and hereby grants to the Priority Collateral
Trustee, for the equal and ratable benefit of the Priority Lien Secured Parties,
a lien on and, except as set forth in Section 4.2 or 4.3, a first priority
security interest in all of the Collateral, as collateral security for the
prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Priority Lien Obligations,
(ii) assigns and transfers to the Parity Collateral Trustee, and hereby grants
to the Parity Collateral Trustee, for the equal and ratable benefit of the
Parity Lien Secured Parties, a lien on and, except as set forth in Section 4.2
or 4.3, a second priority security interest in all of 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 Parity
Lien Obligations, and (iii) assigns and transfers to the Account Collateral
Trustee and hereby grants to the Account Collateral Trustee, for the benefit of
the Priority Lien Secured Parties and the Parity Lien Secured Parties, a lien on
and security interest in all Deposit Accounts and Securities Accounts, in each
case as collateral security for the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise) of the
Priority Lien Obligations and the Parity Lien Obligations, respectively (it
being understood that the grants of security interest under the foregoing clause
(y)(i), clause (y)(ii) and clause (y)(iii) constitute three separate and
distinct grants of security and Liens, one in favor of the Priority Collateral
Trustee in its capacity as collateral agent for the equal and ratable benefit of
the Priority Lien Secured Parties to secure the Priority Lien Obligations and
the second in favor of the Parity Collateral Trustee in its capacity as
collateral agent for the equal and ratable benefit of

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the Parity Lien Secured Parties to secure the Parity Lien Obligations) and the
third in favor of the Account Collateral Trustee for the benefit of the Priority
Lien Secured Parties and the Parity Lien Secured Parties to secure the Priority
Lien Obligations and the Parity Lien Obligations, respectively:

               (i) all Accounts;

               (ii) all Chattel Paper;

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

               (iv) all Commercial Tort Claims from time to time specifically
described on Schedule 4.13;

               (v) all Contracts;

               (vi) all Deposit Accounts;

               (vii) all Documents;

               (viii) all Equipment;

               (ix) all Fixtures;

               (x) all General Intangibles;

               (xi) all Goods;

               (xii) all Instruments;

               (xiii) all Insurance;

               (xiv) all Intellectual Property;

               (xv) all Inventory;

               (xvi) all Investment Property;

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

               (xviii) all Money;

               (xix) all Securities Accounts;

               (xx) all books, records, ledger cards, files, correspondence,
customer lists, blueprints, technical specifications, manuals, computer
software, computer printouts, tapes, disks and other electronic storage media
and related data processing software and similar items that at any time pertain
to or evidence or contain information

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relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon; and

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

provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not, at any time, constitute a grant of a
security interest in any property that is, at such time, an Excluded Asset. The
Grantor, the Priority Collateral Trustee, Parity Collateral Trustee and Account
Collateral Trustee hereby acknowledge and agree that the security interest
created hereby in the Collateral is not, in and of itself, to be construed as a
grant of a fee interest in (as opposed to a security interest in) any Copyright,
Trademark, Patent, Copyright License, Patent License, Trademark License, Trade
Secret or Trade Secret License.

          This Agreement, and the security interests and Liens granted and
created herein, secures the payment and performance of all Secured Obligations
now or hereafter in effect, whether direct or indirect, absolute or contingent,
and whether for principal, reimbursement obligations, interest (including any
interest accruing at the then applicable rate provided in any applicable Secured
Debt Document after the maturity of the Indebtedness thereunder and
reimbursement obligations therein and interest accruing at the then applicable
rate provided in any applicable Secured Debt Document after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding relating to any Grantor, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding), fees, premiums,
penalties, indemnifications, expenses or otherwise, and including all amounts
that constitute part of the Secured Obligations and would be owed by any Grantor
but for the fact that they are unenforceable or not allowed due to a pending
Bankruptcy Case or Insolvency Proceeding. Without limiting the generality of the
foregoing, it is the intent of the parties that (i) the Liens securing the
Parity Lien Obligations are subject and subordinate to the Liens securing the
Priority Lien Obligations and (ii) this Agreement creates two separate and
distinct Liens: the first priority Lien securing the payment and performance of
the Priority Lien Obligations and the second priority Lien securing the payment
and performance of the Parity Lien Obligations, in each case as may be more
particularly set forth in the Collateral Trust Agreement. For purposes of
perfecting the security interests hereunder, all property in the possession or
control of the Collateral Trustee will be held by the Collateral Trustee in its
capacity as Priority Collateral Trustee for the benefit of the Priority Lien
Secured Parties and in its capacity as Parity Collateral Trustee for the benefit
of the Parity Lien Secured Parties, and in its capacity as Account Collateral
Trustee for the benefit of the Priority Lien Secured Parties and the Parity Lien
Secured Parties, in each case subject to the terms of the Collateral Trust
Agreement.

          (b) Notwithstanding anything herein to the contrary, (i) each Grantor
shall remain liable for all obligations under and in respect of the Collateral
and nothing contained herein is intended or shall be a delegation of duties to
the Collateral Trustee or any other Secured Party, (ii) each Grantor shall
remain liable under each of the agreements included in the Collateral, including
any Receivables, any Contracts and any agreements relating to Pledged
Partnership Interests or Pledged LLC Interests, to perform all of the
obligations undertaken by it

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

SECTION 4. REPRESENTATIONS AND WARRANTIES

          To induce the applicable Secured Parties to enter into the Secured
Debt Documents and to induce the applicable Secured Parties to make their
respective extensions of credit to the applicable Grantor or Grantors
thereunder, each Grantor hereby represents and warrants to the Collateral
Trustee and each other applicable Secured Party that:

          4.1. Representations in Secured Debt Documents. In the case of each
Grantor, the representations and warranties set forth in each credit agreement
and indenture constituting a Secured Debt Document as they relate to such
Grantor or to the Secured Debt Documents to which such Grantor is a party, each
of which is hereby incorporated herein by reference, are true and correct in all
material respects, except for representations and warranties expressly stated to
relate to a specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date, and the Collateral Trustee and the other Secured Parties shall be entitled
to rely on each of them as if they were fully set forth herein (to the extent
that such Secured Parties are parties to or have the benefit of the Secured Debt
Document in which such representatives and warranties are contained); provided
that each reference in each such representation and warranty to a Person’s
knowledge shall, for the purposes of this Section 4.l, be deemed to be a
reference to such Grantor’s knowledge.

          4.2. Title; No Other Liens. Such Grantor owns each item of the
Collateral in which it purports to grant a Lien hereunder free and clear of any
and all Liens or claims, including Liens arising as a result of such Grantor
becoming bound (as a result of merger or otherwise) as grantor under a security
agreement entered into by another Person, except for Liens expressly permitted
to exist on the Collateral by each of the Secured Debt Documents. No financing
statement, mortgage or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as have
been filed in favor of the Collateral Trustee, for the benefit of the Secured
Parties, pursuant to this Agreement or as are expressly permitted by each of the
Secured Debt Documents.

          4.3. Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 4.3(a) (all of which, in the case of all filings and other
documents listed on such schedule, have been delivered to the Collateral Trustee
in duly completed and duly executed form, as applicable, and

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may be filed by or on behalf of the Collateral Trustee at any time) and payment
of all filing fees, will constitute valid, fully-perfected security interests in
all of the Collateral (other than the Excluded Perfection Assets) in favor of
the Collateral Trustee, for the benefit of the Secured Parties, as collateral
security for such Grantor’s Secured Obligations, enforceable in accordance with
the terms hereof and of the Collateral Trust Agreement, (b) are, to the extent
that such Liens have been granted to the Collateral Trustee for the benefit of
the Priority Lien Secured Parties, prior to all other Liens on the Collateral
except for Liens expressly permitted by each of the Secured Debt Documents and
(c) are, to the extent that such Liens have been granted to the Collateral
Trustee for the benefit of the Parity Lien Secured Parties, prior to all other
Liens on the Collateral except for the prior Liens for the benefit of the
Priority Lien Secured Parties and for Liens expressly permitted by each of the
Secured Debt Documents. Without limiting the foregoing, each Grantor has taken
all actions necessary or desirable, including those specified in Section 5.2,
to: (i) establish the Collateral Trustee’s “control” (within the meanings of
Sections 8-106 and 9-106 of the New York UCC) over any portion of the Investment
Property constituting Certificated Securities, Uncertificated Securities,
Securities Accounts, Securities Entitlements or Commodity Accounts,
(ii) establish the Collateral Trustee’s “control” (within the meaning of
Section 9-104 of the New York UCC) over all Deposit Accounts, (iii) establish
the Collateral Trustee’s “control” (within the meaning of Section 9-107 of the
New York UCC) over all Letter of Credit Rights, (iv) establish the Collateral
Trustee’s control (within the meaning of Section 9-105 of the New York UCC) over
all Electronic Chattel Paper and (v) establish the Collateral Agent’s “control”
(within the meaning of Section 16 of the Uniform Electronic Transaction Act as
in effect in the applicable jurisdiction (the “UETA”)) over all “transferable
records” (as defined in UETA).

          4.4. Name; Jurisdiction of Organization, etc. On the date hereof, such
Grantor’s exact legal name (as indicated on the public record of such Grantor’s
jurisdiction of formation or organization), jurisdiction of organization,
organizational identification number, if any, and the location of such Grantor’s
chief executive office or sole place of business are specified on Schedule 4.4.
Each Grantor is organized solely under the law of the jurisdiction so specified
and has not filed any certificates of domestication, transfer or continuance in
any other jurisdiction. Except as specified on Schedule 4.4, (i) no such Grantor
has changed its name, jurisdiction of organization, chief executive office or
sole place of business within the past five years, (ii) no such Grantor has
within the last five years become bound (whether as a result of merger or
otherwise) as a grantor under a security agreement entered into by another
Person which has not heretofore been terminated and (iii) no such Grantor has
changed its corporate structure in any way (e.g. by merger, consolidation,
change in corporate form or otherwise) within the past two years.

          4.5. Inventory and Equipment. (a) On the date hereof, the Inventory
and the Equipment (other than mobile goods) that is included in the Collateral
are kept at the locations listed on Schedule 4.5(a). Within the two years
preceding execution of this agreement, such Grantor has not changed the location
of a material portion of its Equipment and Inventory that is included in the
Collateral except as otherwise disclosed on Schedule 4.5(a).

          (b) None of the Inventory or Equipment that is included in the
Collateral having a book value (net of depreciation) in excess of $250,000 is in
the possession of an issuer

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of a negotiable document (as defined in Section 7-104 of the New York UCC)
therefor or, except as set forth on Schedule 4.5(b), is otherwise in the
possession of any bailee or warehouseman.

