Exhibit 10.2




 





 


GUARANTEE AND COLLATERAL
AGREEMENT


 


among


 


SCIENTIFIC GAMES INTERNATIONAL,
INC.,


 


SCIENTIFIC GAMES CORPORATION,


as a Guarantor


 


and certain of their
Subsidiaries


 


in favor of


 


JPMORGAN CHASE BANK, N.A.,


 


as Administrative Agent


 


Dated as of June 9, 2008




 





 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.
  DEFINED TERMS

  	
  1

  
	
   

  	
  1.1.

  	
  Definitions

  	
  1

  
	
   

  	
  1.2.

  	
  Other Definitional Provisions

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.
  GUARANTEE

  	
  5

  
	
   

  	
  2.1.

  	
  Guarantee

  	
  5

  
	
   

  	
  2.2.

  	
  Indemnity and Subrogation.

  	
  5

  
	
   

  	
  2.3.

  	
  Contribution and Subrogation

  	
  6

  
	
   

  	
  2.4.

  	
  Subordination.

  	
  6

  
	
   

  	
  2.5.

  	
  Amendments, etc. with respect to the
  Borrower Obligations

  	
  6

  
	
   

  	
  2.6.

  	
  Guarantee Absolute and Unconditional

  	
  7

  
	
   

  	
  2.7.

  	
  Reinstatement

  	
  7

  
	
   

  	
  2.8.

  	
  Payments

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.
  GRANT OF SECURITY INTEREST

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 4.
  REPRESENTATIONS AND WARRANTIES

  	
  9

  
	
   

  	
  4.1.

  	
  Representations in Credit Agreement

  	
  9

  
	
   

  	
  4.2.

  	
  Title; No Other Liens

  	
  9

  
	
   

  	
  4.3.

  	
  Perfected Liens

  	
  9

  
	
   

  	
  4.4.

  	
  Jurisdiction of Organization; Chief
  Executive Office

  	
  10

  
	
   

  	
  4.5.

  	
  Inventory and Equipment

  	
  10

  
	
   

  	
  4.6.

  	
  Farm Products

  	
  10

  
	
   

  	
  4.7.

  	
  Investment Property

  	
  10

  
	
   

  	
  4.8.

  	
  Receivables

  	
  11

  
	
   

  	
  4.9.

  	
  Intellectual Property

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.
  COVENANTS

  	
  11

  
	
   

  	
  5.1.

  	
  Covenants in Credit Agreement

  	
  11

  
	
   

  	
  5.2.

  	
  Delivery of Instruments and Chattel Paper

  	
  12

  
	
   

  	
  5.3.

  	
  Maintenance of Insurance

  	
  12

  
	
   

  	
  5.4.

  	
  Payment of Obligations

  	
  12

  
	
   

  	
  5.5.

  	
  Maintenance of Perfected Security Interest;
  Further Documentation

  	
  12

  
	
   

  	
  5.6.

  	
  Changes in Locations, Name, etc.

  	
  13

  
	
   

  	
  5.7.

  	
  Notices

  	
  13

  
	
   

  	
  5.8.

  	
  Investment Property

  	
  13

  
	
   

  	
  5.9.

  	
  Receivables

  	
  13

  
	
   

  	
  5.10.

  	
  Intellectual Property

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.
  REMEDIAL PROVISIONS

  	
  16

  
	
   

  	
  6.1.

  	
  Certain Matters Relating to Receivables

  	
  16

  
	
   

  	
  6.2.

  	
  Communications with Obligors; Grantors
  Remain Liable

  	
  17

  
	
   

  	
  6.3.

  	
  Pledged Stock

  	
  17

  



 

















 


	
   

  	
  6.4.

  	
  Proceeds to be Turned Over to
  Administrative Agent

  	
  18

  
	
   

  	
  6.5.

  	
  Application of Proceeds

  	
  18

  
	
   

  	
  6.6.

  	
  Code and Other Remedies

  	
  19

  
	
   

  	
  6.7.

  	
  Registration Rights

  	
  20

  
	
   

  	
  6.8.

  	
  Deficiency

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.
  THE ADMINISTRATIVE AGENT

  	
  21

  
	
   

  	
  7.1.

  	
  Administrative Agent’s Appointment as
  Attorney-in-Fact, etc.

  	
  21

  
	
   

  	
  7.2.

  	
  Duty of Administrative Agent

  	
  23

  
	
   

  	
  7.3.

  	
  Recording of Financing Statements

  	
  23

  
	
   

  	
  7.4.

  	
  Authority of Administrative Agent

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.
  MISCELLANEOUS

  	
  24

  
	
   

  	
  8.1.

  	
  Amendments in Writing

  	
  24

  
	
   

  	
  8.2.

  	
  Notices

  	
  24

  
	
   

  	
  8.3.

  	
  No Waiver by Course of Conduct; Cumulative
  Remedies

  	
  24

  
	
   

  	
  8.4.

  	
  Enforcement Expenses; Indemnification

  	
  24

  
	
   

  	
  8.5.

  	
  Successors and Assigns

  	
  25

  
	
   

  	
  8.6.

  	
  Set-Off

  	
  25

  
	
   

  	
  8.7.

  	
  Counterparts

  	
  25

  
	
   

  	
  8.8.

  	
  Severability

  	
  25

  
	
   

  	
  8.9.

  	
  Section Headings

  	
  25

  
	
   

  	
  8.10.

  	
  Integration

  	
  25

  
	
   

  	
  8.11.

  	
  GOVERNING LAW

  	
  26

  
	
   

  	
  8.12.

  	
  Submission To Jurisdiction; Waivers

  	
  26

  
	
   

  	
  8.13.

  	
  Acknowledgements

  	
  26

  
	
   

  	
  8.14.

  	
  Additional Grantors

  	
  27

  
	
   

  	
  8.15.

  	
  Releases

  	
  27

  
	
   

  	
  8.16.

  	
  WAIVER OF JURY TRIAL

  	
  27

  



 

















 




	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  Schedule 1

  	
   

  	
  Guarantors

  
	
  Schedule 2

  	
   

  	
  Description of Pledged Securities

  
	
  Schedule 3

  	
   

  	
  Filings and Other Actions
  Required to Perfect Security Interests

  
	
  Schedule 4

  	
   

  	
  Location of Jurisdiction of
  Organization and Chief Executive Office

  
	
  Schedule 5

  	
   

  	
  Location of Inventory and
  Equipment

  
	
  Schedule 6

  	
   

  	
  Intellectual Property

  
	
   

  	
   

  	
   

  
	
  ANNEXES

  	
   

  
	
   

  	
   

  	
   

  
	
  Annex I

  	
   

  	
  Form of Assumption Agreement

  
	
  Annex II

  	
   

  	
  Form of Acknowledgment and
  Consent

  
	
  Annex III

  	
   

  	
  Form of Perfection
  Certificate

  






 

















 


GUARANTEE AND COLLATERAL AGREEMENT, dated as
of June 9, 2008, SCIENTIFIC GAMES INTERNATIONAL, INC., a Delaware
corporation (the “Borrower”), SCIENTIFIC GAMES CORPORATION, a Delaware
corporation (“Holdings”), as a Guarantor, each of the subsidiaries of
Holdings party hereto (together with the Borrower, Holdings and any other
subsidiary of Holdings that may become a party hereto as provided herein, the “Grantors”),
in favor of JPMORGAN CHASE BANK, N.A., as Administrative Agent (in such
capacity, the “Administrative Agent”) for the several banks, financial
institutions and other entities (the “Lenders”) from time to time
parties to the Credit Agreement, dated as of June 9, 2008 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among the Borrower, as borrower, Holdings, as a Guarantor and parent of the
Borrower, the Lenders and the Administrative Agent.


