EX-10.32



 





Exhibit 10.32




EXECUTION VERSION




 





GUARANTEE AND COLLATERAL AGREEMENT




made by




GNC CORPORATION




GENERAL NUTRITION CENTERS, INC.




and certain of its Subsidiaries




in favor of




JPMORGAN CHASE BANK, N.A.,

as Administrative Agent




Dated as of March 16, 2007



 





 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	SECTION 1. DEFINED TERMS
	 	 	2	 
	 
	 	 	 	 
	1.1. Definitions
	 	 	2	 
	1.2. Other Definitional Provisions
	 	 	7	 
	 
	 	 	 	 
	SECTION 2. GUARANTEE
	 	 	8	 
	 
	 	 	 	 
	2.1. Guarantee
	 	 	8	 
	2.2. Rights of Reimbursement, Contribution and Subrogation
	 	 	9	 
	2.3. Amendments, etc. with respect to the Borrower Obligations
	 	 	10	 
	2.4. Guarantee Absolute and Unconditional
	 	 	11	 
	2.5. Reinstatement
	 	 	12	 
	2.6. Payments
	 	 	12	 
	 
	 	 	 	 
	SECTION 3. GRANT OF SECURITY INTEREST; CONTINUING LIABILITY UNDER COLLATERAL
	 	 	12	 
	 
	 	 	 	 
	SECTION 4. REPRESENTATIONS AND WARRANTIES
	 	 	14	 
	 
	 	 	 	 
	4.1. Representations in Credit Agreement
	 	 	14	 
	4.2. Title; No Other Liens
	 	 	14	 
	4.3. Perfected First Priority Liens
	 	 	14	 
	4.4. Name; Jurisdiction of Organization, etc
	 	 	15	 
	4.5. Inventory and Equipment
	 	 	15	 
	4.6. Farm Products
	 	 	15	 
	4.7. Investment Property
	 	 	15	 
	4.8. Receivables
	 	 	17	 
	4.9. Contracts
	 	 	17	 
	4.10. Intellectual Property
	 	 	17	 
	4.11. Vehicles
	 	 	19	 
	4.12. Letter of Credit Rights
	 	 	19	 
	4.13. Commercial Tort Claims
	 	 	19	 
	 
	 	 	 	 
	SECTION 5. COVENANTS
	 	 	19	 
	 
	 	 	 	 
	5.1. Covenants in Credit Agreement
	 	 	19	 
	5.2. Delivery and Control of Instruments, Chattel Paper, Negotiable
Documents, Investment Property and Deposit Accounts
	 	 	20	 
	5.3. Maintenance of Insurance
	 	 	21	 
	5.4. Payment of Obligations
	 	 	21	 
	5.5. Maintenance of Perfected Security Interest; Further Documentation
	 	 	22	 
	5.6. Changes in Locations, Name, Jurisdiction of Incorporation, etc
	 	 	22	 
	5.7. Notices
	 	 	23	 
	5.8. Investment Property
	 	 	23	 
	5.9. Receivables
	 	 	24	 
	5.10. Intellectual Property
	 	 	25	 






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	 	 	Page	 
	5.11. Vehicles
	 	 	27	 
	 
	 	 	 	 
	SECTION 6. REMEDIAL PROVISIONS
	 	 	28	 
	 
	 	 	 	 
	6.1. Certain Matters Relating to Receivables
	 	 	28	 
	6.2. Communications with Obligors; Grantors Remain Liable
	 	 	28	 
	6.3. Pledged Securities
	 	 	29	 
	6.4. Proceeds to be Turned Over To Administrative Agent
	 	 	30	 
	6.5. Application of Proceeds
	 	 	30	 
	6.6. Code and Other Remedies
	 	 	31	 
	6.7. Registration Rights
	 	 	33	 
	6.8. Waiver; Deficiency
	 	 	34	 
	 
	 	 	 	 
	SECTION 7. THE ADMINISTRATIVE AGENT
	 	 	34	 
	 
	 	 	 	 
	7.1. Administrative Agent’s Appointment as Attorney-in-Fact, etc
	 	 	34	 
	7.2. Duty of Administrative Agent
	 	 	35	 
	7.3. Execution of Financing Statements
	 	 	36	 
	7.4. Authority of Administrative Agent
	 	 	36	 
	7.5. Appointment of Co-Collateral Agents
	 	 	36	 
	 
	 	 	 	 
	SECTION 8. MISCELLANEOUS
	 	 	37	 
	 
	 	 	 	 
	8.1. Amendments in Writing
	 	 	37	 
	8.2. Notices
	 	 	37	 
	8.3. No Waiver by Course of Conduct; Cumulative Remedies
	 	 	37	 
	8.4. Enforcement Expenses; Indemnification
	 	 	37	 
	8.5. Successors and Assigns
	 	 	38	 
	8.6. Set-Off
	 	 	38	 
	8.7. Counterparts
	 	 	38	 
	8.8. Severability
	 	 	38	 
	8.9. Section Headings
	 	 	39	 
	8.10. Integration
	 	 	39	 
	8.11. GOVERNING LAW
	 	 	39	 
	8.12. Submission to Jurisdiction; Waivers
	 	 	39	 
	8.13. Acknowledgments
	 	 	39	 
	8.14. Additional Grantors
	 	 	40	 
	8.15. Releases
	 	 	40	 
	8.16. WAIVER OF JURY TRIAL
	 	 	41	 







ii









 








SCHEDULES




	 	 	 
	Schedule 1

	 	Notice Addresses of Guarantors
	Schedule 2

	 	Description of Pledged Investment Property
	Schedule 3

	 	Filings and Other Actions Required to Perfect Security Interests
	Schedule 4

	 	Exact Legal Name, Location of Jurisdiction of Organization and
Chief Executive Office
	Schedule 5

	 	Location of Inventory and Equipment
	Schedule 6

	 	Copyrights, Patents, Trademarks,
Intellectual Property Licenses and Other Intellectual Property
	Schedule 7

	 	Beneficiary of Letters of Credit
	 
	 	 
	EXHIBITS
	 
	 	 
	Exhibit A

	 	Acknowledgment and Consent
	Exhibit B-1

	 	Intellectual Property Security Agreement
	Exhibit B-2

	 	After-Acquired Intellectual Property Security Agreement
	Exhibit C

	 	Intercompany Subordinated Demand Promissory Note
	Annex I

	 	Assumption Agreement







i









 








GUARANTEE AND COLLATERAL AGREEMENT




          GUARANTEE AND COLLATERAL AGREEMENT, dated as of March 16, 2007, made by each of the
signatories hereto (together with any other entity that may become a party hereto as provided
herein, the “Grantors”), in favor of JPMORGAN CHASE BANK, N.A., as Administrative Agent (in
such capacity, the “Administrative Agent”) for (i) the banks and other financial
institutions or entities (the “Lenders”) from time to time parties to the Credit Agreement,
dated as of March 16, 2007 (as amended, supplemented, replaced or otherwise modified from time to
time, the “Credit Agreement”), among GNC CORPORATION, a Delaware corporation
(“Holdings”), GENERAL NUTRITION CENTERS, INC., a Delaware corporation (the
“Borrower”), the several banks and other financial institutions or entities from time to
time parties thereto (the “Lenders”), J.P. MORGAN SECURITIES INC. and GOLDMAN SACHS CREDIT
PARTNERS L.P., as joint lead arrangers and joint bookrunners (in such capacities, the
“Arrangers”), GOLDMAN SACHS CREDIT PARTNERS L.P., as syndication agent (in such capacity,
the “Syndication Agent”), the Administrative Agent and MERRILL LYNCH CAPITAL CORPORATION
and LEHMAN COMMERCIAL PAPER INC., as documentation agents (in such capacity, the “Documentation
Agents”), and (ii) the other Secured Parties (as hereinafter defined).




W
I T N E S S E
T H:




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




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




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




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




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




          NOW, THEREFORE, in consideration of the premises and to induce the Arrangers, the
Administrative Agent and the Lenders to enter into the Credit Agreement and to




 









 







induce the Lenders to make their respective extensions of credit to the Borrower thereunder,
each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Secured
Parties, as follows:




SECTION 1. DEFINED TERMS




          1.1. Definitions. (a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the
following terms which are defined in Article 8 or 9 of the Uniform Commercial Code in effect in the
State of New York on the date hereof are used herein as so defined: Accounts, Account Debtor,
Authenticate, Certificated Security, Chattel Paper, Commodity Account, Commodity Contract,
Commodity Intermediary, Documents, Electronic Chattel Paper, Entitlement Order, Equipment, Farm
Products, Financial Asset, Fixtures, Goods, Instruments, Inventory, Letter of Credit Rights, Money,
Payment Intangibles, Securities Account, Securities Intermediary, Security, Security Entitlement,
Supporting Obligations, Tangible Chattel Paper and Uncertificated Security.




