Exhibit 10.8

GUARANTEE AND COLLATERAL AGREEMENT

made by

HANGER ORTHOPEDIC GROUP, INC.,
as Borrower,

and certain of its Subsidiaries

in favor of

CITICORP NORTH AMERICA, INC.,
as Administrative Agent

Dated as of May 26, 2006

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TABLE OF CONTENTS

Page SECTION 1. DEFINED TERMS   1     1.1 Definitions   1     1.2 Other
Definitional Provisions   6 SECTION 2. GUARANTEE   7     2.1 Guarantee 7     2.2
Right of Contribution   8     2.3 Subrogation   8     2.4 Amendments, etc. with
respect to the Borrower Obligations   9     2.5 Guarantee Absolute and
Unconditional   9     2.6 Reinstatement 11     2.7 Payments 11 SECTION 3. GRANT
OF SECURITY INTEREST 12 SECTION 4. REPRESENTATIONS AND WARRANTIES 13     4.1
Representations in Credit Agreement 13     4.2 Title; No Other Liens 13     4.3
Perfected First Priority Liens 13     4.4 Jurisdiction of Organization; Chief
Executive Office 13     4.5 Inventory and Equipment 14     4.6 Farm Products 14
    4.7 Investment Property 14     4.8 Receivables 14     4.9 Intellectual
Property 14 SECTION 5. COVENANTS 15     5.1 Covenants in Credit Agreement 15
    5.2 Delivery of Instruments and Chattel Paper 15     5.3 Maintenance of
Insurance 16     5.4 Payment of Obligations 16     5.5 Maintenance of Perfected
Security Interest; Further Documentation 16     5.6 Changes in Name, etc 17
    5.7 Notices 17     5.8 Investment Property 18

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    5.9 Receivables 19     5.10 Intellectual Property 19     5.11 Vehicles 21
    5.12 Commercial Tort Claims 21 SECTION 6. REMEDIAL PROVISIONS 21     6.1
Certain Matters Relating to Receivables 21     6.2 Communications with Obligors;
Grantors Remain Liable 22     6.3 Pledged Stock 23     6.4 Proceeds to be Turned
Over To Administrative Agent 23     6.5 Application of Proceeds 24     6.6 Code
and Other Remedies 24     6.7 Sale of Pledged Stock 25     6.8 Deficiency 26
SECTION 7. THE ADMINISTRATIVE AGENT 26     7.1 Administrative Agent's
Appointment as Attorney-in-Fact, etc 26     7.2 Duty of Administrative Agent 27
    7.3 Execution of Financing Statements 28     7.4 Authority of Administrative
Agent 28 SECTION 8. MISCELLANEOUS 28     8.1 Amendments in Writing 28     8.2
Notices 29     8.3 No Waiver by Course of Conduct; Cumulative Remedies 29
    8.4 Enforcement Expenses; Indemnification 29     8.5 Successors and Assigns
29     8.6 Set-Off 30     8.7 Counterparts 30     8.8 Severability 30     8.9
Section Headings 30     8.10 Integration 30     8.11 GOVERNING LAW 30     8.12
Submission To Jurisdiction; Waivers 31     8.13 Acknowledgements 31     8.14
Additional Grantors 31

ii

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    8.15 Releases 31     8.16 WAIVER OF JURY TRIAL 32

iii

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Schedules

Schedule 1 Notice Addresses of Guarantors Schedule 2 Description of Pledged
Securities Schedule 3 Filings and Other Actions Required to Perfect Security
Interest Schedule 4 Jurisdiction of Organization, Identification Number and
Location of Chief Executive Office Schedule 5 Locations of Inventory and
Equipment Schedule 6 Existing Prior Liens Schedule 7 Intellectual Property
Schedule 8 Intellectual Property Matters Schedule 9 Deposit Accounts

Annexes

Annex I Assumption Agreement Annex II Acknowledgment and Consent Annex III Form
of Patent Security Agreement Annex IV Form of Trademark Security Agreement

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        GUARANTEE AND COLLATERAL AGREEMENT, dated as of May 26, 2006, made by
each of the signatories hereto (together with any other entity that may become a
party hereto as provided herein, the “Grantors”), in favor of CITICORP NORTH
AMERICA, INC., as Administrative Agent (in such capacity, the “Administrative
Agent”) for the banks and other financial institutions (the “Lenders”) from time
to time parties to the Credit Agreement, dated as of May 26, 2006, (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among HANGER ORTHOPEDIC GROUP, INC., a Delaware corporation (the “Borrower”),
the several banks and other financial institutions or entities from time to time
parties to the Credit Agreement (the “Lenders”), LEHMAN BROTHERS INC., as joint
lead arranger and joint bookrunner, CITIGROUP GLOBAL MARKETS INC., as joint lead
arranger and joint bookrunner, the Administrative Agent, LEHMAN COMMERCIAL
PAPER, INC., as syndication agent (in such capacity, the “Syndication Agent”),
GENERAL ELECTRIC CAPITAL CORPORATION, as co-documentation agent, and LASALLE
BANK, N.A., as co-documentation agent.

W I T N E S S E T H:

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

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

Grantor;

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

        WHEREAS, certain of the Qualified Counterparties may enter into
Specified Hedge Agreements with one or more of the Grantors;

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

        WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective extensions of credit to the Borrower under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent;

        NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
benefit of the Secured Parties, as follows:

SECTION 1. DEFINED TERMS

    1.1        Definitions. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement and the following terms are used herein as defined in the
New York UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort
Claims, Documents, Equipment, Farm Products, General Intangibles, Goods,
Instruments, Inventory, Letter-of-Credit Rights and Supporting Obligations.

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

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

          “Borrower Credit Agreement Obligations”: the collective reference to
the unpaid principal of and interest on the Loans and Reimbursement Obligations
and all other obligations and liabilities of the Borrower (including interest
accruing at the then applicable rate provided in the Credit Agreement after the
maturity of the Loans and Reimbursement Obligations and interest accruing at the
then applicable rate provided in the Credit Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) to the
Administrative Agent or any Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, this
Agreement, or the other Loan Documents, or any Letter of Credit, or any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including all fees and disbursements of counsel to
the Administrative Agent or to the Lenders that are required to be paid by the
Borrower pursuant to the terms of any of the foregoing agreements).