          4.6. Condition and Maintenance of Equipment. The Equipment of such
Grantor that is included in the Collateral is in good repair, working order and
condition, reasonable wear and tear excepted. Each Grantor shall cause its
Equipment that is included in the Collateral to be maintained and preserved in
good repair, working order and condition, reasonable wear and tear excepted, and
shall as quickly as commercially practicable make or cause to be made all
repairs, replacements and other improvements which are necessary or appropriate
in the conduct of such Grantor’s business in its prudent business judgment.

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

          4.8. Investment Property. (a) Schedule 4.8(a) (as such schedule may be
amended or supplemented from time to time) sets forth under the headings
“Pledged Stock,” “Pledged LLC Interests,” “Pledged Partnership Interests” and
“Pledged Trust Interests,” respectively, all of the Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests owned by
any Grantor and such Pledged Equity Interests constitute the percentage of
issued and outstanding shares of stock, percentage of membership interests,
percentage of partnership interests or percentage of beneficial interest of the
respective issuers thereof indicated on such Schedule. Schedule 4.8(b) (as such
schedule may be amended or supplemented from time to time) sets forth under the
heading “Pledged Debt Securities” or “Pledged Notes” all of the Pledged Debt
Securities and Pledged Notes (if any) owned by any Grantor and each of such
Pledged Debt Securities and Pledged Notes (if any) has been duly authorized,
authenticated or issued and delivered and is the legal, valid and binding
obligation of the issuers thereof enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principals of equity, regardless of whether considered in a proceeding in equity
or at law, and is not in default and constitutes all of the issued and
outstanding inter-company indebtedness evidenced by an instrument or
certificated security of the respective issuers thereof owing to such Grantor.
Schedule 4.8(c) (as such schedule may be amended or supplemented from time to
time) sets forth under the headings “Securities Accounts,” “Commodities
Accounts,” and “Deposit Accounts” respectively, all of the Securities Accounts,
Commodities Accounts and Deposit Accounts in which each Grantor has an interest
that are included in the Collateral. Each Grantor is the sole entitlement holder
or customer of each such account set forth opposite its name on such schedule,
and such Grantor has not consented to, and is not otherwise aware of, any Person
(other than the Collateral Trustee pursuant hereto) having “control” (within the
meanings of Sections 8-106, 9-106 and 9-104 of the New York UCC) over, or any
other interest in, any such Securities Account, Commodity Account or Deposit
Account or any securities, commodities or other property credited thereto,
except for any such account that constitutes an Excluded Asset.

          (b) The shares of Pledged Equity Interests pledged by such Grantor
hereunder constitute all of the issued and outstanding shares of all classes of
the Capital Stock of each Issuer owned by such Grantor or, in the case of
Excluded Foreign Subsidiary Voting Stock, if less, 66% of the outstanding
Excluded Foreign Subsidiary Voting Stock of each relevant Issuer.

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          (c) The Pledged Equity Interests have been duly and validly issued and
all the shares of the Pledged Stock are fully paid and nonassessable.

          (d) As of the Restatement Date, the terms of any uncertificated
Pledged LLC Interests and Pledged Partnership Interests do not provide that they
are securities governed by Article 8 of the Uniform Commercial Code in effect
from time to time in the “issuer’s jurisdiction” of each Issuer thereof (as such
term is defined in the Uniform Commercial Code in effect in such jurisdiction).

          (e) There shall be no certificated Pledged LLC Interests or Pledged
Partnership Interests which 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, except if such certificate has
been delivered to the Collateral Trustee pursuant to the terms hereof.

          (f) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property and Deposit Accounts pledged by
it hereunder, free of any and all Liens or options in favor of, or claims of,
any other Person, except Liens expressly permitted to exist thereon by each of
the Secured Debt Documents, and there are no outstanding warrants, options or
other rights to purchase, or shareholder, voting trust or similar agreements
outstanding with respect to, or property that is convertible into, or that
requires the issuance or sale of, any Pledged Equity Interests.

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

          4.9. Receivables. (a) No amount payable to such Grantor under or in
connection with any Receivable that is included in the Collateral is evidenced
by any Instrument or Tangible Chattel Paper which has not been delivered to the
Collateral Trustee or constitutes Electronic Chattel Paper that has not been
subjected to the control (within the meaning of Section 9-105 of the New York
UCC) of the Collateral Trustee.

          (b) None of the obligors (other than “independent system operators”)
on any Receivable that is included in the Collateral in excess of $500,000
individually or $1,000,000 in the aggregate is a Governmental Authority.

          (c) Each Receivable that is included in the Collateral (i) is and will
be the legal, valid and binding obligation of the Account Debtor in respect
thereof, representing an unsatisfied obligation of such Account Debtor, (ii) is
and will be enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law, (iii) is
not and will not be subject to any defenses or taxes and (iv) is and will be in
compliance with all applicable laws and regulations.

          4.10. Contracts.

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          (a) Schedule 4.10(a) (as such schedule may be amended or supplemented
form time to time) sets forth all of the Material Contracts in which such
Grantor has any right or interest.

          (b) Except as set forth on Schedule 4.10(b), no Material Contract
prohibits assignment or encumbrance by such Grantor or requires or purports to
require consent of, or notice to, any party (other than such Grantor) to any
Material Contract in connection with the execution, delivery and performance of
this Agreement, including the exercise of remedies by the Collateral Trustee
with respect to such Material Contract, except for such consents that have been
obtained and such notices that have been given.

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

          (d) The right, title and interest of such Grantor in, to and under the
Material Contracts are not subject to any defenses, rights of recoupment or
claims.

          (e) Neither such Grantor nor (to the best of such Grantor’s knowledge)
any of the other parties to the Material Contracts is in default in the
performance or observance of any of the terms thereof.

          (f) The right, title and interest of such Grantor in, to and under the
Material Contracts are not subject to any defenses or claims.

          (g) Such Grantor has delivered to the Collateral Trustee a complete
and correct copy of each Material Contract, including all amendments,
supplements and other modifications thereto.

          (h) No amount payable to such Grantor under or in connection with any
Contract which has a value in excess of $500,000 individually or $1,000,000 in
the aggregate is evidenced by any Instrument or Tangible Chattel Paper which has
not been delivered to the Collateral Trustee or constitutes Electronic Chattel
Paper that is not under the control (within the meaning of Section 9-105 of the
New York UCC) of the Collateral Trustee.

          (i) None of the parties to any Contract (other than “independent
system operators”) which has a value in excess of $500,000 individually or
$1,000,000 in the aggregate is a Governmental Authority.

          4.11. Intellectual Property. (a) Schedule 4.11(a) lists all
Intellectual Property which is registered with a Governmental Authority or is
the subject of an application for registration and all material unregistered
Intellectual Property forming part of the Core Collateral, in each case which is
owned by such Grantor in its own name on the date hereof (collectively, the
“Owned Intellectual Property”). Except as set forth in Schedule 4.11, such
Grantor is the exclusive owner of the entire and unencumbered right, title and
interest in and to

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all Owned Intellectual Property and is otherwise entitled to use, and grant to
others the right to use, all Owned Intellectual Property, subject only to the
license terms of the licensing or franchise agreements referred to in paragraph
(c) below. Such Grantor has a valid and enforceable right to use all
Intellectual Property which it uses in its business, but does not own
(collectively, the “Licensed Intellectual Property”).

          (b) On the date hereof, all Owned Intellectual Property and, to such
Grantor’s knowledge, all Licensed Intellectual Property, in each case, which is
material to such Grantor’s business (collectively, and subject to the foregoing
knowledge qualifier in the case of Licensed Intellectual Property, the “Material
Intellectual Property”), is valid, subsisting, unexpired and enforceable, has
not been abandoned. Neither the operation of such Grantor’s business as
currently conducted or as contemplated to be conducted nor the use of the
Intellectual Property in connection therewith conflicts with, infringes,
misappropriates, dilutes, misuses or otherwise violates the intellectual
property rights of any other Person, in each case, which conflict, infringement,
misappropriation, dilution, misuse or violation could reasonably be expected to
have a Material Adverse Effect, and no claim has been so asserted by any other
Person.

          (c) Except as set forth in Schedule 4.11(c), on the date hereof
(i) none of the Material Intellectual Property is the subject of any licensing
or franchise agreement pursuant to which such Grantor is the licensor or
franchisor and (ii) there are no other agreements, obligations, orders or
judgments which affect the use of any Material Intellectual Property.

          (d) To such Grantor’s knowledge, no holding, decision or judgment has
been rendered by any Governmental Authority or arbitrator in the United States
or outside the United States which would limit, cancel or question the validity
or enforceability of, or such Grantor’s rights in, any Material Intellectual
Property. Such Grantor is not aware of any uses of any item of Material
Intellectual Property that could reasonably be expected to lead to such item
becoming invalid or unenforceable, including unauthorized uses by third parties
and uses which were not supported by the goodwill of the business connected with
Trademarks and Trademark Licenses.

          (e) No action or proceeding is pending, or, to such Grantor’s
knowledge, threatened, on the date hereof (i) seeking to limit, cancel or
question the validity of any Owned Intellectual Property, (ii) alleging that any
services provided by, processes used by, or products manufactured or sold by
such Grantor infringe any patent, trademark, copyright, or any other right of
any other Person, (iii) alleging that any Material Intellectual Property is
being licensed, sublicensed or used in violation of any intellectual property or
any other right of any other Person or (iv) which, if adversely determined,
would have a material adverse effect on the value of any Material Intellectual
Property. To such Grantor’s knowledge, no Person is engaging in any activity
that infringes upon, or is otherwise an unauthorized use of, any Material
Intellectual Property or upon the rights of such Grantor therein. Except as set
forth in Schedule 4.11(e), such Grantor has not granted any license, release,
covenant not to sue, non-assertion assurance, or other right to any Person with
respect to any part of the Material Intellectual Property. The consummation of
the transactions contemplated by this Agreement (including the enforcement of
remedies) will not result in the termination or impairment of any of the
Material Intellectual Property.

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

          (g) Except as set forth in Schedule 4.11, such Grantor has performed
all acts and has paid all required fees and taxes to maintain each and every
item of registered owned Intellectual Property that is material to its business
in full force and effect and to protect and maintain its interest therein. Such
Grantor has used proper statutory notice in connection with its use of each
Patent, Trademark and Copyright that is material to its business included in the
Intellectual Property.