 


W  I  T  N  E  S  S  E  T
H:


 


WHEREAS, the Lenders have agreed to extend
credit to the Borrower subject to the terms and conditions set forth in the
Credit Agreement.


 


WHEREAS, the obligations of the Lenders to
extend such credit are conditioned upon, among other things, the execution and
delivery of this Agreement.


 


WHEREAS, the Guarantors are affiliates of the
Borrower, will derive substantial benefits from the extension of credit to the
Borrower pursuant to the Credit Agreement and are willing to execute and
deliver this Agreement in order to induce the Lenders to extend such credit.


 


NOW, THEREFORE, in consideration of the
premises, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Agents and the Lenders, as follows:


 


SECTION 1.  DEFINED TERMS


 


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


 


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


 


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


 


“Borrower
Credit Agreement Obligations”:  the
collective reference to the unpaid principal of and interest on the Loans and
Reimbursement Obligations and all other obligations and liabilities of the
Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the
Loans and Reimbursement Obligations and interest accruing at the then applicable
rate provided in the


 

















 


Credit Agreement after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
to any Agent or any Lender, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Credit Agreement, this Agreement, the
other Loan Documents or any Letter of Credit, or any other document made,
delivered or given in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Agents or to the Lenders that are required to
be paid by the Borrower pursuant to the terms of any of the foregoing
agreements).


 


“Borrower
Obligations”:  the collective
reference to (i) the Borrower Credit Agreement Obligations and (ii) Hedge
Agreement Obligations, but only to the extent that, and only so long as, the
Borrower Credit Agreement Obligations are secured and guaranteed pursuant
hereto.


 


“Collateral”:  as defined in Section 3.


 


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


 


“Copyrights”:  (i) all copyrights arising under the
laws of the United States, any other country or any political subdivision
thereof, whether registered or unregistered and whether published or
unpublished (including, without limitation, those listed on Schedule 6),
all registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.


 


“Copyright
Licenses”:  any written agreement
naming any Grantor as licensor or licensee (including, without limitation,
those listed on Schedule 6), granting any right under any
Copyright, including, without limitation, the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright.


 


“Deposit
Account”:  as defined in the Uniform
Commercial Code of any applicable jurisdiction and, in any event, including,
without limitation, any demand, time, savings, passbook or like account
maintained with a depositary institution.


 


“Financial Officer”:  the chief financial officer, principal
accounting officer, treasurer or controller of Holdings.


 


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


 


“Grantors”:
as defined in the preamble to this Agreement.


 


“Guarantor
Obligations”:  with respect to any
Guarantor, all obligations and liabilities of such Guarantor which may arise
under or in connection with this Agreement (including, without limitation, Section 2)
or any other Loan Document to which such Guarantor is a party, in each case
whether on account of guarantee obligations, reimbursement obligations, fees,
indemnities, 


 


2

















 


costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Agents or to the Lenders that are required to be paid by such Guarantor
pursuant to the terms of this Agreement or any other Loan Document).


 


“Guarantors”:  the collective reference to each Grantor
other than the Borrower.  The initial
Guarantors are identified on Schedule 1 hereto.


 


“Hedge
Agreement Obligations”:  the
collective reference to all obligations and liabilities of Holdings or any
Subsidiary (including, without limitation, interest accruing at the then
applicable rate provided in any Specified Hedge Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to Holdings or any such Subsidiary,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any counterparty to a Specified Hedge Agreement, whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, any Specified Hedge Agreement or any other document made, delivered or
given in connection therewith, in each case, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the relevant counterparty to a Specified Hedge Agreement that are required
to be paid by Holdings or any such Subsidiary pursuant to the terms of any
Specified Hedge Agreement).


 


“Intercompany
Note”:  any promissory note evidencing
loans made by any Grantor to any other Group Member.


 


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


 


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


 


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


 


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


 


“Patents”:  (i) all letters patent of the United
States, any other country or any political subdivision thereof, all reissues
and extensions thereof and all goodwill associated therewith, including,
without limitation, any of the foregoing referred to on Schedule 6,
(ii) all applications for letters patent of the United States or any other
country and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to on Schedule 6,
and (iii) all rights to obtain any reissues or extensions of the
foregoing.


 


“Patent
License”:  all agreements, whether
written or oral, providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in part by a Patent,
including, without limitation, any of the foregoing referred to on Schedule 6.


 


3

















 


“Perfection Certificate”:  a certificate substantially in the form of
Annex II, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Financial Officer and the chief
legal officer of Holdings.


 


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


 


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


 


“Proceeds”:  all “proceeds” as such term is defined in Section 9-102(a)(64)
of the New York UCC and, in any event, shall include, without limitation, all
dividends or other income from the Investment Property, collections thereon or
distributions or payments with respect thereto.


 


“Receivable”:  any right to payment for goods sold or leased
or for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).


 


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


 


“Trademarks”:  (i) all trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, service marks, logos and other source or business identifiers,
and all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all
common-law rights related thereto, including, without limitation, any of the
foregoing referred to on Schedule 6, and (ii) the right to
obtain all renewals thereof.


 


“Trademark
License”:  any agreement, whether
written or oral, providing for the grant by or to any Grantor of any right to
use any Trademark, including, without limitation, any of the foregoing referred
to on Schedule 6.


 


“Vehicles”:  all cars, trucks, trailers, construction,
special purpose and other vehicles and equipment covered by a certificate of
title of any state or of the United States of America and all appurtenants to
any of the foregoing.


 


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


 


4

















 


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


 


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


 


(d)          Where the context requires, any affiliate of a Lender which
is a party to a Specified Hedge Agreement and any counterparty to a Specified
Hedge Agreement set forth on Schedule 1.1(b) to the Credit Agreement,
in each case shall be deemed to be a “Lender”
for purposes of this Agreement.


 


SECTION 2.  GUARANTEE


 


2.1.         Guarantee.  (a)  Each
of the Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantees to the Administrative Agent, for the ratable benefit of
the Agents and the Lenders and their respective permitted successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.


 


(b)          [Reserved.]


 


(c)          [Reserved.]


 


(d)          The
guarantee contained in this Section 2 shall remain in full force and
effect until all the Borrower Obligations and the obligations of each Guarantor
under the guarantee contained in this Section 2 shall have been satisfied
by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.