          “Borrower Hedge Agreement Obligations”: the collective reference to
all obligations and liabilities of the Borrower (including interest accruing at
the then applicable rate provided in any Specified Hedge Agreement after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
to any Qualified Counterparty, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, any Specified Hedge Agreement or
any other document made, delivered or given in connection therewith, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including all fees and disbursements
of counsel to the relevant Qualified Counterparty that are required to be paid
by the Borrower pursuant to the terms of any Specified Hedge Agreement).

          “Borrower Obligations”: the collective reference to (i) the Borrower
Credit Agreement Obligations, (ii) the Borrower Hedge Agreement Obligations, but
only to the extent that, and only so long as, the Borrower Credit Agreement
Obligations are secured and guaranteed pursuant hereto, and (iii) all other
obligations and liabilities of the Borrower, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this Agreement
(including all fees and disbursements of counsel to the Administrative Agent or
to the Secured Parties that are required to be paid by the Borrower pursuant to
the terms of this Agreement).

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          “Collateral”: as defined in Section 3.

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

          “Copyrights”: all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered, including any renewals thereof, or unregistered and whether
published or unpublished (including those listed in Schedule 7), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office.

          “Copyright Licenses”: any written agreement naming any Grantor as
licensor or licensee (including those listed in Schedule 7), granting any right
under any Copyright, including the grant of rights to manufacture, distribute,
exploit and sell materials derived from any Copyright.

          “Deposit Account”: as defined in the Uniform Commercial Code of any
applicable jurisdiction and, in any event, including any demand, time, savings,
passbook or like account maintained with a depositary institution.

          “Excluded Assets”: the collective reference to (i) any contract,
General Intangible, Copyright License, Patent License or Trademark License
(“Intangible Assets”), in each case to the extent the grant by the relevant
Grantor of a security interest pursuant to this Agreement in such Grantor’s
right, title and interest in such Intangible Asset (A) is prohibited by legally
enforceable provisions of any contract, agreement, instrument or indenture
governing such Intangible Asset, (B) would give any other party to such
contract, agreement, instrument or indenture a legally enforceable right to
terminate its obligations thereunder or (C) is permitted only with the consent
of another party, if the requirement to obtain such consent is legally
enforceable and such consent has not been obtained; provided, that in any event
any Receivable or any money or other amounts due or to become due under any such
contract, agreement, instrument or indenture shall not be Excluded Assets to the
extent that any of the foregoing is (or if it contained a provision limiting the
transferability or pledge thereof would be) subject to Section 9-406 of the New
York UCC, and (ii) Foreign Subsidiary Voting Stock excluded from the definition
of “Pledged Stock” set forth in this Section 1.1.

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

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

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          “Guarantor Hedge Agreement Obligations”: the collective reference to
all obligations and liabilities of a Guarantor (including interest accruing at
the then applicable rate provided in any Specified Hedge Agreement after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to such Guarantor, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
to any Qualified Counterparty, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, any Specified Hedge Agreement or
any other document made, delivered or given in connection therewith, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including all fees and disbursements
of counsel to the relevant Qualified Counterparty that are required to be paid
by such Guarantor pursuant to the terms of any Specified Hedge Agreement).

          “Guarantor Obligations”: with respect to any Guarantor, the collective
reference to (i) any Guarantor Hedge Agreement Obligations of such Guarantor,
but only to the extent that, and only so long as, the other Obligations of such
Guarantor are secured and guaranteed pursuant hereto, and (ii) all obligations
and liabilities of such Guarantor which may arise under or in connection with
this Agreement (including Section 2) or any other Loan Document to which such
Guarantor is a party, in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including all fees and disbursements of counsel to the Administrative Agent or
to any Secured Party that are required to be paid by such Guarantor pursuant to
the terms of this Agreement or any other Loan Document).

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

          “Hedge Agreements”: as to any Person, all interest rate swaps,
currency exchange agreements, commodity swaps, caps or collar agreements or
similar arrangements entered into by such Person providing for protection
against fluctuations in interest rates, currency exchange rates or commodity
prices or the exchange of nominal interest obligations, either generally or
under specific contingencies. For avoidance of doubt, Hedge Agreements shall
include any interest rate swap or similar agreement that provides for the
payment by the Borrower or any of its Subsidiaries of amounts based upon a
floating rate in exchange for receipt by the Borrower or such Subsidiary of
amounts based upon a fixed rate.

          “Intellectual Property”: the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks and the Trademark Licenses, inventions, processes, designs, formulae,
trade secrets and know-how, computer software (including data and related
documentation), other than off-the-shelf software, and all rights to sue at law
or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.

          “Intercompany Note”: any promissory note evidencing loans made by any
Grantor to Holdings or any of its Subsidiaries.

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          “Investment Property”: the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(a)(49) of the New York UCC
(other than any Foreign Subsidiary Voting Stock excluded from the definition of
“Pledged Stock” in this Section 1.1) and (ii) whether or not constituting
“investment property” as so defined, all Pledged Notes and all Pledged Stock.

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

          “Licensed Intellectual Property”: as defined in Section 4.10.

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

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

          “Patents”: (i) all letters patent, including any reissues or
extensions, of the United States, any other country or any political subdivision
thereof, all reissues and extensions thereof and all goodwill associated
therewith, including any of the foregoing referred to in Schedule 7 and (ii) all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, including any of
the foregoing referred to in Schedule 7.

          “Patent License”: any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including any of the
foregoing referred to in Schedule 7.

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

          “Pledged Securities”: the collective reference to the Pledged Notes
and the Pledged Stock.

          “Pledged Stock”: the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options or rights of any
nature whatsoever in respect of the Capital Stock of any Person that may be
issued or granted to, or held by, any Grantor while this Agreement is in effect;
provided that in no event shall more than 65% of the total outstanding Foreign
Subsidiary Voting Stock of any Foreign Subsidiary be required to be pledged
hereunder.

          “Proceeds”: all “proceeds” as such term is defined in Section
9-102(a)(64) of the Uniform Commercial Code in effect in the State of New York
on the date hereof and, in any event, including all dividends or other income
from the Investment Property, collections thereon or distributions or payments
with respect thereto.

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          “Qualified Counterparty”: with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge
Agreement was entered into, was a Lender or an affiliate of a Lender.

          “Receivable”: any right to payment for goods sold, leased, licensed,
assigned or otherwise disposed of, or for services rendered, whether or not such
right is evidenced by an Instrument or Chattel Paper and whether or not it has
been earned by performance (including any Account).

