Exhibit 10.3
SECURITY AGREEMENT
 
PLEDGE AND SECURITY AGREEMENT dated as of November 6, 2008 (as amended,
restated, replaced, supplemented, modified or otherwise changed from time to
time, this "Agreement"), made by each of the Grantors referred to below, in
favor of Ableco Finance LLC, a Delaware limited liability company, in its
capacity as collateral agent for the Secured Parties referred to below (in such
capacity, together with its successors and assigns in such capacity, if any, the
"Collateral Agent").
 
W I T N E S S E T H:
 
WHEREAS, Monaco Coach Corporation, a Delaware corporation ("Monaco"), each
subsidiary of Monaco listed as a "Borrower" on the signature pages thereto
(together with Monaco, each a "Borrower" and collectively, the "Borrowers"),
each subsidiary of Monaco listed as a "Guarantor" on the signature pages thereto
(together with each other Person that becomes a "Guarantor" thereunder or
otherwise guaranties all or any part of the Obligations (as defined in the
Financing Agreement), each a "Guarantor" and collectively, the "Guarantors", and
together with the Borrowers and each other Person that executes a supplement
hereto and becomes an "Additional Grantor" hereunder, each a "Grantor" and
collectively, the "Grantors"), the lenders from time to time party thereto (each
a "Lender" and collectively, the "Lenders"), the Collateral Agent, and Ableco,
as administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, if any, the "Administrative Agent" and
together with the Collateral Agent, each an "Agent" and collectively, the
"Agents") are parties to a Financing Agreement, dated as of November 6, 2008
(such agreement, as amended, restated, replaced, supplemented, modified or
otherwise changed from time to time, being hereinafter referred to as the
"Financing Agreement");
 
WHEREAS, pursuant to the Financing Agreement, the Lenders have agreed to make a
term loan (the "Loan") to the Borrowers in an aggregate principal amount not to
exceed the Total Commitment (as defined in the Financing Agreement);
 
WHEREAS, it is a condition precedent to the Lenders making the Loan to the
Borrowers pursuant to the Financing Agreement that each Grantor shall have
executed and delivered to the Collateral Agent a pledge to the Collateral Agent,
for the benefit of the Secured Parties, and the grant to the Collateral Agent,
for the benefit of the Secured Parties, of (a) a security interest in and Lien
on the outstanding shares of Equity Interests (as defined in the Financing
Agreement) and indebtedness from time to time owned by such Grantor of each
Person now or hereafter existing and in which such Grantor has any interest at
any time, and (b) a security interest in all other personal property and
fixtures of such Grantor;
 
WHEREAS, the Grantors are mutually dependent on each other in the conduct of
their respective businesses as an integrated operation, with credit needed from
time to time by each Grantor often being provided through financing obtained by
the other Grantors and the ability to obtain such financing being dependent on
the successful operations of all of the Grantors as a whole; and
 

 
 

--------------------------------------------------------------------------------

 

WHEREAS, each Grantor has determined that the execution, delivery and
performance of this Agreement directly benefit, and are in the best interest of,
such Grantor;
 
NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce the Collateral Agent and the Lenders to make and maintain the
Loan to the Borrowers pursuant to the Financing Agreement, the Grantors hereby
jointly and severally agree with the Collateral Agent, for the benefit of the
Secured Parties, as follows:
 
SECTION 1. Definitions .
 
(a) Reference is hereby made to the Financing Agreement for a statement of the
terms thereof.  All capitalized terms used in this Agreement and the recitals
hereto which are defined in the Financing Agreement or in Article 8 or 9 of the
Uniform Commercial Code as in effect from time to time in the State of New York
(the "Code") and which are not otherwise defined herein shall have the same
meanings herein as set forth therein; provided that terms used herein which are
defined in the Code as in effect in the State of New York on the date hereof
shall continue to have the same meaning notwithstanding any replacement or
amendment of such statute except as the Collateral Agent may otherwise
determine.
 
(b) The following terms shall have the respective meanings provided for in the
Code:  "Accounts", "Account Debtor", "Cash Proceeds", "Certificate of Title",
"Chattel Paper", "Commercial Tort Claim", "Commodity Account", "Commodity
Contracts", "Deposit Account", "Documents", "Electronic Chattel Paper",
"Equipment", "Fixtures", "General Intangibles", "Goods", "Instruments",
"Inventory", "Investment Property", "Letter-of-Credit Rights", "Noncash
Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes", "Record",
"Security Account", "Software", "Supporting Obligations" and "Tangible Chattel
Paper".
 
(c) As used in this Agreement, the following terms shall have the respective
meanings indicated below, such meanings to be applicable equally to both the
singular and plural forms of such terms:
 
"Additional Collateral" has the meaning specified therefor in Section 4(a)(i)
hereof.
 
"Copyright Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to use or sell any works covered by any Copyright
(including, without limitation, all Copyright Licenses set forth in Schedule II
hereto).
 
"Existing Issuer" has the meaning specified therefor in the definition of the
term "Pledged Shares".
 
"Intellectual Property" means all U.S and non-U.S. (i) published and unpublished
works of authorship (including, without limitation, computer software),
copyrights therein and thereto, and registrations and applications therefor, and
all renewals, extensions, restorations and reversions thereof, including,
without limitation, all copyright registrations and applications
 

 
2

--------------------------------------------------------------------------------

 

listed in Schedule II hereto (collectively, "Copyrights"); (ii) inventions,
discoveries, ideas and all patents, registrations, and applications therefor,
including, without limitation, divisions, continuations, continuations-in-part
and renewal applications, and all renewals, extensions and reissues, including,
without limitation, all patents and patent applications listed in Schedule II
hereto (collectively, "Patents"); (iii) trademarks, service marks, brand names,
certification marks, collective marks, d/b/a's, Internet domain names, logos,
symbols, trade dress, assumed names, fictitious names, trade names, and other
indicia of origin, all applications and registrations for all of the foregoing,
and all goodwill associated therewith and symbolized thereby, and all
extensions, modifications and renewals of same, including, without limitation,
all trademark registrations and applications listed in Schedule II hereto
(collectively, "Trademarks"); (iv) confidential and proprietary information,
trade secrets and know-how, including, without limitation, processes,
schematics, databases, formulae, drawings, prototypes, models, designs and
customer lists (collectively, "Trade Secrets"); and (v) all other intellectual
property or proprietary rights and claims or causes of action arising out of or
related to any infringement, misappropriation or other violation of any of the
foregoing, including, without limitation, rights to recover for past, present
and future violations thereof (collectively, "Other Proprietary Rights").
 
"Licenses" means the Copyright Licenses, the Patent Licenses and the Trademark
Licenses.
 
"Patent Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to manufacture, use or sell any invention covered by any
Patent (including, without limitation, all Patent Licenses set forth in Schedule
II hereto).
 
"Pledged Debt" means the indebtedness described in Schedule VII hereto and all
indebtedness from time to time owned or acquired by a Grantor, the promissory
notes and other Instruments evidencing any or all of such indebtedness, and all
interest, cash, Instruments, Investment Property, financial assets, securities,
Equity Interests, other equity interests, stock options and commodity contracts,
notes, debentures, bonds, promissory notes or other evidences of indebtedness
and all other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such indebtedness.
 
"Pledged Interests" means, collectively, (a) the Pledged Debt, (b) the Pledged
Shares and (c) all security entitlements in any and all of the foregoing.
 
"Pledged Issuer" has the meaning specified therefor in the definition of the
term "Pledged Shares".
 
"Pledged Shares" means (a) the shares of Equity Interests described in Schedule
VIII hereto, whether or not evidenced or represented by any stock certificate,
certificated security or other Instrument, issued by the Persons described in
such Schedule VIII (the "Existing Issuers"), (b) the shares of Equity Interests
at any time and from time to time acquired by a Grantor of any and all Persons
now or hereafter existing (such Persons, together with the Existing Issuers,
being hereinafter referred to collectively as the "Pledged Issuers" and each
individually as a "Pledged Issuer"), whether or not evidenced or represented by
any stock
 

 
3

--------------------------------------------------------------------------------

 

certificate, certificated security or other Instrument, and (c) the certificates
representing such shares of Equity Interests, all options and other rights,
contractual or otherwise, in respect thereof and all dividends, distributions,
cash, Instruments, Investment Property, financial assets, securities, Equity
Interests, other equity interests, stock options and commodity contracts, notes,
debentures, bonds, promissory notes or other evidences of indebtedness and all
other property (including, without limitation, any stock dividend and any
distribution in connection with a stock split) from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Equity Interests.
 
"Secured Parties" means, collectively, the Agents and the Lenders.
 
"Secured Obligations" has the meaning specified therefor in Section 3 hereof.
 
"Shrink-Wrap License" means a License for the use of generally commercially
available software where the user agrees to its terms by opening the package of
or downloading such software or similarly manifesting consent to the licensor's
standard terms.
 
"Titled Collateral" means all Collateral for which the title to such Collateral
is governed by a Certificate of Title or certificate of ownership, including,
without limitation, all motor vehicles (including, without limitation, all
trucks, trailers, tractors, service vehicles, automobiles and other mobile
equipment) for which the title to such motor vehicles is governed by a
Certificate of Title or certificate of ownership.
 
"Trademark Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensor or licensee and providing for
the grant of any right concerning any Trademark, together with any goodwill
connected with and symbolized by any such trademark licenses, contracts or
agreements (including, without limitation, all Trademark Licenses described in
Schedule II hereto).
 
SECTION 2. Grant of Security Interest .  As collateral security for the payment,
performance and observance of all of the Secured Obligations, each Grantor
hereby pledges and assigns to the Collateral Agent (and its agents and
designees), and grants to the Collateral Agent (and its agents and designees),
for the benefit of the Secured Parties, a continuing security interest in, all
personal property and Fixtures of such Grantor, wherever located and whether now
or hereafter existing and whether now owned or hereafter acquired, of every kind
and description, tangible or intangible, including, without limitation, the
following (all being collectively referred to herein as the "Collateral"):
 
(a) all Accounts;
 
(b) all Chattel Paper (whether tangible or electronic);
 
(c) the Commercial Tort Claims specified on Schedule VI hereto;
 
(d) all Deposit Accounts, all cash, and all other property from time to time
deposited therein or otherwise credited thereto and the monies and property in
the possession or under the control of any Agent or any Lender or any affiliate,
representative, agent or correspondent of any Agent or any Lender;
 
4

--------------------------------------------------------------------------------

 
(e) all Documents;
 
(f) all General Intangibles (including, without limitation, all Payment
Intangibles, Intellectual Property and Licenses);
 
(g) all Goods, including, without limitation, all Equipment, Fixtures and
Inventory;
 
(h) all Instruments (including, without limitation, Promissory Notes);
 
(i) all Investment Property;
 
(j) all Letter-of-Credit Rights;
 
(k) all Pledged Interests;
 
(l) all Supporting Obligations;
 
(m) all other tangible and intangible personal property of such Grantor (whether
or not subject to the Code), including, without limitation, all bank and other
accounts and all cash and all investments therein, all proceeds, products,
offspring, accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of such Grantor described in the
preceding clauses of this Section 2 hereof (including, without limitation, any
proceeds of insurance thereon and all causes of action, claims and warranties
now or hereafter held by such Grantor in respect of any of the items listed
above), and all books, correspondence, files and other Records, including,
without limitation, all tapes, disks, cards, Software, data and computer
programs in the possession or under the control of such Grantor or any other
Person from time to time acting for such Grantor that at any time evidence or
contain information relating to any of the property described in the preceding
clauses of this Section 2 hereof or are otherwise necessary or helpful in the
collection or realization thereof; and
 