 


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


 


2.2.         Indemnity
and Subrogation.  In addition to all
such rights of indemnity and subrogation as the Guarantors may have under
applicable law (but subject to Section 2.4), Holdings and the Borrower
agree that (a) in the event a payment of an obligation shall be made by
any Guarantor (other than Holdings) under this Agreement, Holdings and the
Borrower shall indemnify such Guarantor for the full amount of such payment and
such Guarantor shall be 


 


5

















 


subrogated to the
rights of the Person to whom such payment shall have been made to the extent of
such payment and (b) in the event any assets of any Grantor (other than
Holdings or the Borrower) shall be sold pursuant to this Agreement or any other
Security Document to satisfy in whole or in part an obligation owed to any
Lender, Holdings and the Borrower shall indemnify such Grantor in an amount
equal to the greater of the book value or the fair market value of the assets
so sold.


 


2.3.         Contribution
and Subrogation.  Each Guarantor and Grantor (a “Contributing
Party”) agrees (subject to Section 2.4) that, in the event a payment
shall be made by any other Guarantor (other than Holdings) hereunder in respect
of any Borrower Obligation or assets of any other Grantor (other than Holdings
or the Borrower) shall be sold pursuant to any Security Document to satisfy any
Borrower Obligation owed to any Lender and such other Guarantor or Grantor (the
“Claiming Party”) shall not have been fully indemnified by Holdings and
the Borrower as provided in Section 2.2, the Contributing Party shall
indemnify the Claiming Party in an amount equal to the amount of such payment
or the greater of the book value or the fair market value of such assets, as
the case may be, in each case multiplied by a fraction of which the numerator
shall be the net worth of the Contributing Party on the date hereof and the
denominator shall be the aggregate net worth of all the Guarantors and Grantors
on the date hereof (or, in the case of any Guarantor or Grantor becoming a
party hereto pursuant to Section 8.14, the date of the Assumption
Agreement executed and delivered by such Guarantor or Grantor).  Any Contributing Party making any payment to
a Claiming Party pursuant to this Section 2.3 shall be subrogated to the
rights of such Claiming Party under Section 2.2 to the extent of such
payment.


 


2.4.         Subordination.  Notwithstanding any
provision of this Agreement to the contrary, all rights of the Guarantors and
Grantors under Sections 2.2 and 2.3 and all other rights of indemnity,
contribution or subrogation under applicable law or otherwise shall be fully
subordinated to the indefeasible payment in full in cash of the Borrower
Obligations.  No failure on the part of
the Borrower or any Guarantor or Grantor to make the payments required by
Sections 2.2 and 2.3 (or any other payments required under applicable law
or otherwise) shall in any respect limit the obligations and liabilities of any
Guarantor or Grantor with respect to its obligations hereunder, and each
Guarantor and Grantor shall remain liable for the full amount of the
obligations of such Guarantor or Grantor hereunder.


 


(b)          Each Guarantor and Grantor hereby agrees that all
Indebtedness and other monetary obligations owed by it to any other Guarantor, Grantor
or any other Subsidiary shall be fully subordinated to the indefeasible payment
in full in cash of the Borrower Obligations.


 


2.5.         Amendments,
etc. with respect to the Borrower Obligations.  Each Guarantor
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Borrower Obligations made by
any Agent or any Lender may be rescinded by such Agent or such Lender and any
of the Borrower Obligations continued, and the Borrower Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by any
Agent or any Lender, and the Credit Agreement and the 


 


6

















 


other Loan Documents
and any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, and any
collateral security, guarantee or right of offset at any time held by any Agent
or any Lender for the payment of the Borrower Obligations may be sold,
exchanged, waived, surrendered or released. 
No Agent or Lender shall have any obligation to protect, secure, perfect
or insure any Lien at any time held by it as security for the Borrower
Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.


 


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


 


2.7.         Reinstatement.  The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of


 


7
















 


any of the
Borrower Obligations is rescinded or must otherwise be restored or returned by
any Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or any Guarantor, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.


 


2.8.         Payments.  Each Guarantor hereby guarantees that
payments hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars or the relevant Foreign Currency, as applicable, at the
Funding Office.


 


SECTION 3.  GRANT OF SECURITY INTEREST


 


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


 


(a)          all
Accounts;


 


(b)          all
Chattel Paper;


 


(c)          all
Deposit Accounts;


 


(d)          all
Documents;


 


(e)          all
Equipment, other than Vehicles;


 


(f)           all
General Intangibles;


 


(g)          all
Instruments (except with regard to licenses of Intellectual Property by a third
party to a Grantor, if the assignment, transfer or grant of the security
interest would breach, limit the rights of the Grantor under or give rise to a
right to terminate such license);


 


(h)          all
Intellectual Property;


 


(i)           all
Inventory;


 


(j)           all
Investment Property;


 


(k)          all Letter-of-Credit
Rights;


 


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


 


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


 


8

















 


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


 


provided,
however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not constitute a grant of a security
interest in any property to the extent that such grant of a security interest
is prohibited by any Requirements of Law of a Governmental Authority, requires
a consent not obtained of any Governmental Authority pursuant to such
Requirement of Law or is prohibited by, or constitutes a breach or default
under or results in the termination of or requires any consent not obtained
under, any contract, license, agreement, instrument or other document
evidencing or giving rise to such property or, in the case of any Investment
Property, any applicable shareholder or similar agreement, except to the extent
that such Requirement of Law or the term in such contract, license, agreement,
instrument or other document or shareholder or similar agreement providing for
such prohibition, breach, default or termination or requiring such consent is
ineffective under applicable law; and provided, further, that the
parties hereto acknowledge that the security interest is granted as security
only and shall not subject the Administrative Agent or any Lender to, or in any
way alter or modify, any obligation or liability of any Grantor with respect to
or arising out of the Collateral.


 


SECTION 4.  REPRESENTATIONS AND WARRANTIES


 


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


 


4.1.         Representations
in Credit Agreement.  In the case of each Guarantor, the
representations and warranties set forth in Section 5 of the Credit
Agreement as they relate to such Guarantor or to the Loan Documents to which
such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and each Agent and each Lender shall be
entitled to rely on each of them as if they were fully set forth herein, provided
that each reference in each such representation and warranty to the knowledge
of Holdings and the Borrower shall, for the purposes of this Section 4.1,
be deemed to be a reference to such Guarantor’s knowledge.


 


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


 


4.3.         Perfected
Liens.  The security interests granted pursuant to this Agreement
(a) upon completion of the filings and other actions specified on Schedule 3
(which, in the case of all filings and other documents referred to on said
Schedule, have been delivered to the Administrative Agent in completed and duly
executed form) will constitute valid perfected 


 


9

















 


security interests
in all of the Collateral in favor of the Administrative Agent, for the ratable
benefit of the Agents and the Lenders, as collateral security for such Grantor’s
Obligations, enforceable in accordance with the terms hereof against all
creditors of such Grantor and any Persons purporting to purchase any Collateral
from such Grantor and (b) are prior to all other Liens on the Collateral
in existence on the date hereof except for Liens permitted by the Credit
Agreement.