          “Secured Parties”: the collective reference to the Administrative
Agent, the Syndication Agent, the Lenders (including any Issuing Lender in its
capacity as Issuing Lender) and any Qualified Counterparties.

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

          “Specified Hedge Agreement”: any Hedge Agreement entered into by (i)
the Borrower or any Guarantor and (ii) any Qualified Counterparty.

          “Trademarks”: all registered and unregistered trademarks, trade names,
corporate names, company names, business names, Internet domain names,
fictitious business names, trade styles, service marks, logos and other source
or business identifiers, including any renewals thereof, 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, any State
thereof or any other country or any political subdivision thereof, or otherwise,
and all common-law rights related thereto, including any of the foregoing
referred to in Schedule 7.

          “Trademark License”: any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trademark, including
any of the foregoing referred to in Schedule 7.

          “Vehicles”: all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title law of any state
and all tires and other appurtenances to any of the foregoing.

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

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

        (c)     The terms “include”, “includes” and “including” shall be deemed
to be followed by the phrase “without limitation”.

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

SECTION 2. GUARANTEE

    2.1        Guarantee. (a) (i) The Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantee to the Administrative Agent, for the
ratable benefit of the Secured Parties and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at stated maturity, by
acceleration or otherwise) of the Borrower Obligations (other than, in the case
of each Guarantor, Borrower Obligations arising pursuant to clause (ii) of this
Section 2.1(a) in respect of Guarantor Hedge Agreement Obligations in respect of
which such Guarantor is a primary obligor).

        (ii)     The Borrower hereby unconditionally and irrevocably guarantees
to the Administrative Agent, for the ratable benefit of the Secured Parties and
their respective successors, endorsees, transferees and assigns, the prompt and
complete payment and performance by each Guarantor when due (whether at stated
maturity, by acceleration or otherwise) of the Guarantor Hedge Agreement
Obligations of such Guarantor.

        (b)     Anything herein or in any other Loan Document to the contrary
notwithstanding, (i) the maximum liability of each Guarantor hereunder and under
the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating to
fraudulent conveyances or transfers or the insolvency of debtors (after giving
effect to the right of contribution established in Section 2.2) and (ii) the
maximum liability of the Borrower under this Section 2 shall in no event exceed
the amount which can be guaranteed by the Borrower under applicable federal and
state laws relating to fraudulent conveyances or transfers or the insolvency of
debtors (after giving effect to the right of contribution established in Section
2.2).

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

        (ii)     The Borrower agrees that the Guarantor Hedge Agreement
Obligations may at any time and from time to time exceed the amount of the
liability of the Borrower under this Section 2 without impairing the guarantee
of the Borrower contained in this Section 2 or affecting the rights and remedies
of the Administrative Agent or any other Secured Party hereunder.

        (d)     Subject to Section 8.15 hereof, the guarantee contained in this
Section 2 shall remain in full force and effect until all the Borrower
Obligations (other than Borrower Obligations arising under Section 2.1(a)(ii)
hereof) and the obligations of each Guarantor under the guarantee contained in
this Section 2 (other than Guarantor Obligations in respect of Borrower
Obligations arising under Section 2.1(a)(ii) hereof) shall have been satisfied
by full and final payment in cash, no Letter of Credit shall be outstanding and
the Commitments shall be terminated, notwithstanding that from time to time
during the term of the Credit Agreement the Borrower may be free from any
Borrower Obligations and any or all of the Guarantors may be free from their
respective Guarantor Hedge Agreement Obligations.

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        (e)     No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any Secured Party from the Borrower, any of the
Guarantors, any other guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Borrower Obligations or the
Guarantor Hedge Agreement Obligations shall be deemed to modify, reduce, release
or otherwise affect the liability of the Borrower or any Guarantor under this
Section 2 which shall, notwithstanding any such payment (other than any payment
made by the Borrower or such Guarantor in respect of the Borrower Obligations or
the Guarantor Hedge Agreement Obligations or any payment received or collected
from the Borrower or such Guarantor in respect of the Borrower Obligations or
the Guarantor Hedge Agreement Obligations), remain liable for the Borrower
Obligations and the Guarantor Hedge Agreement Obligations up to the maximum
liability of the Borrower or such Guarantor hereunder until the Borrower
Obligations and the Guarantor Hedge Agreement Obligations are fully and finally
paid in cash, no Letter of Credit shall be outstanding and the Commitments are
terminated.

    2.2        Right of Contribution. (a) Each Guarantor hereby agrees that to
the extent that a Guarantor shall have paid more than its proportionate share of
any payment made hereunder or the Guarantor Hedge Agreement Obligations, such
Guarantor shall be entitled to seek and receive contribution from and against
any other Guarantor hereunder which has not paid its proportionate share of such
payment.

        (b)     The Borrower and each Guarantor agrees that to the extent that
the Borrower or any Guarantor shall have paid more than its proportionate share
of any payment made hereunder in respect of any Guarantor Hedge Agreement
Obligation of any other Guarantor, the Borrower or such Guarantor, as the case
may be, shall be entitled to seek and receive contribution from and against the
Borrower and any other Guarantor which has not paid its proportionate share of
such payment.

        (c)     The Borrower’s and each Guarantor’s right of contribution under
this Section 2.2 shall be subject to the terms and conditions of Section 2.3.
The provisions of this Section 2.2 shall in no respect limit the obligations and
liabilities of the Borrower or any Guarantor to the Administrative Agent and the
Secured Parties, and the Borrower and each Guarantor shall remain liable to the
Administrative Agent and the Secured Parties for the full amount guaranteed by
the Borrower or such Guarantor hereunder.