          (h) (i) None of the Trade Secrets of such Grantor that are material to
its business has been used, divulged, disclosed or appropriated to the detriment
of such Grantor for the benefit of any other Person; (ii) no employee,
independent contractor or agent of such Grantor has misappropriated any trade
secrets of any other Person in the course of the performance of his or her
duties as an employee, independent contractor or agent of such Grantor; and
(iii) no employee, independent contractor or agent of such Grantor is in default
or breach of any term of any employment agreement, non-disclosure agreement,
assignment of inventions agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of such
Grantor’s Intellectual Property.

          (i) Such Grantor has taken all commercially reasonable steps to use
consistent standards of quality in the manufacture, distribution and sale of all
products sold and provision of all services provided under or in connection with
any item of Intellectual Property and has taken all steps to ensure that all
licensed users of any kind of Intellectual Property use such consistent
standards of quality.

          4.12. Letters of Credit and Letter of Credit Rights. No Grantor is a
beneficiary or assignee under any Letter of Credit other than the Letters of
Credit described on Schedule 4.12 (as such schedule may be amended or
supplemented from time to time). With respect to any Letters of Credit that are
by their terms transferable, each Grantor has caused (or, in the case of the
Letters of Credit that are specified on Schedule 4.12 on the date hereof, will
use commercially reasonable efforts to cause) all issuers and nominated persons
under Letters of Credit in which the Grantor is the beneficiary or assignee to
consent to the assignment of such Letter of Credit to the Collateral Trustee and
has agreed that upon the occurrence of a Secured

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Debt Default it shall cause all payments thereunder to be made to the Collateral
Account. With respect to any Letters of Credit that are not transferable, each
Grantor shall obtain (or, in the case of the Letters of Credit that are
specified on Schedule 4.12 on the date hereof, use commercially reasonable
efforts to obtain) the consent of the issuer thereof and any nominated Person
thereon to the assignment of the proceeds of the released Letter of Credit to
the Collateral Trustee in accordance with Section 5-114(c) of the New York UCC.

          4.13. Commercial Tort Claims. No Grantor has any Commercial Tort
Claims as of the date hereof individually or in the aggregate in excess of
$500,000 and, except as specifically described on Schedule 4.13 (as such
schedule may be amended or supplemented from time to time), no Grantor has any
Commercial Tort Claims after the date hereof individually or in the aggregate in
excess of $500,000.

SECTION 5. COVENANTS

          Each Grantor covenants and agrees with the Collateral Trustee and the
other Secured Parties that, from and after the date of this Agreement, until the
Secured Obligations (other than Secured Obligations in respect of any Specified
Hedging Agreement and indemnification and other contingent obligations not then
due and payable) shall have been paid in full in cash, no letter of credit
issued under any Secured Debt Document shall be outstanding, any Credit-Linked
Deposits (or similar deposits) shall have been returned and all commitments to
extend credit under all Secured Debt Documents shall have expired or been
terminated:

          5.1. Covenants in Secured Debt Documents. Each Grantor 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 Secured Debt Default under
any Secured Debt Document is caused by the failure to take such action or to
refrain from taking such action by such Grantor.

          5.2. Delivery and Control of Instruments, Certificated Securities,
Chattel Paper, Negotiable Documents, Investment Property and Letter of Credit
Rights. (a) If any of the Collateral is or shall become evidenced or represented
by any Instrument, Certificated Security, Negotiable Document or Tangible
Chattel Paper, such Instrument (other than checks received in the ordinary
course of business), Certificated Security, Negotiable Documents or Tangible
Chattel Paper shall promptly be delivered to (or, in the case of the Pledged NEO
Notes, the Company or such other applicable Grantor shall use commercially
reasonable efforts to cause such Pledged NEO Notes to be delivered to) the
Collateral Trustee, duly endorsed in a manner reasonably satisfactory to the
Collateral Trustee, to be held as Collateral pursuant to this Agreement, and all
of such property owned by any Grantor as of the Restatement Date shall be
delivered on the Restatement Date.

          (b) If any of the Collateral is or shall become “Electronic Chattel
Paper” such Grantor shall ensure that (i) a single authoritative copy exists
which is unique, identifiable, unalterable (except as provided in clauses (iii),
(iv) and (v) of this paragraph), (ii) such authoritative copy identifies the
Collateral Trustee as the assignee and is communicated to and maintained by the
Collateral Trustee or its designee, (iii) copies or revisions that add or change
the assignee of the authoritative copy can only be made with the participation
of the Collateral Trustee, (iv) each copy of the authoritative copy and any copy
of a copy is readily identifiable as

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a copy and not the authoritative copy and (v) any revision of the authoritative
copy is readily identifiable as an authorized or unauthorized revision.

          (c) If any of the Collateral is or shall become evidenced or
represented by an Uncertificated Security, such Grantor shall cause the Issuer
thereof either (i) to register the Collateral Trustee 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 Collateral Trustee that such
Issuer will comply with instructions with respect to such Uncertificated
Security originated by the Collateral Trustee without further consent of such
Grantor, such agreement to be in substantially the form of Exhibit C, and such
action shall be taken on or prior to the Restatement Date with respect to any
Uncertificated Securities owned as of the Restatement Date by any Grantor.

          (d) Each Grantor shall maintain Securities Entitlements, Securities
Accounts and Deposit Accounts (other than any which constitute Excluded
Perfection Assets) only with financial institutions that have agreed, pursuant
to Control Agreements (Deposit and Securities Accounts), to comply with
entitlement orders and instructions issued or originated by the Collateral
Trustee without further consent of such Grantor.

          (e) If any of the Collateral is or shall 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 Collateral Trustee, pursuant to a Control Agreement
(Commodity Contracts), that such Commodity Intermediary will apply any value
distributed on account of such Commodity Contract as directed by the Collateral
Trustee without further consent of such Grantor.

          (f) In addition to and not in lieu of the foregoing, if any Issuer of
any Investment Property is organized under the law of, or has its chief
executive office in, a jurisdiction outside of the United States, each Grantor
shall take such additional actions, including causing the issuer to register the
pledge on its books and records, as may be necessary or advisable or as may be
reasonably requested by the Collateral Trustee, under the laws of such
jurisdiction to insure the validity, perfection and priority of the security
interest of the Collateral Trustee.

          (g) In the case of any transferable Letters of Credit in excess of
$250,000 individually or in the aggregate, each Grantor shall use commercially
reasonable efforts to obtain the consent of any issuer thereof to the transfer
of such Letter of Credit to the Collateral Trustee. In the case of any other
Letter-of-Credit Rights in excess of $250,000 individually or in the aggregate
each Grantor shall use commercially reasonable efforts to obtain the consent of
the issuer thereof and any nominated Person thereon to the assignment of the
proceeds of the related Letter of Credit in accordance with Section 5-114(c) of
the New York UCC.

          (h) Each Grantor agrees (i) to cause (or, in the case of any Pledged
LLC Interest that have been issued by an Issuer that is not a Subsidiary, to use
commercially reasonable efforts to cause) each Pledged LLC Interest and Pledged
Partnership Interest to be represented by a certificate delivered to the
Collateral Trustee pursuant to the terms hereof and (ii) to cause (or, in the
case of any Pledged LLC Interest that have been issued by an Issuer that

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is not a Subsidiary, to use commercially reasonable efforts to cause) the terms
thereof to expressly provide that each such Pledged LLC Interest and Pledged
Partnership Interest is a security governed by Article 8 of the New York UCC, in
each case no later than 60 days following the date hereof and for all times
thereafter during the term of this Agreement.

          5.3. Maintenance of Insurance. (a) Such Grantor shall keep its
properties that are of an insurable character adequately insured at all times by
financially sound and responsible insurers, which, in the case of any insurance
on any property with respect to which a mortgage has been granted pursuant to
the terms of any Security Documents, are licensed to do business in the States
where the applicable property is located; maintain such other insurance, to such
extent and against such risks (and with such deductibles, retentions and
exclusions), including fire and other risks insured against by extended coverage
and coverage for acts of terrorism, in each case as is customary with companies
of a similar size operating in the same or similar businesses, including public
liability insurance against claims for personal injury or death or property
damage; and maintain such other insurance as may be required by law; provided
that in any event such Grantor shall maintain, to the extent obtainable on
commercially reasonable terms, (i) property and machinery breakage insurance on
all real and personal property on an all risks basis (including the perils of
flood and quake and loss by fire, explosion and theft), covering the repair or
replacement cost of all such property (with the exception of losses from
terrorism, earthquake and flood which may be subject to the highest amount
commercially and reasonably available), (ii) consequential loss coverage for
business interruption and extra expense (which shall include construction
expenses and such other business interruption expenses as are otherwise
generally available to similar businesses) in an amount of not less than
12 months gross revenues and (iii) public liability insurance providing limits
of $150,000,000 per occurrence and in the aggregate for bodily injury and
property damage to third parties resulting from such Grantor’s operations; which
public liability insurance shall be written to include worldwide risks on a
commercial general liability form. All such insurance with respect to such
Grantor shall be provided by insurers or reinsurers which have an A.M. Best
policyholders rating of not less than A- or a Standard & Poor rating of not less
than BBB, or, if the relevant insurance is not available from such insurers,
such other insurers as the Collateral Trustee may approve in writing, acting
reasonably. All insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days (or, in the case of non-payment of premium, 10 days)
after receipt by the Collateral Trustee of written notice thereof, (ii) if
reasonably requested by the Collateral Trustee, include a breach of warranty
clause and (iii) be reasonably satisfactory in all other respects to the
Collateral Trustee.

          (b) The Company shall deliver to the Collateral Trustee on behalf of
the Secured Parties, (i) on the Restatement Date, a certificate dated such date
showing the amount and types of insurance coverage as of such date, (ii) upon
request of any Secured Debt Representative or the Collateral Trustee from time
to time, full information as to the insurance carried, (iii) promptly following
receipt of notice from any insurer, a copy of any notice of cancellation of any
material coverage or material change in coverage from that existing on the
Restatement Date, (iv) forthwith, notice of any cancellation or nonrenewal of
material coverage by any Grantor and (v) promptly after such information is
available to the Company, full information as to any claim for an amount in
excess of $5,000,000 with respect to any property or machinery breakage
insurance policy maintained by such Grantor. The Collateral Trustee shall be
named as additional insured on all such liability insurance policies of such
Grantor and

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the Collateral Trustee shall be named as loss payee on all property and
machinery breakage insurance policies of each Grantor.

          (c) Upon the request of any Secured Debt Representative or the
Collateral Trustee, the Company shall deliver to such Secured Debt
Representative and/or the Collateral Trustee a report of a reputable insurance
broker with respect to such insurance and such supplemental reports with respect
thereto as the Collateral Trustee or any Secured Debt Representative may from
time to time reasonably request but, unless a Secured Debt Default shall have
occurred and be continuing, not more than once per fiscal year.

