Exhibit 10.2
 

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SECURITY AGREEMENT
 
By
 
STEAK N SHAKE OPERATIONS, INC.,
as Borrower
 
and
 
THE GUARANTORS PARTY HERETO
 
and
 
JEFFERIES FINANCE LLC,
as Collateral Agent
 
Dated as of September 8, 2011
 

 

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TABLE OF CONTENTS
 
Page(s)
 
ARTICLE I DEFINITIONS AND INTERPRETATION
2
     
SECTION 1.1
Definitions
2
SECTION 1.2
Interpretation
8
SECTION 1.3
Resolution of Drafting Ambiguities
8
SECTION 1.4
Perfection Certificate
8
   
ARTICLE II GRANT OF SECURITY AND SECURED OBLIGATIONS
8
     
SECTION 2.1
Grant of Security Interest
8
SECTION 2.2
Filings.
9
   
ARTICLE III PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF PLEDGED
COLLATERAL
10
     
SECTION 3.1
Delivery of Certificated Securities Collateral
10
SECTION 3.2
Perfection of Uncertificated Securities Collateral
11
SECTION 3.3
Financing Statements and Other Filings; Maintenance of Perfected Security
Interest
11
SECTION 3.4
Other Actions
11
SECTION 3.5
Joinder of Additional Guarantors
15
SECTION 3.6
Supplements; Further Assurances
15
   
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS
15
     
SECTION 4.1
Title
15
SECTION 4.2
Validity of Security Interest
16
SECTION 4.3
Defense of Claims;  Transferability of Pledged Collateral
16
SECTION 4.4
Other Financing Statements
16
SECTION 4.5
Chief Executive Office; Change of Name; Jurisdiction of Organization, etc.
16
SECTION 4.6
Location of Inventory and Equipment
17
SECTION 4.7
Corporate Names; Prior Transactions
17
SECTION 4.8
Due Authorization and Issuance
17
SECTION 4.9
Consents, etc.
17
SECTION 4.10
Pledged Collateral
18
SECTION 4.11
Insurance
18
SECTION 4.12
Payment of Taxes; Compliance with Legal Requirements; Contesting Liens; Charges
18
SECTION 4.13
Access to Pledged Collateral, Books and Records; Other Information
18
   
ARTICLE V CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
18
     
SECTION 5.1
Pledge of Additional Securities Collateral
18
SECTION 5.2
Voting Rights; Distributions; etc.
19
SECTION 5.3
Organizational Documents
20
SECTION 5.4
Default
20
SECTION 5.5
Certain Agreements of Pledgors as Issuers and Holders of Equity Interests
20

 
 
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ARTICLE VI CERTAIN PROVISIONS CONCERNING INTELLECTUAL PROPERTY COLLATERAL
20
     
SECTION 6.1
Grant of License
20
SECTION 6.2
Registration
21
SECTION 6.3
No Violations or Proceedings
21
SECTION 6.4
Protection of Collateral Agent's Security
21
SECTION 6.5
After-Acquired Property
22
SECTION 6.6
Litigation
22
SECTION 6.7
Intent-to-Use Trademark and Service Mark Applications
23
   
ARTICLE VII CERTAIN PROVISIONS CONCERNING ACCOUNTS
23
     
SECTION 7.1
Special Representation and Warranties
23
SECTION 7.2
Maintenance of Records
23
SECTION 7.3
Legend
23
SECTION 7.4
Modification of Terms, etc.
24
SECTION 7.5
Collection
24
   
ARTICLE VIII REMEDIES
24
     
SECTION 8.1
Remedies
24
SECTION 8.2
Notice of Sale
26
SECTION 8.3
Waiver of Notice and Claims; Other Waivers; Marshalling
26
SECTION 8.4
Standards for Exercising Rights and Remedies
27
SECTION 8.5
Certain Sales of Pledged Collateral
27
SECTION 8.6
No Waiver; Cumulative Remedies
28
SECTION 8.7
Certain Additional Actions Regarding Intellectual Property
29
   
ARTICLE IX APPLICATION OF PROCEEDS
29
     
SECTION 9.1
Application of Proceeds
29
   
ARTICLE X MISCELLANEOUS
29
     
SECTION 10.1
Concerning Collateral Agent
29
SECTION 10.2
Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact
30
SECTION 10.3
Continuing Security Interest; Assignment
30
SECTION 10.4
Termination; Release
31
SECTION 10.5
Modification in Writing
31
SECTION 10.6
Notices
31
SECTION 10.7
Governing Law, Consent to Jurisdiction and Service of Process; Waiver of Jury
Trial
31
SECTION 10.8
Severability of Provisions
32
SECTION 10.9
Execution in Counterparts
33
SECTION 10.10
Business Days
33
SECTION 10.11
Waiver of Stay
33
SECTION 10.12
No Credit for Payment of Taxes or Imposition
33

 
 
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SECTION 10.13
No Claims Against Collateral Agent
33
SECTION 10.14
No Release
34
SECTION 10.15
Overdue Amounts
34
SECTION 10.16
Obligations Absolute
34
     
SCHEDULES
         
Schedule 1
Perfection Steps
       
EXHIBITS
         
Exhibit 1
Issuer’s Acknowledgment
 
Exhibit 2
Securities Pledge Amendment
 
Exhibit 3
Joinder Agreement
 
Exhibit 4
Securities Account Control Agreement
 
Exhibit 5
Deposit Account Control Agreement
 
Exhibit 6
Copyright Security Agreement
 
Exhibit 7
Patent Security Agreement
 
Exhibit 8
Trademark Security Agreement
 

 
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SECURITY AGREEMENT
 
This SECURITY AGREEMENT, dated as of September 8, 2011 (as amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with the provisions hereof, this “Agreement”), made by Steak n Shake Operations,
Inc., an Indiana corporation (“Borrower”), and the Subsidiary Guarantors from
time to time party hereto by execution of this Agreement or otherwise by
execution of a Joinder Agreement (the “Guarantors”), as pledgors, assignors and
debtors (Borrower, together with the Guarantors, in such capacities and together
with any successors in such capacities, the “Pledgors,” and each, a “Pledgor”),
in favor of Jefferies Finance LLC, in its capacity as Collateral Agent pursuant
to the Credit Agreement (as hereinafter defined), as pledgee, assignee and
secured party (in such capacities and together with any successors in such
capacities, the “Collateral Agent”).
 
R E C I T A L S:
 
A.           Borrower, the Subsidiary Guarantors party thereto, the Collateral
Agent and the lending institutions and other entities party thereto (the
“Lenders”) have entered into that certain Credit Agreement, dated as of
September 8, 2011 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”).
 
B.           The Guarantors have, pursuant to the Credit Agreement,
unconditionally guaranteed the Secured Obligations.
 
C.           Borrower and the Guarantors will receive substantial benefits from
the execution, delivery and performance of the Secured Obligations under the
Credit Agreement and the other Loan Documents and are, therefore, willing to
enter into this Agreement.
 
D.           Each Pledgor is, or as to Pledged Collateral acquired by such
Pledgor after the date hereof will be, the legal and/or beneficial owner of the
Pledged Collateral pledged by it hereunder.
 
E.           This Agreement is given by each Pledgor in favor of the Collateral
Agent for the benefit of the Secured Parties to secure the payment and
performance of all of the Secured Obligations.
 
F.           It is a condition to the obligations of the Lenders to make the
Loans under the Credit Agreement and a condition to the Issuing Bank issuing
Letters of Credit under the Credit Agreement that each Pledgor execute and
deliver the applicable Loan Documents, including this Agreement.
 
A G R E E M E N T:
 
NOW THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor and the Collateral Agent hereby agree as follows:
 
 
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ARTICLE I
 
DEFINITIONS AND INTERPRETATION
 
SECTION 1.1                           Definitions.
 
(a)   Unless otherwise defined herein or in the Credit Agreement, capitalized
terms used herein that are defined in the UCC shall have the meanings assigned
to them in the UCC.
 
(b)           Terms used but not otherwise defined herein that are defined in
the Credit Agreement shall have the meanings given to them in the Credit
Agreement.
 
(c)           The following terms shall have the following meanings:
 
“Additional Pledged Interests” shall mean, collectively, with respect to each
Pledgor, (i) all options, warrants, rights, agreements, additional membership,
partnership or other equity interests of whatever class of any issuer of Initial
Pledged Interests or any interest in any such issuer, together with all rights,
privileges, authority and powers of such Pledgor relating to such interests in
each such issuer or under any Organizational Document of any such issuer, and
the certificates, instruments and agreements representing such membership,
partnership or other interests and any and all interest of such Pledgor in the
entries on the books of any financial intermediary pertaining to such
membership, partnership or other equity interests from time to time acquired by
such Pledgor in any manner and (ii) all membership, partnership or other equity
interests, as applicable, of each limited liability company, partnership or
other entity (other than a corporation) hereafter acquired or formed by such
Pledgor and all options, warrants, rights, agreements, additional membership,
partnership or other equity interests of whatever class of such limited
liability company, partnership or other entity, together with all rights,
privileges, authority and powers of such Pledgor relating to such interests or
under any Organizational Document of any such issuer, and the certificates,
instruments and agreements representing such membership, partnership or other
equity interests and any and all interest of such Pledgor in the entries on the
books of any financial intermediary pertaining to such membership, partnership
or other interests, from time to time acquired by such Pledgor in any manner.
 
“Additional Pledged Shares” shall mean, collectively, with respect to each
Pledgor, (i) all options, warrants, rights, Equity Interests, agreements,
additional shares of capital stock of whatever class of any issuer of the
Initial Pledged Shares or any other equity interest in any such issuer, together
with all rights, privileges, authority and powers of such Pledgor relating to
such interests issued by any such issuer under any Organizational Document of
any such issuer, and the certificates, instruments and agreements representing
such interests and any and all interest of such Pledgor in the entries on the
books of any financial intermediary pertaining to such interests, from time to
time acquired by such Pledgor in any manner and (ii) all the issued and
outstanding shares of capital stock of each corporation hereafter acquired or
formed by such Pledgor and all options, warrants, rights, agreements or
additional shares of capital stock of whatever class of such corporation,
together with all rights, privileges, authority and powers of such Pledgor
relating to such shares or under any Organizational Document of such
corporation, and the certificates, instruments and agreements representing such
shares and any and all interest of such Pledgor in the entries on the books of
any financial intermediary pertaining to such shares, from time to time acquired
by such Pledgor in any manner.
 
“Agreement” shall have the meaning assigned to such term in the Preamble hereof.
 
“Bailee Letter” shall have the meaning assigned to such term in Section 3.4.
 
“Borrower” shall have the meaning assigned to such term in the Preamble.
 
 
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“Charges” shall mean any and all property and other taxes, assessments and
special assessments, levies, fees and all governmental charges imposed upon or
assessed against, and all claims (including any landlords’, carriers’,
mechanics’, workmen’s, repairmen’s, laborers’, materialmen’s, suppliers’ and
warehousemen’s Liens and other charges arising by operation of law) against, all
or any portion of the Pledged Collateral.
 
“Commercial Motor Vehicles” shall mean motor vehicles used primarily for
commercial purposes.
 
“Commodity Account Control Agreement” shall mean a commodity account control
agreement in a form that is reasonably satisfactory to the Collateral Agent.
 
“Contracts” shall mean, collectively, with respect to each Pledgor, all sale,
service, performance, equipment or property lease contracts, agreements and
grants and all other contracts, agreements or grants (in each case, whether
written or oral, or third party or intercompany), to which such Pledgor is a
party, and all assignments, amendments, restatements, supplements, extensions,
renewals, replacements or modifications thereof.
 
“Control” shall mean (i) in the case of each Deposit Account, “control,” as such
term is defined in Section 9-104 of the UCC, and (ii) in the case of any
Security Entitlement, “control,” as such term is defined in Section 8-106 of the
UCC and (iii) in the case of any Commodity Contract, “control,” as such term is
defined in Section 9-106 of the UCC.
 
“Control Agreements” shall mean, collectively, the Deposit Account Control
Agreement(s), the Securities Account Control Agreement(s) and the Commodity
Account Control Agreement(s).
 
“Copyright Security Agreement” shall mean an agreement substantially in the form
annexed hereto as Exhibit 6.
 
“Copyrights” shall mean, collectively, with respect to each Pledgor, all works
of authorship (whether protected by statutory or common law copyright, whether
established or registered in the United States or any other country or any
political subdivision thereof, whether registered or unregistered and whether
published or unpublished) and all copyright registrations and applications made
by such Pledgor, in each case, whether now owned or hereafter created or
acquired by such Pledgor, including the copyrights, registrations and
applications listed on Schedule 14(c) to the Perfection Certificate, together
with any and all (i) rights and privileges arising under applicable Legal
Requirements with respect to such Pledgor’s use of such copyrights,
(ii) renewals and extensions thereof, (iii) income, fees, royalties, damages,
claims and payments now or hereafter due and/or payable with respect thereto,
including damages and payments for past, present or future infringements
thereof, (iv) rights corresponding thereto throughout the world and (v) rights
to sue for past, present or future infringements thereof.
 
“Credit Agreement” shall have the meaning assigned to such term in Recital A
hereof.
 
“Deposit Account Control Agreement” shall mean an agreement substantially in the
form annexed hereto as Exhibit 5 or such other form that is reasonably
satisfactory to the Collateral Agent.
 
“Deposit Accounts” shall mean, collectively, with respect to each Pledgor,
(i) all “deposit accounts” as such term is defined in the UCC and all accounts
and sub-accounts relating to any of the foregoing accounts and (ii) all cash,
funds, checks, notes and instruments from time to time on deposit in any of the
accounts or sub-accounts described in clause (i) of this definition.
 
 
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“Distributions” shall mean, collectively, with respect to each Pledgor, all
dividends, cash, options, warrants, rights, instruments, distributions, returns
of capital or principal, income, interest, profits and other property, interests
(debt or equity) or proceeds, including as a result of a split, revision,
reclassification or other like change of the Pledged Securities, from time to
time received, receivable or otherwise distributed to such Pledgor in respect of
or in exchange for any or all of the Pledged Securities or Intercompany Notes.
 
“Excluded Accounts” shall mean (i) Payroll Accounts, (ii) escrow accounts, and
(iii) trust accounts, in each case entered into in the ordinary course of
business and consistent with past practices, where the applicable Pledgor holds
the funds exclusively for the benefit of an unaffiliated third party.
 