    2.3        Subrogation. Notwithstanding any payment made by the Borrower or
any Guarantor hereunder or any set-off or application of funds of the Borrower
or any Guarantor by the Administrative Agent or any Secured Party, neither the
Borrower nor any Guarantor shall be entitled to be subrogated to any of the
rights of the Administrative Agent or any Secured Party against the Borrower or
any other Guarantor or any collateral security or guarantee or right of offset
held by the Administrative Agent or any Secured Party for the payment of the
Borrower Obligations or the Guarantor Hedge Agreement Obligations, nor shall the
Borrower or any Guarantor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other Guarantor in respect of payments
made by the Borrower or such Guarantor hereunder, until all amounts owing to the
Administrative Agent and the Secured Parties by the Borrower on account of the
Borrower Obligations are fully and finally paid in cash, no Letter of Credit
shall be outstanding and the Commitments are terminated. If any amount shall be
paid to the Borrower or any Guarantor on account of such subrogation rights at
any time when all of the Borrower Obligations shall not have been fully and
finally paid in cash, such amount shall be held by the Borrower or such
Guarantor in trust for the Administrative Agent and the Secured Parties,
segregated from other funds of the Borrower or such Guarantor, and shall,
forthwith upon receipt by the Borrower or such Guarantor, be turned over to the
Administrative Agent in the exact form received by the Borrower or such
Guarantor (duly indorsed by the Borrower or such Guarantor to the Administrative
Agent, if required), to be applied against the Borrower Obligations or the
Guarantor Hedge Agreement Obligations, whether matured or unmatured, in such
order as the Administrative Agent may determine.

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    2.4        Amendments, etc. with respect to the Borrower Obligations. The
Borrower and each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Borrower or any Guarantor
and without notice to or further assent by the Borrower or any Guarantor, any
demand for payment of any of the Borrower Obligations or Guarantor Hedge
Agreement Obligations made by the Administrative Agent or any Secured Party may
be rescinded by the Administrative Agent or such Secured Party and any of the
Borrower Obligations or Guarantor Hedge Agreement Obligations continued, and the
Borrower Obligations or Guarantor Hedge Agreement Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent or any
Secured Party (with the consent of such of the Borrower and the Guarantors as
shall be required thereunder), and the Specified Hedge Agreements, the Credit
Agreement and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders or all Lenders, as the case may be) may (with the consent of such of the
Borrower and the Guarantors as shall be required thereunder) deem advisable from
time to time, and any collateral security, guarantee or right of offset at any
time held by the Administrative Agent or any Secured Party for the payment of
the Borrower Obligations or Guarantor Hedge Agreement Obligations may (with the
consent of such of the Borrower and the Guarantor as shall be required
thereunder) be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Secured Party shall, except to the extent set forth
in, and for the benefit of the parties to, the agreements and instruments
governing such Lien or guarantee, have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Borrower
Obligations or Guarantor Hedge Agreement Obligations or for the guarantees
contained in this Section 2 or any property subject thereto.

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    2.5        Guarantee Absolute and Unconditional. (a) Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations (other than any notice with respect to any Guarantor Hedge
Agreement Obligation with respect to which such Guarantor is a primary obligor
and to which it is entitled pursuant to the applicable Specified Hedge
Agreement) and notice of or proof of reliance by the Administrative Agent or any
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 Borrower and any of
the Guarantors, on the one hand, and the Administrative Agent and the Secured
Parties, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Section 2.
Each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon the Borrower or any of the Guarantors
with respect to the Borrower Obligations (other than any diligence, presentment,
protest, demand or notice with respect to any Guarantor Hedge Agreement
Obligation with respect to which such Guarantor is a primary obligor and to
which it is entitled pursuant to the applicable Specified Hedge Agreement). Each
Guarantor understands and agrees that the guarantee of such Guarantor contained
in this Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of the
Credit Agreement or any other Loan Document, any of the Borrower Obligations or
any collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Administrative Agent or any
Secured Party, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Borrower or any other Person against the Administrative Agent or any Secured
Party, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of the Borrower or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Borrower Obligations, or of such Guarantor under the guarantee of such Guarantor
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, the Administrative Agent or any Secured Party may, but
shall be under no obligation to, make a similar demand on or otherwise pursue
such rights and remedies as it may have against the 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 the Administrative Agent or any Secured Party to make any such
demand, to pursue such other rights or remedies or to collect any payments from
the Borrower, any other Guarantor or any other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Borrower, any other Guarantor or any other Person or any
such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability under this Section 2, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Administrative Agent or any Secured Party against any
Guarantor. For the purposes hereof “demand” shall include the commencement and
continuance of any legal proceedings.

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        (b)     The Borrower waives any and all notice of the creation, renewal,
extension or accrual of any of the Guarantor Hedge Agreement Obligations and
notice of or proof of reliance by the Administrative Agent or any Secured Party
upon the guarantee by the Borrower contained in this Section 2 or acceptance of
the guarantee by the Borrower contained in this Section 2; the Guarantor Hedge
Agreement 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 by the Borrower contained in this Section 2; and
all dealings between the Borrower and any of the Guarantors, on the one hand,
and the Administrative Agent and the Secured Parties, on the other hand, with
respect to any Guarantor Hedge Agreement Obligation likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee by the Borrower contained in this Section 2. The Borrower waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower with respect to the Guarantor Hedge Agreement
Obligations. The Borrower understands and agrees that the guarantee by the
Borrower contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Guarantor Hedge Agreement 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 the Administrative Agent or any
Secured Party, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
any Person against the Administrative Agent or any Secured Party, or (c) any
other circumstance whatsoever (with or without notice to or knowledge of the
Borrower or any Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the applicable Guarantor for the
applicable Guarantor Hedge Agreement Obligations, or of the Borrower under its
guarantee contained in this Section 2, in bankruptcy or in any other instance.
When making any demand under this Section 2 or otherwise pursuing its rights and
remedies under this Section 2 against the Borrower, the Administrative Agent or
any Secured Party may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
any Guarantor or any other Person or against any collateral security or
guarantee for the Guarantor Hedge Agreement Obligations or any right of offset
with respect thereto, and any failure by the Administrative Agent or any Secured
Party to make any such demand, to pursue such other rights or remedies or to
collect any payments from any 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 any Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve the
Borrower of any obligation or liability under this Section 2, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Administrative Agent or any Secured Party against the
Borrower under this Section 2. For the purposes hereof “demand” shall include
the commencement and continuance of any legal proceedings.

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

    2.7        Payments. The Borrower and each Guarantor hereby guarantees that
payments by it hereunder will be paid to the Administrative Agent without
set-off or counterclaim (i) in the case of obligations in respect of Borrower
Obligations arising under the Credit Agreement or any other Loan Document in
Dollars at the Payment Office specified in the Credit Agreement and (ii) in the
case of obligations in respect of any Borrower Hedge Agreement Obligations or
any Guarantor Hedge Agreement Obligations, in the currency and at the place
specified in the applicable Specified Hedge Agreement.