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





     “Agreed Unperfected Collateral”: (a) deposit accounts holding or constituting
(i) cash deposits permitted by Section 6.3(d) of the Credit Agreement, (ii) collection and
disbursement accounts maintained as provided in Section 5.12(b) and (c), or (iii) payroll,
tax withholding and trust accounts maintained in the ordinary course of business, (b) solely
to the extent not required to be perfected pursuant to Section 5.11, Vehicles, (c)
Intellectual Property owned by any Grantor which is registered in a country other than the
United States to the extent that perfection in such Intellectual Property requires filing in
such other country, (d) any leasehold estate in a retail store and (e) as of any date of
determination, any other Collateral which cannot be perfected by the filing of a financing
statement under the UCC as to which the Administrative Agent has agreed in writing that it
does not at such time require the perfection of its security interest therein, however, that
it is understood and agreed that regardless of whether constituting Agreed Unperfected
Collateral, (x) the Administrative Agent shall have a valid security interest in the
property described in clauses (a), (b), (c) and (d) above and (y) such security interest in
the property described in clauses (a), (b), (c) and (d) above shall be perfected to the
extent such property constitutes Proceeds of any other Collateral and such Proceeds are
perfected under Section 9-315 of the Uniform Commercial Code as in effect in any relevant
jurisdiction.




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




     “Applicable Date”: means with respect to any Grantor, (i) the date of this
Agreement if such Grantor is a party hereto on the Closing Date, (ii) the date on which an
Assumption Agreement is executed and delivered by such Grantor if such Grantor is not a
party hereto on the Closing Date, and (iii) the date on which the Borrower or such
Grantor is required to provide updates to the Schedules to this Agreement with respect
to such Grantor pursuant to Section 5.2 or Section 5.10 of the Credit Agreement.



2









 






     “Borrower Obligations”: the collective reference to the Obligations (as
defined in the Credit Agreement).




     “Collateral”: as defined in Section 3.




     “Collateral Account”: any collateral deposit account established by the
Administrative Agent to hold cash pending application to the Obligations.




     “Copyright Licenses”: any written agreement providing for the granting by or
to any Grantor of any right in or to any Copyright, including, without limitation, those
listed in Schedule 6.




     “Copyrights”: (i) all United States and foreign copyrights, whether or not the
underlying works of authorship have been published, including but not limited to copyrights
in software and databases, all Mask Works (as defined in 17 U.S.C. 901 of the U.S. Copyright
Act) and all works of authorship and other intellectual property rights therein, all right,
title and interest to make and exploit all derivative works based on or adopted from works
covered by such copyrights, and all copyright registrations, copyright applications, mask
works registrations and mask works applications, and any renewals or extensions thereof,
including, without limitation, each registration and application identified in Schedule
6, (ii) the rights to print, publish and distribute any of the foregoing, (iii) the
right to sue or otherwise recover for any and all past, present and future infringements and
misappropriations thereof, (iv) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto, and (v) all other rights of any kind
whatsoever accruing thereunder or pertaining thereto.




     “Deposit Account”: (i) all “deposit accounts” as defined in Article 9 of the
Uniform Commercial Code in effect in the state of New York on the date hereof, (ii) all
other accounts maintained with any financial institution (other than Securities Accounts or
Commodity Accounts) and (iii) shall include, without limitation, all of the accounts listed
on Schedule 2 hereto under the heading “Deposit Accounts” (as such schedule may be
amended from time to time) and all Collateral Accounts together, in each case, with all
funds held therein and all certificates or instruments representing any of the foregoing.




     “Excluded Assets”: (i) any lease, license, contract, property right or
agreement to which any Grantor is a party or any of its rights or interests or other General
Intangibles arising thereunder if and only for so long as the grant of a security interest
hereunder (x) is prohibited by any Requirement of Law of a Governmental Authority or (y)
shall constitute or result in a breach, termination or default under any such lease,
license, contract, property right or agreement (other than to the extent that any such
Requirement of Law or term would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC of any relevant jurisdiction or any other applicable law or
principles of equity); provided, however, that such security interest shall
attach immediately to any portion of such lease, license, contract, property rights or
agreement that does not result
in any of the consequences specified in (i)(y) above, and (ii) 35% of the total
outstanding Excluded Foreign Subsidiary Voting Stock issued by a Foreign Subsidiary that is
(x) treated for United States federal tax purposes as a corporation or (y) any entity owned



3









 







directly or indirectly by another entity that is treated as a corporation for such purposes
and not formed under the laws of the United States of America or a State of the United
States of America or the District of Columbia.




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




     “General Intangibles”: all “general intangibles” as such term is defined in
Section 9-102(a)(42) of the Uniform Commercial Code in effect in the State of New York on
the date hereof and, in any event, including, without limitation, with respect to any
Grantor, all rights of such Grantor to receive any tax refunds, all Hedge Agreements and all
contracts, agreements, instruments and indentures and all licenses, permits, concessions,
franchises and authorizations issued by Governmental Authorities in any form, and portions
thereof, to which such Grantor is a party or under which such Grantor has any right, title
or interest or to which such Grantor or any property of such Grantor is subject, as the same
may from time to time be amended, supplemented, replaced or otherwise modified, including,
without limitation, (i) all rights of such Grantor to receive moneys due and to become due
to it thereunder or in connection therewith, (ii) all rights of such Grantor to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect thereto, (iii) all
rights of such Grantor to damages arising thereunder, and (iv) all rights of such Grantor to
terminate and to perform, compel performance and to exercise all remedies thereunder.




     “Governmental Authority”: a federal, state, local or foreign court or
governmental agency, authority, instrumentality or regulatory body.




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




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




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




     “Intellectual Property”: the collective reference to all rights relating to
intellectual property, whether arising under United States federal or state laws,
multinational or foreign laws or otherwise, including, without limitation, the Copyrights,
the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark
Licenses, the Trade Secrets and the Trade Secret Licenses, and all rights to sue at law or



4









 







in equity for any past, present and future infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.




     “Intercompany Note”: any promissory note evidencing loans made by any Grantor
to Holdings or any of its Subsidiaries, including, without limitation, the subordinated
Intercompany Note in the form attached as Exhibit C (the “Subordinated Intercompany
Note”).




     “Investment Property”: the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(a)(49) of the Uniform Commercial Code in
effect in the State of New York on the date hereof, (ii) security entitlements, in the case
of any United States Treasury book-entry securities, as defined in 31 C.F.R. section 357.2,
or, in the case of any United States federal agency book-entry securities, as defined in the
corresponding United States federal regulations governing such book-entry securities, and
(iii) whether or not constituting “investment property” as so defined, all Pledged
Securities, all Pledged Security Entitlements and all Pledged Commodity Contracts.




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




     “Material Contracts”: any other contract, lease, license, indenture,
agreement, commitment or other arrangement (other than the Credit Agreement, other Loan
Documents and Note Documentation), whether or not in writing, to which the Borrower or any
Guarantor is a party with respect to which breaches, performances, nonperformances,
cancellations or failures to review by any party thereto singly or in the aggregate could
reasonably be expected to have a Material Adverse Effect.




     “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.




     “Patent License”: all agreements, whether written or oral, providing for the
granting by or to any Grantor of any right in or to a Patent, including, without limitation,
any of the foregoing referred to in Schedule 6.




     “Patents”: (i) all United States and foreign patents, patent applications and
patentable inventions, including, without limitation, each issued patent and patent
application identified in Schedule 6, and all certificates of invention or similar
property rights (ii) all inventions and improvements described and claimed therein, (iii)
the right to sue or otherwise recover for any and all past, present and future infringements
and misappropriations thereof, (iv) all income, royalties, damages and other payments now
and hereafter due and/or payable with respect thereto, and (v) all reissues, divisions,
reexaminations, continuations, continuations-in-part, substitutes, renewals, and
extensions thereof, all improvements thereon and all other rights of any kind
whatsoever accruing thereunder or pertaining thereto.



5









 






     “Pledged Capital Stock”: shall mean all shares or other equity interests
constituting Capital Stock now owned or hereafter acquired by such Grantor, including,
without limitation, all shares of Capital Stock described on Schedule 2 hereto (as
such schedule may be amended from time to time), and the certificates, if any, representing
such Capital Stock and any interest of such Grantor in the entries on the books of the
issuer of such Capital Stock and all dividends, distributions, cash, warrants, rights,
options, instruments, securities and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all of such
Capital Stock and any other warrant, right or option to acquire any of the foregoing.




     “Pledged Commodity Contracts”: all commodity contracts listed on Schedule
2 (as such Schedule may be amended from time to time) and all other commodity contracts
to which any Grantor is party from time to time.




     “Pledged Debt Securities”: all debt securities now owned or hereafter acquired
by any Grantor, including, without limitation, the debt securities listed on Schedule
2, (as such Schedule may be amended from time to time) together with any other
certificates, options, rights or security entitlements of any nature whatsoever in respect
of the debt securities of any Person that may be issued or granted to, or held by, any
Grantor while this Agreement is in effect.




     “Pledged Notes”: all promissory notes now owned or hereafter acquired by any
Grantor including, without limitation, those listed on Schedule 2 (as such Schedule
may be amended from time to time) and all Intercompany Notes at any time issued to any
Grantor.




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




     “Pledged Security Entitlements”: all security entitlements with respect to the
financial assets listed on Schedule 2 (as such Schedule may be amended from time to
time) and all other security entitlements of any Grantor.