          5.4. Payment of Secured Obligations. Such Grantor shall pay and
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all taxes, assessments and governmental charges
or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including claims for labor,
materials and supplies) against or with respect to the Collateral, except that
no such charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.

          5.5. Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain each of the security interests
created by this Agreement as a perfected security interest having at least the
priority described in Section 4.3 and shall defend such security interest
against the claims and demands of all persons whomsoever (other than the Secured
Parties), subject to the rights of such Grantor under the Secured Debt Documents
to dispose of the Collateral and subject to the provisions relating to the
release of the Liens in the Secured Debt Documents and the Collateral Trust
Agreement.

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

          (c) At any time and from time to time, upon the written request of the
Collateral Trustee, and at the sole expense of such Grantor, such Grantor shall
promptly and duly authorize, execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Collateral Trustee may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including (i) the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property, Deposit Accounts and any other relevant
Collateral, taking any actions necessary to enable the Collateral Trustee to
obtain “control” (within the meaning of the applicable Uniform Commercial Code)
with respect thereto, including executing and delivering and causing the
relevant depositary bank or securities intermediary to execute and deliver a
Control Agreement (Deposit and Securities Accounts).

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          5.6. Changes in Location, Name, Jurisdiction of Incorporation, etc.
Such Grantor shall not, except upon 15 days’ prior written notice to the
Collateral Trustee and delivery to the Collateral Trustee of duly authorized
and, where required, executed copies of (a) all additional financing statements
and other documents reasonably requested by the Collateral Trustee to maintain
the validity, perfection and priority of the security interests provided for
herein and (b) if applicable, a written supplement to Schedule 4.5 showing any
additional location at which Inventory or Equipment (other than mobile goods)
with a value in excess of $250,000 shall be kept:

          (i) permit any of the Inventory or Equipment (other than mobile goods)
with a value in excess of $250,000 to be kept at a location other than those
listed on Schedule 4.5;

          (ii) change its legal name, jurisdiction of organization or the
location of its chief executive office or sole place of business from that
referred to in Section 4.4; or

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

          5.7. Notices. Such Grantor shall advise the Collateral Trustee
promptly, in reasonable detail, of:

          (a) any Lien (other than any Lien expressly permitted under the
Secured Debt Documents) on any of the Collateral which would adversely affect
the ability of the Collateral Trustee to exercise any of its remedies hereunder;
and

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

          5.8. Investment Property. (a) If such Grantor shall become entitled to
receive or shall receive any stock or other ownership certificate (including any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any certificate issued
in connection with any reorganization), option or rights in respect of the
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 Securities, or otherwise in respect thereof, such Grantor shall
accept the same as the agent of the Parties, hold the same in trust for the
Secured Parties and deliver the same forthwith to the Collateral Trustee in the
exact form received, duly endorsed by such Grantor to the Collateral Trustee, if
required, together with an undated stock power or similar instrument of transfer
covering such certificate duly executed in blank by such Grantor and with, if
the Collateral Trustee so requests, signature guaranteed, to be held by the
Collateral Trustee, subject to the terms hereof, as additional collateral
security for the Secured Obligations. Upon the occurrence and during the
continuance of a Secured Debt Default, 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 Collateral Trustee to be held by it hereunder as additional
collateral security for the Secured

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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 Collateral Trustee, be delivered to
the Collateral Trustee 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 Collateral Trustee, hold such money or property in trust for the Secured
Parties, segregated from other funds of such Grantor, as additional collateral
security for the Secured Obligations.

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

          (c) In the case of each Grantor which is an Issuer, such Issuer agrees
that (i) it shall be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and shall comply with such terms insofar as such
terms are applicable to it, (ii) it shall notify the Collateral Trustee promptly
in writing of the occurrence of any of the events described in Section 5.8(a)
with respect to the Pledged Securities issued by it and (iii) the terms of
Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all
actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Pledged Securities issued by it. In addition, each Grantor which
is either an Issuer or an owner of any Pledged Security hereby consents to the
grant by each other Grantor of the security interest hereunder in favor of the
Collateral Trustee and to the transfer of any Pledged Security to the Collateral
Trustee or its nominee

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following a Secured Debt Default and to the substitution of the Collateral
Trustee or its nominee as a partner, member or shareholder of the Issuer of the
related Pledged Security.

          5.9. Receivables. (a) Other than in the ordinary course of business
consistent with its past practice, such Grantor shall not (i) grant any
extension of the time of payment of any Receivable that is included in the
Collateral, (ii) compromise or settle any Receivable for less than the full
amount thereof, (iii) release, wholly or partially, any Person liable for the
payment of any Receivable, (iv) allow any credit or discount whatsoever on any
Receivable that is included in the Collateral or (v) amend, supplement or modify
any Receivable that is included in the Collateral in any manner that could
adversely affect the value thereof.

          (b) Such Grantor shall deliver to the Collateral Trustee a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or enforceability of more than 7.5% of the aggregate
amount of the then outstanding Receivables that are included in the Collateral.

          (c) Each Grantor shall perform and comply in all material respects
with all of its obligations with respect to the Receivables that are included in
the Collateral.

          (d) Each Grantor shall keep and maintain at its own cost and expense
complete records of each Receivable that is included in the Collateral, in a
manner consistent with prudent business practice, including records of all
payments received, credits granted thereon, advances paid, advances recouped,
advances not recouped and all other documentation relating thereto.

          (e) Each Grantor shall legend, at the request of the Collateral
Trustee made at any time after the occurrence of any Secured Debt Default under
any Secured Debt Document and in form and manner reasonably satisfactory to the
Collateral Trustee, the Receivables that are included in the Collateral and the
other books, records and documents of such Grantor evidencing or pertaining to
the Receivables that are included in the Collateral with an appropriate
reference to the fact that the Receivables that are included in the Collateral
have been assigned to the Collateral Trustee for the benefit of the Secured
Parties and that the Collateral Trustee has a security interest therein for the
benefit of the Secured Parties.

          (f) No Grantor shall rescind or cancel any indebtedness evidenced by
any Receivable that is included in the Collateral or modify any term thereof or
make any adjustment with respect thereto except in the ordinary course of
business consistent with prudent business practice, or extend or renew any such
indebtedness except in the ordinary course of business consistent with prudent
business practice or compromise or settle any dispute, claim, suit or legal
proceeding relating thereto or sell any Receivable that is included in the
Collateral or interest therein except in the ordinary course of business
consistent with prudent business practice without the prior written consent of
the Collateral Trustee. Each Grantor shall timely fulfill all obligations on its
part to be fulfilled under or in connection with the Receivables that are
included in the Collateral in a manner consistent with Good Utility Practices.

          (g) Each Grantor shall cause to be collected from the account debtor
of each of the Receivables that are included in the Collateral, as and when due
in the ordinary course of

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business consistent with prudent business practice (including Receivables that
are delinquent, such Receivables that are included in the Collateral to be
collected in accordance with generally accepted commercial collection
procedures), any and all amounts owing under or on account of such Receivable
that is included in the Collateral, and apply forthwith upon receipt thereof all
such amounts as are so collected to the outstanding balance of such Receivable,
except that any Grantor may, with respect to any Receivable that is included in
the Collateral, allow in the ordinary course of business such extensions of time
to pay amounts due in respect of Receivables that are included in the Collateral
and such other modifications of payment terms or settlements in respect of
Receivables as shall be commercially reasonable under the circumstances, all in
accordance with such Grantor’s ordinary course of business consistent with its
collection practices as in effect from time to time. The costs and expenses
(including attorneys’ fees) of collection, in any case, whether incurred by any
Grantor, the Collateral Trustee or any other Secured Party, shall be paid by the
Grantors.

          5.10. Contracts. (a) Such Grantor shall perform and comply in all
material respects with all its obligations under the Contracts.

          (b) Such Grantor shall not amend, modify, terminate, waive or fail to
enforce any provision of any Contract in any manner which could reasonably be
expected to materially adversely affect the value of the Collateral or otherwise
have a Material Adverse Effect.

          (c) Such Grantor shall exercise promptly and diligently each and every
material right which it may have under each Material Contract (other than any
right of termination).

          (d) Such Grantor shall deliver to the Collateral Trustee a copy of
each material demand, notice or document received by it relating in any way to
any Material Contract and shall also deliver to the Collateral Trustee a copy of
all new Material Contracts entered into after the date hereof.

          (e) With respect to any Non-Assignable Contract that is a Material
Contract as of the date hereof, each Grantor shall, within thirty days of the
date hereof, request in writing the consent of the counterparty or
counterparties to such Non-Assignable Contract pursuant to the terms of such
Non-Assignable Contract or applicable law to the assignment or granting of a
security interest in such Non-Assignable Contract to the Collateral Trustee for
the benefit of the Secured Parties and use its commercially reasonable efforts
to obtain such consent as soon as practicable thereafter. No Grantor shall after
the Restatement Date enter into any Non-Assignable Contract that is a Material
Contract unless, within 30 days, counterparties to such Non-Assignable Contract
consent in writing pursuant to the terms of such Non-Assignable Contract to the
assignment and granting of a security interest in such Non-Assignable Contract
to the Collateral Trustee for the benefit of the Secured Parties.

          (f) Such Grantor shall not permit to become effective in any document
creating, governing or providing for any permit, lease, license or Material
Contract, a provision that would prohibit the creation or perfection of, or
exercise of remedies in connection with, a Lien on such permit, lease, license
or Material Contract in favor of the Collateral Trustee unless

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such Grantor believes, in its reasonable judgment, that such prohibition is
usual and customary in transactions of such type.

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

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

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

          (d) Such Grantor (either itself or through licensees) shall not do any
act that uses any Material Intellectual Property to infringe, misappropriate or
violate the intellectual property rights of any other Person.

          (e) Such Grantor (either itself or through licensees) shall use proper
statutory notice in connection with the use of the Material Intellectual
Property.

          (f) Such Grantor shall notify the Collateral Trustee promptly if it
knows, or has reason to know, that any application or registration relating to
any Material Intellectual Property may become forfeited, abandoned or dedicated
to the public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court or tribunal in any country) regarding such Grantor’s
ownership of, or the validity of, any Material Intellectual Property or such
Grantor’s right to register the same or to own and maintain the same in the case
of Owned Intellectual Property.