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SECTION 3. GRANT OF SECURITY INTEREST

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

        (a)     all Accounts;

        (b)     all Chattel Paper;

        (c)     all Deposit Accounts;

        (d)     all Documents;

        (e)     all Equipment;

        (f)     all General Intangibles;

        (g)     all Instruments;

        (h)     all Intellectual Property;

        (i)     all Inventory;

        (j)     all Investment Property;

        (k)     all Vehicles;

        (l)     all Letter-of-Credit Rights;

        (m)     all Commercial Tort Claims to the extent they have been notified
to the Administrative Agent pursuant to Section 5.13;

        (n)     all Goods and other property not otherwise described above;

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

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

provided, that the Collateral shall not include any Excluded Assets.

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SECTION 4. REPRESENTATIONS AND WARRANTIES

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

    4.1        Representations in Credit Agreement. In the case of each
Guarantor, the representations and warranties set forth in Section 4 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and the Administrative Agent and each Lender
shall be entitled to rely on each of them as if they were made by such Guarantor
and fully set forth herein, provided that each reference in each such
representation and warranty to the Borrower’s knowledge shall, for the purposes
of this Section 4.1, be deemed to be a reference to such Guarantor’s knowledge.

    4.2        Title; No Other Liens. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Secured Parties
pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens. On the date hereof, no financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, pursuant to this Agreement or as are permitted by the Credit
Agreement.

    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 3 (which, in the case of all filings and other documents
referred to on said Schedule, have been delivered to the Administrative Agent in
completed and duly executed form) will constitute valid perfected security
interests in all of the Collateral (other than Vehicles) in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, as
collateral security for such Grantor’s Obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor and (b) are prior to all
other Liens on the Collateral in existence on the date hereof except for (i)
unrecorded Liens permitted by the Credit Agreement which have priority over the
Liens on the Collateral by operation of law and (ii) Liens described on Schedule
6.

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

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

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

    4.7        Investment Property. (a) The shares of Pledged Stock pledged by
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor or, in the
case of Foreign Subsidiary Voting Stock, if less, 65% of the outstanding Foreign
Subsidiary Voting Stock of each relevant Issuer.

        (b)     All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable, except as permitted by Section
180.0622 of the Wisconsin Statutes.

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

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

    4.8        Receivables. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Administrative Agent to the extent required
by Section 5.2.

        (b)     None of the obligors on any Receivable is a Governmental
Authority, except for Receivables constituting not more than 5% of the face
amount of all Receivables.

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

    4.9        Intellectual Property. (a) Schedule 7 lists, the Intellectual
Property (other than trade secrets) owned by such Grantor in its own name on the
date hereof and, to the best of such Grantor’s knowledge, all Intellectual
Property subject to a license or other agreement licensed or otherwise made
available to such Grantor (the “Licensed Intellectual Property”).

        (b)     On the date hereof, all material Intellectual Property of such
Grantor described on Schedule 7 is in compliance in all material respects with
applicable legal requirements (including payment of maintenance fees and the
like) and, to the best of such Grantor’s knowledge, all such rights are valid,
subsisting, and enforceable.

        (c)     On the date hereof, to the best of such Grantor’s knowledge, the
conduct by such Grantor of its business does not infringe upon, misappropriate,
constitute an unauthorized use of or otherwise violate the Intellectual Property
rights of any other Person in any material respect. Except as set forth in
Schedule 8, no claim or demand of any Person has been made in writing, nor is
there any proceeding that is pending or to the knowledge of such Grantor
threatened, which (in any such case) (i) challenges the rights of such Grantor
in respect of any Intellectual Property or (ii) asserts that such Grantor is
infringing upon, misappropriating, making an unauthorized use of or otherwise
violating or in conflict with, or is required to pay any royalty, license fee,
charge or other amount with regard to, any Intellectual Property.

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        (d)     On the date hereof, to the best of such Grantor’s knowledge, no
other Person is infringing upon, misappropriating, constituting an unauthorized
use of or otherwise violating any material Intellectual Property owned by or
licensed to such Grantor or the rights of such Grantor in any material
Intellectual Property of such Grantor described on Schedule 8.

        (e)     Except as set forth in Schedule 7, on the date hereof, none of
the Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.

        (f)     None of the Intellectual Property described in Schedule 8 is
subject to any outstanding order, ruling, decree, judgment or stipulation which
would limit, cancel or call into question the validity of, or such Grantor’s
rights in, the Intellectual Property in any respect that could reasonably be
expected to have a Material Adverse Effect.

        (g)     Except as set forth in Schedule 8, no action or proceeding is
pending, or, to the knowledge of such Grantor, threatened, on the date hereof
(i) seeking to limit, cancel or question the validity of any material
Intellectual Property or such Grantor’s ownership interest therein, or (ii)
which, if adversely determined, would have a material adverse effect on the
value of any Intellectual Property.

SECTION 5. COVENANTS

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

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

    5.2        Delivery of Instruments and Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument, Certificated Security or Chattel Paper, such Instrument,
Certificated Security or Chattel Paper shall be immediately delivered to the
Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement;
provided, that the Grantors shall not be obligated to deliver to the
Administrative Agent any Instruments or Chattel Paper held by any Grantor at any
time to the extent that the aggregate face amount of all such Instruments and
Chattel Paper held by all Grantors at such time does not exceed $1,000,000.

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    5.3        Maintenance of Insurance. (a) Such Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring the
Inventory, Equipment and Vehicles against loss by fire, explosion, theft and
such other casualties as may be reasonably satisfactory to the Administrative
Agent and (ii) to the extent requested by the Administrative Agent, insuring
such Grantor, the Administrative Agent and the Secured Parties against liability
for personal injury and property damage relating to such Inventory, Equipment
and Vehicles, such policies to be in such form and amounts and having such
coverage as may be reasonably satisfactory to the Administrative Agent and the
Lenders.

        (b)     All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured party or
loss payee, as applicable, (iii) if reasonably requested by the Administrative
Agent, include a breach of warranty clause and (iv) be reasonably satisfactory
in all other respects to the Administrative Agent.

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

    5.4        Payment of Obligations. Such Grantor will 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
material 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 the security interest created by
this Agreement (other than the security interest in Vehicles) 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.

        (b)     In addition to the obligations of the Borrower under the Credit
Agreement, after the occurrence and during the continuance of an Event of
Default, such Grantor will furnish to the Administrative Agent and the Lenders
from time to time statements and schedules further identifying and describing
the assets and property of such Grantor and such other reports in connection
with the Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.