“Excluded Property” shall mean (A) any lease, license, contract, property rights
or agreement to which any Pledgor is a party or any of its rights or interests
thereunder if and for so long as the grant of such security interest shall
constitute or result in (i) the abandonment, invalidation or unenforceability of
any right, title or interest of any Pledgor therein or (ii) in a breach or
termination pursuant to the terms of, or a default under, any such lease,
license, contract property rights or agreement (other than to the extent that
any such term would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable Legal Requirement or principles of
equity), provided, however, that such security interest shall attach immediately
and automatically at such time as the condition causing such abandonment,
invalidation or unenforceability shall be remedied and, to the extent severable,
shall attach immediately to any portion of such lease, license, contract,
property rights or agreement that does not result in any of the consequences
specified in (i) or (ii) including any Proceeds of such lease, license,
contract, property rights or agreement; and (B) to the extent applicable,
Pledged Interests, Pledged Shares and Successor Interests to the extent such
Pledged Interests, Pledged Securities and Successor Interests are not required
to be pledged as Pledged Collateral pursuant to Section 5.10(a) or (b) of the
Credit Agreement.
 
“General Intangibles” shall mean, collectively, with respect to each Pledgor,
all “general intangibles,” as such term is defined in the UCC, of such Pledgor
and, in any event, shall include (i) all of such Pledgor’s rights, title and
interest in, to and under all insurance policies and coverages and Contracts,
(ii) all know-how and warranties relating to any of the Pledged Collateral or
any of the Mortgaged Property, (iii) any and all other rights, claims,
choses-in-action and causes of action of such Pledgor against any other person
and the benefits of any and all collateral or other security given by any other
person in connection therewith (other than Commercial Tort Claims), (iv) all
guarantees, endorsements and indemnifications on, or of, any of the Pledged
Collateral or any of the Mortgaged Property, (v) all lists, books, records,
correspondence, ledgers, printouts, files (whether in printed form or stored
electronically), tapes and other papers or materials containing information
relating to any of the Pledged Collateral or any of the Mortgaged Property,
including all customer or tenant lists, identification of suppliers, data,
plans, blueprints, specifications, designs, drawings, appraisals, recorded
knowledge, surveys, studies, engineering reports, test reports, manuals,
standards, processing standards, performance standards, catalogs, research data,
computer and automatic machinery software and programs and the like, field
repair data, accounting information pertaining to such Pledgor’s operations or
any of the Pledged Collateral or any of the Mortgaged Property and all media in
which or on which any of the information or knowledge or data or records may be
recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data, (vi) all licenses,
consents, permits, variances, certifications, authorizations and approvals,
however characterized, of any Governmental Authority (or any person acting on
behalf of a Governmental Authority) now or hereafter acquired or held by such
Pledgor pertaining to operations now or hereafter conducted by such Pledgor or
any of the Pledged Collateral or any of the Mortgaged Property including
building permits, certificates of occupancy, environmental certificates,
industrial permits or licenses and certificates of operation and (vii) all
rights to reserves, payment intangibles, deferred payments, deposits, refunds or
indemnification claims to the extent the foregoing relate to any Pledged
Collateral or any Mortgaged Property and claims for tax or other refunds against
any Governmental Authority relating to any Pledged Collateral or any of the
Mortgaged Property.
 
 
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“Goodwill” shall mean, collectively, with respect to each Pledgor, the goodwill
connected with such Pledgor’s business including (i) all goodwill connected with
the use of and symbolized by any Intellectual Property Collateral in which such
Pledgor has any interest, (ii) all know-how, trade secrets, customer and
supplier lists, proprietary information, inventions, methods, plans, policies,
procedures, formulae, descriptions, compositions, technical data, drawings,
specifications, name plates, catalogs, confidential information and the right to
limit the use or disclosure thereof by any person, pricing and cost information,
business and marketing plans and proposals, consulting agreements, engineering
contracts and such other assets which relate to such goodwill and (iii) all
product lines of such Pledgor’s business.
 
“Guarantors” shall have the meaning assigned to such term in the Preamble
hereof.
 
“Initial Pledged Interests” shall mean, with respect to each Pledgor, all
membership, partnership or other Equity Interests (other than in a corporation),
as applicable, of each issuer described in Schedule 11 to the Perfection
Certificate, together with all rights, privileges, authority and powers of
such Pledgor in and to each such issuer or under any Organizational Document of
each such issuer, and the certificates, instruments and agreements representing
such membership, partnership or other interests and any and all interest of such
Pledgor in the entries on the books of any financial intermediary pertaining to
such membership, partnership or other interests.
 
“Initial Pledged Shares” shall mean, collectively, with respect to each Pledgor,
the issued and outstanding shares of capital stock of each issuer that is a
corporation described in Schedule 11 to the Perfection Certificate, together
with all rights, privileges, authority and powers of such Pledgor relating to
such interests in each such issuer or under any Organizational Document of each
such issuer, and the certificates, instruments and agreements representing such
shares of capital stock and any and all interest of such Pledgor in the entries
on the books of any financial intermediary pertaining to the Initial Pledged
Shares.
 
“Instruments” shall mean, collectively, with respect to each Pledgor, all
“instruments,” as such term is defined in Article 9, rather than Article 3, of
the UCC, and shall include all promissory notes, drafts, bills of exchange or
acceptances.
 
“Intellectual Property Collateral” shall mean, collectively, the Patents,
Trademarks, Copyrights, Licenses and Goodwill.
 
“Intercompany Notes” shall mean, with respect to each Pledgor, the Intercompany
Note and all intercompany notes hereafter acquired by such Pledgor and all
certificates, instruments or agreements evidencing the Intercompany Note and
such intercompany notes, and all assignments, amendments, restatements,
supplements, extensions, renewals, replacements or modifications thereof to the
extent permitted pursuant to the terms hereof.
 
“Investment Property” shall mean a security, whether certificated or
uncertificated, Security Entitlement, Securities Account, Commodity Contract or
Commodity Account, excluding, however, the Securities Collateral.
 
“Joinder Agreement” shall mean an agreement substantially in the form annexed
hereto as Exhibit 3.
 
“Lenders” shall have the meaning assigned to such term in Recital A hereof.
 
 
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“Licenses” shall mean, collectively, with respect to each Pledgor, all license
and distribution agreements with, and covenants not to sue, any other party with
respect to any Patent, Trademark or Copyright or any other patent, trademark or
copyright, whether such Pledgor is a licensor or licensee, distributor or
distributee under any such license or distribution agreement, together with any
and all (i) renewals, extensions, supplements and continuations thereof,
(ii) income, fees, royalties, damages, claims and payments now and hereafter due
and/or payable thereunder and with respect thereto including damages and
payments for past, present or future infringements or violations thereof,
(iii) rights to sue for past, present and future infringements or violations
thereof and (iv) other rights to use, exploit or practice any or all of the
Patents, Trademarks or Copyrights or any other patent, trademark or copyright.
 
“Organizational Documents” shall mean, with respect to any person, (i) in the
case of any corporation, the certificate or articles of incorporation and
by-laws (or similar documents) of such person, (ii) in the case of any limited
liability company, the certificate of formation and operating agreement (or
similar documents) of such person, (iii) in the case of any limited partnership,
the certificate of formation and limited partnership agreement (or similar
documents) of such person, (iv) in the case of any general partnership, the
partnership agreement (or similar document) of such person, (v) in any other
case, the functional equivalent of the foregoing and (vi) any shareholder,
voting trust or similar agreement between or among any holder of Equity
Interests of such person.
 
“Patent Security Agreement” shall mean an agreement substantially in the form
annexed hereto as Exhibit 7.
 
“Patents” shall mean, collectively, with respect to each Pledgor, all patents
owned by, and all patent applications and registrations made by such Pledgor
(whether established or registered or recorded in the United States or any other
country or any political subdivision thereof), including those listed on
Schedule 14(a) to the Perfection Certificate, together with any and all
(i) rights and privileges arising under applicable Legal Requirements with
respect to such Pledgor’s use of any patents, (ii) inventions and improvements
described and charged therein, (iii) reissues, divisions, continuations and
continuations in part thereof, (iv) income, fees, royalties, damages, claims and
payments now or hereafter due and/or payable thereunder and with respect thereto
including damages and payments for past, present or future infringements
thereof, (v) rights corresponding thereto throughout the world and (vi) rights
to sue for past, present or future infringements thereof.
 
“Payroll Account” shall mean any Deposit Account of a Pledgor that is used by
such Pledgor solely as a payroll account for the employees of such Pledgor;
provided that, at no time, shall the aggregate amount contained in all such
accounts exceed the total amount of payroll payable to such employees by such
Pledgor within the immediately succeeding 30 days.
 
“Perfection Certificate” shall mean that certain perfection certificate dated
the date hereof, executed and delivered by each Pledgor party thereto in favor
of the Collateral Agent for the benefit of the Secured Parties, and each other
Perfection Certificate (which shall be in form and substance reasonably
acceptable to the Collateral Agent) executed and delivered by the applicable
Pledgor in favor of the Collateral Agent for the benefit of the Secured Parties
contemporaneously with the execution and delivery of each Joinder Agreement
executed in accordance with Section 3.5, in each case, as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time by a Perfection Certificate Supplement or otherwise in accordance with the
Credit Agreement.
 
“Pledged Collateral” shall have the meaning assigned to such term in
Section 2.1.
 
“Pledged Interests” shall mean, collectively, the Initial Pledged Interests and
the Additional Pledged Interests.
 
 
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“Pledged Securities” shall mean, collectively, the Pledged Interests, the
Pledged Shares and the Successor Interests.
 
“Pledged Shares” shall mean, collectively, the Initial Pledged Shares and the
Additional Pledged Shares.
 
“Pledgor” shall have the meaning assigned to such term in the Preamble hereof.
 
“Secured Obligations” shall mean (i) in the case of Borrower, the Secured
Obligations (as defined in the Credit Agreement) and (ii) in the case of any
Pledgor, the Guaranteed Obligations (as defined in the Credit Agreement).
 
“Secured Parties” shall mean, collectively: 
 
(a)            with respect to the Obligations, the Administrative Agent, the
Collateral Agent, each other Agent and the Lenders;
 
(b)            with respect to obligations under Hedging Agreements, the
Administrative Agent, the Collateral Agent, each other Agent, the Lenders and
each counterparty to a Hedging Agreement relating to the Loans if (i) at the
date of entering into such Hedging Agreement such counterparty was an Agent, a
Lender or an Affiliate of an Agent or Lender, and (ii) such counterparty
executes and delivers to the Administrative Agent a letter agreement in form and
substance acceptable to the Administrative Agent pursuant to which such
counterparty (x) appoints the Administrative Agent and the Collateral Agent as
its agents under the applicable Loan Documents and (y) agrees to be bound by the
provisions of Sections 9.03, 10.03 and 10.09 of the Credit Agreement as if it
were a Lender; and
 
(c)            with respect to overdrafts and related liabilities arising from
treasury, depositary and cash management services or in connection with any
automated clearinghouse transfer of funds, the Administrative Agent, the
Collateral Agent, each other Agent, each Lender, and each Affiliate of an Agent
or Lender that, in each case, provides treasury, depositary and/or cash
management services to a Loan Party; provided that such Affiliate executes and
delivers to the Administrative Agent a letter agreement in form and substance
acceptable to the Administrative Agent pursuant to which such Affiliate
(x) appoints the Administrative Agent and the Collateral Agent as its agents
under the applicable Loan Documents and (y) agrees to be bound by the provisions
of Sections 9.03, 10.03 and 10.09 of the Credit Agreement as if it were a
Lender.
 
“Securities Account Control Agreement” shall mean an agreement substantially in
the form annexed hereto as Exhibit 4 or such other form that is reasonably
satisfactory to the Collateral Agent.
 
“Securities Collateral” shall mean, collectively, the Pledged Securities, the
Intercompany Notes and the Distributions.
 
“Securities Pledge Amendment” shall mean an agreement substantially in the form
annexed hereto as Exhibit 2.
 
“Successor Interests” shall mean, collectively, with respect to each Pledgor,
all shares of each class of the capital stock of the successor corporation or
interests or certificates of the successor limited liability company,
partnership or other entity owned by such Pledgor (unless such successor is such
Pledgor itself) formed by or resulting from any consolidation or merger in which
any person listed on Schedule 1(a) to the Perfection Certificate is not the
surviving entity.
 
 
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“Trademark Security Agreement” shall mean an agreement substantially in the form
annexed hereto as Exhibit 8.
 
“Trademarks” shall mean, collectively, with respect to each Pledgor, all
trademarks (including service marks), slogans, logos, certification marks, trade
dress, uniform resource locations (URL’s), domain names, corporate names and
trade names, whether registered or unregistered, owned by such Pledgor and all
registrations and applications for the foregoing (whether statutory or common
law and whether established or registered in the United States or any other
country or any political subdivision thereof), including those listed on
Schedule 14(b) to the Perfection Certificate together with any and all
(i) rights and privileges arising under applicable Legal Requirements with
respect to such Pledgor’s use of any trademarks, (ii) goodwill associated
therewith, (iii) renewals thereof, (iv) income, fees, royalties, damages and
payments now and hereafter due and/or payable thereunder and with respect
thereto, including damages, claims and payments for past, present or future
infringements thereof, (v) rights corresponding thereto throughout the world and
(vi) rights to sue for past, present and future infringements thereof.
 
“UCC” shall mean the Uniform Commercial Code as in effect in the State of
New York; provided, however, that if by reason of mandatory provisions of
applicable Legal Requirements, any or all of the attachment, perfection or
priority of the Collateral Agent’s and the other Secured Parties’ security
interest in any item or portion of the Pledged Collateral is governed by the
Uniform Commercial Code in a jurisdiction other than the State of New York, the
term “UCC” shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions relating to such
provisions.
 
SECTION 1.2                           Interpretation.  The rules of
interpretation specified in the Credit Agreement (including Section 1.03
thereof) shall be applicable to this Agreement.
 
SECTION 1.3                           Resolution of Drafting Ambiguities.  Each
Pledgor acknowledges and agrees that it was represented by counsel in connection
with the execution and delivery hereof, that it and its counsel reviewed and
participated in the preparation and negotiation hereof and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party (i.e., the Collateral Agent) shall not be employed in the
interpretation hereof.
 
SECTION 1.4                           Perfection Certificate.  The Perfection
Certificate and all descriptions of Pledged Collateral, schedules, amendments
and supplements thereto are and shall at all times remain a part of this
Agreement.
 