 


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


 


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


 


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


 


4.7.         Investment
Property.  (a)  The shares of Pledged Stock pledged by
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each relevant Issuer owned by such Grantor or,
in the case of Foreign Subsidiary Voting Stock, if less, 65% of the outstanding
Foreign Subsidiary Voting Stock of each relevant Issuer owned by such Grantor.
Each Grantor acknowledges and agrees that (i) to the extent each interest
in any limited liability company or limited partnership controlled now or in
the future by such Grantor and pledged hereunder is a “security” within the
meaning of Article 8 of the New York UCC and is governed by Article 8
of the New York UCC, such interest shall be certificated and (ii) each
such interest shall at all times hereafter continue to be such a security and
represented by such certificate.  Each
Grantor further acknowledges and agrees that with respect to any interest in
any limited liability company or limited partnership controlled now or in the
future by such Grantor and pledged hereunder that is not a “security” within
the meaning of Article 8 of the New York UCC, such Grantor shall at no
time elect to treat any such interest as a “security” within the meaning of Article 8
of the New York UCC, nor shall such interest be represented by a certificate,
unless such Grantor provides prior written notification to the Administrative
Agent of such election and such interest is thereafter represented by a
certificate that is promptly delivered to the Administrative Agent pursuant to
the terms hereof.


 


(b)          All
the shares of the Pledged Stock have been duly and validly issued and are fully
paid and nonassessable.


 


(c)          Each
of the Pledged Notes constitutes the legal, valid and binding obligation of the
obligor with respect thereto, enforceable in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally, general equitable principles 


 


10

















 


(whether considered in a proceeding in equity
or at law) and an implied covenant of good faith and fair dealing.


 


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


 


4.8.         Receivables.  (a)  Each
Grantor shall deliver to the Administrative Agent each Instrument or Chattel
Paper in an amount in excess of $1,000,000 payable to such Grantor under or in
connection with any Receivable.


 


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


 


4.9.         Intellectual
Property.  (a)  Schedule 6 lists all
registered Copyrights, registered Trademarks, Patents and applications to
register any of the foregoing owned by such Grantor in its own name on the date
hereof, and all Copyright Licenses, Trademark Licenses and Patent Licenses.


 


(b)          On
the date hereof, all material Intellectual Property of such Grantor, including
without limitation the Intellectual Property described on Schedule 6,
is valid, subsisting, unexpired and enforceable, has not been abandoned and
does not infringe the intellectual property rights of any other Person.


 


(c)          Except
as set forth on Schedule 6, on the date hereof, none of the
Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.


 


(d)          No
holding, decision or judgment has been rendered by any Governmental Authority
which would limit, cancel or question the validity of, or such Grantor’s rights
in, any Intellectual Property in any respect that could reasonably be expected
to have a Material Adverse Effect.


 


(e)          Except as set forth on Schedule 6,
no action or proceeding is pending, or, to the knowledge of such Grantor,
threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or such Grantor’s ownership interest
therein or (ii) which, if adversely determined, would have a material
adverse effect on the value of any Intellectual Property.


 


SECTION 5.  COVENANTS


 


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


 


5.1.         Covenants
in Credit Agreement.  In the case of each Guarantor, such
Guarantor shall take, or shall refrain from taking, as the case may be, each
action that is 


 


11

















 


necessary to be
taken or not taken under Sections 7 and 8 of the Credit Agreement, as the
case may be, so that no Default or Event of Default is caused by the failure to
take such action or to refrain from taking such action by such Guarantor or any
of its Subsidiaries.


 


5.2.         Delivery
of Instruments and Chattel Paper.  If any amount in excess of
$1,000,000 payable under or in connection with any of the Collateral shall be
or become evidenced by any Instrument, Certificated Security or Chattel Paper,
such Instrument, Certificated Security or Chattel Paper shall be promptly
delivered to the Administrative Agent, duly indorsed in a manner reasonably
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.


 


5.3.         Maintenance
of Insurance.  (a)  Such Grantor will maintain, with
financially sound and reputable companies, insurance policies in accordance
with Section 7.5 of the Credit Agreement.


 


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


 


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


 


5.4.         Payment
of Obligations.  Such Grantor will pay and discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all material taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as
all material claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
such Grantor.


 


5.5.         Maintenance
of Perfected Security Interest; Further Documentation.  (a)  Such
Grantor shall maintain the security interest created by this Agreement as a
perfected security interest having at least the priority described in Section 4.3
and shall defend such security interest against the claims and demands of all
Persons whomsoever, subject to the rights of such Grantor under the Loan
Documents to Dispose of the Collateral.


 


(b)          Such
Grantor will furnish to the Administrative Agent and the Lenders from time to
time statements and schedules further identifying and describing the assets and
property of such Grantor and such other reports in connection therewith, in
each case as the Administrative Agent may reasonably request, all in reasonable
detail.


 


12

















 


(c)          At any time and from time to time,
upon the written request of the Administrative Agent, and at the sole expense
of such Grantor, such Grantor will promptly and duly execute and deliver, and
have recorded, such further instruments and documents and take such further
actions as the Administrative Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, (i) the filing
of any financing or continuation statements under the Uniform Commercial Code
(or other similar laws) in effect in any jurisdiction with respect to the
security interests created hereby and (ii) in the case of  Investment Property, Deposit Accounts,
Letter-of-Credit Rights and any other relevant Collateral, taking any actions
necessary to enable the Administrative Agent to obtain “control” (within the
meaning of the applicable Uniform Commercial Code) with respect thereto.


 


5.6.         Changes
in Locations, Name, etc.  Such Grantor will promptly notify the
Administrative Agent of (i) any change in its jurisdiction of organization
or the location of its chief executive office or sole place of business or principal
residence from that referred to in Section 4.4, or (ii) any change in
its name; and thereupon such Grantor shall deliver to the Administrative Agent (a) all
additional financing statements and other documents reasonably requested by the
Administrative Agent as necessary to maintain the validity, perfection and
priority of the security interests provided for herein and (b) if
applicable, a written supplement to Schedule 5 showing any
additional location at which Inventory or Equipment shall be kept.


 


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


 


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


 


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


 


5.9.         Investment
Property.  (a)  If such Grantor shall become entitled
to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in substitution
of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or
otherwise in respect thereof, such Grantor shall accept the same as the agent
of the Agents and the Lenders, hold the same for the benefit of the Agents and
the Lenders and deliver the same forthwith to the Administrative Agent in the
exact form received, duly indorsed by such Grantor to the Administrative Agent,
if required, together with an undated stock power covering such certificate
duly executed in blank by such Grantor to be held by the Administrative Agent,
subject to the terms hereof, as additional collateral security for the
Obligations.  Any sums paid upon or in
respect of the Investment Property upon the liquidation or dissolution of any
Issuer shall be paid over to the Administrative Agent to be held by it
hereunder as additional collateral security for the Obligations, and in case


 


13

















 


any distribution
of capital shall be made on or in respect of the Investment Property or any
property shall be distributed upon or with respect to the Investment Property
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security interest in favor of
the Administrative Agent, be delivered to the Administrative Agent to be held
by it hereunder as additional collateral security for the Obligations.  If any sums of money or property so paid or
distributed in respect of the Investment Property shall be received by such
Grantor, such Grantor shall, until such money or property is paid or delivered
to the Administrative Agent, hold such money or property for the benefit of the
Agents and the Lenders, segregated from other funds of such Grantor, as
additional collateral security for the Obligations.  Notwithstanding the foregoing, the
Grantors shall not be required to pay over to the Administrative Agent or
deliver to the Administrative Agent as Collateral any proceeds of any
liquidation or dissolution of any Issuer, or any distribution of capital or
property in respect of any Investment Property, to the extent that (i) such
liquidation, dissolution or distribution, if treated as a Disposition of the
relevant Issuer, would be permitted by the Credit Agreement and (ii) the
proceeds thereof are applied toward prepayment of Loans and reduction of
Commitments to the extent required by the Credit Agreement.