(n) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products
of any and all of the foregoing Collateral;
 
in each case howsoever such Grantor's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
 
Notwithstanding anything herein to the contrary, the term "Collateral" shall not
include, and no Grantor is pledging, nor granting a security interest hereunder
in (i) any of such Grantor's right, title or interest in any license, contract
or agreement to which such Grantor is a party or any of its right, title or
interest thereunder to the extent, but only to the extent, that such a grant
would, under the express terms of such license, contract or agreement result in
a breach of the terms of, or constitute a default under, such license, contract
or agreement (other than to the extent that any such term (A) has been waived or
(B) would be rendered ineffective pursuant to Sections 9-406, 9-408, 9-409 of
the Code or other applicable provisions of the Uniform Commercial Code of any
relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity); provided, that, the foregoing exclusion shall in
no way be construed so as to limit, impair or otherwise affect the Collateral
 

 
5

--------------------------------------------------------------------------------

 

Agent's unconditional continuing security interest in and liens upon any rights
or interests of a Grantor in or to the proceeds of, or any monies due or to
become due under, any such license, contract or agreement, (ii) Equipment that
is subject to a purchase money Lien as permitted by Section 7.02(a) of the
Financing Agreement, if under the terms of the underlying lease or agreement,
the grant of a security interest or Lien in such Equipment to Agent is
prohibited (other than to the extent that any such restriction would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 or any other
Section of the UCC); provided, that, in the case of both clause (i) and (ii)
above, immediately upon the ineffectiveness, lapse, termination or waiver of any
such provision, the Collateral shall include, and such Grantor shall be deemed
to have granted a security interest in, all such right, title and interest as if
such provision had never been in effect or (iii) any intent-to-use United States
trademark applications for which an amendment to allege use or statement of use
has not been filed under 15 U.S.C. § 1051(c) or 15 U.S.C. § 1051(d),
respectively, or if filed, has not been deemed in conformance with 15 U.S.C.
§ 1051(a) or examined and accepted, respectively, by the United States Patent
and Trademark Office, provided that, upon such filing and acceptance, such
intent-to-use applications shall be included in the definition of Collateral.
 
SECTION 3. Security for Secured Obligations .  The security interest created
hereby in the Collateral constitutes continuing collateral security for all of
the following obligations, whether now existing or hereafter incurred (the
"Secured Obligations"):
 
(a) the prompt payment by each Grantor, as and when due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), of
all amounts from time to time owing by it in respect of the Financing Agreement
and/or the other Loan Documents, including, without limitation, (i) all
Obligations, (ii) in the case of a Guarantor, all amounts from time to time
owing by such Grantor in respect of its guaranty made pursuant to Article XI of
the Financing Agreement or under any other Guaranty to which it is a party,
including, without limitation, all obligations guaranteed by such Grantor and
(iii) all interest (including, without limitation, the PIK Amount), fees,
commissions, charges, expense reimbursements, indemnifications and all other
amounts due or to become due under any Loan Document (including, without
limitation, all interest, the Applicable Prepayment Premium, fees, commissions,
charges, expense reimbursements (including reasonable attorneys' fees and
disbursements), indemnifications and other amounts that accrue after the
commencement of any Insolvency Proceeding of any Loan Party, whether or not the
payment of such interest, fees, commissions, charges, expense reimbursements,
indemnifications and other amounts are unenforceable or are not allowable, in
whole or in part, due to the existence of such Insolvency Proceeding); and
(b) the due performance and observance by each Grantor of all of its other
obligations from time to time existing in respect of the Loan Documents.
 
SECTION 4. Delivery of the Pledged Interests.
 
(a) (i)  All promissory notes currently evidencing the Pledged Debt and all
certificates, if any, currently representing the Pledged Shares shall be
delivered to the Collateral Agent on or prior to the execution and delivery of
this Agreement.  All other promissory notes, certificates and Instruments
constituting Pledged Interests from time to time required to be pledged to the
Collateral
 

 
6

--------------------------------------------------------------------------------

 
 
Agent pursuant to the terms of this Agreement or the Financing Agreement (the
"Additional Collateral") shall be delivered to the Collateral Agent promptly
upon, but in any event within ten (10) days of, receipt thereof by or on behalf
of any of the Grantors.  All such promissory notes, certificates and Instruments
shall be held by or on behalf of the Collateral Agent pursuant hereto and shall
be delivered in suitable form for transfer by delivery or shall be accompanied
by duly executed instruments of transfer or assignment or undated stock powers
executed in blank, all in form and substance reasonably satisfactory to the
Collateral Agent.  If any Pledged Interests consists of uncertificated
securities, unless the immediately following sentence is applicable thereto,
such Grantor shall cause the Collateral Agent (or its designated custodian or
nominee) to become the registered holder thereof, or cause each issuer of such
securities to agree that it will comply with instructions originated by the
Collateral Agent with respect to such securities without further consent by such
Grantor.  If any Pledged Interests consists of security entitlements, such
Grantor shall transfer such security entitlements to the Collateral Agent (or
its custodian, nominee or other designee), or cause the applicable securities
intermediary to agree that it will comply with entitlement orders by the
Collateral Agent without further consent by such Grantor.
 
(ii) Within ten (10) days of the receipt by a Grantor of any Additional
Collateral, a Pledge Amendment, duly executed by such Grantor, in substantially
the form of Exhibit A hereto (a "Pledge Amendment"), shall be delivered to the
Collateral Agent, in respect of the Additional Collateral that must be pledged
pursuant to this Agreement and the Financing Agreement.  The Pledge Amendment
shall from and after delivery thereof constitute part of Schedules VII and VIII
hereto.  Each Grantor hereby authorizes the Collateral Agent to attach each
Pledge Amendment to this Agreement and agrees that all promissory notes,
certificates or Instruments listed on any Pledge Amendment delivered to the
Collateral Agent shall for all purposes hereunder constitute Pledged Interests
and such Grantor shall be deemed upon delivery thereof to have made the
representations and warranties set forth in Section 5 hereof (to the extent
applicable) with respect to such Additional Collateral.
 
(b) If any Grantor shall receive, by virtue of such Grantor's being or having
been an owner of any Pledged Interests, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off or split-off), promissory note or other Instrument, (ii)
option or right, whether as an addition to, substitution for, or in exchange
for, any Pledged Interests, or otherwise, (iii) dividends payable in cash
(except such dividends permitted to be retained by any such Grantor pursuant to
Section 7 hereof) or in securities or other property or (iv) dividends,
distributions, cash, Instruments, Investment Property and other property in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus, such Grantor
shall receive such stock certificate, promissory note, Instrument, option,
right, payment or distribution in trust for the benefit of the Collateral Agent,
shall segregate it from such Grantor's other property and shall deliver it
forthwith to the Collateral Agent, in the exact form received, with any
necessary indorsement and/or appropriate stock powers duly executed in blank, to
be held by the Collateral Agent as Pledged Interests and as further collateral
security for the Secured Obligations.
 
7

--------------------------------------------------------------------------------

 
SECTION 5. Representations and Warranties .  Each Grantor jointly and severally
represents and warrants as follows:
 
(a) Schedule I hereto sets forth (i) the exact legal name of each Grantor, (ii)
the state or jurisdiction of organization of each Grantor, (iii) the type of
organization of each Grantor and (iv) the organizational identification number
of each Grantor or states that no such organizational identification number
exists.  The Perfection Certificate, dated November 6, 2008, a copy of which has
been previously delivered to the Collateral Agent, is true, complete and correct
in all respects.
 
(b) This Agreement is, and each other Loan Document to which any Grantor is or
will be a party, when executed and delivered, will be, a legal, valid and
binding obligation of such Grantor, enforceable against such Grantor in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally.
 
(c) There is no pending or, to the best knowledge of any Grantor, threatened
action, suit, proceeding or claim before any court or other Governmental
Authority or any arbitrator, or any order, judgment or award by any court or
other Governmental Authority or any arbitrator, that, if adversely determined,
may adversely affect the grant by any Grantor, or the perfection, of the
security interest purported to be created hereby in the Collateral, or the
exercise by the Collateral Agent of any of its rights or remedies hereunder.
 
(d) All Equipment, Fixtures, Inventory and other Goods now existing are, and all
Equipment, Fixtures, Inventory and other Goods hereafter existing will be,
located at the addresses specified therefor in Schedule III hereto (as amended,
supplemented or otherwise modified from time to time in accordance with Section
6(b)).  Each Grantor's chief place of business and chief executive office, the
place where such Grantor keeps its Records concerning Accounts and all originals
of all Chattel Paper are located at the addresses specified therefor in Schedule
III hereto (as amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof).  None of the Accounts is evidenced by
Promissory Notes or other Instruments.  Set forth in Schedule IV hereto is a
complete and accurate list, as of the date of this Agreement, of each Deposit
Account, Securities Account and Commodities Account of each Grantor, together
with the name and address of each institution at which each such Account is
maintained, the account number for each such Account and a description of the
purpose of each such Account.  Set forth in Schedule II hereto is (i) a complete
and correct list of each trade name, business names, or similar appellations
used by each Grantor and (ii) the name of, and each trade name used by, each
Person from which such Grantor has acquired any substantial part of the
Collateral within five years of the date hereof.
 
(e) Schedule II hereto sets forth a true and complete list of all Licenses owned
or used by each Grantor as the date hereof (other than Shrink-Wrap
Licenses).  Each Grantor has delivered to the Collateral Agent complete and
correct copies of each such License, including all schedules and exhibits
thereto.  Each such License sets forth the entire agreement and understanding of
the parties thereto relating to the subject matter thereof, and there are no
other agreements, arrangements or understandings, written or oral, relating to
the matters covered thereby or the rights of any
 

 
8

--------------------------------------------------------------------------------

 

Grantor or any of its Affiliates in respect thereof.  Each License now existing
is, and each other License will be, the legal, valid and binding obligation of
the parties thereto, enforceable against such parties in accordance with its
terms except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally.  No default under any License by any such party has
occurred, nor does any defense, offset, deduction or counterclaim exist
thereunder in favor of any such party.  No party to any License has given any
Grantor written notice of its intention to cancel, terminate or fail to renew
any License.
 
(f) (i) The Grantors own and control, or otherwise possess adequate rights to
use, all Intellectual Property necessary to conduct their business in
substantially the same manner as conducted as of the date hereof.  Schedule II
hereto sets forth a true and complete list of all issued, registered, renewed,
applied-for or otherwise material Intellectual Property owned or used by each
Grantor as of the date hereof.  All such Intellectual Property is valid,
subsisting and enforceable, has not been abandoned in whole or in part and is
not subject to any outstanding order, judgment or decree restricting its use in
any material respect or adversely affecting the Grantor's rights thereto in any
material respect.  There are no restrictions or other limitations on the ability
of any Grantor to assign its rights with respect to any material intellectual
property owned, licensed or otherwise used by it.  Except as set forth in
Schedule II hereto, no such Intellectual Property is the subject of any
licensing or franchising agreement.
 
(ii) To each Grantor's knowledge, no such Grantor is violating any Intellectual
Property rights.  No Grantor has, within the last two years, received a written
notice that it has violated any Intellectual Property rights.  There are no
suits, actions, reissues, reexaminations, public protests, interferences,
arbitrations, mediations, oppositions, cancellations, Internet domain name
dispute resolutions or other proceedings (collectively, "Suits") pending,
decided, or to Grantor's knowledge, threatened or asserted concerning any claim
or position that a Grantor or any of its indemnitees have violated any
Intellectual Property rights.  There are no Suits or claims pending, decided, or
to the Grantor's knowledge, threatened or asserted concerning the Intellectual
Property owned or controlled by a Grantor, and, to such Grantor's knowledge, no
valid basis for any such Suits or claims exists.  There are no Suits or claims
pending, decided, or to the Grantor's knowledge, threatened or asserted
concerning the Licenses or the right of the Grantor to use the Licenses, and no
valid basis for any such Suits or claims exists.
 