ARTICLE II

 
GRANT OF SECURITY AND SECURED OBLIGATIONS
 
SECTION 2.1                           Grant of Security Interest.  As collateral
security for the payment and performance in full of all the Secured Obligations,
each Pledgor hereby pledges and grants to the Collateral Agent for the ratable
benefit of the Secured Parties, a lien on and security interest in and to all of
the right, title and interest of such Pledgor in, to and under the following
property, wherever located, whether now existing or hereafter arising or
acquired from time to time (collectively, the “Pledged Collateral”):
 
(i)            all Accounts;
 
(ii)           all Equipment (including Commercial Motor Vehicles), Goods,
Inventory and Fixtures;
 
 
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(iii)           all Documents, Instruments and Chattel Paper;
 
(iv)           all Letter-of-Credit Rights (whether or not the letter of credit
is evidenced by a writing);
 
(v)           all Securities Collateral;
 
(vi)           all Investment Property;
 
(vii)          all Intellectual Property Collateral;
 
(viii)         the Commercial Tort Claims described on Schedule 15 to the
Perfection Certificate;
 
(ix)            all General Intangibles;
 
(x)             all Deposit Accounts;
 
(xi)            all Money;
 
(xii)           all Supporting Obligations;
 
(xiii)          all books and records pertaining to the Pledged Collateral;
 
(xiv)          to the extent not covered by clauses (i) through (xiv) of this
sentence, choses in action and all other personal property of such Pledgor,
whether tangible or intangible; and
 
(xv)           all Proceeds and products of each of the foregoing and all
accessions to, substitutions and replacements for, and rents, profits and
products of, each of the foregoing, and any and all Proceeds of any insurance,
indemnity, warranty or guaranty payable to such Pledgor from time to time with
respect to any of the foregoing.
 
Notwithstanding anything to the contrary contained in clauses (i) through (xvi)
above, the security interest created by this Agreement shall not extend to, and
the term “Pledged Collateral” shall not include, any Excluded Property.  In
addition, (i) the Pledgors shall from time to time at the reasonable request of
the Collateral Agent give written notice to the Collateral Agent identifying in
reasonable detail the Excluded Property and shall provide to the Collateral
Agent such other information regarding the Excluded Property as the Collateral
Agent may reasonably request and (ii) from and after the Closing Date, no
Pledgor shall permit to become effective in any document creating, governing or
providing for any permit, lease or license, a provision that would prohibit the
creation of a Lien on such permit, lease or license in favor of the Collateral
Agent unless (x) no Event of Default has occurred and is continuing and (y) such
Pledgor believes, in its reasonable judgment, that such prohibition is usual and
customary in transactions of such type.
 
SECTION 2.2                           Filings.
 
(a)           Each Pledgor hereby irrevocably authorizes the Collateral Agent at
any time and from time to time to file in any relevant jurisdiction any initial
financing statements (including fixture filings), continuation statements and
amendments thereto that contain the information required by Article 9 of the UCC
of each applicable jurisdiction for the filing of any financing statement,
continuation statement or amendment relating to the Pledged Collateral,
including (i) whether such Pledgor is an organization, the type of organization
and any organizational identification number issued to such Pledgor, and (ii) in
the case of a financing statement filed as a fixture filing or covering Pledged
Collateral constituting minerals or the like to be extracted or timber to be
cut, a sufficient description of the real property to which such Pledged
Collateral relates.  Each Pledgor agrees to provide all information described in
the immediately preceding sentence to the Collateral Agent promptly upon
request.  Such financing statements may describe the collateral in the same
manner as described herein or may contain a description of collateral that
describes such property in any other manner as the Collateral Agent may
determine, in its sole discretion, is necessary, advisable or prudent to ensure
the perfection or priority of the security interest in the collateral granted to
the Collateral Agent in connection herewith, including, describing such property
as “all assets whether now owned or hereafter acquired” or “all personal
property whether now owned or hereafter acquired” (regardless of whether any
particular asset comprised in the Pledged Collateral falls within the scope of
Article 9 of the UCC).
 
 
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(b)           Each Pledgor hereby ratifies its authorization for the Collateral
Agent to file in any relevant jurisdiction any initial financing statements or
amendments thereto relating to the Pledged Collateral if filed prior to the date
hereof.
 
(c)           Each Pledgor hereby further authorizes the Collateral Agent to
file filings with the United States Patent and Trademark Office or the United
States Copyright Office (or any successor office or any similar office in any
other country), including this Agreement, the Copyright Security Agreement, the
Patent Security Agreement and the Trademark Security Agreement, or other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the pledge and security interest granted by such Pledgor hereunder,
without the signature of such Pledgor, and naming such Pledgor, as debtor, and
the Collateral Agent, as secured party.
 
ARTICLE III

 
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
 
SECTION 3.1                           Delivery of Certificated Securities
Collateral.  Each Pledgor represents and warrants that all certificates,
agreements or instruments representing or evidencing the Securities Collateral
in existence on the date hereof have been delivered to the Collateral Agent in
suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank and that the Collateral Agent has
a valid, enforceable, perfected first priority security interest therein
(subject to Permitted Collateral Liens).  Each Pledgor hereby agrees that all
certificates, agreements or instruments representing or evidencing Securities
Collateral acquired by such Pledgor after the date hereof shall promptly (and in
any event within five Business Days) upon receipt thereof by such Pledgor be
delivered to and held by or on behalf of the Collateral Agent pursuant
hereto.  All certificated Securities Collateral shall be in suitable form for
transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance reasonably
satisfactory to the Collateral Agent.  The Collateral Agent shall have the
right, at any time upon the occurrence and during the continuance of any Event
of Default, to endorse, assign or otherwise transfer to or to register in the
name of the Collateral Agent or any of its nominees or endorse for negotiation
any or all of the Securities Collateral, without any indication that such
Securities Collateral is subject to the security interest hereunder.  In
addition, the Collateral Agent shall have the right at any time in its
reasonable discretion to exchange certificates representing or evidencing
Securities Collateral for certificates of smaller or larger denominations.
 
 
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SECTION 3.2                           Perfection of Uncertificated Securities
Collateral.  Each Pledgor represents and warrants that the Collateral Agent has
a valid, enforceable, perfected first priority security interest (subject to
Permitted Collateral Liens) in all uncertificated Pledged Securities pledged by
it hereunder that are in existence on the date hereof.  Each Pledgor hereby
agrees that if any issuer of Pledged Securities is organized in a jurisdiction
that does not require the use of certificates to evidence equity ownership or
any of the Pledged Securities are at any time not evidenced by certificates of
ownership, then each applicable Pledgor shall, (i) if necessary to perfect a
first priority security interest (subject to Permitted Collateral Liens) in such
Pledged Securities, cause such pledge to be recorded on the equityholder
register or the books of the issuer, cause the issuer to execute and deliver to
the Collateral Agent an acknowledgment of the pledge of such Pledged Securities
substantially in the form of Exhibit 1 annexed hereto, execute any customary
pledge forms or other documents necessary or appropriate to complete the pledge
and give the Collateral Agent the right to transfer such Pledged Securities
under the terms hereof and, upon the Collateral Agent’s reasonable request,
provide to the Collateral Agent an opinion of counsel, in form and substance
reasonably satisfactory to the Collateral Agent, confirming such pledge and
perfection thereof and (ii) to the extent permitted by applicable Legal
Requirements, cause such Pledged Securities to become certificated and delivered
to the Collateral Agent in accordance with the provisions of Section 3.1.
 
SECTION 3.3                           Financing Statements and Other Filings;
Maintenance of Perfected Security Interest.  Each Pledgor represents and
warrants that the only filings, registrations and recordings necessary to
perfect the security interest granted by each Pledgor to the Collateral Agent in
respect of the Pledged Collateral (to the extent that a security interest
therein may be perfected by filing a financing statement or filing the Security
Agreement or a short form thereof with the United States Copyright Office or the
United States Patent and Trademark Office) are listed on Schedule 1 hereto.  All
such filings, registrations and recordings have been delivered to the Collateral
Agent in completed and, to the extent necessary or appropriate, duly executed
form for filing in each applicable governmental, municipal or other office
specified in Schedule 1 hereto.  Each Pledgor agrees that at the sole cost and
expense of the Pledgors, (i) such Pledgor will maintain the security interest
created by this Agreement in the Pledged Collateral as a valid, enforceable,
perfected first priority security interest (subject to Permitted Collateral
Liens) and shall defend such security interest against the claims and demands of
all persons, (ii) such Pledgor shall furnish to the Collateral Agent from time
to time statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Collateral Agent may reasonably request, all in reasonable detail and
(iii) at any time and from time to time, upon the written request of the
Collateral Agent, such Pledgor shall promptly and duly execute and deliver, and
file and have recorded, such further instruments and documents and take such
further action as the Collateral Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and the rights and
powers herein granted, including (x) the filing of any financing statements and
amendments thereof, continuation statements and other documents (including this
Agreement) under the UCC (or other similar laws) in effect in any jurisdiction
with respect to the security interest created hereby and (y) the execution and
delivery of Control Agreements, all in form reasonably satisfactory to the
Collateral Agent and in such offices (including the United States Patent and
Trademark Office and the United States Copyright Office) wherever required by
applicable Legal Requirements to perfect (to the extent a security interest in
such Pledged Collateral may be so perfected under applicable Legal
Requirements), continue and maintain a valid, enforceable, first priority
security interest (subject to Permitted Collateral Liens) in the Pledged
Collateral as provided herein and to preserve the other rights and interests
granted to the Collateral Agent hereunder, as against third parties, with
respect to the Pledged Collateral.
 
SECTION 3.4                           Other Actions.  In order to further ensure
the attachment, perfection and priority of, and the ability of the Collateral
Agent to enforce, the Collateral Agent’s security interest in the Pledged
Collateral, each Pledgor represents and warrants and covenants as follows, in
each case at such Pledgor’s own expense, to take the following actions with
respect to the following Pledged Collateral:
 
 
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(a)           Instruments and Tangible Chattel Paper.  As of the date hereof,
each Pledgor hereby represents and warrants that (i) no amounts individually or
in the aggregate in excess of $250,000 payable under or in connection with any
of the Pledged Collateral are evidenced by any Instrument or Tangible Chattel
Paper other than the Intercompany Note and the Instruments and Tangible Chattel
Paper listed on Schedule 12 to the Perfection Certificate, (ii) the Intercompany
Note has been properly assigned and delivered to the Collateral Agent,
accompanied by an endorsement to the Intercompany Note in the form attached
thereto duly executed in blank by each Pledgor and (iii) each such Instrument
and each such item of Tangible Chattel Paper individually or in the aggregate in
excess of $250,000 has been properly endorsed, assigned and delivered to the
Collateral Agent, accompanied by instruments of transfer or assignment duly
executed in blank.  If any amount, individually or in the aggregate, in excess
of $250,000 then payable under or in connection with any of the Pledged
Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, the
Pledgor acquiring such Instrument or Tangible Chattel Paper shall promptly (and
in any event within five Business Days) endorse, assign and deliver the same to
the Collateral Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Collateral Agent may from time to time reasonably
request; provided, however, that so long as no Event of Default has occurred and
is continuing, upon written request by such Pledgor, the Collateral Agent shall
promptly (and in any event within five Business Days) return such Instrument
(other than the Intercompany Note) or Tangible Chattel Paper to such Pledgor
from time to time, to the extent necessary for collection in the ordinary course
of such Pledgor’s business.
 
(b)           Deposit Accounts.  Each Pledgor hereby represents and warrants
that (i) as of the date hereof, each Pledgor has neither opened nor maintains
any Deposit Accounts in which the Pledgors maintain an average daily balance in
excess of $100,000, individually or in the aggregate, other than the accounts
listed on Schedule 16 to the Perfection Certificate, (ii) as of the date hereof,
each applicable Pledgor and the relevant Bank(s) have executed and delivered a
Deposit Account Control Agreement with respect to each of the Deposit Accounts
(other than Excluded Accounts) listed on Schedule 16 to the Perfection
Certificate or the Pledgors have closed such accounts, and (iii) the Collateral
Agent has a valid, enforceable, perfected first priority security interest
(subject to Permitted Collateral Liens) in such Deposit Accounts by Control.  No
Pledgor shall hereafter establish and maintain any Deposit Account (other than
any Excluded Account) in which the Pledgors customarily maintain in excess of
$100,000, individually or in the aggregate, unless (1) the applicable Pledgor
shall have given the Collateral Agent five Business Days’ prior written notice
of its intention to establish such new Deposit Account with a Bank, (2) such
Bank shall be reasonably acceptable to the Collateral Agent and (3) such Bank
and such Pledgor shall have duly executed and delivered to the Collateral Agent
a Deposit Account Control Agreement (or an amendment to an existing Deposit
Account Control Agreement) with respect to such Deposit Account.  The Collateral
Agent shall not give any instructions directing the disposition of funds from
time to time credited to any Deposit Account or withhold any withdrawal rights
from such Pledgor with respect to funds from time to time credited to any
Deposit Account unless an Event of Default has occurred and is continuing or,
after giving effect to any withdrawal, would occur.  The provisions of this
Section 3.4(b) shall not apply to any Excluded Accounts or to any other Deposit
Accounts for which the Collateral Agent is the Bank.  No Pledgor has granted or
shall grant Control of any Deposit Account (including any Excluded Account) to
any person other than the Collateral Agent.
 