 


(b)          Without
the prior written consent of the Administrative Agent, such Grantor will not (i) vote
to enable, or take any other action to permit, any Issuer to issue any stock or
other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of any Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Investment Property or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Credit Agreement), (iii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Investment Property or Proceeds thereof, or any interest
therein, except for the security interests created by this Agreement or (iv) enter
into any agreement or undertaking restricting the right or ability of such
Grantor or the Administrative Agent to sell, assign or transfer any of the
Investment Property or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Credit Agreement).


 


(c)          In
the case of each Grantor which is an Issuer, such Issuer agrees that (i) it
will be bound by the terms of this Agreement relating to the Investment
Property issued by it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) with
respect to the Investment Property issued by it and (iii) the terms of
Sections 6.3(c) and 6.7 shall apply to it, mutatis  mutandis,
with respect to all actions that may be required of it pursuant to Section 6.3(c) or
6.7 with respect to the Investment Property issued by it.


 


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


 


14

















 


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


 


5.11.       Intellectual
Property.  (a)  Such Grantor (either itself or through
licensees) will (i) continue to use each material Trademark owned by any
Grantor on and with respect to each and every product and service applicable to
its then current line in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, provided that if a product or
service line is discontinued, use of a Trademark with respect to such product
or service line may be discontinued, (ii) maintain at least the current
quality of products and services offered under such Trademark, (iii) use
such Trademark with the appropriate notice of registration and all other
notices and legends required by applicable Requirements of Law, (iv) not
adopt or use any mark which is confusingly similar or a colorable imitation of
such Trademark unless the Administrative Agent, for the ratable benefit of the
Agents and the Lenders, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not knowingly (and not knowingly
permit any licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby such Trademark may become invalidated or impaired in any
way, except as provided in Section 5.10(a)(i) above.


 


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


 


(c)          Such
Grantor (either itself or through licensees) will not knowingly (and will not
knowingly permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any material portion of the Copyrights
owned by any Grantor may become invalidated or otherwise impaired.  Such Grantor will not knowingly (either
itself or through licensees) do any act whereby any material portion of the
Copyrights owned by any Grantor may fall into the public domain.


 


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


 


(e)          Such
Grantor will notify the Administrative Agent and the Lenders promptly if it
knows, or has reason to know, that any application or registration relating to
any material Intellectual Property may become forfeited, abandoned or dedicated
to the public, or of any adverse determination or development (including,
without limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any court or tribunal in any
country) regarding such Grantor’s ownership of, or the validity of, any
material Intellectual Property or such Grantor’s right to register the same or
to own and maintain the same.


 


(f)           Whenever
such Grantor, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Intellectual
Property with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, such Grantor shall 


 


15

















 


report such filing to the Administrative
Agent within thirty Business Days after the last day of the fiscal quarter in
which such filing occurs.  Upon request
of the Administrative Agent, such Grantor shall execute and deliver, for
recordation by the Administrative Agent (at such Grantor’s cost and expense),
any and all agreements, instruments, documents, and papers as the
Administrative Agent may request to evidence the Agents’ and the Lenders’ security
interest in any Copyright, Patent or Trademark owned by any Grantor and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby.


 


(g)          Such
Grantor will take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain and pursue
each application (and to obtain the relevant registration) and to maintain each
registration of the material Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.


 


(h)          In
the event that any material Intellectual Property is infringed, misappropriated
or diluted by a third party, such Grantor shall (i) take such actions as
such Grantor shall reasonably deem appropriate under the circumstances to
protect such Intellectual Property and (ii) if such Intellectual Property
is of material economic value, promptly notify the Administrative Agent after
it learns thereof and take all commercially reasonable actions necessary to
protect such Intellectual Property and to recover any and all damages for such
infringement, misappropriation or dilution.


 


SECTION 6.  REMEDIAL PROVISIONS


 


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


 


(b)          The Administrative Agent hereby
authorizes each Grantor to collect such Grantor’s Receivables and the
Administrative Agent may curtail or terminate said authority at any time after
the occurrence and during the continuance of an Event of Default.  If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of
Default, any payments of Receivables, when collected by any Grantor, (i) shall
be forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Lenders only as provided in Section 6.5,
and (ii) until so turned over, shall be held by such Grantor on behalf of 


 


16

















 


the Administrative Agent and the Lenders,
segregated from other funds of such Grantor. 
Each such deposit of Proceeds of Receivables shall be accompanied by a
report identifying in reasonable detail the nature and source of the payments
included in the deposit.


 


(c)          Upon
the occurrence and during the continuance of an Event of Default, at the
Administrative Agent’s request, each Grantor shall deliver to the
Administrative Agent all original (where practicable, otherwise copies will be
delivered) and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Receivables, including, without limitation,
all original orders, invoices and shipping receipts.


 


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


 


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


 


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


 


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


 


17
















 


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


 


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


 


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


 


6.5.                          Application
of Proceeds.  At such intervals as
may be agreed upon by the Borrower and the Administrative Agent, or, if an
Event of Default shall have occurred and be 


 


18

















 


continuing, at any time
at the Administrative Agent’s election, the Administrative Agent may apply all
or any part of Proceeds constituting Collateral, whether or not held in any
Collateral Account, and any proceeds of the guarantee set forth in Section 2,
in payment of the Obligations in the following order:


 


First,
to pay incurred and unpaid fees, costs and expenses of the Administrative Agent
under the Loan Documents, including, without limitation, the reasonable fees
and expenses of counsel to the Administrative Agent;


 


Second,
to the Administrative Agent, for application by it towards payment of amounts
remaining unpaid in respect of the Obligations, pro  rata among
the Agents and the Lenders according to the amounts of the Obligations
remaining unpaid to the Agents and the Lenders (including depositing in a cash
collateral account opened by the Administrative Agent, an amount equal to the
aggregate amount of L/C Obligations at the time of application of Proceeds
pursuant to this Section 6.5 and with respect to which the Borrower has
not previously made a deposit into a cash collateral account pursuant to Section 9
of the Credit Agreement); and


 


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


 


6.6.                          Code
and Other Remedies.  If an Event of
Default shall occur and be continuing, the Administrative Agent, on behalf of
the Lenders, may exercise, in addition to all other rights and remedies granted
to them in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the New York UCC or any other applicable law.  Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived to the extent permitted by applicable law), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of any Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may reasonably
deem best, for cash or on credit or for future delivery without assumption of
any credit risk.  Any Agent or any Lender
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption
in any Grantor, which right or equity is hereby waived and released.  Each Grantor further agrees, at the
Administrative Agent’s request, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at such Grantor’s premises or elsewhere.  The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6, after
deducting all reasonable costs and expenses of every kind incurred in 


 


19

















 


connection therewith or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys’ fees
and disbursements, to the payment in whole or in part of the Obligations, in
such order as the Administrative Agent may elect, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section 9-615(a)(3) of
the New York UCC, need the Administrative Agent account for the surplus, if
any, to any Grantor.  To the extent
permitted by applicable law, each Grantor waives all claims, damages and
demands it may acquire against any Agent or any Lender arising out of the
exercise by them of any rights hereunder. 
If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition.