(g) None of the material Other Proprietary Rights or material Trade Secrets of
any Grantor have been used, divulged, disclosed or appropriated to the detriment
of such Grantor for the benefit of any other Person other than such Grantor; to
such Grantor's knowledge, no employee, independent contractor or agent of any
Grantor has misappropriated any Other Proprietary Rights or Trade Secrets of any
other Person in the course of the performance of his or her duties as an
employee, independent contractor or agent of such Grantor; and, to such
Grantor's knowledge, no employee, independent contractor or agent of any Grantor
is in default or breach of any term of any employment agreement, non-disclosure
agreement, assignment of inventions agreement or similar agreement, or contract
relating an any way to the protection, ownership, development, use or transfer
of such Grantor's Intellectual Property Collateral.
 
 
9

--------------------------------------------------------------------------------

 
(h) The Existing Issuers set forth in Schedule VIII identified as a Subsidiary
of a Grantor are each such Grantor's only Subsidiaries existing on the date
hereof.  The Pledged Shares have been duly authorized and validly issued and are
fully paid and nonassessable and the holders thereof are not entitled to any
preemptive, first refusal or other similar rights.  Except as noted in Schedule
VIII hereto, the Pledged Shares constitute 100% of the issued shares of Equity
Interests of the Pledged Issuers as of the date hereof.  All other shares of
Equity Interests constituting Pledged Interests will be duly authorized and
validly issued, fully paid and nonassessable.
 
(i) The promissory notes currently evidencing the Pledged Debt have been, and
all other promissory notes from time to time evidencing Pledged Debt, when
executed and delivered, will have been, duly authorized, executed and delivered
by the respective makers thereof, and all such promissory notes are or will be,
as the case may be, legal, valid and binding obligations of such makers,
enforceable against such makers in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditor's rights generally.
 
(j) The Grantors are and will be at all times the sole and exclusive owners of,
or otherwise have and will have adequate rights in, the Collateral free and
clear of any Lien except for the Permitted Liens.  No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording or filing office except such as may have
been filed to perfect or protect any Permitted Lien.
 
(k) The exercise by the Collateral Agent of any of its rights and remedies
hereunder will not contravene any law or any contractual restriction binding on
or otherwise affecting any Grantor or any of its properties and will not result
in, or require the creation of, any Lien upon or with respect to any of its
properties.
 
(l) No authorization or approval or other action by, and no notice to or filing
with, any Governmental Authority or any other Person, is required for (i) the
due execution, delivery and performance by any Grantor of this Agreement,
(ii) the grant by any Grantor of the security interest purported to be created
hereby in the Collateral or (iii) the exercise by the Collateral Agent of any of
its rights and remedies hereunder, except, in the case of this clause (iii), as
may be required in connection with any sale of any Pledged Interests by laws
affecting the offering and sale of securities generally.  No authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority or any other Person, is required for the perfection of the security
interest purported to be created hereby in the Collateral, except (A) for the
filing under the Uniform Commercial Code as in effect in the applicable
jurisdiction of the financing statements described in Schedule V hereto, all of
which financing statements have been duly filed and are in full force and
effect, (B) with respect to the perfection of the security interest created
hereby in the United States Intellectual Property and Licenses, for the
recording of the appropriate Grant of a Security Interest, substantially in the
form of Exhibit B hereto in the United States Patent and Trademark Office or the
United States Copyright Office, as applicable, (C) with respect to the
perfection of the security interest created hereby in foreign Intellectual
Property and Licenses, for registrations and filings in jurisdictions located
 

 
10

--------------------------------------------------------------------------------

 

outside of the United States and covering rights in such jurisdictions relating
to such foreign Intellectual Property and Licenses, (D) with respect to the
perfection of the security interest created hereby in Titled Collateral with a
book value in excess of $10,000, for the submission of an appropriate
application requesting that the Lien of the Collateral Agent be noted on the
Certificate of Title or certificate of ownership, completed and authenticated by
the applicable Grantor, together with the Certificate of Title or certificate of
ownership, with respect to such Titled Collateral, to the appropriate
Governmental Authority, (E) with respect to any action that may be necessary to
obtain control of Collateral constituting Deposit Accounts, Electronic Chattel
Paper, Investment Property or Letter-of-Credit Rights, the taking of such
actions, (F) the Collateral Agent's having possession of all Documents, Chattel
Paper, Instruments and cash constituting Collateral and (G) the Collateral Agent
filing an amendment to financing statements filed under the Uniform Commercial
Code with respect to Commercial Tort Claims arising after the date hereof
(subclauses (A), (B), (C), (D), (E), (F) and (G), each a "Perfection
Requirement" and collectively, the "Perfection Requirements").
 
(m) This Agreement creates a legal, valid and enforceable security interest in
favor of the Collateral Agent, for the benefit of the Secured Parties, in the
Collateral, as security for the Secured Obligations.  The Perfection
Requirements result in the perfection of such security interests.  Such security
interests are, or in the case of Collateral in which any Grantor obtains rights
after the date hereof, will be, perfected, (i) in the case of any Liens granted
with respect to assets and property constituting Term Loan Priority Collateral,
first priority security interest and (ii) in the case of any Liens granted with
respect to any assets and property constituting Working Capital Priority
Collateral, second priority security interests (subject only to the Liens
granted pursuant to the Working Capital Loan Documents), and the recording of
such instruments of assignment described above.  Such Perfection Requirements
and all other action necessary or desirable to perfect and protect such security
interest have been duly made or taken, except for (i) the Collateral Agent's
having possession of all Instruments, Documents, Chattel Paper and cash
constituting Collateral after the date hereof, (ii) the Collateral Agent's
having control of all Deposit Accounts, Electronic Chattel Paper, Investment
Property or Letter-of-Credit Rights constituting Collateral after the date
hereof, and (iii) the other filings and recordations and actions described in
Section 5(l) hereof.
 
(n) As of the date hereof, no Grantor holds any Commercial Tort Claims or is
aware of any such pending claims, except for such claims described in Schedule
VI.
 
(o) With respect to each Grantor and its Subsidiaries that is a partnership or a
limited liability company, the partnership interest or membership interest of
each such Person is not (A) dealt in or traded on securities exchanges or in
securities markets, (B) securities for purposes of Article 8 of any relevant
Uniform Commercial Code, (C) investment company securities within the meaning of
Section 8-103 of any relevant Uniform Commercial Code or (D) evidenced by a
certificate.  Such uncertificated partnership interest or membership interest
constitutes General Intangibles.
 
SECTION 6. Covenants as to the Collateral .  So long as any of the Secured
Obligations (whether or not due) shall remain unpaid or any Lender shall have
any Commitment under the Financing Agreement, unless the Collateral Agent shall
otherwise consent in writing:
 

 
11

--------------------------------------------------------------------------------

 
 
(a) Further Assurances.  Each Grantor will at its expense, at any time and from
time to time, promptly execute and deliver all further instruments and documents
and take all further action that may be necessary or reasonably desirable or
that the Collateral Agent may request in order (i) to perfect and protect, or
maintain the perfection of, the security interest and Lien purported to be
created hereby; (ii) to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder in respect of the Collateral; or (iii) otherwise
to effect the purposes of this Agreement, including, without
limitation:  (A) marking conspicuously all Chattel Paper, Instruments and
Licenses and, at the request of the Collateral Agent, all of its Records
pertaining to the Collateral with a legend, in form and substance reasonably
satisfactory to the Collateral Agent, indicating that such Chattel Paper,
Instrument, License or Collateral is subject to the security interest created
hereby, (B) if any Account shall be evidenced by a Promissory Note or other
Instrument or Chattel Paper, delivering and pledging to the Collateral Agent
such Promissory Note, other Instrument or Chattel Paper, duly endorsed and
accompanied by executed instruments of transfer or assignment, all in form and
substance reasonably satisfactory to the Collateral Agent, (C) executing and
filing (to the extent, if any, that such Grantor's signature is required
thereon) or authenticating the filing of, such financing or continuation
statements, or amendments thereto, (D) with respect to Intellectual Property
hereafter existing and not covered by an appropriate security interest grant,
the executing and recording in the United States Patent and Trademark Office or
the United States Copyright Office, as applicable, appropriate instruments
granting a security interest, as may be necessary or desirable or that the
Collateral Agent may reasonably request in order to perfect and preserve the
security interest purported to be created hereby, (E) delivering to the
Collateral Agent upon request irrevocable proxies in respect of the Pledged
Interests, (F) furnishing to the Collateral Agent from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail, (G) if any Collateral with a book value in
excess of $100,000 (when aggregated with all other Collateral at the same
location) shall be in the possession of a third party, notifying such Person of
the Collateral Agent's security interest created hereby and obtaining a written
agreement, in form and substance reasonably satisfactory to the Collateral
Agent, providing access to such Collateral in order to remove such Collateral
from such premises during an Event of Default and acknowledging that such Person
holds possession of the Collateral for the benefit of the Collateral Agent,
(H) if at any time after the date hereof, any Grantor acquires or holds any
Commercial Tort Claim, involving a claim in excess of $100,000, promptly
notifying the Collateral Agent in a writing signed by such Grantor setting forth
a brief description of such Commercial Tort Claim and granting to the Collateral
Agent a security interest therein and in the proceeds thereof, which writing
shall incorporate the provisions hereof and shall be in form and substance
reasonably satisfactory to the Collateral Agent, (I) upon the acquisition after
the date hereof by any Grantor of any Titled Collateral (other than Equipment
that is subject to a purchase money security interest permitted by Section
7.02(a) of the Financing Agreement), immediately notifying the Collateral Agent
of such acquisition, setting forth a description of the Titled Collateral
acquired and a good faith estimate of the current value of such Titled
Collateral, and, to the extent such Titled Collateral has a book value in excess
of $10,000, immediately causing the Collateral Agent to be listed as the
lienholder on such Certificate of Title or certificate of ownership and
delivering evidence of the same to the Collateral Agent, and (II) taking all
actions required by law in any relevant Uniform Commercial Code jurisdiction, or
by other law as applicable in any foreign jurisdiction.  No Grantor shall take
or fail to take any action which would in any manner impair the validity or
enforceability of the Collateral Agent's security interest in and Lien on any
Collateral.
 
(b) Location of Equipment and Inventory.  Each Grantor will keep the Equipment
and Inventory (other than Equipment and Inventory in transit or sold in the
ordinary course of business in accordance with Section 6(h) hereof) at the
locations specified in Schedule III hereto or, upon not less than thirty (30)
days' prior written notice to the Collateral Agent accompanied by a new Schedule
III hereto indicating each new location of the Equipment and Inventory, at such
other locations in the continental United States as the Grantors may elect,
provided that (i) all action has been taken to grant to the Collateral Agent a
perfected, first priority security interest in such Equipment and Inventory, and
(ii) the Collateral Agent's rights in such Equipment and Inventory, including,
without limitation, the existence, perfection and priority of the security
interest created hereby in such Equipment and Inventory, are not adversely
affected thereby.
 