 
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(c)           Securities Accounts and Commodity Accounts.  (i) Each Pledgor
hereby represents and warrants that (1) as of the date hereof, it has neither
opened nor maintains any Securities Accounts or Commodity Accounts in which the
amount and/or fair market value, individually or in the aggregate, of the
financial assets and/or commodity contracts, as the case may be, held from time
to time in all such accounts does not exceed $100,000, other than those listed
on Schedule 16 to the Perfection Certificate, (2) as of the date hereof, each
applicable Pledgor and the relevant Securities Intermediary or Commodity
Intermediary have executed and delivered a Securities Account Control Agreement
or Commodity Account Control Agreement, as applicable, for each Securities
Account or Commodity Account listed on Schedule 16 to the Perfection
Certificate, or the Pledgors have closed such accounts, (3) the Collateral Agent
has a valid, enforceable, perfected first priority security interest (other than
Permitted Collateral Liens) in such Securities Accounts and Commodity Accounts
by Control, and (4) it does not hold, own or have any interest in any
certificated securities or uncertificated securities other than those
constituting Pledged Securities and those maintained in Securities Accounts or
Commodity Accounts listed on Schedule 16 to the Perfection Certificate or in
respect of which the Collateral Agent has Control.  If any Pledgor shall at any
time hold or acquire any certificated securities constituting Investment
Property and having a fair market value, individually or in the aggregate, in
excess of $100,000, such Pledgor shall promptly (and in any event within
five Business Days of acquiring such security) (a) endorse, assign and deliver
the same to the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank, all in form and substance reasonably
satisfactory to the Collateral Agent or (b) deliver such securities into a
Securities Account (other than an Excluded Account) with respect to which a
Control Agreement is in effect in favor of the Collateral Agent.  If any
securities now or hereafter acquired by any Pledgor constituting Investment
Property and having a fair market value, individually or in the aggregate, in
excess of $100,000 are uncertificated and are issued to such Pledgor or its
nominee directly by the issuer thereof, such Pledgor shall promptly (and in any
event within five Business Days of acquiring such security) notify the
Collateral Agent thereof and pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent, either (a) cause the issuer to
agree to comply with Entitlement Orders or other instructions from the
Collateral Agent as to such securities, without further consent of any Pledgor
or such nominee, (b) cause a Security Entitlement with respect to such
uncertificated security to be held in a Securities Account (other than an
Excluded Account) with respect to which the Collateral Agent has Control or (c)
arrange for the Collateral Agent to become the registered owner of the
securities.  The Pledgors shall not hereafter establish and maintain any
Securities Account or Commodity Account with any Securities Intermediary or
Commodity Intermediary unless (1) the applicable Pledgor shall have given the
Collateral Agent 30 days’ prior written notice of its intention to establish
such new Securities Account or Commodity Account with such Securities
Intermediary or Commodity Intermediary, (2) such Securities Intermediary or
Commodity Intermediary shall be reasonably acceptable to the Collateral Agent
and (3) except in the case of an Excluded Account, such Securities Intermediary
or Commodity Intermediary, as the case may be, and such Pledgor shall have duly
executed and delivered a Control Agreement with respect to such Securities
Account or Commodity Account, as the case may be.  The Collateral Agent shall
not give any Entitlement Orders or instructions or directions to any issuer of
uncertificated securities, Securities Intermediary or Commodity Intermediary,
and shall not withhold its consent to the exercise of any withdrawal or dealing
rights by such Pledgor, unless an Event of Default has occurred and is
continuing, or, after giving effect to any such investment and withdrawal
rights, would occur.  The provisions of this Section 3.4(c) shall not apply to
any Financial Assets credited to a Securities Account for which the Collateral
Agent is the Securities Intermediary.  No Pledgor shall grant Control over any
Investment Property (including any Excluded Account) to any person other than
the Collateral Agent.
 
(ii)           As between the Collateral Agent and the Pledgors, the Pledgors
shall bear the investment risk with respect to the Investment Property and
Pledged Securities, and the risk of loss of, damage to, or the destruction of
the Investment Property and Pledged Securities, whether in the possession of, or
maintained as a security entitlement or deposit by, or subject to the control
of, the Collateral Agent, a Securities Intermediary, Commodity Intermediary, any
Pledgor or any other person; provided, however, that nothing contained in this
Section 3.4(c) shall release or relieve any Securities Intermediary or Commodity
Intermediary of its duties and obligations to the Pledgors or any other person
under any Control Agreement or under applicable Legal Requirements.  Each
Pledgor shall promptly pay all Charges and fees of whatever kind or nature with
respect to the Investment Property and Pledged Securities pledged by it under
this Agreement.  In the event any Pledgor shall fail to make such payment
contemplated in the immediately preceding sentence, the Collateral Agent may do
so for the account of such Pledgor and the Pledgors shall promptly reimburse and
indemnify the Collateral Agent from all reasonable costs and expenses incurred
by the Collateral Agent under this Section 3.4(c) in accordance with
Section 10.03 of the Credit Agreement.
 
 
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(d)           Electronic Chattel Paper and Transferable Records.  If any amount,
individually or in the aggregate, in excess of $100,000 or payable under or in
connection with any of the Pledged Collateral is evidenced by any Electronic
Chattel Paper or any “transferable record” (as that term is defined in
Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in
any relevant jurisdiction), the Pledgor acquiring such Electronic Chattel Paper
or transferable record shall promptly (and in any event within 10 days of the
acquisition thereof) notify the Collateral Agent thereof and shall take such
action as the Collateral Agent may reasonably request to vest in the Collateral
Agent control under UCC Section 9-105 of such Electronic Chattel Paper or
control under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction, of such
transferable record.  The Collateral Agent agrees with such Pledgor that the
Collateral Agent will arrange, pursuant to procedures reasonably satisfactory to
the Collateral Agent and so long as such procedures will not result in the
Collateral Agent’s loss of control, for the Pledgor to make alterations to the
Electronic Chattel Paper or transferable record permitted under UCC
Section 9-105 or, as the case may be, Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or Section 16 of the Uniform
Electronic Transactions Act for a party in control to allow without loss of
control, unless an Event of Default has occurred and is continuing or would
occur after taking into account any action by such Pledgor with respect to such
Electronic Chattel Paper or transferable record.
 
(e)           Letter-of-Credit Rights.  If any Pledgor is at any time a
beneficiary under a Letter of Credit now or hereafter issued in favor of such
Pledgor, other than (i) a Letter of Credit issued pursuant to the Credit
Agreement or (ii) a Letter of Credit that is a “supporting obligation” (as
defined in Section 9-102 of the UCC) with respect to other Pledged
Collateral,  in which the Collateral Agent has a valid, enforceable, perfected
first priority security interest (subject to Permitted Collateral Liens) in an
amount individually or in the aggregate in excess of $250,000, such Pledgor
shall promptly (and in any event within five Business Days of becoming a
beneficiary thereunder) notify the Collateral Agent thereof and such Pledgor
shall, at the reasonable request of the Collateral Agent, pursuant to an
agreement in form and substance reasonably satisfactory to the Collateral Agent,
either (i) arrange for the issuer and any confirmer or other nominated person of
such Letter of Credit to consent to an assignment to the Collateral Agent of the
proceeds of any drawing under the Letter of Credit or (ii) arrange for the
Collateral Agent to become the transferee beneficiary of such Letter of Credit,
with the Collateral Agent agreeing, in each case, that the proceeds of any
drawing under the Letter of Credit are to be applied as provided in the Credit
Agreement.
 
(f)           Commercial Tort Claims.  As of the date hereof, each Pledgor
hereby represents and warrants that it holds no Commercial Tort Claims having a
value reasonably believed by the Pledgors to be, individually or in the
aggregate, in excess of $250,000, other than those (if any) listed on
Schedule 15 to the Perfection Certificate.  If any Pledgor shall at any time
hold or acquire a Commercial Tort Claim having a value reasonably believed by
the Pledgors to be, individually or in the aggregate, in excess of $250,000,
such Pledgor shall promptly (and in any event within five Business Days of
acquiring such Commercial Tort Claim) notify the Collateral Agent in writing
signed by such Pledgor of the brief details thereof and grant to the Collateral
Agent 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 Collateral Agent.
 
(g)           Pledged Collateral in the Possession of a Third Party.  If any
Equipment or Inventory (other than Equipment or Inventory leased to a franchisee
in the ordinary course of business) with a fair market value individually or in
the aggregate in excess of $100,000 is in possession or control of any third
party, including any warehouseman, landlord, lessor, bailee or agent, the
Pledgors shall notify the Collateral Agent thereof and notify the third party of
the Collateral Agent’s security interest therein and obtain an acknowledgment (a
“Bailee Letter”) from such third party that (i) it is holding the Equipment and
Inventory for the benefit of the Collateral Agent and (ii) such party will
comply with instructions from the Collateral Agent with respect to such Pledged
Collateral, without further consent of any Pledgors.
 
 
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SECTION 3.5                           Joinder of Additional Guarantors.  The
Pledgors shall cause each Subsidiary of Borrower that, from time to time, after
the date hereof shall be required to pledge any assets to the Collateral Agent
for the benefit of the Secured Parties pursuant to the Credit Agreement, (a) to
execute and deliver to the Collateral Agent (i) a Joinder Agreement within
30 days after the date on which it was acquired or created and (ii) a Perfection
Certificate within 30 days after the date on which it was acquired or created
and/or (b) in the case of a Subsidiary organized outside of the United States
required to pledge any assets to the Collateral Agent, execute and deliver such
documentation as the Collateral Agent shall reasonably request and, in each
case, upon such execution and delivery, such Subsidiary shall constitute a
“Guarantor” and a “Pledgor” for all purposes hereunder with the same force and
effect as if originally named as a Guarantor and Pledgor herein.  The execution
and delivery of such Joinder Agreement shall not require the consent of any
Pledgor hereunder.  The rights and obligations of each Pledgor hereunder shall
remain in full force and effect notwithstanding the addition of any new
Guarantor and Pledgor as a party to this Agreement or any other Loan Document.
 
SECTION 3.6                           Supplements; Further Assurances.  Each
Pledgor shall take such further actions, and execute and deliver to the
Collateral Agent such additional assignments, agreements, supplements, powers
and instruments, as the Collateral Agent may in its reasonable judgment deem
necessary, wherever required by applicable Legal Requirements, in order to
perfect, preserve and protect the security interest in the Pledged Collateral as
provided herein and the rights and interests granted to the Collateral Agent
hereunder, to carry into effect the purposes hereof or better to assure and
confirm unto the Collateral Agent the Pledged Collateral or permit the
Collateral Agent to exercise and enforce its rights, powers and remedies
hereunder with respect to any Pledged Collateral.  Without limiting the
generality of the foregoing, each Pledgor shall make, execute, endorse,
acknowledge, file or refile and/or deliver to the Collateral Agent from time to
time upon reasonable request such lists, descriptions and designations of the
Pledged Collateral, copies of warehouse receipts, receipts in the nature of
warehouse receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, supplements, additional security
agreements, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments as the
Collateral Agent shall reasonably request.  If an Event of Default has occurred
and is continuing, the Collateral Agent may institute and maintain, in its own
name or in the name of any Pledgor, such suits and proceedings as the Collateral
Agent may be advised by counsel shall be necessary or expedient to prevent any
impairment of the security interest in the Pledged Collateral or the perfection
or priority thereof.  All of the foregoing shall be at the sole cost and expense
of the Pledgors.
 
ARTICLE IV
 
REPRESENTATIONS, WARRANTIES AND COVENANTS
 
Each Pledgor represents, warrants and covenants as follows:
 
SECTION 4.1                           Title.  Except for the security interest
granted to the Collateral Agent for the ratable benefit of the Secured Parties
pursuant to this Agreement and Permitted Collateral Liens, such Pledgor owns (or
either owns or has a License to, in the case of Intellectual Property) and, as
to Pledged Collateral acquired by it from time to time after the date hereof,
will either own or hold a License to the rights in each item of Pledged
Collateral pledged by it hereunder free and clear of any and all Liens or claims
of others (except Permitted Collateral Liens). Such Pledgor has not filed, nor
authorized any third party to file a financing statement or other public notice
with respect to all or any part of the Pledged Collateral on file or of record
in any public office, except such as have been filed in favor of the Collateral
Agent pursuant to this Agreement or as are permitted by the Credit Agreement or
otherwise relate to Permitted Collateral Liens or financing statements or public
notices relating to the termination statements listed on Schedule 9(a) to the
Perfection Certificate. No person other than any Pledgor or the Collateral Agent
has, or will have, control or possession of all or any part of the Pledged
Collateral, except as expressly permitted by the Loan Documents.
 
 
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SECTION 4.2                           Validity of Security Interest.  The
security interest in and Lien on the Pledged Collateral granted to the
Collateral Agent for the ratable benefit of the Secured Parties hereunder
constitutes (a) a legal and valid security interest in all the Pledged
Collateral securing the payment and performance of the Secured Obligations, and
(b) subject to the filings and other actions described in Schedule 1 hereto, a
valid, enforceable, and except to the extent otherwise expressly permitted under
Article III, perfected first priority security interest (other than Permitted
Collateral Liens) in all the Pledged Collateral. The security interest and Lien
granted to the Collateral Agent for the ratable benefit of the Secured Parties
pursuant to this Agreement in and on the Pledged Collateral will at all times
constitute a valid, enforceable, and except to the extent otherwise expressly
permitted under Article III, perfected, continuing first priority security
interest therein, subject only to Permitted Collateral Liens.
 
SECTION 4.3                           Defense of Claims;  Transferability of
Pledged Collateral.  Each Pledgor shall, at its own cost and expense, use
commercially reasonable efforts to defend title to the Pledged Collateral
pledged by it hereunder and the security interest therein granted to the
Collateral Agent and the priority thereof (subject to Permitted Collateral
Liens) required hereunder against all claims and demands of all persons, at its
own cost and expense, at any time claiming any interest therein adverse to the
Collateral Agent or any other Secured Party. There is no agreement that
restricts the transferability of any material portion of the Pledged Collateral
or otherwise materially impairs or conflicts with any Pledgor’s obligations or
the rights of the Collateral Agent hereunder, and the Pledgors shall not enter
into any agreement or take any other action that would restrict the
transferability of any material portion of the Pledged Collateral or otherwise
materially impair or conflict with any Pledgor’s obligations or the rights of
the Collateral Agent hereunder.
 
SECTION 4.4                           Other Financing Statements.  No Pledgor
has filed, nor authorized any third party to file (nor will there be) any valid
or effective financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) covering or purporting to cover
any interest of any kind in the Pledged Collateral other than financing
statements and other statements and instruments relating to Permitted Collateral
Liens.  So long as any of the Secured Obligations remain unpaid and unperformed,
no Pledgor shall execute, authorize or permit to be filed in any public office
any financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) relating to any Pledged Collateral, except
financing statements and other statements and instruments filed or to be filed
in respect of and covering the security interests granted by such Pledgor to the
holder(s) of Permitted Collateral Liens.
 
SECTION 4.5                           Chief Executive Office; Change of Name;
Jurisdiction of Organization, etc.  Such Pledgor shall, (i) unless it shall have
given the Collateral Agent not less than 30 days’ prior written notice (in the
form of an Officers’ Certificate), not change its name, identity, legal
structure (whether by merger, consolidation, change in corporate form or
otherwise), type of organization or jurisdiction of organization or
organizational identification number if it has one and (ii) take all actions
necessary or advisable to maintain the continuous validity, perfection and the
same or better priority (subject to Permitted Collateral Liens) of the
Collateral Agent’s security interest in the Pledged Collateral granted or
intended to be granted hereunder, which in the case of any merger or other
change in organizational structure shall include delivering a written notice (in
the form of an Officers’ Certificate) upon completion of such merger or other
change in organizational structure confirming the grant of the security interest
under this Agreement.  Unless it shall have given the Collateral Agent prior
written notice (in the form of an Officers’ Certificate), such Pledgor shall not
change its chief executive office, place of business or its mailing address. If
such Pledgor does not have an organizational identification number and later
obtains one, such Pledgor shall forthwith notify the Collateral Agent of such
organizational identification number. The Collateral Agent may rely on opinions
of counsel as to whether any or all UCC financing statements of the Pledgors
need to be amended as a result of any of the changes described in this Section
4.5.  The Collateral Agent shall not be liable or responsible to any party for
any failure to maintain a valid, enforceable, perfected security interest with
the priority required hereunder in such Pledgor’s property constituting Pledged
Collateral. The Collateral Agent shall have no duty to inquire about such
changes, the parties acknowledging and agreeing that it would not be feasible or
practical for the Collateral Agent to search for information on such changes if
such information is not provided by any Pledgor.
 