          (g) Promptly upon such Grantor’s acquisition or creation of any
invention, trademark or other similar property that is material to the business
of such Grantor, apply for registration thereof with the United States Patent
and Trademark Office and any other appropriate office. 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 that is
material to the business of such Grantor with the United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, such

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Grantor shall report such filing to the Collateral Trustee within five Business
Days after the last day of the fiscal quarter in which such filing occurs. Upon
request of the Collateral Trustee, such Grantor shall execute and deliver, and
have recorded, any and all agreements, instruments, documents, and papers as the
Collateral Trustee may request to evidence the Secured Parties’ security
interest in any Patent, Trademark or other Intellectual Property of such Grantor
and the goodwill and general intangibles of such Grantor relating thereto or
represented thereby. Notwithstanding the foregoing, such Grantor shall register
with the U.S. Copyright Office copyrightable works only (i) if reasonably
requested by the Collateral Trustee or (ii) if the Collateral Trustee has been
given at least 45 days prior notice and the opportunity to record with the U.S.
Copyright Office an instrument evidencing the Collateral Trustee’s security
interest in such copyrighted works.

          (h) Such Grantor shall take all reasonable and necessary steps,
including in any proceeding before the United States Patent and Trademark
Office, subject to the last sentence of the preceding paragraph, the United
States Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of
Intellectual Property material to its business, including the payment of
required fees and taxes, the filing of responses to office actions issued by the
United States Patent and Trademark Office and the United States Copyright
Office, the filing of applications for renewal or extension, the filing of
affidavits of use and affidavits of incontestability, the filing of divisional,
continuation, continuation-in-part, reissue, and renewal applications or
extensions, the payment of maintenance fees, and the participation in
interference, reexamination, opposition, cancellation, infringement and
misappropriation proceedings.

          (i) Such Grantor (either itself or through licensees) shall not,
without the prior written consent of the Collateral Trustee, discontinue use of
or otherwise abandon any of its Intellectual Property, or abandon any
application or 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
Collateral Trustee in accordance herewith.

          (j) In the event that any Owned Intellectual Property material to its
business is infringed, misappropriated or diluted by a third party, such Grantor
shall (i) take such actions as such Grantor shall reasonably deem appropriate
under the circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Collateral Trustee 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.

          (k) Such Grantor agrees that, should it obtain an ownership interest
in any item of intellectual property which is not, as of the Restatement Date, 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,

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shall automatically become part of the Intellectual Property Collateral,
(iii) it shall give prompt (and, in any event within five Business Days after
the last day of the fiscal quarter in which such Grantor acquires such ownership
interest) written notice thereof to the Collateral Trustee in accordance
herewith and (iv) it shall provide the Collateral Trustee promptly (and, in any
event within five Business Days after the last day of the fiscal quarter in
which such Grantor acquires such ownership interest) with an amended
Schedule 4.11 and take the actions specified in Section 5.11(m).

          (l) Such Grantor agrees to execute an Intellectual Property Security
Agreement with respect to its Intellectual Property in substantially the form of
Exhibit D in order to record the security interest granted herein to the
Collateral Trustee for the benefit of the Secured Parties with the United States
Patent and Trademark Office, the United States Copyright Office and any other
applicable Governmental Authority.

          (m) Such Grantor agrees to execute an After-Acquired Intellectual
Property Security Agreement with respect to its After-Acquired Intellectual
Property in substantially the form of Exhibit E in order to record the security
interest granted herein to the Collateral Trustee, for the benefit of Secured
Parties, with the United States Patent and Trademark Office, the United States
Copyright Office and any other applicable Governmental Authority.

          (n) Such Grantor shall take all steps reasonably necessary to protect
the secrecy of all Trade Secrets material to its business, including entering
into confidentiality agreements with employees and labeling and restricting
access to secret information and documents.

          5.12. Commercial Tort Claims. Such Grantor shall advise the Collateral
Trustee promptly of any Commercial Tort Claim held by such Grantor individually
or in the aggregate in excess of $100,000 and shall promptly execute a
supplement to this Agreement in form and substance reasonably satisfactory to
the Collateral Trustee to grant a security interest in such Commercial Tort
Claim to the Collateral Trustee for the benefit of the Secured Parties.

          5.13. Deposit and Securities Accounts. (a) On or prior to the
Restatement Date, each Grantor shall deliver to the Collateral Trustee one or
more Control Agreements (Deposit and Securities Accounts), executed by all
parties thereto, for each Deposit Account and each Securities Account that is
included in the Collateral in which such Grantor has an interest as of the date
hereof (collectively, the “Pledged Accounts”); provided that no Grantor shall be
required at any time to enter into Control Agreements (Deposit and Securities
Accounts) with respect to any Deposit Account or Securities Account solely to
the extent that the same constitutes an Excluded Perfection Asset at such time.
After the Restatement Date, each Grantor shall deliver to the Collateral Trustee
a Control Agreement (Deposit and Securities Accounts) for each Deposit Account
and each Securities Account in which such Grantor has an interest after the
Restatement Date; provided that no Grantor shall be required at any time to
enter into a Control Agreement with respect to any Deposit Account or Securities
Account solely to the extent that the same constitutes an Excluded Perfection
Asset at such time. Each Grantor agrees that it shall have no Deposit Account or
Securities Accounts other than (i) Deposit Accounts and Securities Accounts with
respect to which Control Agreements (Deposit and Securities Accounts) have

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been delivered, (ii) Deposit Accounts and Securities Accounts that constitute
Excluded Perfection Interests and (iii) Deposit Accounts that constitute
Excluded Assets.

          (b) Each Grantor irrevocably authorizes the Collateral Trustee to
notify each Depositary Bank of the occurrence of an Actionable Default.
Following the occurrence of an Actionable Default, the Collateral Trustee may
instruct each Depositary Bank to transfer immediately all funds and investments
held in each Deposit Account or Securities Account to an account designated by
the Collateral Trustee; provided, however, that the Collateral Trustee agrees
that it shall deliver such instruction only during the continuation of an
Actionable Default. Each Grantor hereby agrees to irrevocably direct each
Depositary Bank to comply with the instructions of the Collateral Trustee with
respect to the applicable Deposit Account or Securities Account held by such
Depositary Bank without further consent from the Grantor or any other Person.

          5.14. Collections. (a) Each Grantor agrees (i) to notify and direct
promptly each Account Debtor and every other Person obligated to make payments
on Accounts that are included in the Collateral or in respect of any Inventory
that is included in the Collateral to make all such payments directly to the
Pledged Accounts established in accordance with Section 5.13, (ii) to use all
reasonable efforts to cause each Account Debtor and every other Person
identified in clause (i) above to make all payments with respect to Accounts
that are included in the Collateral and Inventory that is included in the
Collateral directly to the Pledged Accounts and (iii) promptly to deposit all
payments received by it on account of Accounts that are included in the
Collateral and Inventory that is included in the Collateral, whether in the form
of cash, checks, notes, drafts, bills of exchange, money orders or otherwise, in
the Pledged Accounts in precisely the form in which received (but with any
endorsements of such Grantor necessary for deposit or collection), and until
they are so deposited such payments shall be held in trust by such Grantor for
the benefit and as the property of the Secured Parties.

          (b) Without the prior written consent of the Collateral Trustee, no
Grantor shall, in a manner adverse to the Secured Parties, change the general
instructions given to Account Debtors in respect of payment on Accounts to be
deposited in the Pledged Accounts. Until the Collateral Trustee shall have
advised the Grantors to the contrary, each Grantor shall, and the Collateral
Trustee hereby authorizes each Grantor to, enforce and collect all amounts owing
on the Inventory and Accounts, for the benefit and on behalf of the Collateral
Trustee and the other Secured Parties; provided, however, that such privilege
may at the option of the Collateral Trustee be terminated upon the occurrence
and during the continuance of any Actionable Default.

SECTION 6. REMEDIAL PROVISIONS

          6.1. Certain Matters Relating to Receivables.

          (a) At any time after the occurrence and during the continuance of an
Actionable Default, the Collateral Trustee shall have the right, but shall in no
way be obligated to make test verifications of the Receivables that are included
in the Collateral in any manner and through any medium that it reasonably
considers advisable, and each Grantor shall furnish all such assistance and
information as the Collateral Trustee may require in connection with such test
verifications.

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At any time and from time to time after the occurrence and during the
continuance of an Actionable Default, upon the Collateral Trustee’s request and
at the expense of the relevant Grantor, such Grantor shall cause independent
public accountants or others satisfactory to the Collateral Trustee or the
Administrative Agent, as agent for the Collateral Trustee, to furnish to the
Collateral Trustee or the Administrative Agent, as agent for the Collateral
Trustee, as the case may be, reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables that are included in
the Collateral.

          (b) Each Grantor may collect such Grantor’s Receivables that are
included in the Collateral, subject to the Collateral Trustee’s direction and
control as defined in Section 5.13, and each Grantor hereby agrees to continue
to collect all amounts due or to become due to such Grantor under the
Receivables and any Supporting Obligation, in each case, that are included in
the Collateral and diligently exercise each material right it may have under any
Receivable and any Supporting Obligation, in each case, that are included in the
Collateral at its own expense; provided, however, that the Collateral Trustee
may curtail or terminate said authority at any time after the occurrence and
during the continuance of an Actionable Default as provided in Section 5.13. If
required by the Collateral Trustee at any time after the occurrence and during
the continuance of an Actionable Default, any payments of Receivables that are
included in the Collateral, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly endorsed by such Grantor to the
Collateral Trustee for the benefit of the Secured Parties if required, in a
Collateral Account maintained under the sole dominion and control of the
Collateral Trustee, subject to withdrawal by the Collateral Trustee for the
account of the Secured Parties only as provided in Section 6.7, and (ii) until
so turned over, shall be held by such Grantor in trust for the Secured Parties,
segregated from other funds of such Grantor. Each such deposit of Proceeds of
Receivables that are included in the Collateral shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.

          (c) At any time after the occurrence and during the continuance of an
Actionable Default, at the Collateral Trustee’s request, each Grantor shall
deliver to the Collateral Trustee all original and other documents evidencing,
and relating to, the agreements and transactions which gave rise to the
Receivables that are included in the Collateral, including all original orders,
invoices and shipping receipts.

          6.2. Communications with Obligors; Grantors Remain Liable. (a) At any
time after the occurrence and during the continuance of an Actionable Default,
the Collateral Trustee in its own name or in the name of others may at any time
communicate with obligors under the Receivables that are included in the
Collateral and parties to the Contracts to verify with them to the Collateral
Trustee’s reasonable satisfaction the existence, amount and terms of any
Receivables or Contracts, in each case, that are included in the Collateral.