(c) Condition of Equipment.  Each Grantor will maintain or cause the Equipment
which is necessary or useful in the proper conduct of its business to be
maintained and preserved in good condition, repair and working order as when
acquired and in accordance with any manufacturer's manual, ordinary wear and
tear excepted, and will forthwith, or upon the occurrence of any loss or damage
affecting the Equipment promptly commence and diligently prosecute the
restoration of the Equipment and make or cause to be made all repairs,
replacements and other improvements in connection therewith which are necessary
or desirable, consistent with past practice, or which the Collateral Agent may
request to such end, without regard to the availability or adequacy of insurance
proceeds and at its sole cost and expenses but in all events in a manner
approved by the Agents.  Each Grantor will promptly furnish to the Collateral
Agent a statement describing in reasonable detail any loss or damage.
 
 
 
12

--------------------------------------------------------------------------------

 
 
(d) Taxes, Etc.  Each Grantor jointly and severally agrees to pay promptly when
due all property and other taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment and Inventory, except to the extent otherwise
provided in the Financing Agreement.
 
(e) Insurance.  Each Grantor will, at its own expense, maintain insurance with
respect to the Collateral in accordance with the terms of the Financing
Agreement.  Each Grantor will, if so requested by the Collateral Agent, deliver
to the Collateral Agent original or duplicate insurance policies and, as often
as the Collateral Agent may reasonably request, a report of a reputable
insurance broker with respect to such insurance.  Each Grantor will also, at the
request of the Collateral Agent, execute and deliver instruments of assignment
of such insurance policies and cause the respective insurers to acknowledge
notice of such assignment.
 
(f) Provisions Concerning the Accounts and the Licenses.
 
(i) Each Grantor will, except as otherwise provided in this subsection (f),
continue to collect, at its own expense, all amounts due or to become due under
the Accounts.  In connection with such collections, each Grantor may (and, at
the Collateral Agent's direction, will) take such action as such Grantor (or, if
applicable, the Collateral Agent) may deem necessary or advisable to enforce
collection or performance of the Accounts; provided, however, that the
Collateral Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default, to notify the Account Debtors or
obligors under any Accounts of the assignment of such Accounts to the Collateral
Agent and to direct such Account Debtors or obligors to make payment of all
amounts due or to become due to such Grantor thereunder directly to the
Collateral Agent or its designated agent and, upon such notification and at the
expense of such Grantor and to the extent permitted by law, to enforce
collection of any such Accounts and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as such Grantor
might have done.  After receipt by any Grantor of a notice from the Collateral
Agent that the Collateral Agent has notified, intends to notify, or has enforced
or intends to enforce a Grantor's rights against the Account Debtors or obligors
under any Accounts as referred to in the proviso to the immediately preceding
sentence, (A) all amounts and proceeds (including Instruments) received by such
Grantor in respect of the Accounts shall be received in trust for the benefit of
the Collateral Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent or its
designated agent in the same form as so received (with any necessary
endorsement) to be held as cash collateral and applied as specified in Section
9(d) hereof, and (B) such Grantor will not adjust, settle or compromise the
amount or payment of any Account or release wholly or partly any Account Debtor
or obligor thereof or allow any credit or discount thereon.  In addition, upon
the occurrence and during the continuance of an Event of Default, to the extent
set forth in Section 8.01 of the Financing Agreement, the Collateral Agent may
(in its sole and absolute discretion) direct any or all of the banks and
financial institutions with which any Grantor either maintains a Deposit Account
or a lockbox or deposits the proceeds of any Accounts to send immediately to the
Collateral Agent or its designated agent by wire transfer (to such account as
the Collateral Agent shall specify, or in such other manner as the Collateral
Agent shall direct) all or a portion of such securities, cash, investments and
other items held by such institution.  Any such securities, cash, investments
and other items so received by the Collateral Agent or its designated agent
shall (in the sole and absolute discretion of the Collateral Agent) be held as
additional Collateral for the Secured Obligations or distributed in accordance
with Section 9 hereof.
 
(ii) Upon the occurrence and during the continuance of any breach or default
under any material License by any party thereto other than a Grantor, (A) the
relevant Grantor will, promptly after obtaining knowledge thereof, give the
Collateral Agent written notice of the nature and duration thereof, specifying
what action, if any, it has taken and proposes to take with respect thereto, (B)
no Grantor will, without the prior written consent of the Collateral Agent,
declare or waive any such breach or default or affirmatively consent to the cure
thereof or exercise any of its remedies in respect thereof, and (C) each Grantor
will, upon written instructions from the Collateral Agent and at such Grantor's
expense, take such action as the Collateral Agent may deem necessary or
advisable in respect thereof.
 
(iii) Each Grantor will, at its expense, promptly deliver to the Collateral
Agent a copy of each notice or other communication received by it by which any
other party to any material License (A) declares a breach or default by a
Grantor of any material term thereunder, (B) terminates such License or (C)
purports to exercise any of its rights or affect any of its obligations
thereunder, together with a copy of any reply by such Grantor thereto.
 

 
13

--------------------------------------------------------------------------------

 
 
(iv) Each Grantor will exercise promptly and diligently each and every right
which it may have under each material License (other than any right of
termination) and will duly perform and observe in all respects all of its
obligations under each material License and will take all action necessary to
maintain the material Licenses in full force and effect.  No Grantor will,
without the prior written consent of the Collateral Agent, cancel, terminate,
amend or otherwise modify in any material respect, or waive any provision of,
any material License.
 
(g) Provisions Concerning the Pledged Interests.  Each Grantor will
 
(i) at the Grantors' joint and several expense, promptly deliver to the
Collateral Agent a copy of each notice or other communication received by it in
respect of the Pledged Interests;
 
(ii) at the Grantors' joint and several expense, defend the Collateral Agent's
right, title and security interest in and to the Pledged Interests against the
claims of any Person;
 
(iii) not make or consent to any amendment or other modification or waiver with
respect to any Pledged Interests or enter into any agreement or permit to exist
any restriction with respect to any Pledged Interests other than pursuant to or
to the extent expressly permitted by the Loan Documents; and
 
(iv) not permit the issuance of (A) any additional shares of any class of Equity
Interests of any Pledged Issuer, (B) any securities convertible voluntarily by
the holder thereof or automatically upon the occurrence or non-occurrence of any
event or condition into, or exchangeable for, any such shares of Equity
Interests or (C) any warrants, options, contracts or other commitments entitling
any Person to purchase or otherwise acquire any such shares of Equity Interest,
in each case, unless otherwise expressly permitted by Sections 7.02(e) and (l)
of the Financing Agreement.
 
(h) Transfers and Other Liens.
 
(i) Except to the extent expressly permitted by Section 7.02(c) of the Financing
Agreement, no Grantor will sell, assign (by operation of law or otherwise),
lease, license, exchange or otherwise transfer or dispose of any of the
Collateral.
 
(ii) Except to the extent expressly permitted by Section 7.02(a) of the
Financing Agreement, no Grantor will create, suffer to exist or grant any Lien
upon or with respect to any Collateral.
 
(i) Intellectual Property.
 
(i) Each Grantor has duly executed and delivered the applicable Grant of a
Security Interest in the form attached hereto as Exhibit B.
 
(ii) Each Grantor (either itself or through its licensees or its sublicensees)
agrees that it will not do any act or omit to do any act whereby any Patent that
is material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary to establish
and preserve its rights under applicable patent laws, except where the failure
to do so, together with all other such failures hereunder since the Effective
Date, could not reasonably be expected to result in a material diminution in the
value of the Collateral.
 

 
14

--------------------------------------------------------------------------------

 
 
(iii) Each Grantor (either itself or through its licensees or its sublicensees)
will, for each Trademark material to the conduct of such Grantor's business,
(i) maintain such Trademark in full force free from any claim of abandonment or
invalidity for non-use, (ii) maintain the quality of products and services
offered under such Trademark, (iii) display such Trademark with notice of U.S.
or non-U.S. registration to the extent necessary to establish and preserve its
rights under applicable law, and (iv) not knowingly use or knowingly permit the
use of such Trademark in violation of any third party rights.
 
(iv) Each Grantor (either itself or through its licensees or sublicensees) will,
for each work covered by a material Copyright, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary to establish and preserve its rights under applicable copyright laws,
except where the failure to do so, together with all other such failures
hereunder since the Effective Date, could not reasonably be expected to result
in a material diminution in the value of the Collateral.
 
(v) Each Grantor shall notify the Collateral Agent promptly if it knows or has
reason to know that any Intellectual Property material to the conduct of its
business may become abandoned, lost or dedicated to the public, or of any final
materially adverse determination (including the institution of, or any such
determination in, any proceeding in the United States Patent and Trademark
Office, United States Copyright Office or any court or similar office of any
country) regarding such Grantor's ownership of any Intellectual Property, its
right to register the same, or its right to keep and maintain the same.
 
(vi) In the event that any Grantor (i) files an application or registration for
any Intellectual Property with the United States Patent and Trademark Office,
United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, either itself or through any agent, employee, licensee or
designee or (ii) obtains rights to or develops any new Intellectual Property or
any reissue, division, continuation, renewal, extension or continuation-in-part
of any existing Intellectual Property, in each case that is the subject of a
registration or a pending application with the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or political
subdivision thereof, or which is material to such Grantor business, whether
pursuant to any license or otherwise; the provisions of Section 2 hereof shall
automatically apply thereto and such Grantor shall give to the Collateral Agent
prompt notice thereof, and, upon request of the Collateral Agent, execute and
deliver any and all agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence the Collateral Agent's
security interest in such Intellectual Property, and each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
 

15

--------------------------------------------------------------------------------

 
(vii) Each Grantor will take all necessary steps that are consistent with the
practice in any proceeding before the United States Patent and Trademark Office,
United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, to maintain and pursue each application relating to the
Intellectual Property of such Grantor (and to obtain the relevant grant or
registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights, in each case that is material to the conduct of any
Grantor's business as conducted or proposed to be conducted, including timely
filings of applications for renewal, affidavits of use, affidavits of
incontestability and payment of maintenance fees, and, if consistent with good
business judgment, to initiate opposition, interference and cancellation
proceedings against third parties.
 
(viii) In the event that any Grantor has reason to believe that any Collateral
consisting of Intellectual Property material to the conduct of any Grantor's
business has been infringed, misappropriated or diluted by a third party, such
Grantor shall if consistent with good business judgment, promptly sue for
infringement, misappropriation or dilution and to recover any and all damages
for such infringement, misappropriation or dilution, and take such other actions
as are appropriate under the circumstances to protect such Collateral and
promptly shall notify the Collateral Agent of the initiation of such suit.
 
(ix) Upon and during the continuance of an Event of Default, (i) no Grantor
shall abandon or otherwise permit any Intellectual Property to become invalid
and (ii) each Grantor shall use its best efforts to obtain all requisite
consents or approvals by the licensor of each License that constitutes
Collateral owned by such Grantor to effect the assignment of all such Grantor's
right, title and interest thereunder to the Collateral Agent or its designee.
 
(x) Each Grantor shall execute, authenticate and deliver any and all
assignments, agreements, instruments, documents and papers as the Collateral
Agent may reasonably request to evidence the Collateral Agent's security
interest hereunder in such Intellectual Property and the General Intangibles of
such Grantor relating thereto or represented thereby, each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
 
(xi) Upon the Collateral Agent's request, each Grantor agrees, at its own
expense, as soon as practicable after the date of such request, to make such
filings and to take such other actions as are reasonably necessary in each
non-U.S. jurisdiction in which such Grantor owns any Intellectual Property in
order to perfect the Security Interest with respect to such Intellectual
Property in such jurisdiction, provided that no Grantor shall be obligated to
make any such filing or to take any such other action where the Collateral Agent
and the Borrowers agree that the cost of such filing or action exceeds the value
of the security afforded thereby.
 