 
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SECTION 4.6                           Location of Inventory and Equipment.  As
of the date hereof, all Equipment and Inventory of such Pledgor, individually or
in the aggregate with a fair market value in excess of $250,000, is located at
the chief executive office or such other location listed on Schedule 2(a), 2(b),
2(c) or 2(d) to the Perfection Certificate. Such Pledgor shall not move any
Equipment or Inventory, with a fair market value individually or in the
aggregate in excess of $250,000, to any location other than (x) the chief
executive office, (y) any other location listed on Schedule 2(a), 2(b), 2(c) or
2(d) to the Perfection Certificate, until (i) it shall have given the Collateral
Agent not less than 20 days’ prior written notice (in the form of an Officers’
Certificate) of its intention so to do, clearly describing such new location
within the continental United States and providing such other information in
connection therewith as the Collateral Agent may reasonably request and (ii)
with respect to such new location, such Pledgor shall have taken all action
reasonably satisfactory to the Collateral Agent to maintain the perfection and
priority (subject to Permitted Collateral Liens) of the security interest of the
Collateral Agent in the Pledged Collateral intended to be granted hereby,
including, to the extent required under Section 3.4(g), obtaining waivers of
landlord’s or warehousemen’s and/or bailee’s liens with respect to such new
location, if applicable, and if reasonably requested by the Collateral Agent.
Such Pledgor agrees to provide the Collateral Agent with prompt notice following
the movement of any Equipment or Inventory, individually or in the aggregate
with a fair market value in excess of $250,000, to any location other than one
that is listed in Schedule 2(a), 2(b), 2(c) or 2(d) to the Perfection
Certificate.
 
SECTION 4.7                           Corporate Names; Prior
Transactions.  Except as set forth in Schedules 1(a) and (b) to the Perfection
Certificate, such Pledgor has not, during the past five years, been known by or
used any other corporate or fictitious name or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any person,
or acquired any of its property or assets out of the ordinary course of
business.
 
SECTION 4.8                           Due Authorization and Issuance.  All of
the Initial Pledged Shares have been, and to the extent any Pledged Shares are
hereafter issued, such Pledged Shares will be, upon such issuance, duly
authorized, validly issued and fully paid and non-assessable.  All of the
Initial Pledged Interests have been fully paid for, and there is no amount or
other obligation owing by any Pledgor to any issuer of the Initial Pledged
Interests in exchange for or in connection with the issuance of the Initial
Pledged Interests or any Pledgor’s status as a partner or a member of any issuer
of the Initial Pledged Interests.
 
SECTION 4.9                           Consents, etc.  No consent of any party
(including equityholders or creditors of such Pledgor) and no consent,
authorization, approval, license or other action by, and no notice to or filing
with, any Governmental Authority or regulatory body or other person is required
for the exercise by the Collateral Agent of (i) the voting or other rights
provided for in this Agreement or (ii) the remedies in respect of the Pledged
Collateral pursuant to this Agreement.  In the event that the Collateral Agent
desires to exercise any remedies, voting or consensual rights or
attorney-in-fact powers set forth in this Agreement and determines it necessary
to obtain any approvals or consents of any Governmental Authority or regulatory
body or any other person therefor, then, upon the reasonable request of the
Collateral Agent, each Pledgor agrees to use commercially reasonable efforts to
assist and aid the Collateral Agent to obtain as soon as practicable any
necessary approvals or consents for the exercise of any such remedies, rights
and powers.
 
 
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SECTION 4.10                           Pledged Collateral.  All information set
forth herein, including the schedules annexed hereto, and all information
contained in any documents, schedules and lists heretofore delivered to any
Secured Party, including the Perfection Certificate and the schedules thereto,
in connection with this Agreement, in each case, relating to the Pledged
Collateral, is accurate and complete in all material respects.
 
SECTION 4.11                           Insurance.  In the event that the
proceeds of any insurance claim are paid after the Collateral Agent has
exercised its right to foreclose after an Event of Default, such Net Cash
Proceeds shall be paid to the Collateral Agent to satisfy any deficiency
remaining after such foreclosure.  The Collateral Agent shall retain its
interest in the insurance policies and coverages required to be maintained
pursuant to the Credit Agreement during any redemption period.
 
SECTION 4.12                           Payment of Taxes; Compliance with Legal
Requirements; Contesting Liens; Charges.  Each Pledgor may at its own expense
contest the validity, amount or applicability of any Charges so long as the
contest thereof shall be conducted in accordance with, and permitted pursuant to
the provisions of, the Credit Agreement.  Notwithstanding the foregoing
sentence, (i) no contest of any such obligation may be pursued by such Pledgor
if such contest would expose the Collateral Agent or any other Secured Party to
(A) any possible criminal liability or (B) any civil liability for failure to
comply with such obligations unless such Pledgor shall have furnished, if
reasonably requested by the Collateral Agent or any Lender, a bond or other
security therefor reasonably satisfactory to the Collateral Agent, or such
Secured Party, as the case may be, and (ii) if at any time payment or
performance of any obligation contested by such Pledgor pursuant to this Section
4.12 shall become necessary to prevent the imposition of remedies because of
non-payment, such Pledgor shall pay or perform the same in sufficient time to
prevent the imposition of remedies in respect of such default or prospective
default.
 
SECTION 4.13                           Access to Pledged Collateral, Books and
Records; Other Information.  Each Pledgor shall permit representatives of the
Collateral Agent or any Secured Party upon reasonable notice to visit and
inspect any of its assets or properties, including to conduct any environmental
assessments, sampling, testing or monitoring of the Mortgaged Property (such
visits and inspections to be limited to one visit and inspection coordinated by
the Collateral Agent per fiscal year so long as no Default or Event of Default
has occurred and is continuing), and examine and make abstracts from any of its
books and records (including insurance policies) at any reasonable time and upon
reasonable notice.  Such Pledgor shall, at any and all times, within a
reasonable time after written request by the Collateral Agent, furnish or cause
to be furnished to the Collateral Agent, in such manner and in such detail as
may be reasonably requested by the Collateral Agent, additional information with
respect to the Pledged Collateral.  If a Default occurs and is continuing, the
Collateral Agent shall have the right, but not the obligation, to access any
Mortgaged Property to undertake any Response that the Collateral Agent in its
sole but reasonable discretion deems appropriate at the sole but reasonable cost
and expense of the Pledgors.
 
ARTICLE V

 
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
 
SECTION 5.1                           Pledge of Additional Securities
Collateral.  Each Pledgor shall, upon obtaining any Pledged Securities or
intercompany notes of any person (other than Excluded Property), accept the same
in trust for the benefit of the Collateral Agent and promptly (and in any event
within five Business Days thereafter) deliver to the Collateral Agent a
Securities Pledge Amendment, duly executed by such Pledgor, and the certificates
and other documents required under Section 3.1 and Section 3.2 in respect of the
additional Pledged Securities or intercompany notes that are to be pledged
pursuant to this Agreement, and confirming the attachment of the Lien hereby
created on and in respect of such additional Pledged Securities or intercompany
notes.  Each Pledgor hereby authorizes the Collateral Agent to attach each
Securities Pledge Amendment to this Agreement and agrees that all Pledged
Securities or intercompany notes listed on any Securities Pledge Amendment
delivered to the Collateral Agent shall for all purposes hereunder be considered
Pledged Collateral.
 
 
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SECTION 5.2                           Voting Rights; Distributions; etc.
 
(i)           So long as no Event of Default shall have occurred and be
continuing:
 
(A)           Each Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Securities Collateral or any part
thereof for any purpose not inconsistent with the terms or purposes hereof, the
Loan Documents or any other document evidencing the Secured Obligations;
provided, however, that no Pledgor shall in any event exercise such rights in
any manner that is disadvantageous to any Agent or Lender in any material
respect; and
 
(B)           Each Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the Lien hereof, any and all Distributions, but only
if and to the extent made in accordance with the provisions of the Credit
Agreement; provided, however, that any and all such Distributions consisting of
rights or interests in the form of Pledged Securities or Intercompany Notes
shall promptly (and in any event within five Business Days after receipt
thereof) be delivered to the Collateral Agent to hold as Pledged Collateral and
shall, if received by any Pledgor, be received in trust for the benefit of the
Collateral Agent, be segregated from the other property or funds of such Pledgor
and be forthwith delivered to the Collateral Agent as Pledged Collateral in the
same form as so received (with any necessary or reasonably requested
endorsement).
 
(ii)           Upon the occurrence and during the continuance of any Event of
Default:
 
(A)           All rights of each Pledgor to exercise the voting and other
consensual rights it would otherwise be entitled to exercise pursuant to
Section 5.2(i)(A) shall cease, and all such rights shall thereupon become vested
in the Collateral Agent, which shall thereupon have the sole right to exercise
such voting and other consensual rights until the applicable Event of Default is
no longer continuing, in which case the Collateral Agent’s rights under this
Section 5.2(ii)(A) shall cease to be effective, subject to revesting in the
event of a subsequent Event of Default that is continuing; and
 
(B)           All rights of each Pledgor to receive Distributions that it would
otherwise be authorized to receive and retain pursuant to Section 5.2(i)(B)
without further action shall cease and all such rights shall thereupon become
vested in the Collateral Agent, which shall thereupon have the sole right to
receive and hold as Pledged Collateral such Distributions until the applicable
Event of Default is no longer continuing, in which case the Collateral Agent’s
rights under this Section 5.2(ii)(B) shall cease to be effective, subject to
revesting in the event of a subsequent Event of Default that is continuing.
 
(iii)           Each Pledgor shall, at its sole cost and expense, from time to
time execute and deliver to the Collateral Agent appropriate instruments as the
Collateral Agent may reasonably request in order to permit the Collateral Agent
to exercise the voting and other rights which it may be entitled to exercise
pursuant to Section 5.2(ii)(A) and to receive all Distributions which it may be
entitled to receive under Section 5.2(ii)(B).
 
 
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(iv)           All Distributions that are received by any Pledgor contrary to
the provisions of Section 5.2(ii)(B) shall be received in trust for the benefit
of the Collateral Agent, shall be segregated from the other funds of such
Pledgor and shall immediately be paid over to the Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary or reasonably
requested endorsement).
 
SECTION 5.3                           Organizational Documents.  As of the date
hereof, each Pledgor has delivered to the Collateral Agent true, correct, and
complete copies of the Organizational Documents of such Pledgor.  As of the date
hereof, the Organizational Documents of the Pledgors are in full force and
effect, have not as of the date hereof been amended or modified except as
disclosed in writing to the Collateral Agent, and there is no existing default
by any party thereunder or any event which, with the giving of notice or passage
of time or both, would constitute a default under any Organizational
Documents.  No Pledgor will terminate or agree to terminate any Organizational
Documents or make any amendment or modification to any Organization Documents if
such termination, agreement to terminate, amendment or modification could
reasonably be expected to have a Material Adverse Effect.
 
SECTION 5.4                           Default.  As of the date hereof, such
Pledgor is not in default in the payment of any portion of any mandatory capital
contribution, if any, required to be made under any agreement to which such
Pledgor is a party relating to the Pledged Securities pledged by it, and such
Pledgor is not in violation of any other provisions of any such agreement to
which such Pledgor is a party, or otherwise in default or violation
thereunder.  As of the date hereof, no Securities Collateral pledged by such
Pledgor is subject to any defense, offset or counterclaim, nor have any of the
foregoing been asserted or alleged against such Pledgor by any person with
respect thereto, and as of the date hereof, there are no certificates,
instruments, documents or other writings (other than the Organizational
Documents of such Pledgor and certificates, if any, delivered to the Collateral
Agent) which evidence any Pledged Securities of such Pledgor.
 
SECTION 5.5                           Certain Agreements of Pledgors as Issuers
and Holders of Equity Interests.  In the case of each Pledgor that is an issuer
of Securities Collateral, such Pledgor agrees to be bound by the terms of this
Agreement relating to the Securities Collateral issued by it and will comply
with such terms insofar as such terms are applicable to it.
 
(i)           In the case of each Pledgor that is a partner, member or holder of
any Equity Interests in a partnership, limited liability company or other
entity, such Pledgor hereby consents to the extent required by the applicable
Organizational Documents of such Pledgor to the pledge by each other Pledgor,
pursuant to the terms hereof, of the Pledged Interests in such partnership,
limited liability company or other entity and, upon the occurrence and during
the continuance of an Event of Default, to the transfer of such Pledged
Interests to the Collateral Agent or its nominee and to the substitution of the
Collateral Agent or its nominee as a substituted partner, member or holder of
Equity Interests in such partnership, limited liability company or other entity
with all the rights, powers and duties of a general partner, a limited partner,
member or holder of Equity Interests, as the case may be.
 
ARTICLE VI
 
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
 
SECTION 6.1                           Grant of License.  For the purpose of
enabling the Collateral Agent, during the continuance of an Event of Default, to
exercise rights and remedies under Article VIII hereof at such time as the
Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, and for no other purpose, each Pledgor hereby grants to the Collateral
Agent, to the extent licensable, exercisable solely upon the occurrence and
during the continuance of any Event of Default, an irrevocable, non-exclusive
worldwide license (exercisable without payment of royalty or other compensation
to such Pledgor) to use, assign, license sublicense or otherwise dispose of the
Intellectual Property Collateral now owned or hereafter acquired by such Pledgor
(excluding, for the avoidance of doubt, any License that by its terms is
prohibited from being so licensed to the extent constituting Excluded Property),
wherever the same may be located.  Such license shall include access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout hereof.
 
 
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SECTION 6.2                           Registration.  Except pursuant to material
licenses and other user agreement entered into by any Pledgor in the ordinary
course of business, on and as of the date hereof (i) each Pledgor owns and/or
possesses the right to use, and has done nothing to authorize or enable any
other person to use, any Copyright, Patent or Trademark listed on
Schedules 14(a), (b) and (c) to the Perfection Certificate, and (ii) all
registrations listed on Schedules 14(a), (b) and (c) to the Perfection
Certificate are valid and in full force and effect.
 