 


6.7.                          Registration
Rights.  (a)  If the
Administrative Agent shall determine to exercise its right to sell any or all
of the Pledged Stock pursuant to Section 6.6, and if in the opinion of the
Administrative Agent it is necessary or advisable to have the Pledged Stock, or
that portion thereof to be sold, registered under the provisions of the
Securities Act, the relevant Grantor will cause the Issuer thereof to (i) execute
and deliver, and cause the directors and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of the Administrative Agent,
necessary or advisable to register the Pledged Stock, or that portion thereof
to be sold, under the provisions of the Securities Act, (ii) use its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Stock, or that portion thereof to be sold,
and (iii) make all amendments thereto and/or to the related prospectus
which, in the opinion of the Administrative Agent, are necessary or advisable,
all in conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto.  Each Grantor agrees to cause such Issuer to
comply with the provisions of the securities or “Blue Sky” laws of any and all
jurisdictions which the Administrative Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of Section 11(a) of
the Securities Act.


 


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


 


20

















 


(c)                              Each
Grantor agrees to use its best efforts to do or cause to be done all such other
acts as may be necessary to make such sale or sales of all or any portion of
the Pledged Stock pursuant to this Section 6.7 valid and binding and in
compliance with any and all other applicable Requirements of Law.  Each Grantor further agrees that a breach of
any of the covenants contained in this Section 6.7 will cause irreparable
injury to the Agents and the Lenders, that the Agents and the Lenders have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 6.7 shall be
specifically enforceable against such Grantor, and such Grantor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred
under the Credit Agreement.


 


6.8.                          Deficiency.  Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations.


 


SECTION 7.  THE ADMINISTRATIVE AGENT


 


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


 


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


 


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


 


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


 


21

















 


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


 


(v)                             (1) direct
any party liable for any payment under any of the Collateral to make payment of
any and all moneys due or to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall direct; (2) ask
or demand for, collect, and receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect of
or arising out of any Collateral; (3) sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, notices and other documents
in connection with any of the Collateral; (4) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to enforce
any other right in respect of any Collateral; (5) defend any suit, action
or proceeding brought against such Grantor with respect to any Collateral; (6) settle,
compromise or adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Administrative Agent may
deem appropriate; (7) assign any Copyright, Patent or Trademark (along with
the goodwill of the business to which any such Copyright, Patent or Trademark
owned by any Grantor pertains), throughout the world for such term or terms, on
such conditions, and in such manner, as the Administrative Agent shall in its
sole discretion determine; and (8) generally, sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the absolute
owner thereof for all purposes, and do, at the Administrative Agent’s option
and such Grantor’s expense, at any time, or from time to time, all acts and
things which the Administrative Agent deems necessary to protect, preserve or
realize upon the Collateral and the Administrative Agent’s and the Lenders’
security interests therein and to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.


 


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


 


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


 


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


 


22

















 


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


 


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


 


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


 


7.4.                          Authority
of Administrative Agent.  Each
Grantor acknowledges that the rights and responsibilities of the Administrative
Agent under this Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Agreement shall, as
between the Agents and the Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Agents and the Lenders with full and valid authority so to act or refrain
from acting, and no Grantor shall be under any obligation, or entitlement, to
make any inquiry respecting such authority.


 


23

















 


SECTION 8.  MISCELLANEOUS


 


8.1.                          Amendments
in Writing.  None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except in accordance with Section 11.1 of the Credit Agreement.


 


8.2.                          Notices.  All notices, requests and demands to or upon
the Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 11.2 of the Credit Agreement; provided that
any such notice, request or demand to or upon any Guarantor (other than
Holdings) shall be addressed to such Guarantor at its notice address set forth
on Schedule 1.


 


8.3.                          No
Waiver by Course of Conduct; Cumulative Remedies.  No Agent or Lender shall by any act (except
by a written instrument pursuant to Section 8.1), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default.  No failure to exercise, nor any delay in
exercising, on the part of any Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  A waiver by any Agent or any Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which the Administrative Agent or such Lender would
otherwise have on any future occasion. 
The rights and remedies herein provided are cumulative, may be exercised
singly or concurrently and are not exclusive of any other rights or remedies
provided by law.


 


8.4.                          Enforcement
Expenses; Indemnification.  (a)  Each
Guarantor agrees to pay, or reimburse each Lender and Agent for all its costs
and reasonable expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 or otherwise enforcing or preserving any
rights under this Agreement and the other Loan Documents to which such
Guarantor is a party, including, without limitation, the fees and disbursements
of counsel (including the allocated fees and expenses of in-house counsel) to
each Lender and of counsel to the Administrative Agent.


 


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


 


(c)                              Each
Guarantor agrees to pay, and to save the Agents and the Lenders harmless from,
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, reasonable expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 11.5 of the Credit
Agreement.


 


24

















 


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


 


8.5.                          Successors
and Assigns.  This Agreement shall be
binding upon the successors and assigns of each Grantor and shall inure to the
benefit of the Agents and the Lenders and their successors and assigns; provided
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent unless permitted by the Credit Agreement.


 


8.6.                          Set-Off.  Each Grantor hereby irrevocably authorizes
each Agent and each Lender at any time and from time to time while an Event of
Default shall have occurred and be continuing, without notice to such Grantor
or any other Grantor, any such notice being expressly waived by each Grantor to
the extent permitted by applicable law, to set-off and appropriate and apply
any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Agent or such Lender to
or for the credit or the account of such Grantor, or any part thereof in such
amounts as such Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Grantor to such Agent or such Lender
hereunder and claims of every nature and description of such Agent or such Lender
against such Grantor, in any currency, arising hereunder, under the Credit
Agreement or any other Loan Document to which it is a party, as such Agent or
such Lender may elect, whether or not any Agent or any Lender has made any
demand for payment and although such obligations, liabilities and claims may be
contingent or unmatured.  Each Agent and
each Lender shall notify such Grantor promptly of any such set-off and the
application made by such Agent or such Lender of the proceeds thereof, provided
that the failure to give such notice shall not affect the validity of such
set-off and application.  The rights of
each Agent and each Lender under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which such Agent or such Lender may have.


 


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


 


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


 


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


 


8.10.                    Integration.  This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Agents and the Lenders with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by any Agent 


 


25

















 


or any Lender relative to
subject matter hereof and thereof not expressly set forth or referred to herein
or in the other Loan Documents.


 


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


 


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


 


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


 


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


 


(c)                              agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such Grantor (other than the
Borrower and Holdings) at its address referred to on Schedule 1, or
in the case of the Borrower and Holdings, at their respective addresses
referred to in Section 11.2 of the Credit Agreement, or at such other
address of which the Administrative Agent shall have been notified pursuant
hereto;


 


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


 


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


 


8.13.                    Acknowledgements.  Each Grantor hereby acknowledges that:


 


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


 


(b)                             no
Agent or Lender has any fiduciary relationship with or duty to any Grantor
arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Grantors, on the one hand, and the
Agents and Lenders, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and


 


26

















 


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


 


8.14.                    Additional
Grantors.  Each Subsidiary of
Holdings that is required to become a party to this Agreement pursuant to Section 7.9
of the Credit Agreement shall become a Grantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex I hereto.