     “Proceeds”: all “proceeds” as such term is defined in Section 9-102(a)(64) of
the Uniform Commercial Code in effect in the State of New York on the date hereof and, in
any event, shall include, without limitation, all dividends or other income from the Pledged
Securities, collections thereon or distributions or payments with respect thereto.




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




     “Secured Parties”: collectively, the Arrangers, the Administrative Agent, the
Syndication Agent, the Lenders and, with respect to any Specified Hedge Agreement or Cash
Management Obligations, any Qualified Counterparty that has agreed to be bound



6









 







by the
provisions of Section 7.2 hereof as if it were a party hereto and by the provisions of
Section 8 of the Credit Agreement as if it were a Lender party thereto; provided that no
Qualified Counterparty shall have any rights in connection with the management or release of
any Collateral or the obligations of any Guarantor under this Agreement.




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




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




     “Trademarks”: (i) all United States, state and foreign trademarks, service
marks, trade names, corporate names, company names, business names, trade dress, trade
styles, logos, or other indicia of origin or source identification, Internet domain names,
trademark and service mark registrations, and applications for trademark or service mark
registrations and any renewals thereof, including, without limitation, each registration and
application identified in Schedule 6, (ii) the right to sue or otherwise recover for
any and all past, present and future infringements and misappropriations thereof, (iii) all
income, royalties, damages and other payments now and hereafter due and/or payable with
respect thereto, and (iv) all other rights of any kind whatsoever accruing thereunder or
pertaining thereto, together in each case with the goodwill of the business connected with
the use of, and symbolized by, each of the above.




     “Trade Secret License”: any agreement, whether written or oral, providing for
the granting by or to any Grantor of any right in or to any Trade Secret, including, without
limitation, any of the foregoing referred to in Schedule 6.




     “Trade Secrets”: (i) all trade secrets and all confidential and proprietary
information, including know-how, manufacturing and production processes and techniques,
inventions, research and development information, technical data, financial, marketing and
business data, pricing and cost information, business and marketing plans, and customer and
supplier lists and information, formulae, parts, diagrams, drawings, specifications, blue
prints, lists of materials, and production manuals, (ii) the right to sue or otherwise
recover for any and all past, present and future infringements and misappropriations
thereof, (iii) all income, royalties, damages and other payments now and hereafter due
and/or payable with respect thereto, and (iv) all other rights of any kind whatsoever of any
Grantor accruing thereunder or pertaining thereto.




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



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




7









 








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




          (b) 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.




          (c) The expressions “payment in full,” “paid in full” and any other similar terms or phrases
when used herein with respect to the Obligations or the Borrower Obligations shall mean the payment
in full, in immediately available funds, of all of the Obligations (excluding Obligations in
respect of any Specified Hedge Agreements and contingent reimbursement and indemnification
obligations, in each case, that are not due and payable at or prior to the time the Commitments
have expired or have been terminated), the Loans and Reimbursement Obligations have been paid in
full and all Letters of Credit have been discharged or cash collateralized in accordance with
Section 2.8(j) of the Credit Agreement or backed (in a manner reasonably satisfactory to the
relevant Issuing Bank) with another letter of credit.




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




8









 








          (c) Each Guarantor agrees that Borrower Obligations may at any time and from time to time be
incurred or permitted in an amount exceeding the maximum liability of such Guarantor under Section
2.1(b) without impairing the guarantee contained in this Section 2 or affecting the rights and
remedies of any Secured Party hereunder.




          (d) The guarantee contained in this Section 2 shall remain in full force and effect until
payment in full of the Obligations, 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 Secured Party from the Borrower, any of the Guarantors, any
other guarantor or any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or in payment of the
Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability
of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment received or collected
from such Guarantor in respect of the Borrower Obligations), remain liable for the Borrower
Obligations up to the maximum liability of such Guarantor hereunder until the Borrower Obligations
are paid in full.




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




          (a) If such payment is made by the Borrower or from its property, then, if and to the extent
such payment is made on account of Obligations arising from or relating to a Loan made to the
Borrower or a Letter of Credit issued for account of the Borrower, the Borrower shall not be
entitled (A) to demand or enforce reimbursement or contribution in respect of such payment from any
other Grantor or (B) to be subrogated to any claim, interest, right or remedy of any Secured Party
against any other Person, including any other Grantor or its property.




          (b) If such payment is made by a Guarantor or from its property, such Guarantor shall be
entitled, subject to and upon payment in full of the Obligations, (A) to demand and enforce
reimbursement for the full amount of such payment from the Borrower and (B) to demand and enforce
contribution in respect of such payment from each other Guarantor which has not paid its fair share
of such payment, as necessary to ensure that (after giving effect to any enforcement of
reimbursement rights provided hereby) each Guarantor pays its fair share of the unreimbursed
portion of such payment. For this purpose, the fair share of each Guarantor as to any unreimbursed
payment shall be determined based on an equitable apportionment of such unreimbursed payment among
all Guarantors based on the relative value of their assets and any other equitable considerations
deemed appropriate by the court.




          (c) If and whenever (after payment in full of the Obligations) any right of reimbursement or
contribution becomes enforceable by any Grantor against any other Grantor under Sections 2.2(a) and
2.2(b), such Grantor shall be entitled, subject to and upon payment in full of the Obligations, to
be subrogated (equally and ratably with all other Grantors entitled to reimbursement or
contribution from any other Grantor as set forth in this Section 2.2) to any

9









 








security interest that
may then be held by the Administrative Agent upon any Collateral granted to it in this Agreement or
any other Loan Document. Such right of subrogation shall be enforceable solely against the
Grantors, and not against the Secured Parties, and neither the Administrative Agent nor any other
Secured Party shall have any duty whatsoever to warrant, ensure or protect any such right of
subrogation or to obtain, perfect, maintain, hold, enforce or retain any Collateral for any purpose
related to any such right of subrogation. If subrogation is demanded by any Grantor, then (after
payment in full of the Obligations) the Administrative Agent shall deliver to the Grantors making
such demand, or to a representative of such Grantors or of the Grantors generally, an instrument
reasonably satisfactory to the Administrative Agent transferring, on a quitclaim basis without any
recourse, representation, warranty or obligation whatsoever, whatever security interest the
Administrative Agent then may hold in whatever Collateral may then exist that was not previously
released or disposed of by the Administrative Agent.




          (d) All rights and claims arising under this Section 2.2 or based upon or relating to any
other right of reimbursement, indemnification, contribution or subrogation that may at any time
arise or exist in favor of any Grantor as to any payment on account of the Obligations made by it
or received or collected from its property shall be fully subordinated in all respects to the prior
payment in full of all of the Obligations. Until payment in full of the Obligations, no Grantor
shall demand or receive any collateral security, payment or distribution whatsoever (whether in
cash, property or securities or otherwise) on account of any such right or claim. If any such
payment or distribution is made or becomes available to any Grantor in any bankruptcy case or
receivership, insolvency or liquidation proceeding, such payment or distribution shall be delivered
by the person making such payment or distribution directly to the Administrative Agent, for
application to the payment of the Obligations. If any such payment or distribution is received by
any Grantor, it shall be held by such Grantor in trust, as trustee of an express trust for the
benefit of the Secured Parties, and shall forthwith be transferred and delivered by such Grantor to
the Administrative Agent, in the exact form received and, if necessary, duly endorsed.




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




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




          2.3. Amendments, etc. with respect to the Borrower Obligations. Each Guarantor shall
remain obligated hereunder notwithstanding that, without any reservation of

10









 








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 Secured Party may be rescinded by such Secured Party and
any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in part, be renewed,
increased, extended, amended, modified, accelerated, compromised, waived, surrendered or released
by any Secured Party, and the Credit Agreement and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the requisite Lenders under the
Credit Agreement or all Lenders, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by any Secured Party for the
payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released. No
Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Borrower Obligations or for the guarantee contained in this Section
2 or any property subject thereto.




          2.4. Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice
of the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or
proof of reliance by any Secured Party upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended
or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the
Borrower and any of the Guarantors, on the one hand, and the Secured Parties, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Borrower or any of the
Guarantors with respect to the Borrower Obligations. Each Guarantor understands and agrees that
the guarantee contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance without regard to (a) the validity or
enforceability of 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 Secured Party, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance hereunder) which may at any time be available to or
be asserted by the Borrower or any other Person against any Secured Party, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor)
which constitutes, or might be construed to constitute, an equitable or legal discharge of the
Borrower for the Borrower Obligations, or of such Guarantor under the guarantee contained in this
Section 2, in bankruptcy or in any other instance other than the
express written release of such Guarantor from this Agreement by the Administrative Agent
pursuant to and to the extent set forth in Section 9.14 of the Credit Agreement. When making any
demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, any
Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other Guarantor or any
other Person or against any collateral security or guarantee for the Borrower Obligations or any
right of offset with respect thereto, and

11









 








any failure by any Secured Party to make any such demand,
to pursue such other rights or remedies or to collect any payments from the Borrower, any other
Guarantor or any other Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower, any other Guarantor or any other
Person or any such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of any Secured Party against
any Guarantor. For the purposes hereof “demand” shall include the commencement and continuance of
any legal proceedings.