SECTION 6.3                           No Violations or Proceedings.  On and as
of the date hereof, (i) there is no material violation by others of any right of
such Pledgor with respect to any Copyright, Patent or Trademark listed on
Schedules 14(a), (b) and (c) to the Perfection Certificate, respectively,
pledged by it under the name of such Pledgor, (ii) such Pledgor is not
infringing upon any Copyright, Patent or Trademark of any other person other
than such infringement that, individually or in the aggregate, would not (and
could not reasonably be expected to) result in a material adverse effect on the
value or utility of the Intellectual Property Collateral or any portion thereof
material to the use and operation of the Pledged Collateral or the Mortgaged
Property and (iii) no proceedings have been instituted or are pending against
such Pledgor or, to such Pledgor’s knowledge, threatened, and no such claim
against such Pledgor has been received by such Pledgor since September 29, 2010
alleging any such violation.
 
SECTION 6.4                           Protection of Collateral Agent's
Security.  On a continuing basis, each Pledgor shall, at its sole cost and
expense, (i) promptly following its becoming aware thereof, notify the
Collateral Agent of (A) any materially adverse determination in any proceeding
in the United States Patent and Trademark Office or the United States Copyright
Office with respect to any material Patent, Trademark or Copyright or (B) the
institution of any proceeding or any adverse determination in any federal, state
or local court or administrative body regarding such Pledgor’s claim of
ownership in or right to use any of the Intellectual Property Collateral
material to the use and operation of the Pledged Collateral or any Mortgaged
Property, its right to register such Intellectual Property Collateral or its
right to keep and maintain such registration in full force and effect,
(ii) maintain and protect the Intellectual Property Collateral material to the
use and operation of the Pledged Collateral or any Mortgaged Property as
presently used and operated and as contemplated by the Credit Agreement,
(iii) not permit to lapse or become abandoned any Intellectual Property
Collateral material to the use and operation of the Pledged Collateral or any
Mortgaged Property as presently used and operated and as contemplated by the
Credit Agreement, and not settle or compromise any pending or future litigation
or administrative proceeding with respect to such Intellectual Property
Collateral without the prior written consent of the Collateral Agent, (iv) upon
such Pledgor obtaining knowledge thereof, promptly notify the Collateral Agent
in writing of any event that may be reasonably expected to materially and
adversely affect the value or utility of the Intellectual Property Collateral
material to the use and operation of the Pledged Collateral or any Mortgaged
Property, the ability of such Pledgor or the Collateral Agent to dispose of such
Intellectual Property Collateral or any portion thereof or the rights and
remedies of the Collateral Agent in relation thereto including a levy or written
threat of levy or any legal process against such Intellectual Property
Collateral owned or licensed by such Pledgor or any portion thereof, (v) not
license the Intellectual Property Collateral other than licenses entered into by
such Pledgor in, or incidental to, the ordinary course of business, or amend or
permit the amendment of any of the licenses in a manner that materially and
adversely affects the right to receive payments thereunder, or in any manner
that would materially impair the value of the Intellectual Property Collateral
or the Lien on and security interest in the Intellectual Property Collateral
intended to be granted to the Collateral Agent for the ratable benefit of the
Secured Parties, without the consent of the Collateral Agent, (vi) diligently
keep adequate records respecting the Intellectual Property Collateral and
(vii) furnish to the Collateral Agent from time to time upon the Collateral
Agent’s request therefor reasonably detailed statements and amended schedules
further identifying and describing the Intellectual Property Collateral and such
other materials evidencing or reports pertaining to the Intellectual Property
Collateral as the Collateral Agent may from time to time request.
 
 
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SECTION 6.5                           After-Acquired Property.  If any Pledgor
shall, at any time before the Secured Obligations have been paid and performed
in full (other than contingent indemnification obligations that, pursuant to the
provisions of the Credit Agreement or the Security Documents, survive the
termination thereof), (i) obtain any rights to any additional Intellectual
Property Collateral or (ii) become entitled to the benefit of any additional
Intellectual Property Collateral or any renewal or extension thereof, including
any reissue, division, continuation, or continuation-in-part of any Intellectual
Property Collateral, or any improvement on any Intellectual Property Collateral,
the provisions hereof shall automatically apply thereto and any such item
enumerated in clause (i) or (ii) of this sentence with respect to such Pledgor
shall automatically constitute Intellectual Property Collateral if such would
have constituted Intellectual Property Collateral at the time of execution
hereof and be subject to the Lien and security interest created by this
Agreement without further action by any party (excluding any Intellectual
Property Collateral that constitutes Excluded Property).  Each Pledgor shall
promptly (i) provide to the Collateral Agent written notice of any of the
foregoing and (ii) confirm the attachment of the Lien and security interest
created by this Agreement to any rights described in clauses (i) and (ii) of the
immediately preceding sentence of this Section 6.5 by execution of an instrument
in form reasonably acceptable to the Collateral Agent and the filing of any
instruments or statements as shall be reasonably necessary or reasonably
requested by the Collateral Agent to preserve, protect or perfect the Collateral
Agent’s security interest in such Intellectual Property Collateral to the extent
such security interest in such Intellectual Property Collateral may be perfected
under applicable Legal Requirements.  Further, each Pledgor authorizes the
Collateral Agent to modify this Agreement by amending Schedules 14(a) - (c) to
the Perfection Certificate to include any Intellectual Property Collateral
acquired or arising after the date hereof of such Pledgor.
 
SECTION 6.6                           Litigation.  Unless there shall occur and
be continuing any Event of Default, each Pledgor shall have the right to
commence and prosecute in its own name, as the party in interest, for its own
benefit and at the sole cost and expense of the Pledgors, such applications for
protection of the Intellectual Property Collateral and suits, proceedings or
other actions to prevent the infringement, counterfeiting, unfair competition,
dilution, diminution in value or other damage as are necessary to protect the
Intellectual Property Collateral.  Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent shall have the right
but shall in no way be obligated to file applications for protection of the
Intellectual Property Collateral and/or bring suit in the name of any Pledgor,
the Collateral Agent or the Secured Parties to enforce the Intellectual Property
Collateral and any license thereunder.  In the event of such suit, each Pledgor
shall, at the reasonable request of the Collateral Agent, do any and all lawful
acts and execute any and all documents reasonably requested by the Collateral
Agent in aid of such enforcement and the Pledgors shall promptly reimburse and
indemnify the Collateral Agent for all reasonable costs and expenses incurred by
the Collateral Agent in the exercise of its rights under this Section 6.6 in
accordance with Section 10.03 of the Credit Agreement.  In the event that the
Collateral Agent shall elect not to bring such suit to enforce the Intellectual
Property Collateral, each Pledgor agrees, at the reasonable request of the
Collateral Agent, to take all actions necessary, whether by suit, proceeding or
other action, to prevent the infringement, counterfeiting, unfair competition,
dilution, diminution in value of or other damage to any of the Intellectual
Property Collateral by others and for that purpose agrees to diligently maintain
any suit, proceeding or other action against any person so infringing necessary
to prevent such infringement.
 
 
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SECTION 6.7                           Intent-to-Use Trademark and Service Mark
Applications.  In connection with any intent-to-use trademark or service mark
applications whether listed on Schedule 14(b) to the Perfection Certificate or
otherwise, the Pledgors shall file a bona fide statement of use and shall take
such other actions or steps as shall be required by the United States Patent and
Trademark Office, to entitle such application to registration within 10 Business
Days following the date of first use in commerce of the mark that is the subject
of such application.  Upon acceptance of such bona fide statement of use by the
United States Patent and Trademark Office, such application shall automatically
become subject to the security interest granted herein.  The Pledgors shall
execute any further documents and instruments as the Collateral Agent reasonably
may deem necessary or appropriate to confirm, implement, or enforce the
Collateral Agent’s security interest in such applications.  If the Pledgors fail
to execute such further documents and instruments within five Business Days of
presentment, the Collateral Agent may, in the name of, and on behalf of, the
Pledgors, execute such documents and instruments and make appropriate
disposition of same, and the Pledgors hereby irrevocably appoint the Collateral
Agent as their lawful attorney-in-fact with full power to do so.  The foregoing
power of attorney is coupled with an interest and such appointment shall be
irrevocable for the term hereof.
 
ARTICLE VII
 
CERTAIN PROVISIONS CONCERNING ACCOUNTS
 
SECTION 7.1                           Special Representation and Warranties.  As
of the time when each of its Accounts arises, each Pledgor shall be deemed to
have represented and warranted that such Account and all records, papers and
documents relating thereto (i) are genuine and correct and in all material
respects what they purport to be, subject to ordinary course accounts receivable
adjustments and refunds, (ii) to the Pledgor’s knowledge, represent the legal,
valid and binding obligation of the account debtor, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors’ rights generally
or by equitable principles relating to enforceability, evidencing indebtedness
unpaid and owed by such account debtor, arising out of the performance of labor
or services or the sale, lease, license, assignment or other disposition and
delivery of the goods or other property listed therein or out of an advance or a
loan, (iii) will, in the case of an Account, except for the original or
duplicate original invoice sent to purchase evidencing such purchaser’s account,
be the only original writing evidencing and embodying such obligation of the
account debtor named therein and (iv) are in all material respects in compliance
and conform with all applicable Legal Requirements.
 
SECTION 7.2                           Maintenance of Records.  Each Pledgor
shall keep and maintain at its own cost and expense complete records of each
Account, in a manner consistent with its customary business practice, including
records of all payments received, all credits granted thereon, all merchandise
returned and all other documentation relating thereto. Each Pledgor shall, at
such Pledgor’s sole cost and expense, upon the Collateral Agent’s demand made at
any time after the occurrence and during the continuance of any Event of
Default, deliver all tangible evidence of Accounts, including all documents
evidencing Accounts and any books and records relating thereto to the Collateral
Agent or to its representatives (copies of which evidence and books and records
may be retained by such Pledgor). Upon the occurrence and during the continuance
of any Event of Default, the Collateral Agent may transfer a full and complete
copy of any Pledgor’s books, records, credit information, reports, memoranda and
all other writings relating to the Accounts to and for the use by any person
that has acquired or is contemplating acquisition of an interest in the Accounts
or the Collateral Agent’s security interest therein without the consent of any
Pledgor, but subject at all times to Section 10.12 of the Credit Agreement.
 
SECTION 7.3                           Legend.  At the reasonable request of the
Collateral Agent and in form and manner reasonably satisfactory to the
Collateral Agent, at any time after the occurrence and during the continuance of
any Event of Default, each Pledgor shall legend the Accounts to the extent
represented or evidenced by a written instrument and the other books, records
and documents of such Pledgor evidencing or pertaining to the Accounts with an
appropriate reference to the fact that the Accounts have been assigned for
collateral purposes to the Collateral Agent for the ratable benefit of the
Secured Parties and that the Collateral Agent has a security interest therein.
 
 
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SECTION 7.4                           Modification of Terms, etc.  No Pledgor
shall rescind or cancel any obligations evidenced by any Account or modify any
term thereof or make any adjustment with respect thereto except in the ordinary
course of business, or extend or renew any such obligations except in the
ordinary course of business or compromise or settle any dispute, claim, suit or
legal proceeding relating thereto or sell any Account or interest therein except
in the ordinary course of business; in each case, without the prior written
consent of the Collateral Agent.  Each Pledgor shall timely fulfill all
obligations on its part to be fulfilled under or in connection with the
Accounts.
 
SECTION 7.5                           Collection.  Each Pledgor shall cause to
be collected from the account debtor of each of the Accounts, as and when due in
the ordinary course of business and consistent with past practices (including
Accounts that are delinquent, such Accounts to be collected in accordance with
generally accepted commercial collection procedures), any and all amounts owing
under or on account of such Account, and apply forthwith upon receipt thereof
all such amounts as are so collected to the outstanding balance of such Account,
except that any Pledgor may, with respect to an Account, allow in the ordinary
course of business (i) accounts receivable adjustments or refunds and (ii) such
extensions of time to pay amounts due in respect of Accounts and such other
modifications of payment terms or settlements in respect of Accounts as shall be
commercially reasonable in the circumstances, all in accordance with such
Pledgor’s ordinary course of business consistent with its collection practices
as in effect from time to time and in compliance with applicable Legal
Requirements. The costs and expenses (including attorneys’ fees) of collection,
in any case, whether incurred by any Pledgor, the Collateral Agent or any
Secured Party, shall be paid by the Pledgors. Nothing in this Agreement shall
prohibit any Pledgor from writing off bad debt in the ordinary course of
business, consistent with past practices.
 
ARTICLE VIII

 
REMEDIES
 
SECTION 8.1                           Remedies.  Upon the occurrence and during
the continuance of any Event of Default, the Collateral Agent may from time to
time exercise in respect of the Pledged Collateral, in addition to the other
rights and remedies provided for herein or otherwise available to it, the
following remedies:
 
(i)           Personally, or by agents or attorneys, immediately take possession
of the Pledged Collateral or any part thereof, from any Pledgor or any other
person who then has possession of any part thereof with or without notice or
process of law, and for that purpose may enter upon any Pledgor’s premises where
any of the Pledged Collateral is located, remove such Pledged Collateral, remain
present at such premises to receive copies of all communications and remittances
relating to the Pledged Collateral and use in connection with such removal and
possession any and all services, supplies, aids and other facilities of any
Pledgor;
 
(ii)           Demand, sue for, collect or receive any money or property at any
time payable or receivable in respect of the Pledged Collateral including
instructing the obligor or obligors on any agreement, instrument or other
obligation constituting part of the Pledged Collateral to make any payment
required by the terms of such agreement, instrument or other obligation directly
to the Collateral Agent, and in connection with any of the foregoing,
compromise, settle, extend the time for payment and make other modifications
with respect thereto; provided, however, that in the event that any such
payments are made directly to any Pledgor, such Pledgor shall segregate all
amounts received pursuant thereto in trust for the benefit of the Collateral
Agent and shall promptly (but in no event later than one Business Day after
receipt thereof) pay such amounts to the Collateral Agent;
 
 
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(iii)           Subject to Section 8.2 and Section 8.4, sell, assign, grant a
license to use or otherwise liquidate, or direct any Pledgor to sell, assign,
grant a license to use or otherwise liquidate, any and all investments made in
whole or in part with the Pledged Collateral or any part thereof, and take
possession of the proceeds of any such sale, assignment, license or liquidation;
 