 


8.15.                    Releases.  (a)  At such time as the Loans, the
Reimbursement Obligations and the other Obligations (other than Hedge Agreement
Obligations) shall have been paid in full, the Commitments have been terminated
and no Letters of Credit shall be outstanding (other than any such Letters of
Credit that the applicable Issuing Lender or Issuing Lenders shall, in its sole
discretion, permit to remain outstanding, but shall release the Revolving
Lenders from their participations therein), the Collateral shall be released
from the Liens created hereby, and this Agreement and all obligations (other
than those expressly stated to survive such termination) of the Administrative
Agent and each Grantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors.


 


(b)                             If
any of the Collateral shall be sold, transferred or otherwise Disposed of by
any Grantor in a transaction permitted by the Credit Agreement (other than to a
Loan Party), the Collateral shall be automatically released from the Liens
created hereby.


 


(c)                              At
the request and sole expense of the Borrower, a Guarantor (other than Holdings)
shall be released from its obligations hereunder and the Collateral of such
Guarantor shall be automatically released from the Liens created hereby upon
the consummation of any transaction permitted by the Credit Agreement as a
result of which such Guarantor ceases to be a Subsidiary of Holdings.


 


(d)                             At
the request and sole expense of any Grantor following any such termination or
release pursuant to paragraph (a) , (b) or (c), the Administrative
Agent shall promptly deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination
or release, without recourse or warranty by the Administrative Agent.


 


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


 


27
















 


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


 


 


SCIENTIFIC
GAMES INTERNATIONAL, INC.,


 


 


	
   

  	
  By:

  	
  /s/ DeWayne E. Laird

  
	
   

  	
   

  	
  Name:
  DeWayne E. Laird

  
	
   

  	
   

  	
  Title:
    Vice President

  



 


[Signature Page to Guarantee
and Collateral Agreement]


 

















 


AUTOTOTE ENTERPRISES, INC.,


 


	
   

  	
  by

  	
   

  
	
   

  	
   

  	
    /s/ DeWayne E. Laird

  
	
   

  	
   

  	
    Name:
  DeWayne E. Laird

  
	
   

  	
   

  	
    Title:   Vice President

  



 


[Signature Page to Guarantee
and Collateral Agreement]


 

















 


SCIENTIFIC GAMES CORPORATION,


 


	
   

  	
  by

  	
   

  
	
   

  	
   

  	
    /s/ DeWayne E. Laird

  
	
   

  	
   

  	
    Name:

  	
  DeWayne E. Laird

  
	
   

  	
   

  	
    Title:

  	
  Vice President and Chief 

  
	
   

  	
   

  	
   

  	
  Financial Officer

  



 


[Signature Page to Guarantee
and Collateral Agreement]


 

















 


SCIENTIFIC GAMES HOLDINGS CORP.,


 


	
   

  	
  by

  	
   

  
	
   

  	
   

  	
    /s/ DeWayne E. Laird

  
	
   

  	
   

  	
    Name:
  DeWayne E. Laird

  
	
   

  	
   

  	
    Title:   Vice President

  



 


[Signature Page to Guarantee and Collateral Agreement]


 

















 


MDI ENTERTAINMENT, LLC,


 


	
   

  	
  by

  	
  SCIENTIFIC
  GAMES INTERNATIONAL, 

  INC., as its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    /s/
  Ira H. Raphaelson

  
	
   

  	
   

  	
    Name:

  	
  Ira
  H. Raphaelson

  
	
   

  	
   

  	
    Title:

  	
  Vice
  President, General Counsel and Secretary

  



 


[Signature Page to Guarantee and Collateral Agreement]


 

















 


SCIENTIFIC GAMES RACING, LLC,


 


	
   

  	
  by

  	
   

  
	
   

  	
   

  	
    /s/ Ira H. Raphaelson

  
	
   

  	
   

  	
    Name:

  	
  Ira H. Raphaelson

  
	
   

  	
   

  	
    Title:

  	
  Vice
  President, General Counsel 

  
	
   

  	
   

  	
   

  	
  and
  Secretary

  



 


[Signature Page to Guarantee and Collateral Agreement]


 

















 


TRACKPLAY LLC,


 


	
   

  	
  by

  	
  SCIENTIFIC
  GAMES RACING, LLC, as

  its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    /s/ Ira H. Raphaelson

  
	
   

  	
   

  	
    Name:
  

  	
  Ira
  H. Raphaelson

  
	
   

  	
   

  	
    Title:
  

  	
  Vice
  President, General Counsel and Secretary

  of Scientific Games International, Inc.,

  its sole member

  



 


[Signature Page to Guarantee and Collateral Agreement]


 

















 


SG RACING, INC.,


 


	
   

  	
  by

  	
   

  
	
   

  	
   

  	
    /s/ DeWayne E. Laird

  
	
   

  	
   

  	
    Name:
  DeWayne E. Laird

  
	
   

  	
   

  	
    Title:   Vice President and Treasurer

  



 


[Signature Page to Guarantee and Collateral Agreement]


 

















 


SCIENTIFIC GAMES products, INC.,


 


	
   

  	
  by

  	
   

  
	
   

  	
   

  	
    /s/ DeWayne E. Laird

  
	
   

  	
   

  	
    Name:
  DeWayne E. Laird

  
	
   

  	
   

  	
    Title:   Chief Financial Officer

  



 


[Signature Page to Guarantee and Collateral Agreement]


 

















 


SCIENTIFIC GAMES SA INC.,


 


	
   

  	
  by

  	
   

  
	
   

  	
   

  	
    /s/ DeWayne E. Laird

  
	
   

  	
   

  	
    Name:
  DeWayne E. Laird

  
	
   

  	
   

  	
    Title:   Chief Financial Officer

  



 


[Signature Page to Guarantee and Collateral Agreement]


 
















 


	
   

  	
  AUTOTOTE GAMING, INC.,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
    /s/ DeWayne E. Laird

  
	
   

  	
   

  	
    Name:

  	
  DeWayne E. Laird

  
	
   

  	
   

  	
    Title:

  	
  Vice President and Chief Financial

  Officer

  



 


[Signature Page to Guarantee and Collateral Agreement]


 

















 


Annex I


to


Guarantee and Collateral Agreement


 


ASSUMPTION AGREEMENT, dated as of                               ,
200  , made by                                                         ,
a                                
corporation (the “Additional Grantor”), in favor of JPMorgan Chase Bank,
N.A., as administrative agent (in such capacity, the “Administrative Agent”)
for the banks and other financial institutions (the “Lenders”) parties
to the Credit Agreement referred to below. 
All capitalized terms not defined herein shall have the meaning ascribed
to them in such Credit Agreement.