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




          2.6. Payments. Each Guarantor hereby guarantees that payments hereunder will be paid
to the Administrative Agent without set-off or counterclaim in Dollars in immediately available
funds at the office of the Administrative Agent in New York, NY.




SECTION 3. GRANT OF SECURITY INTEREST;

CONTINUING LIABILITY UNDER COLLATERAL




          (a) Each Grantor hereby assigns and transfers to the Administrative Agent, and hereby grants
to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest
in, all of such Grantor’s right, title and interest in and to all of its personal property,
including, without limitation, the following property, in each case, wherever located and whether
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:





	 	(i)	 	all Accounts;
	 
	 	(ii)	 	all Chattel Paper;
	 
	 	(iii)	 	all Deposit Accounts;
	 
	 	(iv)	 	all Documents;
	 
	 	(v)	 	all Equipment;
	 
	 	(vi)	 	all General Intangibles;
	 
	 	(vii)	 	all Instruments;




12









 






	 	(viii)	 	Insurance;
	 
	 	(ix)	 	all Intellectual Property;
	 
	 	(x)	 	all Inventory;
	 
	 	(xi)	 	all Investment Property;
	 
	 	(xii)	 	all Letter of Credit Rights;
	 
	 	(xiii)	 	all Money;
	 
	 	(xiv)	 	all Vehicles;
	 
	 	(xv)	 	all Goods not otherwise described above;
	 
	 	(xvi)	 	any Collateral Account;





             (xvii) all books, records, ledger cards, files, correspondence, customer lists,
blueprints, technical specifications, manuals, computer software, computer printouts, tapes,
disks and other electronic storage media and related data processing software and similar
items that at any time evidence or contain information relating to any of the Collateral or
are otherwise necessary or helpful in the collection thereof or realization thereupon; and




             (xviii) to the extent not otherwise included, all other personal property of the
Grantor and all Proceeds, products, accessions, rents and profits of any and all of the
foregoing and all collateral security, Supporting Obligations and guarantees given by any
Person with respect to any of the foregoing.




          Notwithstanding anything to the contrary in this Agreement, (i) none of the Excluded Assets
shall constitute Collateral and (ii) there shall be no requirement on any Grantor to grant or
maintain a perfected security interest in, or Lien on, any Agreed Unperfected Collateral.




          (b) Notwithstanding anything herein to the contrary, (i) each Grantor shall remain liable for
all obligations under the Collateral and nothing contained herein is intended or shall be a
delegation of duties to the Administrative Agent or any Secured Party, (ii) each Grantor shall
remain liable under and each of the agreements included in the Collateral, to perform all of the
obligations undertaken by it thereunder all in accordance with and pursuant to the terms and
provisions thereof and neither the Administrative Agent nor any Secured Party shall have any
obligation or liability under any of such agreements by reason of or arising out of this Agreement
or any other document related thereto nor shall the Administrative Agent nor any Secured Party have
any obligation to make any inquiry as to the nature or sufficiency of any payment received by it or
have any obligation to take any action to collect or enforce any rights under any agreement
included in the Collateral and (iii) the exercise by the Administrative Agent of any of its rights
hereunder shall not release any Grantor from any of its duties or obligations under the contracts
and agreements included in the Collateral.




13









 








SECTION 4. REPRESENTATIONS AND WARRANTIES




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




          4.1. Representations in Credit Agreement. In the case of each Guarantor, the
representations and warranties set forth in Section 3 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, in all material respects, except for
representations and warranties expressly stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material respects as of such
earlier date, and the Secured Parties 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 Borrower’s or Holdings’ knowledge shall, for the purposes of this Section 4.l, be
deemed to be a reference to such Guarantor’s knowledge.




          4.2. Title; No Other Liens. Such Grantor owns each item of the Collateral free and
clear of any and all Liens, including, without limitation, liens arising as a result of such
Grantor becoming bound (as a result of merger or otherwise) as Grantor under a security agreement
entered into by another Person except for Permitted Liens. No financing statement, mortgage or
other public notice with respect to all or any part of the Collateral is on file or of record in
any public office, except such as have been filed in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, pursuant to this Agreement or as are not prohibited by the
Credit Agreement.




          4.3. Perfected First Priority Liens. The security interests granted pursuant to this
Agreement constitute valid security interests in all of the Collateral in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, as collateral security for
such Grantor’s Obligations, enforceable against each applicable Grantor in accordance with the
terms hereof (subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditor’s rights generally and by general equitable principles
(whether enforcement is sought in proceedings in equity or at law)) and, other then with respect to
Agreed Unperfected Collateral,
upon completion of the filings and other actions specified on Schedule 3 (all of
which, in the case of all filings and other documents referred to on said Schedule, except as
otherwise provided in Section 4.3 or 5.14 of the Credit Agreement, have been delivered to the
Administrative Agent in duly completed and duly executed form, as applicable, and may be filed by
the Administrative Agent at any time after the effectiveness of the Credit Agreement) and payment
of all filing fees, will be perfected and are prior to all other Liens on the Collateral except for
Permitted Liens. Without limiting the foregoing, and to the extent required by Section 5.2, each
Grantor has taken all actions necessary, including without limitation those specified in Section
5.2 to: (i) establish the Administrative Agent’s “control” (within the meanings of Sections 8-106
and 9-106 of the UCC) over any portion of the Investment Property constituting Certificated
Securities, Uncertificated Securities, Securities Accounts, Securities Entitlements or Commodity
Accounts (each as defined in the UCC), (ii) establish the Administrative Agent’s “control” (within
the meaning of Section 9-104 of the UCC) over all Deposit Accounts (except Deposit Accounts
constituting Agreed Unperfected Collateral), (iii) establish the Administrative Agent’s “control”
(within the meaning of Section 9-107 of the




14









 







UCC) over all Letter of Credit Rights, (iv) establish
the Administrative Agent’s control (within the meaning of Section 9-105 of the UCC) over all
Electronic Chattel Paper and (v) establish the Administrative Agent’s “control” (within the meaning
of Section 16 of the Uniform Electronic Transaction Act as in effect in the applicable jurisdiction
“UETA”) over all “transferable records” (as defined in UETA).




          4.4. Name; Jurisdiction of Organization, etc. On the date hereof, such Grantor’s
exact legal name (as indicated on the public record of such Grantor’s jurisdiction of formation or
organization), jurisdiction of organization, organizational identification number, if any, and the
location of such Grantor’s chief executive office or sole place of business are specified on
Schedule 4. Each Grantor is organized solely under the law of the jurisdiction so
specified and has not filed any certificates of domestication, transfer or continuance in any other
jurisdiction. Except as otherwise indicated on Schedule 4, the jurisdiction of each such
Grantor’s organization of formation is required to maintain a public record showing the Grantor to
have been organized or formed. Except in connection with the Merger Transactions or as specified
on Schedule 4, it has not changed its name, jurisdiction of organization, chief executive
office or sole place of business or its corporate structure in any way (e.g. by merger,
consolidation, change in corporate form or otherwise) within the past five years and has not within
the last five years become bound (whether as a result of merger or otherwise) as Grantor under a
security agreement entered into by another Person, which has not heretofore been terminated.




          4.5.
Inventory and Equipment. (a) On the date hereof, the warehouses, distribution
centers and locations of material Inventory and the Equipment (other than mobile goods) are kept at
the locations listed on Schedule 5. Within the five years preceding execution of this
Agreement, such Grantor has not changed the location of any warehouses or distribution centers
except (i) in connection with the opening, closing or relocation of stores in the ordinary course
of business or (ii) as disclosed on Schedule 5;




          (b) Except for exceptions to the following that could not reasonably be expected to have a
material adverse effect, any Inventory now or hereafter produced by any Grantor included in the
Collateral have been and will be produced in compliance with the requirements of the Fair Labor
Standards Act, as amended; and




          (c) None of the Inventory or Equipment with a fair market value in excess of $500,000 is in
the possession of an issuer of a negotiable document (as defined in Section 7-104 of the UCC)
therefor or is otherwise in the possession of any bailee or warehouseman, other than such Inventory
as to which the Administrative Agent has been provided with written notice thereof pursuant to
Section 5.7(a) and as to which such Grantor has complied with its obligations under Section 5.13 of
the Credit Agreement.