(iv)           Take possession of the Pledged Collateral or any part thereof, by
directing any Pledgor in writing to deliver the same to the Collateral Agent at
any place or places so designated by the Collateral Agent, in which event such
Pledgor shall at its own expense:  (A) forthwith cause the same to be moved to
the place or places designated by the Collateral Agent and therewith delivered
to the Collateral Agent, (B) store and keep any Pledged Collateral so delivered
to the Collateral Agent at such place or places pending further action by the
Collateral Agent and (C) while the Pledged Collateral shall be so stored and
kept, provide such security and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good condition.  Each
Pledgor’s obligation to deliver the Pledged Collateral as contemplated in this
Section 8.1(iv) is of the essence hereof.  Upon application to a court of equity
having jurisdiction, the Collateral Agent shall be entitled to decree requiring
specific performance by any Pledgor of such obligation;
 
(v)            Withdraw all moneys, instruments, securities and other property
in any bank, financial securities, deposit or other account of any Pledgor
constituting Pledged Collateral;
 
(vi)            Retain and apply the Distributions to the Secured Obligations as
provided in Article IX hereof;
 
(vii)           Exercise any and all rights as beneficial and legal owner of the
Pledged Collateral, including perfecting assignment of and exercising any and
all voting, consensual and other rights and powers with respect to any Pledged
Collateral; and
 
(viii)           All the rights and remedies of a secured party on default under
the UCC (whether or not the UCC applies to the affected Pledged Collateral), and
the Collateral Agent may also in its sole discretion, without notice except as
specified in Section 8.2, sell, assign, transfer or grant a license to use the
Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker’s board or at any of the Collateral
Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at
such price or prices and upon such other terms as the Collateral Agent may deem
commercially reasonable.  The Collateral Agent or any other Secured Party or any
of their respective Affiliates may be the purchaser, licensee, assignee or
recipient of any or all of the Pledged Collateral at any such sale and shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold, assigned
or licensed at such sale, to use and apply any of the Secured Obligations owed
to such person as a credit on account of the purchase price of any Pledged
Collateral payable by such person at such sale.  Each purchaser, assignee,
licensee or recipient at any such sale shall acquire the property sold, assigned
or licensed absolutely free from any claim or right on the part of any Pledgor,
and each Pledgor hereby waives, to the fullest extent permitted by applicable
Legal Requirements, all rights of redemption, stay and/or appraisal that it now
has or may at any time in the future have under any Legal Requirement now
existing or hereafter enacted.  The Collateral Agent shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale having been
given.  The Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.  Each Pledgor hereby waives, to the fullest extent permitted by
applicable Legal Requirements, any claims against the Collateral Agent arising
by reason of the fact that the price at which any Pledged Collateral may have
been sold, assigned or licensed at such a private sale was less than the price
which might have been obtained at a public sale, even if the Collateral Agent
accepts the first offer received and does not offer such Pledged Collateral to
more than one offeree.
 
 
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SECTION 8.2                           Notice of Sale  Each Pledgor acknowledges
and agrees that, to the extent notice of sale or other disposition of Pledged
Collateral shall be required by any Legal Requirement, 10 days prior notice to
such Pledgor of the time and place of any public sale or of the time after which
any private sale or other intended disposition is to take place shall be
commercially reasonable notification of such matters unless the Pledged
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market (in which case no such prior notice
shall be required).  No notification need be given to any Pledgor if it has
signed, after the occurrence of an Event of Default, a statement renouncing or
modifying any right to notification of sale or other intended disposition.
 
SECTION 8.3                           Waiver of Notice and Claims; Other
Waivers; Marshalling.
 
(i)           Each Pledgor hereby waives, to the fullest extent permitted by
applicable Legal Requirements, notice of judicial hearing in connection with the
Collateral Agent’s taking possession or the Collateral Agent’s disposition of
any of the Pledged Collateral, including any and all prior notice and hearing
for any prejudgment remedy or remedies and any such right which such Pledgor
would otherwise have under any Legal Requirement, and each Pledgor hereby
further waives, to the fullest extent permitted by applicable Legal Requirements
(i) all damages occasioned by such taking of possession, (ii) all other
requirements as to the time, place and terms of sale or other requirements with
respect to the enforcement of the Collateral Agent’s rights hereunder and
(iii) all rights of redemption, appraisal, valuation, stay, extension or
moratorium now or hereafter in force under any applicable Legal
Requirements.  The Collateral Agent shall not be liable for any incorrect or
improper payment made pursuant to this Article VIII except to the extent
resulting solely from the Collateral Agent’s gross negligence or willful
misconduct as finally judicially determined by a court of competent
jurisdiction.  Any sale of, or the grant of options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, either at law or in equity, of the applicable
Pledgor therein and thereto, and shall be a perpetual bar both at law and in
equity or otherwise against such Pledgor and against any and all persons
claiming or attempting to claim the Pledged Collateral so sold, optioned or
realized upon, or any part thereof, from, through or under such Pledgor.
 
(ii)           To the maximum extent permitted by applicable Legal Requirements,
each Pledgor hereby waives demand, notice, protest, notice of acceptance of this
Agreement, notice of Credit Extensions, Pledged Collateral received or delivered
or any other action taken in reliance hereon and all other demands and notices
of any description.
 
(iii)           The Collateral Agent shall not be required to marshal any
present or future collateral security (including the Pledged Collateral) for, or
other assurances of payment of, the Secured Obligations or any of them or to
resort to such collateral security or other assurances of payment in any
particular order.  To the maximum extent permitted by applicable Legal
Requirements, each Pledgor hereby agrees that it will not invoke any Legal
Requirement relating to the marshalling of collateral and hereby irrevocably
waives the benefits of all such Legal Requirements.
 
 
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SECTION 8.4                           Standards for Exercising Rights and
Remedies.  To the extent that applicable Legal Requirements impose duties on the
Collateral Agent to exercise remedies in a commercially reasonable manner, each
Pledgor acknowledges and agrees that it is not commercially unreasonable for the
Collateral Agent, in the exercise of such remedies in accordance with all other
terms hereof, (i) to fail to incur expenses reasonably deemed significant by the
Collateral Agent to prepare Pledged Collateral for disposition or otherwise to
fail to complete raw material or work in process into finished goods or other
finished products for disposition, (ii) to fail to obtain third party consents
for access to Pledged Collateral to be disposed of, or to obtain or, if not
required by other Legal Requirements, to fail to obtain consents for
Governmental Authorities or third parties for the collection or disposition of
Pledged Collateral to be collected or disposed of, (iii) to fail to exercise
collection remedies against account debtors or other persons obligated on
Pledged Collateral or to fail to remove liens or encumbrances on or any adverse
claims against Pledged Collateral, (iv) to exercise collection remedies against
account debtors and other persons obligated on Pledged Collateral directly or
through the use of collection agencies and other collection specialists, subject
to their compliance with applicable Legal Requirements, (v) to advertise
dispositions of Pledged Collateral through publications or media of general
circulation, whether or not the Pledged Collateral is of a specialized nature,
(vi) to contact other persons, whether or not in the same business as any
Pledgor, for expressions of interest in acquiring all or any portion of the
Pledged Collateral, (vii) to hire one or more professional auctioneers to assist
in the disposition of Pledged Collateral, whether or not the collateral is of a
specialized nature, (viii) to dispose of Pledged Collateral by utilizing
internet sites that provide for the auction of assets of the types included in
the Pledged Collateral or that have the reasonable capability of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim or modify disposition warranties,
(xi) to purchase insurance or credit enhancements to insure the Collateral Agent
against risks of loss, collection or disposition of Pledged Collateral or to
provide to the Collateral Agent a guaranteed return from the collection or
disposition of Pledged Collateral, or (xii) to the extent deemed appropriate by
the Collateral Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Collateral Agent in
the collection or disposition of any of the Pledged Collateral.  The Pledgors
acknowledge that the purpose of this Section 8.4 is to provide non-exhaustive
indications of what actions or omissions by the Collateral Agent would fulfill
the Collateral Agent’s duties under the UCC or other Legal Requirements of the
State or any other relevant jurisdiction in the Collateral Agent’s exercise of
remedies against the Pledged Collateral and that other actions or omissions by
the Collateral Agent shall not be deemed to fail to fulfill such duties solely
on account of not being indicated in this Section 8.4.  Without limiting the
foregoing, nothing contained in this Section 8.4 shall be construed to grant any
rights to any Pledgor or to impose any duties on the Collateral Agent that would
not have been granted or imposed by this Agreement or by applicable Legal
Requirements in the absence of this Section 8.4.
 
SECTION 8.5                           Certain Sales of Pledged Collateral.
 
(i)   Each Pledgor recognizes that, by reason of certain prohibitions contained
in Legal Requirements, the Collateral Agent may be compelled, with respect to
any sale of all or any part of the Pledged Collateral, to limit purchasers to
those who meet the requirements of a Governmental Authority.  Each Pledgor
acknowledges that any such sales may be at prices and on terms less favorable to
the Collateral Agent than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agrees that any such
restricted sale shall be deemed to have been made in a commercially reasonable
manner and that, except as may be required by applicable Legal Requirements, the
Collateral Agent shall have no obligation to engage in public sales.
 
(ii)           Each Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the “Securities Act”), and
applicable state or foreign securities’ laws, the Collateral Agent may be
compelled, with respect to any sale or disposition of all or any part of the
Securities Collateral and Investment Property, to limit purchasers to persons
who will agree, among other things, to acquire such Securities Collateral or
Investment Property for their own account, for investment and not with a view to
the distribution or resale thereof.  Each Pledgor acknowledges that any such
private sales may be at prices and on terms less favorable to the Collateral
Agent than those obtainable through a public sale without such restrictions
(including a public offering made pursuant to a registration statement under the
Securities Act), and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Collateral Agent shall have no obligation to engage in
public sales and no obligation to delay the sale of any Securities Collateral or
Investment Property for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state or foreign securities laws, even if
such issuer would agree to do so.
 
 
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(iii)           Notwithstanding the foregoing, each Pledgor shall, upon the
occurrence and during the continuance of any Event of Default, at the request of
the Collateral Agent, for the benefit of the Collateral Agent and the other
Secured Parties, cause any registration, qualification under or compliance with
any federal, state or foreign securities law or laws to be effected with respect
to all or any part of the Securities Collateral as soon as practicable and at
the sole cost and expense of the Pledgors.  Each Pledgor will cause such
registration to be effected (and be kept effective) and cause such qualification
and compliance to be effected (and be kept effective) as may be so requested and
as would permit or facilitate the sale and distribution of such Securities
Collateral including registration under the Securities Act (or any similar
statute then in effect), appropriate qualifications under applicable blue sky or
other state or foreign securities laws and appropriate compliance with all other
requirements of any Governmental Authority.  Each Pledgor shall cause the
Collateral Agent to be kept advised in writing as to the progress of each such
registration, qualification or compliance and as to the completion thereof,
shall furnish to the Collateral Agent such number of prospectuses, offering
circulars or other documents incident thereto as the Collateral Agent from time
to time may request, and shall indemnify and shall cause the issuer of the
Securities Collateral to indemnify the Collateral against all claims, losses,
damages and liabilities caused by any untrue statement (or alleged untrue
statement) of a material fact contained therein (or in any related registration
statement, notification or the like) or by any omission (or alleged omission) to
state therein (or in any related registration statement, notification or the
like) a material fact required to be stated therein or necessary to make the
statements therein not misleading.
 
(iv)           If the Collateral Agent determines to exercise its right to sell
any or all of the Securities Collateral or Investment Property, upon written
request, the applicable Pledgor shall, and shall cause each issuer of Securities
Collateral and Investment Property to be sold hereunder to, from time to time
furnish to the Collateral Agent all such information as the Collateral Agent may
reasonably request in order to determine the number and nature or interest, of
securities or other instruments included in the Securities Collateral or
Investment Property which may be sold by the Collateral Agent as exempt
transactions under the Securities Act and the rules of the Securities and
Exchange Commission thereunder, as the same are from time to time in effect.
 
(v)           Each Pledgor further agrees that a breach of any of the covenants
contained in this Section 8.5 will cause irreparable injury to the Collateral
Agent and other Secured Parties, that the Collateral Agent and the other 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 8.5 shall be
specifically enforceable against such Pledgor, and such Pledgor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants.
 
SECTION 8.6                           No Waiver; Cumulative Remedies.  
 
(i)   No failure on the part of the Collateral Agent to exercise, no course of
dealing with respect to, and no delay on the part of the Collateral Agent in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy; nor shall the Collateral Agent be required
to look first to, enforce or exhaust any other security, collateral or
guaranties.  The remedies herein provided are cumulative and are not exclusive
of any remedies provided by applicable Legal Requirements, in equity or
otherwise.
 
 
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(ii)           In the event that the Collateral Agent shall have instituted any
proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Collateral Agent, then and in every such case, the Pledgors, the
Collateral Agent and each other Secured Party shall be restored to their
respective former positions and rights hereunder with respect to the Pledged
Collateral, and all rights, remedies and powers of the Collateral Agent and the
other Secured Parties shall continue as if no such proceeding had been
instituted.
 
SECTION 8.7                           Certain Additional Actions Regarding
Intellectual Property.  If any Event of Default shall have occurred and be
continuing, upon the written demand of the Collateral Agent, each Pledgor shall
execute and deliver to the Collateral Agent an assignment or assignments of the
registered Intellectual Property Collateral or such other documents as are
necessary or appropriate to carry out the intent and purposes hereof; provided,
however, that if the Event of Default is no longer continuing, the Collateral
Agent shall promptly execute and deliver to each Pledgor such reassignments or
other documents necessary to place such Pledgors in control and ownership of
such Intellectual Property Collateral.
 
ARTICLE IX
 
APPLICATION OF PROCEEDS
 
SECTION 9.1                           Application of Proceeds.  The proceeds
received by the Collateral Agent in respect of any sale of, collection from or
other realization upon all or any part of the Collateral pursuant to the
exercise by the Collateral Agent of its remedies shall be applied, together with
any other sums then held by the Collateral Agent pursuant to this Agreement, in
accordance with the Credit Agreement.
 
ARTICLE X
 
MISCELLANEOUS
 
SECTION 10.1                           Concerning Collateral Agent.  
 
(i)   The Collateral Agent has been appointed as Collateral Agent pursuant to
the Credit Agreement.  The actions of the Collateral Agent hereunder are subject
to the provisions of the Credit Agreement.  The Collateral Agent shall have the
right hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking action (including the
release or substitution of the Pledged Collateral), in accordance with this
Agreement and the Credit Agreement.  Each Secured Party, by its acceptance of
the benefits hereof, agrees that it shall have no right individually to realize
upon any of the Pledged Collateral hereunder, it being understood and agreed by
such Secured Party that all rights and remedies hereunder may be exercised
solely by the Collateral Agent for the benefit of the Secured Parties in
accordance with the terms of this Agreement.  The Collateral Agent may employ
agents and attorneys-in-fact in connection herewith and shall not be liable for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it in good faith.  The Collateral Agent may resign and a successor Collateral
Agent may be appointed in the manner provided in the Credit Agreement.  Upon the
acceptance of any appointment as the Collateral Agent by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring Collateral Agent shall
thereupon be discharged from its duties and obligations under this
Agreement.  After any retiring Collateral Agent’s resignation, the provisions
hereof shall inure to its benefit as to any actions taken or omitted to be taken
by it under this Agreement while it was the Collateral Agent.
 