 


W  I  T  N  E
S  S  E  T  H  :


 


WHEREAS, Scientific Games International, Inc.
(the “Borrower”), Scientific Games Corporation (“Holdings”), the
Lenders, the Administrative Agent and other entities party thereto have entered
into a Credit Agreement, dated as of June 9, 2008 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”);


 


WHEREAS, in connection with the Credit
Agreement, Holdings, the Borrower and certain of its Affiliates (other than the
Additional Grantor) have entered into the Guarantee and Collateral Agreement,
dated as of June 9, 2008 (as amended, supplemented or otherwise modified
from time to time, the “Guarantee and Collateral Agreement”) in favor of
the Administrative Agent for the benefit of the Agents and the Lenders;


 


WHEREAS, the Credit Agreement requires the
Additional Grantor to become a party to the Guarantee and Collateral Agreement;
and


 


WHEREAS, the Additional Grantor has agreed to
execute and deliver this Assumption Agreement in order to become a party to the
Guarantee and Collateral Agreement;


 


NOW, THEREFORE, IT IS AGREED:


 


1.  Guarantee
and Collateral Agreement.  By
executing and delivering this Assumption Agreement, the Additional Grantor, as
provided in Section 8.14 of the Guarantee and Collateral Agreement, hereby
becomes a party to the Guarantee and Collateral Agreement as a Grantor
thereunder with the same force and effect as if originally named therein as a
Grantor and, without limiting the generality of the foregoing, hereby expressly
assumes all obligations and liabilities of a Grantor thereunder.  The information set forth in Annex 1-A hereto
is hereby added to the information set forth on Schedules                            *
to the Guarantee and Collateral Agreement. 
The Additional Grantor hereby represents and warrants that each of the
representations and warranties contained in Section 4 of the Guarantee and
Collateral Agreement is true and correct on and as of the date hereof (after
giving effect to this Assumption Agreement) as if made on and as of such date.


 










*              Refer to each
Schedule which needs to be supplemented.


 





















 


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


 


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


 


	
   

  	
  [ADDITIONAL
  GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


2

















 


Annex II

to

Guarantee and Collateral Agreement


 


[FORM OF] PERFECTION CERTIFICATE


 


Reference is made to the Credit
Agreement dated as of June 9, 2008 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among Scientific Games
International, Inc., a Delaware corporation (the “Borrower”),
Scientific Games Corporation, a Delaware corporation (“Holdings”), the
lenders from time to time party thereto (the “Lenders”) and JPMorgan
Chase Bank, N.A., as Administrative Agent for the Lenders (in such capacity,
the “Administrative Agent”). 
Capitalized terms used but not defined herein have the meanings assigned
in the Credit Agreement or the Guarantee and Collateral Agreement referred to
therein, as applicable.


 


The undersigned, a Financial
Officer and a Legal Officer, respectively, of the Borrower, hereby certify to
the Administrative Agent and each other Secured Party as follows:


 


1.             Names.  (a)   The exact legal name of each Grantor, as such
name appears in its respective certificate of formation, is as set forth on
Schedule 1(a).


 


(b)  Set forth on
Schedule 1(b) is each other legal name each Grantor has had in the past
five years, together with the date of the relevant change.


 


(c)  Except as set
forth on Schedule 1(c) hereto, no Grantor has changed its identity or
corporate structure in any way within the past five years.  Changes in identity or corporate structure
would include mergers, consolidations and acquisitions, as well as any change
in the form, nature or jurisdiction of organization.


 


(d)  Set forth on
Schedule 1(d) is a list of all other names (including trade names or
similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years.


 


(e)  Set forth on
Schedule 1(e) is the Organizational Identification Number, if any, issued
by the jurisdiction of formation of each Grantor that is a registered
organization.


 


(f)  Set forth on
Schedule 1(f) is the Federal Taxpayer Identification Number of each
Grantor.


 


2.  Current Locations. 
(a)  The chief executive office of each Grantor is located at
the address set forth on Schedule 2(a).


 


(b)  Set forth on Schedule 2(b) opposite the name of
each Grantor are all locations where such Grantor maintains any books or
records relating to any Accounts Receivable (with each location at which
chattel paper, if any, is kept being indicated by an “*”).


 


3

















 


(c)  The jurisdiction
of formation of each Grantor that is a registered organization is set forth
opposite its name below on Schedule 2(c).


 


(d) Set forth on Schedule 2(d) opposite the name of each
Grantor are all the locations where such Grantor maintains any Equipment or
other Collateral not identified above.


 


(e)  No Grantor maintains places of business at locations
other than those identified in paragraph (a), (b), (c) or (d) above.


 


(f)  Persons other than such Grantor that have possession of any
of the Collateral of such Grantor as indicated on Schedule 2(f).


 


3.  Unusual
Transactions.  All Accounts have been
originated by the Grantors and all Inventory has been acquired by the Grantors
in the ordinary course of business.


 


4.  File Search
Reports.  File search reports have
been obtained from each Uniform Commercial Code filing office identified with
respect to such Grantor in Section 2(c) hereof, and such search
reports reflect no liens against any of the Collateral other than those
permitted under the Credit Agreement.


 


5.  UCC Filings.  Financing statements in substantially the
form of Schedule 5 hereto have been prepared for filing in the proper Uniform
Commercial Code filing office in the jurisdiction in which each Grantor is
located and, to the extent any of the collateral is comprised of fixtures,
timber to be cut or as extracted collateral from the wellhead or minehead, in
the proper local jurisdiction, in each case as set forth with respect to such
Grantor in Section 2(c) hereof.


 


6.  Schedule of
Filings.  Attached hereto as Schedule
6 is a schedule setting forth, with respect to the filings described in Section 5
above, each filing and the filing office in which such filing is to be made.


 


7.  Stock
Ownership and other Equity Interests.  Attached hereto as Schedule 7 is a true and
correct list of all the issued and outstanding stock, partnership interests,
limited liability company membership interests or other equity interest of
Holdings and each Subsidiary and the record and beneficial owners of such
stock, partnership interests, membership interests or other equity interests.


8.  Debt
Instruments.  Attached hereto as
Schedule 8 is a true and correct list of all promissory notes and other
evidence of indebtedness held by a Grantor that are required to be pledged
under the Guarantee and Collateral Agreement.


 


9.  Mortgage
Filings.  Attached hereto as
Schedule 9 is a schedule setting forth, with respect to each Mortgaged
Property, (a) the exact name of the Person that owns such property as such
name appears in its certificate of incorporation or other organizational
document, (b) if different from the name identified pursuant to clause
(a), the exact name of the current record owner of such property reflected in
the records of the filing office for such property identified pursuant to the
following clause and (c) the filing office in which a Mortgage with
respect to such property must 


 


4

















 


be filed or recorded in order
for the Administrative Agent to obtain a perfected security interest therein.


 


10.  Intellectual
Property.  Attached hereto as
Schedule 10(A) in proper form for filing with the United States
Patent and Trademark Office is a schedule setting forth all Patents and
Trademarks owned by any Grantor, including the name of the registered owner and
the registration or application number and the Patent Licenses and Trademark
Licenses owned by any Grantor. Attached hereto as Schedule 10(B) in
proper form for filing with the United States Copyright Office is a schedule
setting forth all of each Grantor’s Copyrights, including the name of the
registered owner, the registration number and the registration date of each
Copyright, and the Copyright Licenses owned by any Grantor.


[This space left intentionally blank]


 


5