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




          4.7. Investment Property. (a) Schedule 2 hereto (as such schedule may be amended
from time to time) sets forth as of the most recent Applicable Date with respect to such

15









 








Grantor
under the heading “Pledged Capital Stock” all of the Pledged Capital Stock owned by any Grantor and
such Pledged Capital Stock constitutes the percentage of issued and outstanding shares of stock,
percentage of membership interests, percentage of partnership interests or percentage of beneficial
interest of the respective issuers thereof indicated on such Schedule. Schedule 2 hereto
(as such schedule may be amended from time to time) sets forth as of the most recent Applicable
Date with respect to such Grantor under the heading “Pledged Debt Securities” or “Pledged Notes”
all of the Pledged Debt Securities and Pledged Notes owned by any Grantor and, to the Grantors’
knowledge, all of such Pledged Debt Securities and Pledged Notes (i) are the legal, valid and
binding obligation of the issuers thereof enforceable against the Grantors in accordance with their
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, and other similar laws relating to or affecting creditors’ rights generally and general
equitable principals (whether considered in a proceeding in equity or at law) and (ii) are not in
default, except for defaults which individually or in the aggregate would not have a material
adverse effect on the value of the Collateral, taken as a whole; and such Pledged Debt Securities
and Pledged Notes constitute all of the issued and outstanding inter-company indebtedness evidenced
by an instrument or certificated security of the respective issuers thereof owing to such Grantor.
Schedule 2 hereto (as such schedule may be amended from time to time) sets forth as of the
most recent Applicable Date with respect to such Grantor under the headings “Securities Accounts,”
“Commodities Accounts,” and “Deposit Accounts” respectively, all of the Securities Accounts,
Commodities Accounts and Deposit Accounts (other than Deposit Accounts constituting Agreed
Unperfected Collateral) in which each Grantor has an interest. Each Grantor is the sole
entitlement holder or customer of each such account, and such Grantor has not consented to, and is
not otherwise aware of, any Person (other than the Administrative Agent pursuant hereto) having
“control” (within the meanings of Sections 8-106, 9-106 and 9-104 of the UCC) over, or any other
interest in, any such Securities Account, Commodity Account or Deposit Account or any securities,
commodities or other property credited thereto;




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




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




          (d) None of the Pledged Capital Stock consisting of partnership interests or limited liability
company interests are or represent interests in issuers that are: (a) registered as investment
companies, (b) are dealt in or traded on securities exchanges or markets or (c) have opted for
their interests to be treated as securities under the UCC.




          (c) Such Grantor is the record and beneficial owner of, and has good and marketable title to,
the Investment Property and Deposit Accounts pledged by it hereunder, free of any and all Liens,
except Permitted Liens and, as of the date hereof, there are no outstanding warrants, options or
other rights to purchase, or shareholder, voting trust or similar agreements outstanding with
respect to, or property that is convertible into, or that requires the issuance or sale of, any
Pledged Capital Stock.




16









 








          (d) Each Issuer that is not a Grantor hereunder has executed and delivered to the
Administrative Agent an Acknowledgment and Agreement, in substantially the form of Exhibit A, to
the pledge of the Pledged Securities pursuant to this Agreement.




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




          (a) None of the obligors in excess of $10,000,000 in the aggregate on any Receivables is a
Governmental Authority.




          (b) To such Grantor’s knowledge, each Receivable in excess of $1,000,000 is and will be (i)
the legal, valid and binding obligation of the Account Debtor in respect thereof, representing an
unsatisfied obligation of such Account Debtor and (ii) enforceable by such Grantor against such
Account Debtor in accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.




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




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




          4.10. Intellectual Property. (a) Schedule 6 lists as of the most recent
Applicable Date (i) all issued patents and pending patent applications, all registered copyrights
and pending copyright applications, and all trademarks and pending trademark applications owned by
such Grantor in its own name on the date hereof, and (ii) all material Patent Licenses, Copyright
Licenses, and Trademark Licenses. Except as set forth in Schedule 6, as of the date hereof such
Grantor is the exclusive owner of the entire and unencumbered right, title and interest in and to
all of the material Intellectual Property owned by such Grantor, and is otherwise entitled to use
all such Intellectual Property, without limitation, subject only to Permitted Liens and to the
terms of the licensing or franchise agreements referred to in paragraph (c) below.




          (a) Except for exceptions to the following that could not reasonably be expected to have a
Material Adverse Effect, Intellectual Property owned by such Grantor is valid, subsisting,
unexpired and enforceable, and has not been abandoned and neither the operation of such Grantor’s
business as currently conducted nor the use of any Intellectual Property by such


17









 







Grantor in
connection therewith conflicts with, infringes upon, misappropriates, dilutes, misuses or otherwise
violates the intellectual property rights of any other Person.




          (b) Except for exceptions to the following that could not reasonably be expected to have a
Material Adverse Effect: (i) no Intellectual Property owned by such Grantor is the subject of any
licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor, and
(ii) to such Grantor’s knowledge, as of the date hereof there are no other agreements, obligations,
orders or judgments which affect the use of any Intellectual Property owned by such Grantor.




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




          (d) Except for exceptions to the following that could not reasonably be expected to have a
Material Adverse Effect, no action or proceeding is pending, or threatened, on the date hereof (i)
seeking to limit, cancel or question the validity of any Intellectual Property owned by such
Grantor or such Grantor’s ownership interest therein, (ii) alleging that any services provided by,
processes used by, or products manufactured or sold by such Grantor infringe any patent, trademark,
copyright, or any other right of any third party or (iii) alleging that any Intellectual Property
owned by such Grantor is being licensed, sublicensed or used in violation of any patent, trademark,
copyright or any other right of any third party. Except for exceptions to the following that could
not reasonably be expected to have a Material Adverse Effect, no Person is engaging
in any activity that infringes upon the Intellectual Property owned by such Grantor or upon
the rights of such Grantor therein. Except as set forth in Schedule 6 hereto, as of the
date hereof, such Grantor has not granted any license, release, covenant not to sue, non-assertion
assurance, or other right to any person with respect to any part of the material Intellectual
Property owned by such Grantor. The consummation of the transactions contemplated by this
Agreement will not result in the termination or impairment of any of the material Intellectual
Property owned by such Grantor or used by such Grantor in the operation of its business.




          (e) With respect to each Copyright License, Trademark License and Patent License to which such
Grantor is a party, except for exceptions to the following that could not reasonably be expected to
have a Material Adverse Effect: (i) such license is valid and binding against such Grantor and in
full force and effect, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in equity or at law);
(ii) such license will not cease to be valid and binding and in full force and effect as a result
of the rights and interests granted herein, nor will the grant of such rights and interests
constitute a breach or default under such license or otherwise give the licensor or licensee a
right to terminate such license; (iii) such Grantor has not received any notice of termination or
cancellation under such license; (iv) such Grantor has not received any notice of a breach or
default under such license, which breach or default has not been cured; (v) such Grantor has not
granted to any other third party any rights, adverse or otherwise, under such license; and (vi)
such Grantor is not in breach or default in any material respect, and no event has





18









 




occurred that, with notice or lapse of time, would constitute such a breach or default or
permit termination, modification or acceleration under such license.




          (f) Except for exceptions to the following that could not reasonably be expected to have a
Material Adverse Effect, such Grantor has performed all acts, has made all necessary filings and
recordations, and has paid all required fees and taxes to adequately protect and maintain each and
every item of Intellectual Property owned by such Grantor in full force and effect and to protect
and maintain the registrations and applications for registration thereof.  




          (g) Such Grantor has taken reasonable measures to protect the confidentiality of its Trade
Secrets in accordance with industry standards to protect rights of like importance.




          (h) Except for exceptions to the following that could not reasonably be expected to have a
Material Adverse Effect, such Grantor has taken all commercially reasonable steps to use consistent
standards of quality in the manufacture, distribution and sale of all products sold and provision
of all services provided under or in connection with any item of Intellectual Property owned by
such Grantor and has taken all commercially reasonable steps necessary to ensure that all licensed users of any kind of
Intellectual Property owned by such Grantor use such consistent standards of quality.




          4.11. Vehicles.
As of the Closing Date, the aggregate book value of all Vehicles owned by all Grantors is less
than $1,000,000.




          4.12. Letter of Credit Rights. As of the Closing Date, except as set forth on Schedule 7 no Grantor is a
beneficiary or assignee under any letter of credit.




          4.13. Commercial Tort Claims. As of the Closing Date, no Grantor has any commercial tort claims individually or in the
aggregate with a value in excess of $1,000,000.




SECTION 5. COVENANTS




          Each Grantor covenants and agrees with the Secured Parties that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding (unless such Letter of Credit has been
cash collateralized in a manner consistent with Section 2.8(j) or otherwise backed by another
letter of credit having terms and conditions reasonably satisfactory to the applicable Issuing
Bank) or any Loan or other amount (excluding Obligations in respect of any Specified Hedge
Agreements and contingent reimbursement and indemnification obligations, in each case, which are
not yet due and payable) is owing to any Lender, any Agent or any Arranger hereunder, each of
Holdings and the Borrower shall and shall cause each of the Borrower’s Subsidiaries to:




          5.1. Covenants in Credit Agreement. Each Subsidiary Guarantor agrees to be bound by the covenants contained in the Credit
Agreement that relate to such Subsidiary Guarantor and in furtherance thereof, shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as
the case may be, under such covenants that relate to such Subsidiary Guarantor so that no Default
or Event of Default occurs.

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          5.2. Delivery and Control of Instruments, Chattel Paper, Negotiable Documents, Investment
Property and Deposit Accounts. (a) If any of the Collateral with a fair market value in excess of $1,000,000 in the aggregate is
or shall become evidenced or represented by any Instrument, Certificated Security, Negotiable
Document or Tangible Chattel Paper, such Instrument (other than checks received in the ordinary
course of business and Pledged Notes issued in connection with the extension of trade credit by a
Grantor in the ordinary course of business), Certificated Security, Negotiable Documents or
Tangible Chattel Paper shall be promptly delivered to the Administrative Agent, duly endorsed in a
manner reasonably satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.