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        (c)     Each of such Grantor’s Deposit Accounts is set forth on Schedule
9 and such Grantor will, on the Closing Date or as provided in Schedule 6.12 of
the Credit Agreement, execute and deliver to the Administrative Agent Deposit
Account control agreements in favor of the Administrative Agent with respect to
each such Deposit Account in a form reasonably satisfactory to the
Administrative Agent; provided that the Grantors, collectively, shall not be
required to deliver to the Administrative Agent a Deposit Account control
agreement with respect to such Deposit Account in which amounts on deposit,
together with the amounts on deposit in all other such Deposit Accounts not
subject to a Deposit Account control agreement, in the aggregate, do not exceed
$1,000,000 at any time.

        (c)     Such Grantor will execute and deliver to the Administrative
Agent from time to time, Deposit Account control agreements in favor of the
Administrative Agent with respect to all of such Grantor’s Deposit Accounts in a
form reasonably satisfactory to the Administrative Agent; provided that the
Grantors, collectively, may maintain amounts on deposit in Deposit Accounts not
subject to any Deposit Account control agreement, so long as the aggregate
amount of all such deposits does not exceed $1,000,000 at any time.

        (d)     At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including (i) the filing of any financing or continuation statements under the
Uniform Commercial Code (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby and (ii) in the case of
Investment Property and Letter-of-Credit Rights, taking any actions necessary to
enable the Administrative Agent to obtain “control” (within the meaning of the
applicable Uniform Commercial Code) with respect thereto.

    5.6        Changes in Name, etc. Such Grantor will not, except upon 15 days’
prior written notice to the Administrative Agent and delivery to the
Administrative Agent of all additional executed financing statements and other
documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein:

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

        (b)     change its name.

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

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

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

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    5.8        Investment Property. (a) If such Grantor shall become entitled to
receive or shall receive any certificate (including any certificate representing
a dividend or a distribution in connection with any reclassification, increase
or reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the Capital Stock of any Issuer,
whether in addition to, in substitution of, as a conversion of, or in exchange
for, any shares of the Pledged Stock, or otherwise in respect thereof, such
Grantor shall accept the same as the agent of the Administrative Agent and the
Secured Parties, hold the same in trust for the Administrative Agent and the
Secured Parties and deliver the same forthwith to the Administrative Agent in
the exact form received, duly indorsed by such Grantor to the Administrative
Agent, if required, together with an undated stock power covering such
certificate duly executed in blank by such Grantor and with, if the
Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of Investment
Property upon the liquidation or dissolution of any Issuer other than a Grantor
shall be paid over to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any distribution
of capital shall be made on or in respect of Investment Property, or any
property shall be distributed upon or with respect to the Investment Property
not issued by a Grantor pursuant to the recapitalization or reclassification of
the capital of such Issuer or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid or
distributed in respect of Investment Property shall be received by such Grantor,
such Grantor shall, until such money or property is paid or delivered to the
Administrative Agent, hold such money or property in trust for the Secured
Parties, segregated from other funds of such Grantor, as additional collateral
security for the Obligations. Notwithstanding the foregoing, the Grantors shall
not be required to pay over to the Administrative Agent or deliver to the
Administrative Agent as Collateral any proceeds of any liquidation or
dissolution of any Issuer, or any distribution of capital or property in respect
of any Investment Property, to the extent that (i) such liquidation, dissolution
or distribution, if treated as a Disposition of the relevant Issuer, would be
permitted by the Credit Agreement and (ii) the proceeds thereof are applied
toward prepayment of Loans and reduction of Commitments to the extent required
by the Credit Agreement.

        (b)     Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
unless such securities are delivered to the Administrative Agent, concurrently
with the issuance thereof, to be held by the Administrative Agent as Collateral,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Investment Property or Proceeds thereof (except
pursuant to a transaction not prohibited by the Credit Agreement), (iii) create,
incur or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Investment Property or Proceeds thereof, or
any interest therein, except for Permitted Liens or (iv) enter into any
agreement or undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Pledged Securities
or Proceeds thereof.

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        (c)     In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.8(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, mutatismutandis, 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.

        (d)     Each Issuer that is a partnership or a limited liability company
(i) confirms that none of the terms of any equity interest issued by it provides
that such equity interest is a “security” within the meaning of Sections 8-102
and 8-103 of the New York UCC (a “Security”), (ii) agrees that it will take no
action to cause or permit any such equity interest to become a Security, (iii)
agrees that it will not issue any certificate representing any such equity
interest and (iv) agrees that if, notwithstanding the foregoing, any such equity
interest shall be or become a Security, such Issuer will (and the Grantor that
holds such equity interest hereby instructs such Issuer to) comply with
instructions originated by the Administrative Agent for the purposes of
implementing or effectuating the provisions of this Agreement, or of more fully
perfecting or renewing the rights of the Administrative Agent and the Lenders
with respect to such equity interests (or with respect to any additions thereto
or replacements or proceeds thereof whether now existing or hereafter acquired),
without further consent by such Grantor.

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

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

    5.10        Intellectual Property. (a) Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark in each
international class for the goods and/or services set forth in its applications
or registrations to maintain such Trademark in full force, free from any claim
of abandonment for non-use, (ii) maintain the past quality of products and
services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) not adopt or use any mark which is
confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Secured Parties, shall
obtain a perfected security interest in such mark pursuant to this Agreement,
and (v) not (and not authorized any licensee or sublicensee thereof to)
knowingly do any act or knowingly omit to do any act whereby such Trademark may
become invalidated or impaired in any way; unless, in each case, such Grantor,
in the exercise of its best business judgment, deems it not commercially
reasonable to do so under the circumstances.

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        (b)     Such Grantor (either itself or through licensees) will not
knowingly do any act, or knowingly omit to do any act, whereby any material
Patent may become forfeited, abandoned or dedicated to the public; unless such
Grantor, in the exercise of its best business judgment, deems it commercially
reasonable to do so under the circumstances.

        (c)     Such Grantor (either itself or through licensees) (i) will not
(and will not permit any licensee or sublicensee thereof to) knowingly do any
act or knowingly omit to do any act whereby any material portion of the
Copyrights may become invalidated or otherwise impaired and (ii) will not
knowingly do any act whereby any material portion of the Copyrights may fall
into the public domain unless, in each case, such Grantor, in the exercise of
its best business judgment, deems it commercially reasonable to do so under the
circumstances.