          (b) The Collateral Trustee may at any time notify, or require any
Grantor to so notify, the Account Debtor or counterparty on any Receivable or
Contract that is included in the Collateral of the security interest of the
Collateral Trustee therein. In addition, after the occurrence and during the
continuance of an Actionable Default, the Collateral Trustee may upon written
notice to the applicable Grantor, notify, or require any Grantor to notify, the

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Account Debtor or counterparty to make all payments under the Receivables and/or
Contracts that are included in the Collateral directly to the Collateral
Trustee.

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

          6.3. Pledged Securities. (a) Unless an Actionable Default shall have
occurred and be continuing and the Collateral Trustee (subject to the terms of
the Collateral Trust Agreement) shall have given notice to the relevant Grantor
of the Collateral Trustee’s intent to exercise its rights pursuant to
Section 6.3(b), each Grantor shall be permitted to receive all cash dividends
paid in respect of the Pledged Equity Interests and all payments made in respect
of the Pledged Notes, in each case paid in the normal course of business of the
relevant Issuer and consistent with past practice, to the extent permitted in
each credit agreement, indenture or comparable document constituting a Secured
Debt Document, and to exercise all voting and corporate rights with respect to
the Pledged Securities; provided, however, that no vote shall be cast or
corporate or other ownership right exercised or other action taken which, in the
Collateral Trustee’s reasonable judgment, would materially impair the Collateral
or which would be inconsistent with or result in any violation of any provision
of this Agreement or any Secured Debt Document.

          (b) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Collateral Trustee in writing that
(x) states that an Actionable Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement and the Collateral
Trust Agreement, without any other or further instructions from such Grantor,
and each Grantor agrees that each Issuer shall be fully protected in so
complying and (ii) upon delivery of any notice to such effect pursuant to
Section 6.3(a), pay any dividends or other payments with respect to the
Investment Property directly to the Collateral Trustee. In order to permit the
Collateral Trustee to exercise the voting and other consensual rights which it
may be entitled to exercise pursuant hereto and to receive all dividends and
other distributions which it may be entitled to receive hereunder each Grantor
shall promptly execute and deliver (or cause to be executed and delivered) to
the Collateral Trustee all proxies, dividend payment orders and other
instruments as the Collateral Trustee may from time to time reasonably request
and each Grantor acknowledges that the Collateral Trustee may utilize the power
of attorney set forth herein.

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          (c) Each Grantor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Collateral Trustee in writing that
(x) states that an Actionable Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement and the Collateral
Trust Agreement, without any other or further instructions from such Grantor,
and each Grantor agrees that each Issuer shall be fully protected in so
complying, and (ii) upon any such instruction following the occurrence of an
Actionable Default, pay any dividends or other payments with respect to the
Investment Property, including the Pledged Securities, directly to the
Collateral Trustee.

          6.4. Intellectual Property; Grant of License. For the purpose of
enabling the Collateral Trustee, after the occurrence and during the continuance
of an Actionable Default, to exercise rights and remedies under this Section 6
at such time as the Collateral Trustee shall be lawfully entitled to exercise
such rights and remedies, and for no other purpose, each Grantor hereby grants
to the Collateral Trustee an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to such Grantor) to use,
exploit, assign or license, after the occurrence and during the continuance of
an Actionable Default, any of the Intellectual Property now owned or hereafter
acquired by such Grantor, wherever the same may be located, through any and all
media, whether now existing or hereafter developed, throughout the world,
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer programs used for the compilation
or printout hereof.

          6.5. Intellectual Property Litigation and Protection.

          (a) Upon the occurrence and during the continuance of any Actionable
Default (and subject to the terms of the Collateral Trust Agreement), the
Collateral Trustee shall have the right but shall in no way be obligated to file
applications for protection of the Intellectual Property and/or bring suit in
the name of any Grantor, the Collateral Trustee or the Secured Parties to
protect or enforce the Intellectual Property and any Intellectual Property
License. In the event of such suit, each Grantor shall, at the reasonable
request of the Collateral Trustee, do any and all lawful acts and execute any
and all documents reasonably requested by the Collateral Trustee in aid of such
enforcement and the Grantors shall promptly reimburse and indemnify the
Collateral Trustee for all costs and expenses incurred by the Collateral Trustee
in the exercise of its rights under this Section 6.5 in accordance with
Section 8.4 hereof. In the event that the Collateral Trustee shall elect not to
bring suit to enforce the Intellectual Property, each Grantor agrees, at the
reasonable request of the Collateral Trustee, to take all commercially
reasonable actions necessary, whether by suit, proceeding or other action, to
prevent the infringement, misappropriation, counterfeiting, unfair competition,
dilution, diminution in value of or other damage to any of the material
Intellectual Property owned by such Grantor by others and for that purpose
agrees to diligently maintain any suit, proceeding or other action against any
Person so infringing necessary to prevent such infringement.

          (b) If an Actionable Default shall occur and be continuing, upon
written demand from the Collateral Trustee (subject to the terms of the
Collateral Trust Agreement), each Grantor shall grant, assign, convey or
otherwise transfer to the Collateral Trustee or such Collateral Trustee’s
designee all of such Grantor’s right, title and interest in and to the

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Intellectual Property and shall execute and deliver to the Collateral Trustee
such documents as are necessary or appropriate to carry out the intent and
purposes of this Agreement.

          6.6. Proceeds to be Turned Over To Collateral Trustee. In addition to
the rights of the Secured Parties specified in Section 6.1 with respect to
payments of Receivables that are included in the Collateral, if an Actionable
Default shall occur and be continuing, all Proceeds received by any Grantor
consisting of cash, cash equivalents, checks and other near-cash items shall be
held by such Grantor in trust for the Secured Parties, segregated from other
funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Collateral Trustee in the exact form received by such Grantor
(duly endorsed by such Grantor to the Collateral Trustee, if required by the
Collateral Trustee). All Proceeds received by the Collateral Trustee hereunder
shall be held by the Collateral Trustee in a Collateral Account maintained under
its sole dominion and control. All Proceeds while held by the Collateral Trustee
in a Collateral Account (or by such Grantor in trust for the Secured Parties)
shall continue to be held as collateral security for all the Secured Obligations
and shall not constitute payment thereof until applied as provided in
Section 6.7.

          6.7. Application of Proceeds. At such intervals as may be agreed upon
by each Borrower and the Collateral Trustee, or, if an Actionable Default shall
have occurred and be continuing, at any time at the Collateral Trustee’s
election, the Collateral Trustee may apply all or any part of Proceeds
constituting Collateral realized through the exercise by the Collateral Trustee
of its remedies hereunder, whether or not held in any Collateral Account, in
payment of the Secured Obligations in accordance with the provisions of the
Collateral Trust Agreement.

          6.8. Code and Other Remedies. (a) If an Actionable Default shall occur
and be continuing, the Collateral Trustee, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
under the New York UCC (whether or not the New York UCC applies to the affected
Collateral) or its rights under any other applicable law or in equity in each
case subject to the terms of the Collateral Trust Agreement. Without limiting
the generality of the foregoing and in each case subject to the terms of the
Collateral Trust Agreement, the Collateral Trustee, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, license, assign, give option or
options to purchase, or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of
the Collateral Trustee or any other Secured Party or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Collateral Trustee and each other Secured Party shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in any Grantor,
which right or equity is hereby waived and released. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of any Grantor,

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

          (b) The Collateral Trustee shall apply the net proceeds of any action
taken by it pursuant to this Section 6.8, after deducting all reasonable costs
and expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Secured Parties hereunder, including reasonable
attorneys’ fees and disbursements, to the payment in whole or in part of the
Secured Obligations in accordance with the Collateral Trust Agreement. If the
Collateral Trustee sells any of the Collateral upon credit, the Grantor will be
credited only with payments actually made by purchaser and received by the
Collateral Trustee and applied to indebtedness of the purchaser. In the event
the purchaser fails to pay for the Collateral, the Collateral Trustee may resell
the Collateral and the Grantor shall be credited with proceeds of the sale. To
the extent permitted by applicable law, each Grantor waives all claims, damages
and demands it may acquire against the Collateral Trustee or the other Secured
Parties arising out of the exercise by them of any rights hereunder.

          (c) In the event of any disposition of any of the Intellectual
Property, the goodwill of the business connected with and symbolized by any
Trademarks subject to such disposition shall be included, and the applicable
Grantor shall supply the Collateral Trustee or its designee with such Grantor’s
know-how and expertise, and with documents and things embodying the same,
relating to the manufacture, distribution, advertising and sale of products or
the provision of services relating to any Intellectual Property subject to such
disposition, and

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such Grantor’s customer lists and other records and documents relating to such
Intellectual Property and to the manufacture, distribution, advertising and sale
of such products and services.

          6.9. Registration Rights. (a) If the Collateral Trustee is directed to
exercise its right to sell any or all of the Pledged Equity Interests or the
Pledged Debt Securities pursuant to Section 6.8, and if the Collateral Trustee
is so directed to have the Pledged Equity Interests or the Pledged Debt
Securities, or that portion thereof to be sold, registered under the provisions
of the Securities Act, the relevant Grantor shall cause the Issuer thereof to
(i) execute and deliver, and cause the directors and officers of such Issuer to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as the Collateral Trustee determines to be reasonably
necessary or advisable to register the Pledged Equity Interests or the Pledged
Debt Securities, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) use its commercially reasonable efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Equity Interests or the Pledged Debt Securities, or that portion
thereof to be sold and (iii) make all amendments thereto and/or to the related
prospectus which, in the opinion of the Collateral Trustee, are reasonably
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. Each Grantor agrees to use commercially
reasonable efforts to cause such Issuer to comply with the provisions of the
securities or “Blue Sky” laws of any and all jurisdictions which the Collateral
Trustee shall designate and to make available to its security holders, as soon
as practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.

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

          (c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Equity Interests or the Pledged Debt Securities
pursuant to this Section 6.9 valid and binding and in compliance with any and
all other applicable Requirements of Law. Each Grantor further agrees that a
breach of any of the covenants contained in this Section 6.9 will cause
irreparable injury to the Secured Parties, that the Secured Parties have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 6.9 shall be specifically
enforceable against such Grantor, and such Grantor hereby

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waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Actionable Default
has occurred.

          6.10. Deficiency. Each Grantor shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by any Secured Party to collect such deficiency.

          6.11. Separate Liens. The Collateral Trustee may exercise any or all
of the rights and remedies set forth in this Section 6 separately with respect
to each security interest granted hereunder or jointly, as directed by the
relevant Secured Parties in accordance with the Collateral Trust Agreement.