 
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(ii)           Except for the exercise of reasonable care in the custody of any
Pledged Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Collateral Agent shall have no duty as to any
Pledged Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Pledged
Collateral.  The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Pledged Collateral in its possession
if such Pledged Collateral is accorded treatment substantially equivalent to
that which the Collateral Agent, in its individual capacity, accords its own
property consisting of similar instruments or interests; provided that neither
the Collateral Agent nor any of the other Secured Parties nor any of their
respective directors, officers, employees or agents shall have responsibility
for (x) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Securities
Collateral, whether or not the Collateral Agent or any other Secured Party has
or is deemed to have knowledge of such matters (y) failing to demand, collect or
realize upon all or any part of the Pledged Collateral or for any delay in doing
so or (z) failing to take any necessary steps to preserve rights against any
person with respect to any Pledged Collateral.
 
(iii)           The Collateral Agent shall be entitled to rely upon any written
notice, statement, certificate, order or other document or any telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person, and, with respect to all matters pertaining to this
Agreement and its duties hereunder, upon advice of counsel selected by it.
 
(iv)           If any item of Pledged Collateral also constitutes collateral
granted to the Collateral Agent under any other deed of trust, mortgage,
security agreement, pledge or instrument of any type, in the event of any
conflict between the provisions hereof and the provisions of such other deed of
trust, mortgage, security agreement, pledge or instrument of any type in respect
of such collateral, the provisions hereof shall control.
 
SECTION 10.2                           Collateral Agent May Perform; Collateral
Agent Appointed Attorney-in-Fact.  If any Pledgor shall fail to perform any
covenants contained in this Agreement (including such Pledgor’s covenants to
(i) pay the premiums in respect of all required insurance policies hereunder,
(ii) pay Charges, (iii) make repairs, or (iv) discharge Liens or pay or perform
any obligations of such Pledgor under any Pledged Collateral) or if any
representation or warranty on the part of any Pledgor contained herein shall be
breached, the Collateral Agent may (but shall not be obligated to) do the same
or cause it to be done or remedy any such breach, and may expend funds for such
purpose; provided, however, that the Collateral Agent shall in no event be bound
to inquire into the validity of any tax, lien, imposition or other obligation
which such Pledgor fails to pay or perform as and when required hereby and which
such Pledgor does not contest in accordance with the provisions of Section 4.12
hereof.  Any and all amounts so expended by the Collateral Agent shall be paid
by the Pledgors in accordance with the provisions of Section 10.03 of the Credit
Agreement.  Neither the provisions of this Section 10.2 nor any action taken by
the Collateral Agent pursuant to the provisions of this Section 10.2 shall
prevent any such failure to observe any covenant contained in this Agreement nor
any breach of representation or warranty from constituting an Event of
Default.  Each Pledgor hereby appoints the Collateral Agent its
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor, or otherwise, from time to time in the Collateral
Agent’s reasonable discretion to take any action and to execute any instrument
consistent with the terms of the Credit Agreement, this Agreement and the other
Loan Documents which the Collateral Agent reasonably may deem necessary or
advisable to accomplish the purposes hereof.  The foregoing grant of authority
is a power of attorney coupled with an interest and such appointment shall be
irrevocable for the term hereof.  Each Pledgor hereby ratifies all that such
attorney shall lawfully do or cause to be done by virtue hereof.
 
SECTION 10.3                           Continuing Security Interest;
Assignment.  This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) be binding upon the Pledgors, their respective
successors and assigns and (ii) inure, together with the rights and remedies of
the Collateral Agent hereunder, to the benefit of the Collateral Agent and the
other Secured Parties and each of their respective successors, transferees and
assigns.  No other persons (including any other creditor of any Pledgor) shall
have any interest herein or any right or benefit with respect hereto (except for
Permitted Collateral Liens).  Without limiting the generality of the foregoing
clause (ii), any Secured Party may assign or otherwise transfer any obligations
held by it secured by this Agreement to any other person, and such other person
shall thereupon become vested with all the benefits in respect thereof granted
to such Secured Party, herein or otherwise, subject however, to the provisions
of the Credit Agreement and Permitted Hedging Agreements.
 
 
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SECTION 10.4                           Termination; Release.  This Agreement
shall terminate and the Pledged Collateral shall be released from the Lien of
this Agreement when the Commitments have been terminated and the principal of
and interest and premium (if any) on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document shall have been paid in full (other
than contingent indemnification obligations that, pursuant to the provisions of
the Credit Agreement of the Security Documents, survive the termination thereof)
and all Letters of Credit have been canceled or have expired and all amounts
drawn thereunder have been reimbursed in full. Upon termination hereof, the
security interests granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to the applicable Pledgor or to such other person as may
be entitled thereto pursuant to any Order or other applicable Legal Requirement.
Upon termination hereof or any release of Pledged Collateral in accordance with
the provisions of the Credit Agreement, the Collateral Agent shall promptly (and
in any event within 10 Business Days), upon the written request and at the sole
cost and expense of the Pledgors, assign, transfer and deliver to the Pledgors,
against receipt and without recourse to or warranty by the Collateral Agent
except that the Collateral Agent has not assigned or otherwise transferred its
security interest in the Pledged Collateral, such of the Pledged Collateral to
be released (in the case of a release) as may be in possession or control of the
Collateral Agent and as shall not have been sold or otherwise applied pursuant
to the terms hereof, and, with respect to any other Pledged Collateral, with
such endorsements or proper documents and instruments (including UCC-3
termination statements or releases) acknowledging the termination hereof or the
release of such Pledged Collateral, as the case may be.
 
SECTION 10.5                           Modification in Writing.  No amendment,
modification, supplement, termination or waiver of or to any provision hereof,
nor consent to any departure by any Pledgor therefrom, shall be effective unless
the same shall be made in accordance with the terms of the Credit Agreement and
unless in writing and signed by the Collateral Agent.  Any amendment,
modification or supplement of or to any provision hereof, any waiver of any
provision hereof and any consent to any departure by any Pledgor from the terms
of any provision hereof shall be effective only in the specific instance and for
the specific purpose for which made or given.  Except where notice is
specifically required by this Agreement, no notice to or demand on any Pledgor
in any case shall entitle any Pledgor to any other or further notice or demand
in similar or other circumstances.
 
SECTION 10.6                           Notices.  Unless otherwise provided
herein or in the Credit Agreement, any notice or other communication herein
required or permitted to be given shall be given in the manner and become
effective as set forth in the Credit Agreement, as to any Pledgor, addressed to
it at the address of Borrower set forth in the Credit Agreement and as to the
Collateral Agent, addressed to it at the address set forth in the Credit
Agreement, or in each case at such other address as shall be designated by such
party in a written notice to the other party complying as to delivery with the
terms of this Section 10.6.
 
SECTION 10.7                           Governing Law, Consent to Jurisdiction
and Service of Process; Waiver of Jury Trial.  
 
(a)   THIS AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION
(WHETHER SOUNDING IN CONTRACT LAW OR TORT LAW OR OTHERWISE) BASED UPON, ARISING
OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PRINCIPLES THAT WOULD APPLY
THE LAWS OF ANOTHER JURISDICTION.
 
 
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(b)           EACH PLEDGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF
THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS
IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
NEW YORK STATE OR, TO THE EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, IN
SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
APPLICABLE LEGAL REQUIREMENTS.  NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR OTHERWISE SHALL AFFECT ANY RIGHT THAT THE COLLATERAL AGENT, ANY
OTHER AGENT, THE ISSUING BANK OR ANY LENDER OR OTHER SECURED PARTY MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AGAINST ANY PLEDGOR OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
 
(c)           EACH PLEDGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN SECTION 10.7(b).  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL
REQUIREMENTS, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.
 
(d)           EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENT, IN THE MANNER PROVIDED FOR NOTICES (OTHER THAN TELECOPY) IN
SECTION 10.6.  NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL AFFECT
THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LEGAL REQUIREMENTS.
 
(e)           EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LEGAL REQUIREMENTS, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT, THE TRANSACTIONS OR THE OTHER TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 10.7.
 
SECTION 10.8                           Severability of Provisions.  Any
provision hereof 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 or
affecting the validity or enforceability of such provision in any other
jurisdiction.
 
 
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SECTION 10.9                           Execution in Counterparts.  This
Agreement and any amendments, waivers, consents or supplements hereto may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original, but all such counterparts together shall constitute
one and the same agreement.  Delivery of an executed counterpart of a signature
page of this Agreement by telecopy or other electronic transmission shall be
effective as delivery of a manually executed counterpart of this Agreement.
 
SECTION 10.10                           Business Days.  In the event any time
period or any date provided in this Agreement ends or falls on a day other than
a Business Day, then such time period shall be deemed to end and such date shall
be deemed to fall on the next succeeding Business Day, and performance herein
may be made on such Business Day, with the same force and effect as if made on
such other day.
 
SECTION 10.11                           Waiver of Stay.  Each Pledgor covenants
that in the event that such Pledgor or any property or assets of such Pledgor
shall hereafter become the subject of a voluntary or involuntary proceeding
under the Bankruptcy Code or such Pledgor shall otherwise be a party to any
federal or state bankruptcy, insolvency, moratorium or similar proceeding to
which the provisions relating to the automatic stay under Section 362 of the
Bankruptcy Code or any similar provision in any such Legal Requirement is
applicable, then, in any such case, whether or not the Collateral Agent has
commenced foreclosure proceedings under this Agreement, such Pledgor shall not,
and each Pledgor hereby expressly waives its right to (to the extent it may
lawfully do so) at any time insist upon, plead or in any whatsoever, claim or
take the benefit or advantage of any such automatic stay or such similar
provision as it relates to the exercise of any of the rights and remedies
(including any foreclosure proceedings) available to the Collateral Agent as
provided in this Agreement, in any other Security Document or any other document
evidencing the Secured Obligations.  Each Pledgor further covenants that it will
not hinder, delay or impede the execution of any power granted herein to the
Collateral Agent, but will suffer and permit the execution of every such power
as though no law relating to any stay or similar provision had been enacted.
 
SECTION 10.12                           No Credit for Payment of Taxes or
Imposition.  No Pledgor shall be entitled to any credit against the principal,
premium, if any, or interest payable under the Credit Agreement, and such
Pledgor shall not be entitled to any credit against any other sums which may
become payable under the terms thereof or hereof, by reason of the payment of
any Tax on the Pledged Collateral or any part thereof.
 
SECTION 10.13                           No Claims Against Collateral
Agent.  Nothing contained in this Agreement shall constitute any consent or
request by the Collateral Agent, express or implied, for the performance of any
labor or services or the furnishing of any materials or other property in
respect of the Pledged Collateral or any part thereof, nor as giving any Pledgor
any right, power or authority to contract for or permit the performance of any
labor or services or the furnishing of any materials or other property in such
fashion as would permit the making of any claim against the Collateral Agent in
respect thereof or any claim that any Lien based on the performance of such
labor or services or the furnishing of any such materials or other property is
prior to the Lien hereof.
 
 
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SECTION 10.14                           No Release.  Nothing set forth in this
Agreement shall relieve any Pledgor from the performance of any term, covenant,
condition or agreement on such Pledgor’s part to be performed or observed under
or in respect of any of the Pledged Collateral or from any liability to any
person under or in respect of any of the Pledged Collateral or shall impose any
obligation on the Collateral Agent or any other Secured Party to perform or
observe any such term, covenant, condition or agreement on such Pledgor’s part
to be so performed or observed or shall impose any liability on the Collateral
Agent or any other Secured Party for any act or omission on the part of such
Pledgor relating thereto or for any breach of any representation or warranty on
the part of such Pledgor contained in this Agreement, the Credit Agreement or
the other Loan Documents, or under or in respect of the Pledged Collateral or
made in connection herewith or therewith.  The obligations of each Pledgor
contained in this Section 10.14 shall survive the termination hereof and the
discharge of such Pledgor’s other obligations under this Agreement, the Credit
Agreement and the other Loan Documents (other than contingent indemnification
obligations that, pursuant to the provisions of the Credit Agreement or the
Security Documents, survive the termination thereof).
 
SECTION 10.15                           Overdue Amounts. Until paid, all amounts
due and payable under this Agreement shall constitute Secured Obligations and
shall bear interest, whether before or after judgment, at the Default
Rate.  Nothing in this Section 10.15 shall affect the Default Rate or the
circumstances in which the Default Rate is payable pursuant to the Credit
Agreement.
 
SECTION 10.16                           Obligations Absolute.  All obligations
of each Pledgor hereunder shall be absolute and unconditional irrespective of:
 
(i)           any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Pledgor;
 
(ii)           any lack of validity or enforceability of any Loan Document, or
any other agreement or instrument relating thereto against any Pledgor;
 
(iii)           any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from any Loan Document or any other
agreement or instrument relating thereto;
 
(iv)           any pledge, exchange, release or non-perfection or loss of
priority of any other collateral, or any release or amendment or waiver of or
consent to any departure from any guarantee, for all or any of the Secured
Obligations;
 
(v)           any exercise, non-exercise or waiver of any right, remedy, power
or privilege under or in respect hereof, or any Loan Document; or
 
(vi)           any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Pledgor.
 
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IN WITNESS WHEREOF, the Pledgors and the Collateral Agent have caused this
Security Agreement to be duly executed and delivered by their duly authorized
officers as of the date first above written.
 

 
STEAK N SHAKE OPERATIONS, INC.,
   
as Pledgor
         
 
By: 
/s/ Sardar Biglari      
Name: 
Title:
Sardar Biglari
Chairman & CEO
                   
STEAK N SHAKE , LLC,
as Pledgor
           
By:
/s/ Sardar Biglari      
Name: 
Title:
Sardar Biglari
Chairman & CEO of Steak n Shake
Operations, its Sole Member
                       
STEAK N SHAKE ENTERPRISES, INC.,
as Pledgor
             
By:
/s/ Sardar Biglari      
Name:
Title:
Sardar Biglari
Chairman & CEO
                       
JEFFERIES FINANCE LLC,
as Collateral Agent
             
By:
/s/ E. Joseph Hess
     
Name:
Title:
E. Joseph Hess
Managing Director
 

 
 
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