 
16

--------------------------------------------------------------------------------

 

(j) Deposit, Commodities and Securities Accounts.  On or prior to the Effective
Date, each Grantor shall, to the extent required by Section 8.01 of the
Financing Agreement, cause each bank and other financial institution with an
account referred to in Schedule IV hereto to execute and deliver to the
Collateral Agent (or its designee) a Cash Management Agreement, or enter into
other arrangements in form and substance reasonably satisfactory to the
Collateral Agent to the extent permitted by the Financing Agreement, pursuant to
which such institution shall irrevocably agree, among other things, that (i) it
will comply at any time with the instructions originated by the Collateral Agent
(or its designee) to such bank or financial institution directing the
disposition of cash, Commodity Contracts, securities, Investment Property and
other items from time to time credited to such account, without further consent
of such Grantor, which instructions the Collateral Agent (or its designee) will
not give to such bank or other financial institution in the absence of a
continuing Event of Default, (ii) all cash, Commodity Contracts, securities,
Investment Property and other items of such Grantor deposited with such
institution shall be subject to a perfected, first priority security interest in
favor of the Collateral Agent (or its designee), (iii) any right of set off,
banker's Lien or other similar Lien, security interest or encumbrance shall,
except as otherwise agreed by the Collateral Agent, be fully waived as against
the Collateral Agent (or its designee) and (iv) upon receipt of written notice
from the Collateral Agent during the continuance of an Event of Default, such
bank or financial institution shall immediately send to the Collateral Agent (or
its designee) by wire transfer (to such account as the Collateral Agent (or its
designee) shall specify, or in such other manner as the Collateral Agent (or its
designee) shall direct) all such cash, the value of any Commodity Contracts,
securities, Investment Property and other items held by it.  Without the prior
written consent of the Collateral Agent, no Grantor shall make or maintain any
Deposit Account, Commodity Account or Securities Account except for the accounts
set forth in Schedule IV hereto.  The provisions of this Section 6(j) shall not
apply to (i) Deposit Accounts for which the Collateral Agent is the depositary,
(ii) Deposit Accounts specially and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of a
Grantor's salaried employees, provided that the funds on deposit in such Deposit
Accounts shall at no time exceed the actual payroll, payroll taxes and other
employee wage and benefit payments then owing by such Grantor for the
immediately succeeding payroll period, and (iii) any Deposit Account which at
all times has a balance of less then $25,000, so long as the aggregate balance
at all Deposit Accounts excluded by this clause (iii) does not exceed $100,000
at any time.
 
(k) Titled Collateral.  Each Grantor shall (a) cause all Collateral, now owned
or hereafter acquired by any Grantor, which under applicable law are required to
be registered, to be properly registered in the name of such Grantor, (b) cause
all Titled Collateral to be properly titled in the name of such Grantor and, to
the extent such Titled Collateral has a book value in excess of $10,000, with
the Collateral Agent's Lien noted thereon and (c) if requested by the Collateral
Agent, promptly deliver to the Collateral Agent (or its custodian) originals of
all such Certificates of Title or certificates of ownership for such Titled
Collateral, with the Collateral Agent's Lien noted thereon, and take such other
actions as may be reasonably required by the Collateral Agent.  Each Grantor
hereby appoints the Collateral Agent as its attorney-in-fact, effective the date
hereof and terminating upon the termination of this Agreement, for the purpose
of (A) executing on behalf of such Grantor title or ownership applications for
filing with appropriate Governmental Authority to enable Titled Collateral now
owned or hereafter acquired by such Grantor to be retitled and the Collateral
Agent listed as lienholder thereof, (B) filing such applications with such
Governmental Authority, and (C) executing such other documents and instruments
on behalf of, and taking such other action in the name of, such Grantor as the
Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof (including, without limitation, for the purpose of creating in favor of
the Collateral Agent a perfected Lien on such Titled Collateral and exercising
the rights and remedies of the Collateral Agent hereunder).  This appointment as
attorney-in-fact is coupled with an interest and is irrevocable until the date
on which all of the Secured Obligations have been indefeasibly paid in full in
cash after the termination of each Lender's Commitment and each of the Loan
Documents.
 

 
17

--------------------------------------------------------------------------------

 
 
(l) Control.  Each Grantor hereby agrees to take any or all action that may be
necessary or desirable or that the Collateral Agent may reasonably request in
order for the Collateral Agent to obtain control in accordance with Sections
9-104, 9-105, 9-106, and 9-107 of the Code with respect to the following
Collateral:  (i) except as otherwise provided in Section 6(J) Deposit Accounts,
(ii) Electronic Chattel Paper, (iii) Investment Property and (iv) Letter of
Credit Rights.  Each Grantor hereby acknowledges and agrees that any agent or
designee of the Collateral Agent shall be deemed to be a "secured party" with
respect to the Collateral under the control of such agent or designee for all
purposes.
 
(m) Records; Inspection and Reporting.
 
(i) Each Grantor shall keep adequate records concerning the Accounts, Chattel
Paper and Pledged Interests.  Each Grantor shall permit any Agent or any agents
or representatives thereof or such professionals or other Persons as any Agent
may designate (A)  to examine and make copies of and abstracts from such
Grantor's books and records, (B) to visit and inspect its properties, (C) to
verify materials, leases, notes, Accounts, Inventory and other assets of such
Grantor from time to time, (D) to conduct audits, physical counts, appraisals
and/or valuations, Phase I and Phase II Environmental Site Assessments or
examinations at the locations of such Grantor and (E) to discuss such Grantor's
affairs, finances and accounts with any of its directors, officers, managerial
employees, independent accountants or any of its other representatives, in each
case as provided in Section 7.01(f) of the Financing Agreement.
 
(ii) Except as otherwise expressly permitted by Section 7.02(m) of the Financing
Agreement, no Grantor shall, without the prior written consent of the Collateral
Agent, change (A) its name, identity or type of organization, (B) its
jurisdiction of incorporation or organization as set forth in Schedule I hereto
or (C) its chief executive office as set forth in Schedule III hereto.  Each
Grantor shall immediately notify the Collateral Agent upon obtaining an
organizational identification number, if on the date hereof such Grantor did not
have such identification number.
 
(n) Partnership and Limited Liability Company Interest.  No Grantor that is a
partnership or a limited liability company shall, nor shall any Grantor with any
Subsidiary that is a partnership or a limited liability company, permit such
partnership interests or membership interests to (i) be dealt in or traded on
securities exchanges or in securities markets, (ii) become a security for
purposes of Article 8 of any relevant Uniform Commercial Code, (iii) become an
investment company security within the meaning of Section 8-103 of any relevant
Uniform Commercial Code or (iv) be evidenced by a certificate.  Each Grantor
agrees that such partnership interests or membership interests shall constitute
General Intangibles.
 
(o) Collateral Assignment of Leases.  To further secure the prompt payment and
performance of all Obligations, each Grantor hereby grants to the Collateral
Agent a security interest in, subject to the final paragraph of Section 2, for
the benefit of Secured Parties, all of such Grantor’s right, title and interest
in, to and under all now or hereafter existing leases of real property to which
such Grantor is a party, whether as lessor or lessee, and all extensions,
renewals, modifications and proceeds thereof.
 

 
18

--------------------------------------------------------------------------------

 
 
SECTION 7. Voting Rights, Dividends, Etc. in Respect of the Pledged Interests.
 
(a) So long as no Event of Default shall have occurred and be continuing:
 
(i) each Grantor may exercise any and all voting and other consensual rights
pertaining to any Pledged Interests for any purpose not inconsistent with the
terms of this Agreement, the Financing Agreement or the other Loan Documents;
provided, however, that (A) each Grantor will give the Collateral Agent at least
five (5) Business Days' written notice of the manner in which it intends to
exercise, or the reasons for refraining from exercising, any such right that
could reasonably be expected to adversely affect in any material respect the
value, liquidity or marketability of any Collateral or the creation, perfection
and priority of the Collateral Agent's Lien; and (B) none of the Grantors will
exercise or refrain from exercising any such right, as the case may be, if the
Collateral Agent gives a Grantor written notice that, in the Collateral Agent's
reasonable business judgment, such action (or inaction) could reasonably be
expected to adversely affect in any material respect the value, liquidity or
marketability of any Collateral or the creation, perfection and priority of the
Collateral Agent's Lien; and
 
(ii) each of the Grantors may receive and retain any and all dividends, interest
or other distributions paid in respect of the Pledged Interests to the extent
permitted by the Financing Agreement; provided, however, that any and all (A)
dividends and interest paid or payable other than in cash in respect of, and
Instruments and other property received, receivable or otherwise distributed in
respect of or in exchange for, any Pledged Interests, (B) dividends and other
distributions paid or payable in cash in respect of any Pledged Interests in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus, and (C) cash
paid, payable or otherwise distributed in redemption of, or in exchange for, any
Pledged Interests, together with any dividend, interest or other distribution or
payment which at the time of such payment was not permitted by the Financing
Agreement, shall be, and shall forthwith be delivered to the Collateral Agent,
to hold as, Pledged Interests and shall, if received by any of the Grantors, be
received in trust for the benefit of the Collateral Agent, shall be segregated
from the other property or funds of the Grantors, and shall be forthwith
delivered to the Collateral Agent in the exact form received with any necessary
indorsement and/or appropriate stock powers duly executed in blank, to be held
by the Collateral Agent as Pledged Interests and as further collateral security
for the Secured Obligations; and
 
(iii) the Collateral Agent will execute and deliver (or cause to be executed and
delivered) to a Grantor all such proxies and other instruments as such Grantor
may reasonably request for the purpose of enabling such Grantor to exercise the
voting and other rights which it is entitled to exercise pursuant to Section
7(a)(i) hereof and to receive the dividends, interest and/or other distributions
which it is authorized to receive and retain pursuant to Section 7(a)(ii)
hereof.
 
19

--------------------------------------------------------------------------------

 
(b) Upon the occurrence and during the continuance of an Event of Default:
 
(i) all rights of each Grantor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to Section
7(a)(i) hereof, and to receive the dividends, distributions, interest and other
payments that it would otherwise be authorized to receive and retain pursuant to
Section 7(a)(ii) hereof, 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 and to receive and hold as
Pledged Interests such dividends, distributions and interest payments;
 
(ii) the Collateral Agent is authorized to notify each debtor with respect to
the Pledged Debt to make payment directly to the Collateral Agent (or its
designee) and may collect any and all moneys due or to become due to any Grantor
in respect of the Pledged Debt, and each of the Grantors hereby authorizes each
such debtor to make such payment directly to the Collateral Agent (or its
designee) without any duty of inquiry;
 
(iii) without limiting the generality of the foregoing, the Collateral Agent may
at its option exercise any and all rights of conversion, exchange, subscription
or any other rights, privileges or options pertaining to any of the Pledged
Interests as if it were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all of the Pledged
Interests upon the merger, consolidation, reorganization, recapitalization or
other adjustment of any Pledged Issuer, or upon the exercise by any Pledged
Issuer of any right, privilege or option pertaining to any Pledged Interests,
and, in connection therewith, to deposit and deliver any and all of the Pledged
Interests with any committee, depository, transfer agent, registrar or other
designated agent upon such terms and conditions as it may determine; and
 
(iv) all dividends, distributions, interest and other payments that are received
by any of the Grantors contrary to the provisions of Section 7(b)(i) hereof
shall be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of the Grantors, and shall be forthwith paid over to
the Collateral Agent as Pledged Interests in the exact form received with any
necessary indorsement and/or appropriate stock powers duly executed in blank, to
be held by the Collateral Agent as Pledged Interests and as further collateral
security for the Secured Obligations.
 