SECTION 7. THE COLLATERAL TRUSTEE

          7.1. Collateral Trustee’s Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the Collateral
Trustee and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Collateral Trustee the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:

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

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

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

               (iv) execute, in connection with any sale provided for in
Section 6.8 or 6.9, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and

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               (v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due thereunder
directly to the Collateral Trustee or as the Collateral Trustee 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 Collateral Trustee 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
Collateral Trustee shall determine; and (8) generally, sell, transfer, pledge
and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Collateral Trustee were the
absolute owner thereof for all purposes, and do, at the Collateral Trustee’s
option and such Grantor’s expense, at any time, or from time to time, all acts
and things which the Collateral Trustee deems necessary to protect, preserve or
realize upon the Collateral and the Collateral Trustee’s security interests
therein and to effect the intent of this Agreement, all as fully and effectively
as such Grantor might do.

          Anything in this Section 7.1(a) to the contrary notwithstanding, the
Collateral Trustee agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Actionable Default
shall have occurred and be continuing, and in accordance with the Collateral
Trust Agreement.

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

          (c) The expenses of the Collateral Trustee incurred in connection with
actions undertaken as provided in this Section 7.1, together with interest
thereon at the rate applicable under Section 2.06 of the Credit Agreement, from
the date of payment by the Collateral Trustee to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to the Collateral Trustee on
demand.

          (d) Each Grantor hereby ratifies all that said attorneys set forth in
this Section 7.1 shall lawfully do or cause to be done by virtue hereof. All
powers, authorizations and agencies contained in this Agreement are coupled with
an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.

          7.2. Duty of Collateral Trustee. The Collateral Trustee’s sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under

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Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the
same manner as the Collateral Trustee deals with similar property for its own
account. Neither the Collateral Trustee, nor any other Secured Party nor any of
their respective officers, directors, partners, employees, agents, attorneys and
other advisors, attorneys-in-fact or Affiliates shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Collateral Trustee and the other Secured Parties
hereunder are solely to protect the Secured Parties’ interests in the Collateral
and shall not impose any duty upon any Secured Party to exercise any such
powers. The Secured Parties shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, partners, employees, agents, attorneys and
other advisors, attorneys-in-fact or Affiliates shall be responsible to any
Grantor for any act or failure to act hereunder, except 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 own gross negligence
or willful misconduct.

          Notwithstanding anything to the contrary contained in this Agreement,
the rights, privileges, powers, benefits and immunities of the Collateral
Trustee hereunder are subject to the terms, conditions and limitations set forth
in the Collateral Trust Agreement, reference to which is made for all purposes;
provided, however, that any forbearance by the Collateral Trustee in exercising
any right or remedy available to it under the Collateral Trust Agreement shall
not give rise to a defense on the part of the Grantors with respect to the
Collateral Trustee’s exercise of any right or remedy pursuant to this Agreement
or as otherwise afforded by applicable law.

          7.3. Execution of Financing Statements. Each Grantor acknowledges that
pursuant to Section 9-509(b) of the New York UCC and any other applicable law,
each Grantor authorizes the Collateral Trustee to file or record financing or
continuation statements, and amendments thereto, and other filing or recording
documents or instruments with respect to the Collateral, without the signature
of such Grantor, in such form and in such offices as the Collateral Trustee
reasonably determines appropriate to perfect or maintain the perfection of the
security interests of the Collateral Trustee under this Agreement. Each Grantor
agrees that such financing statements may describe the collateral in the same
manner as described in the Security Documents or as “all assets” or “all
personal property”, wherever located and whether now owned or hereafter existing
or acquired or such other description as the Collateral Trustee, in its sole
judgment, determines is necessary or advisable. A photographic or other
reproduction of this Agreement shall be sufficient as a financing statement or
other filing or recording document or instrument for filing or recording in any
jurisdiction. Each Grantor hereby ratifies and authorizes the filing by or on
behalf of the Collateral Trustee of any financing statement with respect to the
Collateral made prior to the date hereof.

          7.4. Authority of Collateral Trustee. Each Grantor acknowledges that
the rights and responsibilities of the Collateral Trustee under this Agreement
with respect to any action taken by the Collateral Trustee or the exercise or
non-exercise by the Collateral Trustee 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 Collateral Trustee and the other
Secured Parties, be governed by the Collateral Trust Agreement and by such other
agreements

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with respect thereto as may exist from time to time among them, but, as between
the Collateral Trustee and the Grantors, the Collateral Trustee shall be
conclusively presumed to be acting as agent for the Secured Parties, in its
capacities as further described in the Collateral Trust Agreement, and 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. Notwithstanding anything to the contrary contained herein, in taking
any action hereunder the Collateral Trustee shall not be required to act except
to the extent that it shall have been directed in writing to so act by a Secured
Debt Representative; provided that all actions of the Collateral Trustee
hereunder shall be taken pursuant to the terms of the Collateral Trust Agreement
and the Collateral Trustee shall act to the extent directed pursuant to the
terms thereof with respect to those matters specified therein.

          7.5. Access to Collateral, Books and Records; Other Information. Upon
reasonable request to any Grantor, representatives of the Collateral Trustee or
any other Secured Party (acting through the applicable Secured Debt
Representative) shall have full and free access to visit and inspect, as
applicable, during normal business hours all of the Collateral of such Grantor,
including all of the books, correspondence and records of such Grantor relating
thereto; provided that no Grantor shall be required to provide such access more
than two times in any fiscal year, unless an Actionable Default shall have
occurred and be continuing. The Collateral Trustee and its representatives may
examine the same, take extracts therefrom and make photocopies thereof, and such
Grantor agrees to render to the Collateral Trustee, at such Grantor’s cost and
expense, such clerical and other assistance as may be reasonably requested by
the Collateral Trustee with regard thereto. Such Grantor shall, at any and all
times, within a reasonable time after written request by the Collateral Trustee,
furnish or cause to be furnished to the Collateral Trustee, in such manner and
in such detail as may be reasonably requested by the Collateral Trustee,
additional information with respect to the Collateral.

          7.6. Appointment of Co-Collateral Agents. At any time or from time to
time, in order to comply with any Requirement of Law, the Collateral Trustee may
appoint another bank or trust company or one of more other persons, either to
act as co-agent or agents on behalf of the Secured Parties with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and which may be specified in the instrument of appointment. Each
separate trustee or co-trustee, upon its acceptance of the trusts conferred,
shall be vested with the estates or property specified in its instrument of
appointment, either jointly with the Collateral Trustee or separately, as may be
provided therein, subject to all the provisions of the Collateral Trust
Agreement and the other Security Documents, specifically including every
provision of such agreements relating to the conduct of, affecting the liability
of, or affording protection to, the Collateral Trustee. A copy of every such
instrument shall be sent to the Collateral Trustee.

SECTION 8. MISCELLANEOUS

          8.1. Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 7.1 of the Collateral Trust Agreement.

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          8.2. Notices. All notices, requests and demands to or upon the
Collateral Trustee or any Grantor hereunder shall be effected in the manner
provided for in Section 7.5 of the Collateral Trust Agreement; provided that any
such notice, request or demand to or upon any Guarantor shall be addressed to
such Guarantor at its notice address set forth on Schedule 8.2 or such other
address specified in writing to the Collateral Trustee in accordance with such
Section. Each Grantor agrees to provide a copy of each notice provided by it
hereunder to the Collateral Trustee to each Secured Debt Representative in the
manner provided for in Section 7.1 of the Collateral Trust Agreement.

          8.3. No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Collateral Trustee nor any other Secured Party shall by any act (except by a
written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Secured Debt Default under any Secured Debt Document. No
failure to exercise, nor any delay in exercising, on the part of the Collateral
Trustee or any other Secured Party, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Collateral Trustee or any other Secured Party of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
such Secured Party would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.

          8.4. Enforcement Expenses; Indemnification. (a) Each Grantor agrees to
pay or reimburse the Collateral Trustee and each Secured Party for all its costs
and expenses incurred in collecting against such Grantor under the guarantee
contained in Section 2 or otherwise enforcing or preserving any rights under
this Agreement and the Secured Debt Documents to which such Grantor is a party,
including the fees and disbursements of counsel to the Collateral Trustee and
each Secured Party.

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

          (c) Each Grantor agrees to pay, and to save the Collateral Trustee and
the other Secured Parties harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent each Credit Agreement Borrower would be required to do so pursuant to
Section 9.05 of the Credit Agreement (whether or not then in effect), if the
Collateral Trustee were acting as the Administrative Agent under the Credit
Agreement.

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

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          8.5. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Collateral Trustee and the other Secured Parties and their successors and
assigns; provided that no Grantor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Collateral Trustee, and any attempted assignment without such consent shall
be null and void.

          8.6. Set-Off. Each Grantor hereby irrevocably authorizes each Secured
Party at any time and from time to time, 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 each Secured Party to or for the credit or the account of such Grantor,
or any part thereof in such amounts as each Secured Party may elect, against and
on account of the obligations and liabilities of such Grantor to each Secured
Party hereunder and claims of every nature and description of each Secured Party
against such Grantor, in any currency, whether arising hereunder, under any
other Secured Debt Document or otherwise, as each Secured Party may elect,
whether or not each Secured Party has made any demand for payment and although
such obligations, liabilities and claims may be contingent or unmatured,
provided that each such set-off and appropriation by any Secured Party shall be
held by it and applied in accordance with the terms of the Collateral Trust
Agreement. The applicable Secured Party shall notify such Grantor promptly of
any such set-off and the application made by each Secured Party of the proceeds
thereof, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Secured Party under
this Section are in addition to other rights and remedies (including other
rights of set-off) which each Secured Party may have.

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

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

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

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

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

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

     (a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Secured Debt Documents to which it is a
party, or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the Courts of the State of New York,
the courts of the United States of America for the Southern District of New
York, and appellate courts from any thereof;

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

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

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

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

          8.13. 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 Secured Debt Documents to which it is a
party;

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

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

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          8.14. Additional Grantors. Each Subsidiary of the Company that is
required to become a party to this Agreement pursuant to any Secured Debt
Document shall become a Grantor and a Guarantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex 1.

          8.15. Releases. (a) All or any portion of the Collateral shall be
released from the Liens created hereby, and the Guarantee of any Guarantor under
this Agreement shall terminate, in each case as provided in Section 4.1 of the
Collateral Trust Agreement.