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

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

        (f)     Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent within 30 Business Days after the last day of
the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute, deliver and authorize the
recording of any and all agreements, instruments, documents, and papers as the
Administrative Agent may request to evidence the Administrative Agent’s and the
Secured Parties’ security interest in any Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby.

        (g)     Such Grantor will, at its own expense, take all steps which such
Grantor shall reasonably deem appropriate under the circumstances, which may
include any proceeding before the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue each
application relating to any material Intellectual Property (and to obtain the
relevant registration) and to maintain each registration of the material
Intellectual Property, including filing of applications for renewal, affidavits
of use and affidavits of incontestability.

        (h)     In the event that any other Person infringes upon,
misappropriates, makes an unauthorized use of or otherwise violates any material
Intellectual Property, such Grantor shall (i) take such actions as such Grantor
shall reasonably deem appropriate under the circumstances to protect such
Intellectual Property and (ii) if such Intellectual Property is of material
economic value, promptly notify the Administrative Agent after it learns
thereof.

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        (i)     Such Grantor shall execute and deliver to the Administrative
Agent in form and substance reasonably acceptable to the Administrative Agent
and suitable for filing in the United States Patent and Trademark Office, (i) a
patent security agreement in the form attached hereto as Annex III for all
Patents of such Grantor and (ii) a trademark security agreement in the form
attached hereto as Annex IV for all Trademarks of such Grantor.

    5.11        Vehicles. With respect to any Vehicles now owned or hereafter
acquired by such Grantor subsequent to the date hereof, within 30 days after the
request of the Administrative Agent, all applications for certificates of title
or ownership, as applicable, indicating the Administrative Agent’s first
priority security interest in the Vehicle covered by such certificate, and any
other necessary documentation, shall be filed in each office in each
jurisdiction which the Administrative Agent shall deem advisable to perfect its
security interests in the Vehicles; provided, that the Grantors shall not be
obligated to make such filings to the extent that the aggregate book value or
fair market value of all Vehicles owned by all Grantors at such time does not
exceed $1,000,000.

    5.12        Commercial Tort Claims. If any Grantor shall at any time
commence a suit, action or proceeding with respect to any Commercial Tort Claim
held by it with a value which such Grantor reasonably believes to be of
$1,000,000 or more, such Grantor shall promptly notify the Administrative Agent
thereof in a writing signed by such Grantor and describing the details thereof
and shall grant to the Administrative Agent for the benefit of the Secured
Parties in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to the Administrative Agent.

SECTION 6. REMEDIAL PROVISIONS

    6.1        Certain Matters Relating to Receivables. (a) The Administrative
Agent shall have the right, at any time after the occurrence and during the
continuance of an Event of Default, to make test verifications of the
Receivables in any manner and through any medium that it reasonably considers
advisable, and each Grantor shall furnish all such assistance and information as
the Administrative Agent may require in connection with such test verifications.
At any time and from time to time after the occurrence and during the
continuance of an Event of Default, upon the Administrative Agent’s request and
at the expense of the relevant Grantor, such Grantor shall cause independent
public accountants or others satisfactory to the Administrative Agent to furnish
to the Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.

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

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

        (d)     At any time after the occurrence and during the continuance of
an Event of Default, each Grantor will cooperate with the Administrative Agent
to establish a system of lockbox accounts, under the sole dominion and control
of the Administrative Agent, into which all Receivables shall be paid and from
which all collected funds will be transferred to a Collateral Account.

    6.2        Communications with Obligors; Grantors Remain Liable. (a) The
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent’s satisfaction the existence, amount and terms of any
Receivables.

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

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

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    6.3        Pledged Stock. (a) Unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given notice to the
relevant Grantor of the Administrative Agent’s intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, to
the extent permitted by the Credit Agreement, and to exercise all voting and
corporate rights with respect to the Pledged Securities; provided, however, that
no vote shall be cast or corporate right exercised or other action taken which,
in the Administrative Agent’s reasonable judgment, would impair the Collateral
or which would be inconsistent with or result in any violation of any provision
of the Credit Agreement, this Agreement or any other Loan Document.

        (b)     If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in the order set forth in Section 6.5, and (ii) any or all of the
Pledged Securities shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such Pledged
Securities at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such Pledged
Securities as if it were the absolute owner thereof (including the right to
exchange at its discretion any and all of the Pledged Securities upon the
merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any Issuer, or upon the exercise by any
Grantor or the Administrative Agent of any right, privilege or option pertaining
to such Pledged Securities, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Securities with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.

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

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

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

          First, to pay incurred and unpaid fees and expenses of the
Administrative Agent under the Loan Documents;

          Second, to the Administrative Agent, for application by it towards
payment of amounts then due and owing and remaining unpaid in respect of the
Obligations, pro rata among the Secured Parties according to the amounts of the
Obligations then due and owing and remaining unpaid to the Secured Parties;

          Third, to the Administrative Agent, for application by it towards
prepayment of the Obligations, pro rata among the Secured Parties according to
the amounts of the Obligations then held by the Secured Parties; and

          Fourth, any balance of such Proceeds remaining after the Obligations
shall have been paid in full, no Letters of Credit shall be outstanding and the
Commitments shall have terminated shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive the same.

    6.6        Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC or any other applicable law. Without limiting the generality of
the foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give 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 Administrative Agent or any
Secured Party or elsewhere, subject to applicable law, upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Administrative Agent or any 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 Grantor further agrees, at the Administrative
Agent’s request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall reasonably
select, whether at such Grantor’s premises or elsewhere. The Administrative
Agent shall apply the net proceeds of any action taken by it pursuant to this
Section 6.6 with respect to any Grantor’s Collateral, 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 of such Grantor
or in any way relating to the Collateral of such Grantor or the rights of the
Administrative Agent and the Secured Parties hereunder with respect thereto,
including reasonable attorneys’ fees and disbursements, to the payment in whole
or in part of the Obligations of such Grantor, in the order specified in Section
6.5, and only after such application and after the payment by the Administrative
Agent of any other amount required by any provision of law, including Section
9-615(a)(3) of the New York UCC, need the Administrative Agent account for the
surplus, if any, to any Grantor. To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Secured Party arising out of the exercise by them of
any rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.