          (a) If any of the Collateral with a fair market value in excess of $1,000,000 in the aggregate
is or shall become “Electronic Chattel Paper” such Grantor shall take all reasonable and necessary
steps to establish the Administrative Agent’s “control” (within the meaning of Section 9-105 of the
New York UCC) over such Electronic Chattel Paper.




          (b) If any of the Collateral is or shall become evidenced or represented by an Uncertificated
Security, such Grantor shall cause the Issuer thereof either (i) to register the Administrative
Agent as the registered owner of such Uncertificated Security, upon original issue or registration
of transfer or (ii) to agree in writing with such Grantor and the Administrative Agent that such
Issuer will comply with instructions with respect to such Uncertificated Security originated by the
Administrative Agent without further consent of such Grantor, such agreement to be in form and
substance reasonably satisfactory to the Administrative Agent.




          (c) Each Grantor (other than Holdings) shall maintain Securities Entitlements, Securities
Accounts and Deposit Accounts (except Deposit Accounts constituting Agreed
Unperfected Collateral or as otherwise permitted by Section 5.12) only with financial
institutions that have agreed to comply with entitlement orders and instructions issued or
originated by the Administrative Agent without further consent of such Grantor, such agreement to
be in form and substance reasonably satisfactory to the Administrative Agent.




          (d) If any of the Collateral is or shall become evidenced or represented by a Commodity
Contract, such Grantor shall cause the Commodity Intermediary with respect to such Commodity
Contract to agree in writing with such Grantor and the Administrative Agent that such Commodity
Intermediary will apply any value distributed on account of such Commodity Contract as directed by
the Administrative Agent without further consent of such Grantor, such agreement to be in form and
substance reasonably satisfactory to the Administrative Agent.




          (e) In addition to and not in lieu of the foregoing, if any Issuer of any Investment Related
Property constituting Collateral is organized under the law of, or has its chief executive office
in, a jurisdiction outside of the United States, each Grantor shall take such additional actions,
including, without limitation, causing the issuer to register the pledge on its books and records,
as may be necessary or advisable or as may be reasonably requested by the Administrative Agent,
under the laws of such jurisdiction to insure the validity, perfection and priority of the security
interest of the Administrative Agent.




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          5.3. Maintenance of Insurance.(a) Such Grantor will maintain, with financially sound and reputable insurance companies,
insurance on all its property (including, without limitation, all Inventory, Equipment and
Vehicles) as and to the extent required by Section 5.5 of the Credit Agreement; and furnish to the
Administrative Agent with copies for each Secured Party, upon reasonable written request,
information in reasonable scope and detail as to the insurance carried; provided that in
any event, and without limiting the requirements of Section 5.5 of the Credit Agreement, such
Grantor will maintain to the extent obtainable on commercially reasonable terms, (i) property and
casualty insurance on all real and personal property on an all risks basis (including the perils of
flood and quake and loss by fire, explosion and theft), covering the repair or replacement cost of
all such property and consequential loss coverage for business interruption and extra expense
(which shall include construction expenses and such other business interruption expenses as are
otherwise generally available to similar businesses), and (ii) public liability insurance. All
such insurance with respect to such Grantor shall be provided by insurers or reinsurers which (x)
in the case of United States insurers and reinsurers, have an A.M. Best policyholders rating of not
less than A- with respect to primary insurance and B+ with respect to excess insurance and (y) in
the case of non-United States insurers or reinsurers, the providers of at least 80% of such
insurance have either an ISI policyholders rating of not less than A, an A.M. Best policyholders
rating of not less than A- or a surplus of not less than $500,000,000 with respect to primary
insurance, and an ISI policyholders rating of not less than BBB with respect to excess insurance,
or, if the relevant insurance is not available from such insurers, such other insurers as the
Administrative Agent may approve in writing. All insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be effective until at
least 15 days after receipt by the Administrative Agent of written notice thereof, and (ii) if
reasonably requested by the Administrative Agent, include a breach of warranty clause.




          (a) Such Grantor will deliver to the Administrative Agent on behalf of the Secured Parties,
(i) on or before the date required under Section 4.3 or 5.14 of the Credit Agreement, a certificate
dated such date showing the amount and types of insurance coverage as of such date, (ii) promptly
following receipt of notice from any insurer, a copy of any notice of cancellation or material
change in coverage from that existing on the Closing Date, (iii) forthwith, notice of any
cancellation or nonrenewal of coverage by such Grantor of any coverage required to be maintained
hereunder, and (iv) promptly after such information is available to such Grantor, information in
reasonable scope and detail as to any claim for an amount in excess of $5,000,000 with respect to
any property and casualty insurance policy maintained by such Grantor. Each Secured Party shall be
named as additional insured on all such liability insurance policies of such Grantor and the
Administrative Agent shall be named as loss payee on all property and casualty insurance policies
of such Grantor.




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




          5.4. Payment of Obligations.
Such Grantor will pay and discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all




21









 




taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as well as all claims of
any kind (including, 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, reserves in
conformity with GAAP with respect thereto have been provided on the books of such Grantor and such
proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any
material portion of the Collateral or any interest therein.




          5.5.
Maintenance of Perfected Security Interest; Further Documentation. (a) Such Grantor shall maintain the security interest created by this Agreement on the Collateral
as a perfected security interest having at least the priority described in Section 4.3 until the
Collateral is released from such security interest pursuant to the terms of Section 9.14 of the
Credit Agreement or by operation of law and shall defend such security interest against the claims
and demands of all Persons whomsoever.




          (a) Such Grantor will furnish to the Administrative Agent for further delivery to the Lenders
from time to time statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral of such Grantor as the Administrative Agent
may reasonably request, all in reasonable detail.




          (b) 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 authorize, 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 (except Deposit Accounts constituting Agreed Unperfected Collateral or as
otherwise permitted by Section 5.12) and any other relevant Collateral (other than Agreed
Unperfected 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,
including without limitation, executing and delivering and causing the relevant depositary bank or
securities intermediary to execute and deliver a Control Agreement in form and substance reasonably
satisfactory to the Administrative Agent.




          5.6. Changes in Locations, Name, Jurisdiction of Incorporation, etc. Such Grantor
will not (i) without limiting or expanding the prohibitions on mergers involving the Grantors
contained in the Credit Agreement, change its legal name, jurisdiction of organization or the
location of its chief executive office or sole place of business from that referred to in Section
4.4; or (ii) change its legal name, identity or structure to such an extent that any financing
statement filed by the Administrative Agent in connection with this Agreement would become
misleading except, in each case, unless such Grantor has provided 15 days’ prior written notice or
such lesser amount of time as the Administrative Agent may reasonably agree, but in no event later
than 30 days following the occurrence thereof, to the Administrative Agent and delivered to the
Administrative Agent duly authorized and, where required, executed copies of




22









 




all additional
financing statements and other documents reasonably requested by the Administrative Agent to
maintain the validity, perfection and priority of the security interests provided for herein.




          5.7.
Notices. Such Grantor will advise the Administrative Agent for further delivery to the Lenders
promptly, in reasonable detail, of:




          (a) (i) any commercial tort claims that it may acquire after the Closing Date with a value
individually or in the aggregate in excess of $1,000,000, (ii) if it becomes the beneficiary or
assignee under any letter of credit, (iii) if any of the Inventory or Equipment with a fair market
value in excess of $1,000,000 is in the possession of an issuer of a negotiable document (as
defined in Section 7-104 of the UCC) therefor or is otherwise in the possession of any bailee or
warehouseman or (iv) if it becomes aware that Pledged Debt Securities and Pledged Notes in an
aggregate amount in excess of the greater of (x) 10% of the amount of the Pledged Debt Securities
and Pledged Notes and (y) $1,000,000 are in payment or bankruptcy default;




          (b) any Lien (other than any Permitted Lien) on any of the Collateral which would materially
adversely affect the ability of the Administrative Agent to exercise any of its remedies hereunder;
and




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




          5.8.
Investment Property. (a) If such Grantor shall become entitled to receive or shall receive any stock or other ownership
certificate (including, 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 (other than any Excluded Assets), whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of or other ownership interests
in the Pledged Capital Stock, or otherwise in respect thereof, such Grantor shall accept the same
as the agent of the Secured Parties, hold the same in trust for the Secured Parties and deliver the
same promptly to the Administrative Agent in the exact form received, duly endorsed 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 Pledged Securities 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 any distribution of capital shall be made on or in respect of the
Pledged Securities or any property shall be distributed upon or with respect to the Pledged
Securities pursuant to the recapitalization or reclassification of the capital of any Issuer or
pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject
to a perfected security interest in favor of the 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 Pledged
Securities shall be received by such Grantor, such Grantor shall, until such




23









 




money or property is
paid or delivered to the Administrative Agent, hold such money or property in trust for the Secured
Parties, segregated from other funds of such Grantor, as additional collateral security for the
Obligations.