SECTION 8. Additional Provisions Concerning the Collateral .
 
(a) To the maximum extent permitted by applicable law, and for the purpose of
taking any action that the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, each Grantor hereby (i) authorizes
the Collateral Agent to execute any such agreements, instruments or other
documents in such Grantor's name and to file such agreements, instruments or
other documents in such Grantor's name and in any appropriate filing office,
(ii) authorizes the Collateral Agent at any time and from time to time to file,
one or more financing or continuation
 

 
20

--------------------------------------------------------------------------------

 

statements and amendments thereto, relating to the Collateral (including,
without limitation, any such financing statements that (A) describe the
Collateral as "all assets" or "all personal property" (or words of similar
effect) or that describe or identify the Collateral by type or in any other
manner as the Collateral Agent may determine, regardless of whether any
particular asset of such Grantor falls within the scope of Article 9 of the
Uniform Commercial Code or whether any particular asset of such Grantor
constitutes part of the Collateral, and (B) contain any other information
required by Part 5 of Article 9 of the Code for the sufficiency or filing office
acceptance of any financing statement, continuation statement or amendment,
including, without limitation, whether such Grantor is an organization, the type
of organization and any organizational identification number issued to such
Grantor) and (iii) ratifies such authorization to the extent that the Collateral
Agent has filed any such financing statements, continuation statements, or
amendments thereto, prior to the date hereof.  A photocopy or other reproduction
of this Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.
 
(b) Each Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time in the
Collateral Agent's discretion, to take any action and to execute any instrument
that the Collateral Agent may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of a Grantor under Section 6
hereof and Section 7(a) hereof), including, without limitation, (i) to obtain
and adjust insurance required to be paid to the Collateral Agent pursuant to the
Financing Agreement, (ii) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any Collateral, (iii) to receive, endorse, and collect any
drafts or other Instruments, Documents and Chattel Paper in connection with
clause (i) or (ii) above, (iv) to receive, indorse and collect all Instruments
made payable to such Grantor representing any dividend, interest payment or
other distribution in respect of any Pledged Interests and to give full
discharge for the same, (v) to file any claims or take any action or institute
any proceedings which the Collateral Agent may deem necessary or desirable for
the collection of any Collateral or otherwise to enforce the rights of the
Collateral Agent and the Lenders with respect to any Collateral, (vi) to execute
assignments, licenses and other documents to enforce the rights of the
Collateral Agent and the Lenders with respect to any Collateral, (vii) to pay or
discharge taxes or Liens levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its sole
discretion, and such payments made by the Collateral Agent to become Obligations
of such Grantor to the Collateral Agent, due and payable immediately without
demand, and (viii) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, assignments, verifications and
notices in connection with Accounts, Chattel Paper and other documents relating
to the Collateral.  This power is coupled with an interest and is irrevocable
until the date on which all of the Secured Obligations have been indefeasibly
paid in full in cash after the termination of each Lender's Commitment and each
of the Loan Documents.
 
(c) For the purpose of enabling the Collateral Agent to exercise rights and
remedies hereunder, at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose, each
Grantor hereby (i) grants to the Collateral Agent an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to
 

 
21

--------------------------------------------------------------------------------

 

any Grantor) to use, assign, license or sublicense any Intellectual Property now
or hereafter owned by any Grantor, wherever the same may be located, including
in such license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for the
compilation or printout thereof; and (ii) assigns to the Collateral Agent, to
the extent assignable, all of its rights to any Intellectual Property now or
hereafter licensed or used by any Grantor.  Notwithstanding anything contained
herein to the contrary, but subject to the provisions of the Financing Agreement
that limit the right of a Grantor to dispose of its property and Section 6(i)
hereof, so long as no Event of Default shall have occurred and be continuing,
each Grantor may exploit, use, enjoy, protect, license, sublicense, assign,
sell, dispose of or take other actions with respect to the Intellectual
Property.  In furtherance of the foregoing, unless an Event of Default shall
have occurred and be continuing, the Collateral Agent shall from time to time,
upon the request of a Grantor, execute and deliver any instruments, certificates
or other documents, in the form so requested, which such Grantor shall have
certified are appropriate (in such Grantor's judgment) to allow it to take any
action permitted above (including relinquishment of the license provided
pursuant to this clause (c) as to any Intellectual Property).  Further, upon the
date on which all of the Secured Obligations have been indefeasibly paid in full
in cash after the termination of each Lender's Commitment and each of the Loan
Documents, the Collateral Agent (subject to Section 13(e) hereof) shall release
and reassign to the Grantors all of the Collateral Agent's right, title and
interest in and to the Intellectual Property, and the Licenses, all without
recourse, representation or warranty whatsoever and at the Grantors' sole
expense.  The exercise of rights and remedies hereunder by the Collateral Agent
shall not terminate the rights of the holders of any licenses or sublicenses
theretofore granted by any Grantor in accordance with the second sentence of
this clause (c).  Each Grantor hereby releases the Collateral Agent from any
claims, causes of action and demands at any time arising out of or with respect
to any actions taken or omitted to be taken by the Collateral Agent under the
powers of attorney granted herein other than actions taken or omitted to be
taken through the Collateral Agent's gross negligence or willful misconduct, as
determined by a final determination of a court of competent jurisdiction.
 
(d) If any Grantor fails to perform any agreement or obligation contained
herein, the Collateral Agent may itself perform, or cause performance of, such
agreement or obligation, in the name of such Grantor or the Collateral Agent,
and the expenses of the Collateral Agent incurred in connection therewith shall
be jointly and severally payable by the Grantors pursuant to Section 10 hereof
and shall be secured by the Collateral.
 
(e) The powers conferred on the Collateral Agent hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers.  Other than the exercise of reasonable care to assure the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral and shall
be relieved of all responsibility for any Collateral in its possession upon
surrendering it or tendering surrender of it to any of the Grantors (or
whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct).  The Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of any Collateral
in its possession if such Collateral is accorded treatment substantially equal
to that which the Collateral Agent accords its own property, it being understood
that the Collateral Agent shall not have responsibility for ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relating to any Collateral, whether or not the Collateral Agent
has or is deemed to have knowledge of such matters.  The Collateral Agent shall
not be liable or responsible for any loss or damage to any of the Collateral, or
for any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Collateral Agent in good faith.
 

 
22

--------------------------------------------------------------------------------

 
 
(f) Anything herein to the contrary notwithstanding (i) each Grantor shall
remain liable under the Licenses and otherwise in respect of the Collateral to
the extent set forth therein to perform all of its obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by the
Collateral Agent of any of its rights hereunder shall not release any Grantor
from any of its obligations under the Licenses or otherwise in respect of the
Collateral, and (iii) the Collateral Agent shall not have any obligation or
liability by reason of this Agreement under the Licenses or otherwise in respect
of the Collateral, nor shall the Collateral Agent be obligated to perform any of
the obligations or duties of any Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
 
(g) The Collateral Agent may at any time in its discretion (i) without notice to
any Grantor, transfer or register in the name of the Collateral Agent or any of
its nominees any or all of the Pledged Interests, subject only to the revocable
rights of such Grantor under Section 7(a) hereof, and (ii) exchange certificates
or Instruments constituting Pledged Interests for certificates or Instruments of
smaller or larger denominations.
 
SECTION 9. Remedies Upon Default .  If any Event of Default shall have occurred
and be continuing:
 
(a) The Collateral Agent may exercise in respect of the Collateral, in addition
to any other rights and remedies provided for herein or otherwise available to
it, all of the rights and remedies of a secured party upon default under the
Code (whether or not the Code applies to the affected Collateral), and also may
(i) take absolute control of the Collateral, including, without limitation,
transfer into the Collateral Agent's name or into the name of its nominee or
nominees (to the extent the Collateral Agent has not theretofore done so) and
thereafter receive, for the benefit of the Collateral Agent and the Lenders, all
payments made thereon, give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though it were the outright
owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that
it will at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Collateral as directed by the Collateral Agent and
make it available to the Collateral Agent at a place or places to be designated
by the Collateral Agent that is reasonably convenient to both parties, and the
Collateral Agent may enter into and occupy any premises owned or leased by any
Grantor where the Collateral or any part thereof is located or assembled for a
reasonable period in order to effectuate the Collateral Agent's rights and
remedies hereunder or under law, without obligation to any Grantor in respect of
such occupation, and (iii) without notice except as specified below and without
any obligation to prepare or process the Collateral for sale, (A) sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Collateral Agent's offices, at any exchange or broker's board 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 and/or (B) lease, license or otherwise dispose of the
 

 
23

--------------------------------------------------------------------------------

 
 
 Collateral or any part thereof upon such terms as the Collateral Agent may deem
commercially reasonable.  Each Grantor agrees that, to the extent notice of sale
or any other disposition of the Collateral shall be required by law, at least
five (5) days prior written notice to the applicable Grantor of the time and
place of any public sale or the time after which any private sale or other
disposition of the Collateral is to be made shall constitute reasonable
notification.  The Collateral Agent shall not be obligated to make any sale or
other disposition of 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 Grantor hereby waives any claims against the Collateral Agent
and the Lenders arising by reason of the fact that the price at which the
Collateral may have been sold at a private sale was less than the price which
might have been obtained at a public sale or was less than the aggregate amount
of the Secured Obligations, even if the Collateral Agent accepts the first offer
received and does not offer the Collateral to more than one offeree, and waives
all rights that such Grantor may have to require that all or any part of the
Collateral be marshaled upon any sale (public or private) thereof.  Each Grantor
hereby acknowledges that (i) any such sale of the Collateral by the Collateral
Agent shall be made without warranty, (ii) the Collateral Agent may specifically
disclaim any warranties of title, possession, quiet enjoyment or the like, (iii)
the Collateral Agent may bid (which bid may be, in whole or in part, in the form
of cancellation of indebtedness), if permitted by law, for the purchase, lease,
license or other disposition of the Collateral or any portion thereof for the
account of the Collateral Agent (on behalf of itself and the Lenders) and
(iv) such actions set forth in clauses (i), (ii) and (iii) above shall not
adversely affect the commercial reasonableness of any such sale of the
Collateral.  In addition to the foregoing, (i) upon written notice to any
Grantor from the Collateral Agent, each Grantor shall cease any use of the
Intellectual Property or any trademark, patent or copyright similar thereto for
any purpose described in such notice; (ii) the Collateral Agent may, at any time
and from time to time, upon five days prior written notice to any Grantor,
license, whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any of the Intellectual Property, throughout the universe
for such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall in its sole discretion determine; and (iii) the
Collateral Agent may, at any time, pursuant to the authority granted in Section
8 hereof (such authority being effective upon the occurrence and during the
continuance of an Event of Default), execute and deliver on behalf of a Grantor,
one or more instruments of assignment of the Intellectual Property (or any
application or registration thereof), in form suitable for filing, recording or
registration in any country.
 