          (b) In the event of any sale or other disposition of all of the Equity
Interests in any Guarantor to a Person that is not (either before or after
giving effect to such transactions) the Company or a Subsidiary, then such
Guarantor will be released and relieved of any obligations under its Guarantee;
provided that the proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of all applicable Secured Debt
Documents. Upon delivery by the Company to each applicable Guaranteed Secured
Debt Representative of an officer’s certificate and an opinion of counsel to the
effect that such sale or other disposition was made by the Company or any
applicable Subsidiary in accordance with the provisions of all of the applicable
Secured Debt Documents, such Guaranteed Secured Debt Representative will execute
any documents reasonably required in order to evidence the release of any
Guarantor from its obligations under its Guarantee.

          (c) In addition to the foregoing, the Guarantee of any Guarantor under
this Agreement with respect to any Series of Guaranteed Secured Debt shall
terminate to the extent such termination is provided for in the applicable
Secured Debt Documents governing such Series of Guaranteed Secured Debt.

          8.16. Conflicts. In the case of any conflicts between this Agreement
and the Collateral Trust Agreement, the provisions of the Collateral Trust
Agreement shall govern and control.

          8.17. WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER SECURED DEBT DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.

          8.18. Additional Guaranteed Secured Debt Representatives. Each
Guaranteed Secured Debt Representative that becomes entitled to the benefits of
the Collateral Trust Agreement after the date hereof in accordance with the
terms thereof shall become a party to this Agreement for purposes of Section 2.

          8.19. Rights and Immunities of Secured Debt Representatives. The
Administrative Agent shall be entitled to all of the rights, protections,
immunities and indemnities set forth in the Credit Agreement, the Trustee shall
be entitled to all of the rights, protections, immunities and indemnities set
forth in the Indenture and any future Secured Debt Representative shall be
entitled to all of the rights, protections, immunities and indemnities set forth
in the credit agreement, indenture or other agreement governing the applicable
Secured Debt with respect to which such Person shall act as representative, in
each case as if specifically

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set forth herein. In no event shall any Secured Debt Representative be liable
for any act or omission on the part of the Grantors or the Collateral Trustee
hereunder.

[Remainder of page intentionally left blank]

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

              NRG ENERGY, INC.
 
       

  By:   /s/ George P. Schaefer

       

      Name: George P. Schaefer

      Title: Treasurer
 
            NRG POWER MARKETING INC.
 
       

  By:   /s/ George P. Schaefer

       

      Name: George P. Schaefer

      Title: Treasurer

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  The Guarantors:
 
   

  ARTHUR KILL POWER LLC

  ASTORIA GAS TURBINE POWER LLC

  BERRIANS I GAS TURBINE POWER LLC

  BIG CAJUN II UNIT 4 LLC

  CAMAS POWER BOILER, INC.

  CAPISTRANO COGENERATION COMPANY

  CHICKAHOMINY RIVER ENERGY CORP.

  COMMONWEALTH ATLANTIC POWER LLC

  CONEMAUGH POWER LLC

  CONNECTICUT JET POWER LLC

  DEVON POWER LLC

  DUNKIRK POWER LLC

  EASTERN SIERRA ENERGY COMPANY

  EL SEGUNDO POWER II LLC

  ENERGY NATIONAL, INC.

  ENIFUND, INC.

  ENIGEN, INC.

  ESOCO MOLOKAI, INC.

  ESOCO, INC.

  GRANITE II HOLDING, LLC

  HANOVER ENERGY COMPANY

  HUNTLEY POWER LLC

  INDIAN RIVER ROPERATIONS INC.

  INDIAN RIVER POWER LLC

  JAMES RIVER POWER LLC

  KEYSTONE POWER LLC

  LOUISIANA GENERATING LLC

  LS POWER MANAGEMENT LLC

  MERIDEN GAS TURBINES LLC

  MIDATLANTIC GENERATION HOLDING LLC

  MIDDLETOWN POWER LLC

  MONTVILLE POWER LLC
 
   

  Executing this Agreement on behalf of and so as to bind each of the persons
named above under the caption “The Guarantors”

             

  By:        /s/ George Schaefer    

           

      Name: George Schaefer    

      Title: Treasurer    

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  The Guarantors:
 
   

  NEO CALIFORNIA POWER LLC

  NEO CHESTER-GEN LLC

  NEO CORPORATION

  NEO FREEHOLD-GEN LLC

  NEO LANDFILL GAS HOLDINGS INC.

  NEO POWER SERVICES, INC.

  NEO-MONTAUK GENCO MANAGEMENT LLC

  NORTHEAST GENERATION HOLDINGS LLC

  NORWALK POWER LLC

  NRG AFFILIATE SERVICES INC.

  NRG ARTHUR KILL OPERATIONS, INC.

  NRG ASIA-PACIFIC, LTD.

  NRG ASTORIA GAS TURBINE OPERATIONS INC.

  NRG BAYOU COVE LLC

  NRG BRAZOS VALLEY GP LLC

  NRG BRAZOS VALLEY LP LLC

  NRG BOURBONNAISE EQUIPMENT LLC

  NRG BOURBONAISE LLC

  NRG CALIFORNIA PEAKER OPERATIONS LLC

  NRG CABRILLO POWER OPERATIONS INC.

  NRG CADILLAC OPERATIONS INC.

  NRG CENTRAL U.S. LLC

  NRG COMLEASE LLC

  NRG CONNECTICUT AFFILIATE SERVICES INC.
 
   

  Executing this Agreement on behalf of and so as to bind each of the persons
named above under the caption “The Guarantors”

             

  By:        /s/ George Schaefer    

           

      Name: George Schaefer    

      Title: Treasurer    

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  The Guarantors:
 
   

  NRG DEVELOPMENT COMPANY INC.

  NRG DEVON OPERATIONS INC.

  NRG DUNKIRK OPERATIONS INC.

  NRG EASTERN LLC

  NRG EL SEGUNDO OPERATIONS INC.

  NRG ENERGY JACKSON VALLEY I, INC.

  NRG ENERGY JACKSON VALLEY II, INC.

  NRG GRANITE ACQUISITIONS LLC

  NRG HUNTLEY OPERATIONS INC.

  NRG ILION LP LLC

  NRG INTERNATIONAL LLC

  NRG INTERNATIONAL III, INC.

  NRG KAUFMAN LLC

  NRG LATIN AMERICA INC.

  NRG MARKETING SERVICES LLC

  NRG MESQUITE LLC

  NRG MEXTRANS INC.

  NRG MIDATLANTIC AFFILIATE SERVICES INC.

  NRG MIDATLANTIC GENERATING LLC

  NRG MIDATLANTIC LLC

  NRG MIDDLETOWN OPERATIONS INC.

  NRG MONTVILLE OPERATIONS INC.

  NRG NEW JERSEY ENERGY SALES LLC

  NRG NEW ROADS HOLDINGS LLC

  NRG NORTH CENTRAL OPERATIONS INC.

  NRG NORTHEAST AFFILIATE SERVICES, INC.

  NRG NORTHEAST GENERATING LLC

  NRG NORWALK HARBOR OPERATIONS INC.

  NRG OPERATING SERVICES, INC.

  NRG OSWEGO HARBOR POWER OPERATIONS INC.

  NRG PACGEN INC.

  NRG PROCESSING SOLUTIONS LLC.
 
   

  Executing this Agreement on behalf of and so as to bind each of the persons
named above under the caption “The Guarantors”

             

  By:        /s/ George Schaefer    

           

      Name: George Schaefer    

      Title: Treasurer    

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  The Guarantors:
 
   

  NRG ROCKFORD ACQUISITION LLC

  NRG ROCKFORD EQUIPMENT LLC

  NRG ROCKY ROAD LLC

  NRG SAGUARO OPERATIONS INC.

  NRG SERVICES CORPORATION

  NRG SOUTH CENTRAL AFFILIATE SERVICES INC.

  NRG SOUTH CENTRAL GENERATING LLC

  NRG SOUTH CENTRAL OPERATIONS INC.

  NRG TELOGIA POWER LLC

  NRG WEST COAST LLC

  NRG WESTERN AFFILIATE SERVICES INC.

  O’BRIEN COGENERATION, INC.II

  ONSITE ENERGY, INC.

  OSWEGO HARBOR POWER LLC

  PACIFIC CROCKETT HOLDINGS, INC.

  PACIFIC GENERATION COMPANY

  PACIFIC GENERATION HOLDINGS COMPANY

  PACIFIC-MT. POSO CORPORATION

  SAGUARO POWER LLC

  SAN JOAQUIN VALLEY ENERGY I, INC.

  SAN JOAQUIN VALLEY ENERGY IV, INC.

  SOMERSET OPERATIONS INC.

  SOMERSET POWER LLC

  SOUTH CENTRAL GENERATION HOLDING LLC

  TACOMA ENERGY RECOVERY COMPANY

  TELOGIA POWER INC.

  VIENNA OPERATIONS INC.

  VIENNA POWER LLC.
 
   

  Executing this Agreement on behalf of and so as to bind each of the persons
named above under the caption “The Guarantors”

             

  By:        /s/ George Schaefer    

           

      Name: George Schaefer    

      Title: Treasurer    

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                  GRANITE POWER PARTNERS II, L.P.    
 
                By: NRG Granite Acquisition LLC         Its: General Partner    
 
           

  By:          /s/ George Schaefer    

           

      Name: George Schaefer
Title: Treasurer    
 
                KAUFMAN COGEN LP    
 
                By: NRG Kaufman LLC         Its: General Partner    
 
           

  By:          /s/ George Schaefer    

           

      Name: George Schaefer    

      Title: Treasurer    
 
                NRG ILION LIMITED PARTNERSHIP    
 
                By: NRG Rockford Acquisition LLC         Its: General Partner  
 
 
           

  By:          /s/ George Schaefer    

           

      Name: George Schaefer    

      Title: Treasurer    
 
                NRGENERATING HOLDINGS (NO. 21) B.V.    
 
           

  By:          /s/ Robert Henry    

           

      Name: Robert Henry    

      Title: Director    

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                  DEUTSCHE BANK TRUST COMPANY     AMERICAS, as Priority
Collateral Trustee and     Parity Collateral Trustee
 
           

  By:         /s/ Richard L. Buckwalter    

           

      Name: Richard L. Buckwalter    

      Title: Vice President    
 
           

  By:        /s/ Irina Golovashchuk    

           

      Name: Irina Golovashchuk    

      Title: Associate    

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                  CREDIT SUISSE FIRST BOSTON,     acting through its Cayman
Islands Branch, as the     Administrative Agent
 
           

  By:        /s/ Jay Chall    

           

      Name: Jay Chall    

      Title: Director    
 
           

  By:        /s/ Denise L. Alvarez    

           

      Name: Denise L. Alvarez    

      Title: Associate    

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