          (a) 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 Capital Stock or to
issue any other securities convertible into or granting the right to purchase or exchange for any
Capital Stock of any Issuer (except as expressly permitted by the Credit Agreement), (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, any of
the Investment Property or Proceeds thereof or any interest therein (except, in each case, pursuant
to a transaction not prohibited by the Credit Agreement), (iii) create, incur or permit to exist
any Lien 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 and Permitted Liens, (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 or any interest therein (in each case, to the extent
constituting Collateral) (except as expressly permitted by the Credit Agreement) or (v) without the
prior written consent of the Administrative Agent, cause or permit any Issuer of any Pledged
Capital Stock consisting of partnership interests or limited liability company
interests which are not securities (for purposes of the UCC) on the date hereof to elect or
otherwise take any action to cause such Pledged Capital Stock to be treated as securities for
purposes of the UCC; provided, however, notwithstanding the foregoing, if any
issuer of any Pledged Capital Stock consisting of partnership interests or limited liability
company interests takes any such action in violation of the foregoing in this clause (v), such
Grantor shall promptly notify the Administrative Agent in writing of any such election or action
and, in such event, shall take all steps necessary or advisable to establish the Administrative
Agent’s “control” thereof.




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




          5.9.
Receivables. Other than in the ordinary course of business consistent with its past practice and so long as no
Event of Default shall have occurred and be continuing, such Grantor will not (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or settle any Receivable for
less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the
payment of any Receivable, (iv) allow any credit or discount whatsoever on any Receivable or (v)
amend, supplement or modify any Receivable in any manner that would adversely affect the value
thereof.




24









 





          5.10.
Intellectual Property. (a) With respect to each material Trademark owned by such Grantor, such Grantor (either itself or
through licensees) will (i) continue to use such Trademark in order to maintain such Trademark in
full force free from any claim of abandonment for non-use consistent with Section 5.10(i) below,
(ii) maintain the quality of products and services offered under such Trademark and take all
commercially reasonable steps to ensure that all licensed users of such Trademark maintain such
quality at a level at least substantially consistent with such quality as of the date hereof, (iii)
not adopt or use any mark which is confusingly similar or a colorable imitation of such Trademark
unless the Administrative Agent, for the ratable benefit of the Secured Parties, shall obtain a
perfected security interest in such mark pursuant to this Agreement and the Intellectual Property
Security Agreement, and (iv) not (and not permit any licensee or sublicense thereof to) do any act
or knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any
way, other than acts taken in the ordinary course of such Grantor’s business, consistent with
commercially reasonable practice.




          (a) Such Grantor will not (and will not permit any licensee or sublicensee thereof to) do any
act, or omit to do any act, whereby any material Patent owned by such Grantor may become forfeited,
abandoned or dedicated to the public.




          (b) Such Grantor will not (and will require all licensees and sublicensees thereof not to) do
any act or knowingly omit to do any act whereby any material Copyrights may become invalidated or
otherwise dedicated to the public. Such Grantor will not (and will require that all licensees and
sublicensees thereof will not) do any act whereby any material Copyrights could reasonably be
expected to fall into the public domain.




          (c) Except as set forth on Schedule 6 hereto or except, with respect to Intellectual
Property used or registered outside of the United States of America, as could not be reasonably
expected to have a Material Adverse Effect, such Grantor will not (and will require all licensees
and sublicensees thereof not to) do any act that knowingly uses any material Intellectual Property
to infringe the intellectual property rights of any other Person.




          (d) Except as set forth on Schedule 6 hereto or except, with respect to Intellectual
Property used or registered outside of the United States of America, as could not be reasonably
expected to have a Material Adverse Effect, such Grantor will use commercially reasonable efforts
to use (and will use commercially reasonable efforts to require all licensees and sublicensees
thereof to use) proper statutory notice in connection with the use of each material Patent,
Trademark and Copyright owned by such Grantor.




          (e) Such Grantor will notify the Administrative Agent promptly if it knows, or has reason to
know, that any application or registration relating to any material Intellectual Property included
in the Collateral could reasonably be expected to 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, to the extent such could
reasonably be expected to have a Material Adverse Effect, 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.




25









 





          (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 included in
the Collateral with the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in any other country or any political subdivision thereof,
such Grantor shall report such filing to the Administrative Agent in accordance with Section 5.2(b)
of the Credit Agreement. Upon request of the Administrative Agent, such Grantor shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and papers as the
Administrative Agent may reasonably request to evidence the Secured Parties’ security interest in
any Copyright, Patent, Trademark or other Intellectual Property of such Grantor registered in the
United States Patent and Trademark Office or the United States Copyright Office and the goodwill
and general intangibles of such Grantor relating thereto or represented thereby.




          (g) Unless such Grantor can demonstrate to the Administrative Agent’s reasonable satisfaction
that the economic benefit to such Grantor of not taking such reasonable and necessary steps exceeds
the economic benefit to such Grantor of taking such reasonable and necessary steps, 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 material Intellectual Property (other than Agreed Unperfected Collateral or except, with respect
to Intellectual Property used or registered outside of the United States of America, as could not
be reasonably expected to have a Material Adverse Effect) owned by such Grantor, including, without
limitation, the payment of all required fees and taxes, the filing of applications for renewal or
extension, affidavits of use and incontestability, and the participation in interference,
reexamination, opposition, cancellation, infringement and misappropriation proceedings.




          (h) Such Grantor (either itself or through licensees) will not, without the prior written
consent of the Administrative Agent, discontinue use of or otherwise abandon any Intellectual
Property owned by such Grantor, or abandon any application or any right to file an application for
letters patent, trademark, or copyright, unless such Grantor shall have previously determined that
such use or the pursuit or maintenance of such Intellectual Property is no longer desirable in the
conduct of such Grantor’s business and that the loss thereof could not reasonably be expected to
have a Material Adverse Effect.




          (i) 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 institute proceedings with respect to such infringement, misappropriation or
dilution, and/or seek injunctive relief where appropriate and/or recover damages for such
infringement, misappropriation or dilution.




          (j) Such Grantor agrees to execute an Intellectual Property Security Agreement with respect to
its Intellectual Property in substantially the form of Exhibit B-1 in order to record the security
interest granted herein to the Administrative Agent for the ratable benefit of the




26









 




Secured Parties
with the United States Patent and Trademark Office, the United States Copyright Office, and any
other applicable Governmental Authority.




          (k) Such Grantor agrees that, should it obtain an ownership interest in any item of
intellectual property which is not now a part of the Intellectual Property Collateral (the
“After-Acquired Intellectual Property”), (i) the provisions of Section 3 shall automatically apply
thereto and (ii) any such After-Acquired Intellectual Property, and in the case of trademarks, the
goodwill of the business connected therewith or symbolized thereby, shall automatically become part
of the Intellectual Property Collateral. At such time as the Borrower provides the Administrative
Agent with notice of any newly acquired, created or developed registered Intellectual Property
owned by such Grantor pursuant to Section 5.2(b) of the Credit Agreement, such Grantor agrees to
execute an After-Acquired Intellectual Property Security Agreement with respect to its
After-Acquired Intellectual Property in substantially the form of Exhibit B-2 in
order to record the security interest granted herein to the Administrative Agent for the
ratable benefit of the Secured Parties with the United States Patent and Trademark Office, the
United States Copyright Office, and any other applicable Governmental Authority.




          5.11.
Vehicles. At any time after the fair market value of all Vehicles owned by the Grantors exceeds $10,000,000
in the aggregate, the Borrower shall promptly so notify the Administrative Agent and, upon the
request of the Administrative Agent, the Borrower shall promptly deliver to the Administrative
Agent, with respect to each such Vehicle, all applications for certificates of title or ownership
indicating the Administrative Agent’s first priority (subject to Permitted Liens) security interest
in the Vehicle covered by such certificate and any other necessary documentation shall be filed in
each office in each jurisdiction which the Administrative Agent shall reasonably deem advisable to
perfect its security interests in the Vehicles.




          5.12. Cash and Bank Deposits. With respect to the Borrower and the Subsidiary
Guarantors only, (a) except as provided in Sections 5.12(b) and (c), deposit all checks and other
payment remittances received by it, and keep all of its cash (except store cash and cash deposits
permitted by Sections 6.3(d) and (o) of the Credit Agreement and cash not exceeding $5,000,000 in
the aggregate) and bank deposits (excluding payroll, tax withholding or trust accounts, established
and maintained as such in the ordinary course of business), only in Deposit Accounts that are, at
all times, subject to agreements which establish the Administrative Agent’s “control” (within the
meaning of Section 9-104 of the UCC) over such deposit accounts (each such subject deposit account,
a “Controlled Account”) or Deposit Accounts which are swept on at least a weekly basis into
a Controlled Account;




     (b) Promptly deposit all cash and checks received from store sales to a Controlled Account or
to a collection account which clears good funds on deposit (net of any minimum balance maintained
in the ordinary course of business not to exceed $15,000,000 in the aggregate for all such
collection accounts) to a Controlled Account when the store sales linked to such collection account
exceed $5,000; and



     (c) Maintain its disbursement accounts (excluding payroll, tax withholding or trust account,
established and maintained as such in the ordinary course of business), so that deposits



27









 




therein
are made only from Controlled Accounts and only as and when checks are presented for payment from
such accounts.