(b) In the event that the Collateral Agent determines to exercise its right to
sell all or any part of the Pledged Interests pursuant to Section 9(a) hereof,
each Grantor will, at such Grantor's expense and upon request by the Collateral
Agent:  (i) execute and deliver, and cause each issuer of such Pledged Interests
and the directors and officers thereof to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of the Collateral Agent,
advisable to register such Pledged Interests under the provisions of the
Securities Act, and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of the Collateral
Agent, are necessary or advisable, all in conformity with the requirements of
the
 

 
24

--------------------------------------------------------------------------------

 
 
Securities Act and the rules and regulations of the SEC applicable thereto, (ii)
cause each issuer of such Pledged Interests to qualify such Pledged Interests
under the state securities or "Blue Sky" laws of each jurisdiction, and to
obtain all necessary governmental approvals for the sale of the Pledged
Interests, as requested by the Collateral Agent, (iii) cause each Pledged Issuer
to make available to its securityholders, as soon as practicable, an earnings
statement which will satisfy the provisions of Section 11(a) of the Securities
Act, and (iv) do or cause to be done all such other acts and things as may be
necessary to make such sale of such Pledged Interests valid and binding and in
compliance with applicable law.  Each Grantor acknowledges the impossibility of
ascertaining the amount of damages which would be suffered by the Collateral
Agent by reason of the failure by any Grantor to perform any of the covenants
contained in this Section 9(b) and, consequently, agrees that, if any Grantor
fails to perform any of such covenants, it shall pay, as liquidated damages and
not as a penalty, an amount equal to the value of the Pledged Interests on the
date the Collateral Agent demands compliance with this Section 9(b); provided,
however, that the payment of such amount shall not release any Grantor from any
of its obligations under any of the other Loan Documents.
 
(c) Notwithstanding the provisions of Section 9(b) hereof, each Grantor
recognizes that the Collateral Agent may deem it impracticable to effect a
public sale of all or any part of the Pledged Shares or any other securities
constituting Pledged Interests and that the Collateral Agent may, therefore,
determine to make one or more private sales of any such securities to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof.  Each Grantor acknowledges
that any such private sale may be at prices and on terms less favorable to the
seller than the prices and other terms which might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that such private sales
shall be deemed to have been made in a commercially reasonable manner and that
the Collateral Agent shall have no obligation to delay the sale of any such
securities for the period of time necessary to permit the issuer of such
securities to register such securities for public sale under the Securities
Act.  Each Grantor further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a bona fide basis in a
newspaper or other publication of general circulation in the financial community
of New York, New York (to the extent that such an offer may be so advertised
without prior registration under the Securities Act) or (ii) made privately in
the manner described above to not less than fifteen bona fide offerees shall be
deemed to involve a "public disposition" for the purposes of Section 9-610(c) of
the Code (or any successor or similar, applicable statutory provision) as then
in effect in the State of New York, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act, and that the Collateral
Agent may, in such event, bid for the purchase of such securities.
 
(d) Any cash held by the Collateral Agent (or its agent or designee) as
Collateral and all Cash Proceeds received by the Collateral Agent (or its agent
or designee) in respect of any sale of or collection from, or other realization
upon, all or any part of the Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent (or its agent or designee) as collateral
for, and/or then or at any time thereafter applied (after payment of any amounts
payable to the Collateral Agent pursuant to Section 10 hereof) in whole or in
part by the Collateral Agent against, all or any part of the Secured Obligations
in such order as the Collateral Agent shall elect, consistent with the
provisions of the Financing Agreement.  Any surplus of such cash or Cash
Proceeds held by the Collateral Agent (or its agent or designee) and remaining
after the date on which all of the Secured Obligations have been indefeasibly
paid in full in cash after the termination of each Lender's Commitment and each
of the Loan Documents, shall be paid over to whomsoever shall be lawfully
entitled to receive the same or as a court of competent jurisdiction shall
direct.
 

 
25

--------------------------------------------------------------------------------

 
 
(e) In the event that the proceeds of any such sale, collection or realization
are insufficient to pay all amounts to which the Collateral Agent and the
Lenders are legally entitled, the Grantors shall be jointly and severally liable
for the deficiency, together with interest thereon at the highest rate specified
in any applicable Loan Document for interest on overdue principal thereof or
such other rate as shall be fixed by applicable law, together with the costs of
collection and the reasonable fees, costs, expenses and other client charges of
any attorneys employed by the Collateral Agent to collect such deficiency.
 
(f) Each Grantor hereby acknowledges that if the Collateral Agent complies with
any applicable requirements of law in connection with a disposition of the
Collateral, such compliance will not adversely affect the commercial
reasonableness of any sale or other disposition of the Collateral.
 
(g) The Collateral Agent shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the
Collateral) for, or other assurances of payment of, the Secured Obligations or
any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of the Collateral Agent's rights
hereunder and in respect of such collateral security and other assurances of
payment shall be cumulative and in addition to all other rights, however
existing or arising.  To the extent that any Grantor lawfully may, such Grantor
hereby agrees that it will not invoke any law relating to the marshalling of
collateral which might cause delay in or impede the enforcement of the
Collateral Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Secured Obligations or under which any of the
Secured Obligations is outstanding or by which any of the Secured Obligations is
secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, each Grantor hereby irrevocably waives the benefits of all such
laws.
 
SECTION 10.  Indemnity and Expenses .
 
(a) Each Grantor jointly and severally agrees to defend, protect, indemnify and
hold harmless each Agent and each other Indemnitee from and against any and all
claims, losses, damages, liabilities, obligations, penalties, fees, reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees,
costs, expenses and disbursements) incurred by such Agent or such Indemnitee to
the extent that they arise out of or otherwise result from or relate to or are
in connection with this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting solely and
directly from such Agent's or any such Indemnitee's gross negligence or willful
misconduct, as determined by a final judgment of a court of competent
jurisdiction.
 
(b) Each Grantor jointly and severally agrees to pay to the Agents upon demand
the amount of any and all costs and expenses, including the reasonable fees,
costs, expenses and disbursements of counsel for the Agents and of any experts
and agents (including, without limitation, any collateral trustee which may act
as agent of the Agents), which the Agents may incur in connection with (i) the
preparation, negotiation, execution, delivery, recordation, administration,
amendment, waiver or other modification or termination of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any Collateral, (iii) the exercise or
enforcement of any of the rights of the Agents hereunder, or (iv) the failure by
any Grantor to perform or observe any of the provisions hereof.

26

--------------------------------------------------------------------------------

 
SECTION 11.  Notices, Etc.   All notices and other communications provided for
hereunder shall be given in accordance with the notice provision of the
Financing Agreement.  
 
SECTION 12.  Security Interest Absolute; Joint and Several Obligations .
 
(a) All rights of the Secured Parties, all Liens and all obligations of each of
the Grantors hereunder shall be absolute and unconditional irrespective of (i)
any lack of validity or enforceability of the Financing Agreement or any other
Loan Document, (ii) any change in the time, manner or place of payment of, or in
any other term in respect of, all or any of the Secured Obligations, or any
other amendment or waiver of or consent to any departure from the Financing
Agreement or any other Loan Document, (iii) any exchange or release of, or
non-perfection of any Lien on any Collateral, or any release or amendment or
waiver of or consent to departure from any guaranty, for all or any of the
Secured Obligations, or (iv) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any of the Grantors in
respect of the Secured Obligations.  All authorizations and agencies contained
herein with respect to any of the Collateral are irrevocable and powers coupled
with an interest.
 
(b) Each Grantor hereby waives (i) promptness and diligence, (ii) notice of
acceptance and notice of the incurrence of any Obligation by any Borrower, (iii)
notice of any actions taken by any Agent, any Lender, any Guarantor or any other
Person under any Loan Document or any other agreement, document or instrument
relating thereto, (iv) all other notices, demands and protests, and all other
formalities of every kind in connection with the enforcement of the Obligations,
the omission of or delay in which, but for the provisions of this subsection
(b), might constitute grounds for relieving such Grantor of any such Grantor's
obligations hereunder and (v) any requirement that any Agent or any Lender
protect, secure, perfect or insure any security interest or other lien on any
property subject thereto or exhaust any right or take any action against any
Grantor or any other Person or any collateral.
 
(c) All of the obligations of the Grantors hereunder are joint and several.  The
Collateral Agent may, in its sole and absolute discretion, enforce the
provisions hereof against any of the Grantors and shall not be required to
proceed against all Grantors jointly or seek payment from the Grantors
ratably.  In addition, the Collateral Agent may, in its sole and absolute
discretion, select the Collateral of any one or more of the Grantors for sale or
application to the Secured Obligations, without regard to the ownership of such
Collateral, and shall not be required to make such selection ratably from the
Collateral owned by all of the Grantors.  The release or discharge of any
Grantor by the Collateral Agent shall not release or discharge any other Grantor
from the obligations of such Person hereunder.
 

 
27

--------------------------------------------------------------------------------

 
 
SECTION 13. Miscellaneous.
 
(a) No amendment of any provision of this Agreement (including any Schedule
attached hereto) shall be effective unless it is in writing and signed by each
Grantor affected thereby and the Collateral Agent, and no waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
therefrom, shall be effective unless it is in writing and signed by the
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
 
(b) No failure on the part of the Secured Parties to exercise, and no delay in
exercising, any right hereunder or under any other Loan Document shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.  The rights and remedies of the Secured Parties provided herein and in
the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law.  The rights of the Secured
Parties under any Loan Document against any party thereto are not conditional or
contingent on any attempt by such Person to exercise any of its rights under any
other Loan Document against such party or against any other Person, including
but not limited to, any Grantor.
 
(c) This Agreement shall create a continuing security interest in the Collateral
and shall (i) remain in full force and effect, subject to paragraph (e) below,
until the date on which all of the Secured Obligations have been indefeasibly
paid in full in cash after the termination of each Lender's Commitment and each
of the Loan Documents and (ii) be binding on each Grantor all other Persons who
become bound as debtor to this Agreement in accordance with Section 9-203(d) of
the Code, and shall inure, together with all rights and remedies of the Secured
Parties hereunder, to the benefit of the Secured Parties and their respective
successors, transferees and assigns.  Without limiting the generality of clause
(ii) of the immediately preceding sentence, the Secured Parties may assign or
otherwise transfer their respective rights and obligations under this Agreement
and any other Loan Document to any other Person pursuant to the terms of the
Financing Agreement, and such other Person shall thereupon become vested with
all of the benefits in respect thereof granted to the Secured Parties
and  herein or otherwise.  Upon any such assignment or transfer, all references
in this Agreement to any Secured Party shall mean the assignee of any such
Secured Party.  None of the rights or obligations of any Grantor hereunder may
be assigned or otherwise transferred without the prior written consent of the
Collateral Agent, and any such assignment or transfer shall be null and void.
 
(d) Upon the date on which all of the Secured Obligations have been indefeasibly
paid in full in cash after the termination of each Lender's Commitment and each
of the Loan Documents, (i) subject to paragraph (e) below, this Agreement and
the security interests, powers of attorney and licenses created hereby shall
terminate and all rights to the Collateral shall revert to the Grantors and (ii)
the Collateral Agent will, upon the Grantors' request and at the Grantors'
expense, without any representation, warranty or recourse whatsoever, (A) return
to the Grantors (or whomsoever shall be lawfully entitled to receive the same or
as a court of competent jurisdiction shall direct) such of the Collateral as
shall not have been sold or otherwise disposed of or applied pursuant to the
terms hereof and (B) execute and deliver to the Grantors such documents as the
Grantors shall reasonably request to evidence such termination.
 

 
28

--------------------------------------------------------------------------------

 
 
(e) This Agreement shall remain in full force and effect and continue to be
effective should any petition be filed by or against any Grantor for liquidation
or reorganization, should any Grantor become insolvent or make an assignment for
the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of any Grantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment or performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Secured Obligations, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as though such
payment or performance had not been made.  In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
 
(f) Upon the execution and delivery, or authentication, by any Person of a
security agreement supplement in substantially the form of Exhibit C hereto
(each a "Security Agreement Supplement"), (i) such Person shall be referred to
as an "Additional Grantor" and shall be and become a Grantor, and each reference
in this Agreement to "Grantor" shall also mean and be a reference to such
Additional Grantor, and each reference in this Agreement and the other Loan
Documents to "Collateral" shall also mean and be a reference to the Collateral
of such Additional Grantor, and (ii) the supplemental Schedules I-VIII attached
to each Security Agreement Supplement shall be incorporated into and become a
part of and supplement Schedules I-VIII, respectively, hereto, and the
Collateral Agent may attach such Schedules as supplements to such Schedules, and
each reference to such Schedules shall mean and be a reference to such
Schedules, as supplemented pursuant hereto.
 