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

        (b)     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 Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Administrative Agent and
the Secured Parties, that the Administrative Agent and the Secured Parties have
no adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 6.7 shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Credit Agreement.

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

SECTION 7. THE ADMINISTRATIVE AGENT

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

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

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

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

        (iv)     execute, in connection with any sale provided for in Section
6.6 or 6.7, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral;

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

        (vi)     license or sublicense whether on an exclusive or non-exclusive
basis, any Intellectual Property for such term and on such conditions and in
such manner as the Administrative Agent shall in its sole judgment determine
and, in connection therewith, such Grantor hereby grants to the Administrative
Agent for the benefit of the Secured Parties a royalty-free, world-wide
irrevocable license of its Intellectual Property.

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

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

        (c)     The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Revolving Credit Loans that are Base Rate Loans
under the Credit Agreement, from the date of payment by the Administrative Agent
to the date reimbursed by the relevant Grantor, shall be payable by such Grantor
to the Administrative Agent on demand.

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

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

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

    7.4        Authority of Administrative Agent. Each Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the Secured
Parties, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority. Notwithstanding any other provision herein or in any Loan Document,
the only duty or responsibility of the Administrative Agent to any Qualified
Counterparty under this Agreement is the duty to remit to such Qualified
Counterparty any amounts to which it is entitled pursuant to Section 6.5.

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 10.1 of the Credit Agreement. No consent of any
Qualified Counterparty shall be required for any waiver, amendment, supplement
or other modification to this Agreement.

    8.2        Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.

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    8.3        No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Secured Party shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Secured Party, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by the Administrative Agent or any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Administrative Agent or 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 Guarantor agrees
to pay, or reimburse each Secured Party and the Administrative Agent for, all
its reasonable costs and expenses incurred in collecting against such Guarantor
under the guarantee contained in Section 2 or otherwise enforcing or preserving
any rights under this Agreement and the other Loan Documents to which such
Guarantor is a party, including the reasonable fees and disbursements of counsel
to each Secured Party and of counsel to the Administrative Agent.

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

        (c)     Each Guarantor agrees to pay, and to save the Administrative
Agent and the Secured Parties harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrower would be required to do so pursuant to
Section 10.5 of the Credit Agreement.

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

    8.5        Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the 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
Administrative Agent.

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    8.6        Set-Off. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Secured Party at any time and from time to time
pursuant to Section 10.7(b) of the Credit Agreement, without notice to such
Grantor or any other Grantor, any such notice being expressly waived by each
Grantor upon any amount becoming due and payable by a Grantor hereunder or under
any other Loan Document (whether at the stated maturity, by acceleration or
otherwise) 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 the Administrative Agent or such Secured Party to or for the credit or
the account of such Grantor, or any part thereof in such amounts as the
Administrative Agent or such Secured Party may elect, against and on account of
the obligations and liabilities of such Grantor to the Administrative Agent or
such Secured Party hereunder and claims of every nature and description of the
Administrative Agent or such Secured Party against such Grantor, in any
currency, whether arising hereunder, under the Credit Agreement, any other Loan
Document or otherwise, as the Administrative Agent or such Secured Party may
elect, whether or not the Administrative Agent or any Secured Party has made any
demand for payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Administrative Agent and each Secured Party shall
notify such Grantor promptly of any such set-off and the application made by the
Administrative Agent or such Secured Party of the proceeds thereof, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Administrative Agent and each Secured
Party under this Section are in addition to other rights and remedies (including
other rights of set-off) which the Administrative Agent or such Secured Party
may have.

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

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

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

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

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

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

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

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

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

    8.13        Acknowledgements. (a) Each Grantor hereby acknowledges that:

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

        (c)     neither the Administrative Agent nor any Secured Party has any
fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Administrative Agent
and Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and

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

    8.14        Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 6.10 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex I hereto.

    8.15        Releases. (a) At such time as the Loans, the Reimbursement
Obligations and the other Obligations (other than Borrower Hedge Agreement
Obligations and Guarantor Hedge Agreement Obligations) shall have been paid in
full, the Commitments have been terminated and no Letters of Credit shall be
outstanding, the Collateral shall be released from the Liens created hereby, and
this Agreement and all obligations (other than those expressly stated to survive
such termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.

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        (b)     If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
provided that the Borrower shall have delivered to the Administrative Agent, at
least five Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Subsidiary Guarantor and the terms
of the sale or other disposition in reasonable detail, including the price
thereof in connection therewith, together with a certification by the Borrower
stating that such transaction is in compliance with the Credit Agreement and the
other Loan Documents.

        (c)     No consent of any Qualified Counterparty shall be required for
any release of Collateral or Guarantors pursuant to this Section.

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

[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.

  HANGER ORTHOPEDIC GROUP, INC.,
as Grantor

  By:___________________________________
      Name:
      Title:

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  DOSTEON SOLUTIONS, LLC
INNOVATIVE NEUROTRONICS, INC.
DOBI-SYMPLEX, INC.
HANGER PROSTHETICS & ORTHOTICS, INC.
SOUTHERN PROSTHETIC SUPPLY, INC.
OPNET, INC.
HANGER SERVICES CORPORATION
LINKIA, LLC
ABI ORTHOTIC/PROSTHETIC LABORATORIES, LTD.
HPO, INC.
EUGENE TEUFEL & SON ORTHOTICS & PROSTHETICS, INC.
REHAB DESIGNS OF AMERICA CORPORATION
THE BRACE SHOP PROSTHETIC ORTHOTIC CENTERS, INC.
GREATER CHESAPEAKE ORTHOTICS & PROSTHETICS, INC.
HANGER PROSTHETICS & ORTHOTICS WEST, INC.
HANGER PROSTHETICS & ORTHOTICS EAST, INC.
CERTIFIED ORTHOTIC & PROSTHETIC ASSOCIATES, INC.
ADVANCED BIO-MECHANICS, INC.
NWPO ASSOCIATES, INC.
REHAB DESIGNS OF COLORADO, INC.
LAURENCE’S ORTHOTICS & PROSTHETICS, INC.
SHASTA ORTHOTIC PROSTHETIC SERVICE, INC.
REHAB DESIGNS OF WISCONSIN, INC.
CONNER BRACE CO., INC.
ELITE CARE, INCORPORATED
FORTITUDE MEDICAL SPECIALISTS, INC.,
as Grantor and Guarantor

  By:___________________________________
      Name:
      Title:

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