(g) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR
THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.  ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS.  EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
 

 
29

--------------------------------------------------------------------------------

 

FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.  EACH GRANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAYBE ENFORCED IN OTHER JURISDICTIONS BY SUIT
ON THE JUDGMENT, OR IN ANY OTHER MANNER PROVIDED BY LAW.
 
(h) In addition to and without limitation of any of the foregoing, this
Agreement shall be deemed to be a Loan Document and shall otherwise be subject
to all of terms and conditions contained in Sections 12.10 and 12.11 of the
Financing Agreement, mutatis mutandi.
 
(i) Each Grantor irrevocably and unconditionally waives any right it may have to
claim or recover in any legal action, suit or proceeding with respect to this
Agreement any special, exemplary, punitive or consequential damages.
 
(j) Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
 
(k) Section headings herein are included for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
 
(l) So long as the Working Capital Agent is acting as bailee and as agent for
perfection on behalf of the Collateral Agent pursuant to the terms of the
Intercreditor Agreement, any obligation of any Grantor in this Agreement that
requires delivery of Collateral to, or the possession or control of Collateral
with, the Collateral Agent shall be deemed complied with and satisfied if such
delivery of Collateral is made to, or such possession or control of Collateral
is with, the Working Capital Agent.
 
(m) This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which shall be deemed
an original, but all of such counterparts taken together shall constitute one
and the same agreement.  Delivery of an executed counterpart of this Agreement
by facsimile or electronic mail shall be equally effective as delivery of an
original executed counterpart.
 

 
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
 

 
30

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
 

 

 
GRANTORS:
         
MONACO COACH CORPORATION
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 

 
SIGNATURE  MOTORCOACH RESORTS, INC.
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 

 
NAPLES MOTORCOACH RESORT INC.
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 

 
PORT OF THE ISLES MOTORCOACH RESORT, INC.
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 
OUTDOOR RESORTS OF LAS VEGAS, INC.
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 
Sched. I-1
 

 
 

--------------------------------------------------------------------------------

 

 
OUTDOOR RESORTS MOTORCOACH COUNTRY
 
CLUB, INC.
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 
LA QUINTA MOTORCOACH RESORT, INC.
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 
SIGNATURE  RESORTS OF MICHIGAN, INC.
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 
R-VISION HOLDINGS LLC
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 
R-VISION, INC.
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 
 2
 

--------------------------------------------------------------------------------

 
 

 

 
R-VISION MOTORIZED LLC
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 
BISON  MANUFACTURING, LLC
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 
ROADMASTER LLC
     
By:
/s/ P. Martin Daley
   
Name:  P. Martin Daley
   
Title:  Vice President

 
  3
 

--------------------------------------------------------------------------------

 
 
 
EXHIBIT A
 
PLEDGE AMENDMENT
 
This Pledge Amendment, dated _________ __, __ , is delivered pursuant to Section
4 of the Pledge and Security Agreement referred to below.  The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge and
Security Agreement, dated November 6, 2008, as it may heretofore have been or
hereafter may be amended, restated, supplemented, modified or otherwise changed
from time to time (the "Security Agreement") and that the promissory notes or
shares listed on this Pledge Amendment shall be hereby pledged and assigned to
the Collateral Agent and become part of the Pledged Interests referred to in
such Pledge Agreement and shall secure all of the Secured Obligations referred
to in such Security Agreement.
 
Pledged Debt
Grantor
Name of Maker
Description
Principal Amount
Outstanding as of
               

Pledged Shares
Grantor
Name of
Pledged Issuer
Number of
Shares
Percentage of Outstanding
Shares
Class
Certificate Number
                       

 

 

 
[GRANTOR]
     
By:
     
Name:
   
Title:

 
 
ABLECO FINANCE LLC,
as the Collateral Agent
 
By:
     
Name:
 
Title:

 
Exh. A-1
 

 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT B
 
GRANT OF A SECURITY INTEREST --[TRADEMARKS] [PATENTS] [COPYRIGHTS]
 
WHEREAS, ________________ (the "Grantor") [has adopted, used and is using, and
holds all right, title and interest in and to, the trademarks and service marks
listed on the attached Schedule A, which trademarks and service marks are
registered or applied for in the United States Patent and Trademark Office (the
"Trademarks")] [holds all right, title and interest in the letter patents,
design patents and utility patents listed on the attached Schedule A, which
patents are issued or applied for in the United States Patent and Trademark
Office (the "Patents")] [holds all right, title and interest in the copyrights
listed on the attached Schedule A, which copyrights are registered in the United
States Copyright Office (the "Copyrights")];
 
WHEREAS, the Grantor has entered into a Pledge and Security Agreement, dated
November 6, 2008 (as amended, restated, supplemented, modified or otherwise
changed from time to time, the "Security Agreement"), in favor of Ableco Finance
LLC, as the Collateral Agent for itself and certain lenders (in such capacity,
together with its successors and assigns, if any, the "Grantee"); and
 
WHEREAS, pursuant to the Security Agreement, the Grantor has granted to the
Grantee, and granted to the Grantee for the benefit of the Secured Parties (each
such term as defined in the Security Agreement), a continuing security interest
in all right, title and interest of the Grantor in, to and under the
[Trademarks, together with, among other things, the goodwill of the business
symbolized by the Trademarks] [Patents] [Copyrights] and the applications and
registrations thereof, and all proceeds thereof, including, without limitation,
any and all causes of action which may exist by reason of infringement thereof
and any and all damages arising from past, present and future violations thereof
(the "Collateral"), to secure the payment, performance and observance of the
Secured Obligations (as defined in the Security Agreement).
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Grantor does hereby grant to the Grantee
and grant to the Grantee for the benefit of the Secured Parties, a continuing
security interest in the Collateral to secure the prompt payment, performance
and observance of the Secured Obligations.
 
The Grantor does hereby further acknowledge and affirm that the rights and
remedies of the Grantee with respect to the Collateral are more fully set forth
in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
 

 
Exh. B-1
 

 
 

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the Grantor has caused this Assignment to be duly executed
by its officer thereunto duly authorized as of ___________  ____, 200___.
 
 

 
[GRANTOR]
     
By:
     
Name:
   
Title:

 
 
 
Exh. B-2
 

 
 

--------------------------------------------------------------------------------

 
 
SCHEDULE A TO GRANT OF A SECURITY INTEREST
 

 

[Trademark Registrations and Applications]
[Patents and Patent Applications]
[Copyright Registrations and Applications]

 
Exh. B-3
 

 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT C
 

 
FORM OF SECURITY AGREEMENT SUPPLEMENT
 
[Date of Security Agreement Supplement]
 
Ableco Finance LLC, as Collateral Agent
 
299 Park Avenue
 
23rd Floor
 
New York, NY 10171
 
Attention: [                                           ]
 
Ladies and Gentlemen:
 
Reference hereby is made to (i) the Financing Agreement, dated as of November 6,
2008 (such agreement, as amended, restated, supplemented, modified or otherwise
changed from time to time, including any replacement agreement therefor, being
hereinafter referred to as the "Financing Agreement") by and among Monaco Coach
Corporation, a Delaware corporation ("Monaco"), each subsidiary of Monaco listed
as a "Borrower" on the signature pages thereto (each a "Borrower" and
collectively, the "Borrowers"), each subsidiary of Monaco listed as a
"Guarantor" on the signature pages thereto (together with each other Person (as
defined in the Financing Agreement) that guarantees all or any portion of the
Obligations (as defined in the Financing Agreement) (each a "Guarantor" and
collectively, the "Guarantors"), the lenders from time to time party thereto
(each a "Lender" and collectively, the "Lenders"), the Collateral Agent, and
Ableco, as administrative agent for the Lenders (in such capacity, together with
its successors and assigns in such capacity, if any, the "Administrative Agent"
and together with the Collateral Agent, each an "Agent" and collectively, the
"Agents") and (ii) the Pledge and Security Agreement, dated as of November 6,
2008 (as amended, restated, supplemented or otherwise modified from time to
time, the "Security Agreement"), made by the Grantors from time to time party
thereto in favor of the Collateral Agent.  Capitalized terms defined in the
Financing Agreement or the Security Agreement and not otherwise defined herein
are used herein as defined in the Financing Agreement or the Security Agreement.
 
SECTION 1.                                Grant of Security.  The undersigned
hereby grants to the Collateral Agent, for the ratable benefit of the Secured
Parties, a security interest in, all of its right, title and interest in and to
all of the Collateral (as defined in the Security Agreement) of the undersigned,
whether now owned or hereafter acquired by the undersigned, wherever located and
whether now or hereafter existing or arising, including, without limitation, the
property and assets of the undersigned set forth on the attached supplemental
schedules to the Schedules to the Security Agreement.
 
SECTION 2.                                Security for Obligations.  The grant
of a security interest in the Collateral by the undersigned under this Security
Agreement Supplement and the Security Agreement secures the payment of all
Secured Obligations of the undersigned now or hereafter existing under or in
respect of the Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.  Without limiting the generality of the foregoing, each
of this Security Agreement Supplement and the Security Agreement secures the
payment of all amounts that constitute part of the Secured Obligations and that
would be owed by the undersigned to the Collateral Agent or any Secured Party
under the Loan Documents but for the fact that such Secured Obligations are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Grantor.
 
Exh. C-1

--------------------------------------------------------------------------------

 
SECTION 3.                                Supplements to Security Agreement
Schedules.  The undersigned has attached hereto supplemental Schedules I through
VIII to Schedules I through VIII, respectively, to the Security Agreement, and
the undersigned hereby certifies, as of the date first above written, that such
supplemental Schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement, and such
supplemental Schedules include all of the information required to be scheduled
to the Security Agreement and do not omit to state any information material
thereto.
 
SECTION 4.                                Representations and Warranties.  The
undersigned hereby makes each representation and warranty set forth in Section 5
of the Security Agreement (as supplemented by the attached supplemental
Schedules) to the same extent as each other Grantor.
 
SECTION 5.                                Obligations Under the Security
Agreement.  The undersigned hereby agrees, as of the date first above written,
to be bound as a Grantor by all of the terms and provisions of the Security
Agreement to the same extent as each of the other Grantors.  The undersigned
further agrees, as of the date first above written, that each reference in the
Security Agreement to an "Additional Grantor" or a "Grantor" shall also mean and
be a reference to the undersigned.
 
SECTION 6.                                Governing Law.  This Security
Agreement Supplement shall be governed by, and construed in accordance with, the
laws of the State of New York.
 
SECTION 7.                                Loan Document.  In addition to and
without limitation of any of the foregoing, this Security Agreement Supplement
shall be deemed to be a Loan Document and shall otherwise be subject to all of
terms and conditions contained in Sections 12.10 and 12.11 of the Financing
Agreement, mutatis mutandi.
 

 
Very truly yours,
     
[NAME OF ADDITIONAL LOAN PARTY]
         
By:
     
Name:
   
Title:

 

 
Exh. C-2
 

 
 

--------------------------------------------------------------------------------

 

Acknowledged and Agreed:
     
ABLECO FINANCE LLC,
 
as Collateral Agent
     
By:
     
Name:
   
Title:
 

 
Exh. C-3
 
 

--------------------------------------------------------------------------------