SECTION 6. REMEDIAL PROVISIONS




          6.1.
Certain Matters Relating to Receivables. (a) If an Event of Default has occurred and is continuing, the Administrative Agent shall
have the right to make test verifications of the Receivables in any manner and through any medium
that it reasonably considers advisable, and each Grantor shall furnish all such assistance and
information as the Administrative Agent may reasonably require in connection with such test
verifications. If an Event of Default has occurred and is continuing, upon the Administrative
Agent’s reasonable request and at the expense of the relevant Grantor,
such Grantor shall cause independent public accountants or others 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.




          (a) The Administrative Agent hereby authorizes each Grantor to collect such Grantor’s
Receivables; provided, however, that the Administrative Agent may curtail or
terminate said authority at any time upon written notice to the applicable Grantor 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 endorsed by
such Grantor to the Administrative Agent if required, in a Collateral Account maintained under the
control (within the meaning of Section 9-104 of the UCC) of the Administrative Agent, subject to
withdrawal by the Administrative Agent for the account of the Secured Parties only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in trust for the Secured
Parties, segregated from other funds of such Grantor. Each such deposit of Proceeds of Receivables
shall be accompanied by a report identifying in reasonable detail the nature and source of the
payments included in the deposit.




          (b) If an Event of Default has occurred and is continuing, at the Administrative Agent’s
reasonable request, each Grantor shall deliver to the Administrative Agent all original and other
documents evidencing, and relating to, the agreements and transactions which gave rise to the
Receivables, including, 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 an
Event of Default has occurred and is continuing communicate with obligors under the Receivables to
verify with them to the Administrative Agent’s satisfaction the existence, amount and terms of any
Receivables.




          (a) The Administrative Agent may at any time after an Event of Default has occurred and is
continuing require any Grantor to notify the Account Debtor or counterparty on any Receivable of
the security interest of the Administrative Agent therein. In addition, after the occurrence and
during the continuance of an Event of Default, the Administrative Agent may




28









 




require any Grantor to
notify the Account Debtor or counterparty to make all payments under the Receivables directly to
the Administrative Agent.




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




          6.3.
Pledged Securities. (a) Unless an Event of Default shall have occurred and be continuing and the Administrative Agent
shall have given written 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 Capital Stock and all payments made in
respect of the Pledged Notes, in each case paid in the normal course of business of the relevant
Issuer, to the extent permitted in the Credit Agreement, and to exercise all voting and
corporate or other ownership rights with respect to the Pledged Securities; provided,
however, that no vote shall be cast or corporate or other ownership right exercised or
other action taken which, in the 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.




          (a) If an Event of Default shall occur and be continuing: (i) all rights of each Grantor to
exercise or refrain from exercising the voting and other consensual rights which it would otherwise
be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become
vested in the Administrative Agent which shall thereupon have the sole right, but shall be under no
obligation, to exercise or refrain from exercising such voting and other consensual rights and (ii)
the Administrative Agent shall have the right, without notice to any Grantor, to transfer all or
any portion of the Investment Property to its name or the name of its nominee or agent. In
addition, the Administrative Agent shall have the right at any time, without notice to any Grantor,
to exchange any certificates or instruments representing any Investment Related Property for
certificates or instruments of smaller or larger denominations. In order to permit the
Administrative Agent to exercise the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and other distributions which it may be
entitled to receive hereunder each Grantor shall promptly execute and deliver (or cause to be
executed and delivered) to the Administrative Agent all proxies, dividend payment orders and other
instruments as the Administrative Agent may from time to time reasonably request and each Grantor
acknowledges that the Administrative Agent may utilize the power of attorney set forth herein.




29









 





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




          6.4.
Proceeds to be Turned Over To Administrative Agent. In addition to the rights of the Secured Parties specified in Section 6.1 with respect to
payments of Receivables, if an Event of Default shall occur and be continuing, all Proceeds
received by any Grantor consisting of cash, Cash Equivalents and checks shall be held by such
Grantor in trust for the Secured Parties, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in the exact
form received by such Grantor (duly endorsed by such Grantor to the Administrative Agent, if
required). All such Proceeds of Collateral received by the Administrative Agent under this Section
6.4 shall be held by the Administrative Agent in a Collateral Account maintained under its control
(as defined in Section 9-104 of the UCC). All such Proceeds while held by the Administrative Agent
in a Collateral Account (or by such Grantor in trust for the Secured Parties) shall continue to be
held as collateral security for all the 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 continuing, at any time at the Administrative
Agent’s election, the Administrative Agent may, notwithstanding the provisions of Section 2.15 of
the Credit Agreement, apply all or any part of the net Proceeds (after deducting fees and expenses
as provided in Section 6.6) constituting Collateral realized through the exercise by the
Administrative Agent of its remedies hereunder, 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 payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (other than principal and interest, but including
attorneys fees payable under the Credit Agreement and amounts payable under Section 2 of
this Agreement) payable to the Administrative Agent in its capacity as such;




     Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest and, to the extent payable
under clause First, attorneys fees) payable to the Lenders (including attorneys fees payable
under the Credit Agreement and amounts payable under Section 2 of this Agreement), ratably
among them in proportion to the amounts described in this clause Second payable to them;




     Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans and LC Disbursements, ratably among the holders of such



30









 




Obligations in proportion to the respective amounts described in this clause Third payable
to them;





     Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans and LC Disbursements, the termination value under Specified Hedge
Agreements with Qualified Counterparties and Cash Management Obligations and, to the extent
required under Section 2.8(j) of the Credit Agreement, to cash collateralize the portion of
the LC Disbursements comprised of the aggregate undrawn amount of Letters
of Credit, ratably among the holders of such Obligations in proportion to the
respective amounts described in this clause Fourth held by them;




     Fifth, to the payment of all other Obligations of the Loan Parties that are due
and payable to the Administrative Agent and the other Secured Parties on such date, ratably
based upon the respective aggregate amounts of all such Obligations owing to the
Administrative Agent and the other Secured Parties on such date; and




     Last, the balance, if any, after all of the Obligations have been paid in full,
to the Borrower or as otherwise required by Law.



          6.6.
Code and Other Remedies. (a) If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of
the Secured Parties, may exercise, in addition to all other rights and remedies granted to them in
this Agreement and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC (whether or not the
New York UCC applies to the affected Collateral) or its rights under any other applicable law or in
equity. 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 (other than the defense of payment), advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease, license, assign, give option
or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker’s board or office of any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk, it being understood that a Secured
Party will be subject to the commercially reasonable requirements under the UCC with respect to any
disposition of Collateral. Each Secured Party shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the part of any Grantor,
and each Grantor hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days notice to such Grantor of the time
and place of any public sale or the time after which any private sale is to be made shall




31









 




constitute reasonable notification. The Administrative Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The Administrative Agent may
adjourn any public or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and place to which it was
so adjourned. The Administrative Agent may sell the Collateral without giving any warranties as to
the Collateral. The Administrative Agent may specifically disclaim or modify any warranties of
title or the like. This procedure will not be
considered to adversely effect the commercial reasonableness of any sale of the Collateral. Each
Grantor agrees that it would not be commercially unreasonable for the Administrative Agent to
dispose of the Collateral or any portion thereof by using Internet sites that provide for the
auction of assets of the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets. Each Grantor hereby waives any claims
against the Administrative Agent arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if the Administrative Agent accepts the first offer received and
does not offer such Collateral to more than one offeree. 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. Subject to any applicable landlord consents, the
Administrative Agent shall have the right to enter onto the property where any Collateral is
located and take possession thereof with or without judicial process.




          (a) 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 the Administrative Agent
of every kind incurred in connection therewith or incidental to the care or safekeeping of any of
the Collateral or in any way relating to the Collateral or the rights of the Secured Parties
hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the
payment in whole or in part of the Obligations 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) of the New York UCC, need the Administrative Agent
account for the surplus, if any, to any Grantor. If the Administrative Agent sells any of the
Collateral upon credit, the Grantor will be credited only with payments actually made by the
purchaser and received by the Administrative Agent and applied to indebtedness of the purchaser.
In the event the purchaser fails to pay for the Collateral, the Administrative Agent may resell the
Collateral and the Grantor shall be credited with proceeds of the sale. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may acquire against any
Secured Party arising out of the exercise by them of any rights hereunder.




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




32









 




such Intellectual
Property and to the manufacture, distribution, advertising and sale of such products and services.




          6.7.
Registration Rights. (a) If the Administrative Agent shall determine to exercise its right to sell all or substantially
all of the Pledged Capital Stock or the Pledged Debt Securities pursuant to Section 6.6, and if in
the opinion of the Administrative Agent it is necessary to have the Pledged Capital Stock or the
Pledged Debt Securities, 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 to register the Pledged Capital Stock or the Pledged Debt
Securities, 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 Capital Stock or the Pledged Debt Securities, or that portion thereof to be sold, and (iii)
make all amendments thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary, all in conformity with the requirements of the Securities Act
and the rules and regulations of the SEC 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.




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




          (b) Each Grantor agrees to use its best efforts to do or cause to be done all such other acts
as may be necessary to make such sale or sales of all or any portion of the Pledged Capital Stock
or the Pledged Debt Securities 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 Secured
Parties, that the Secured Parties have no adequate remedy at law in respect of such breach and, as
a consequence, that (to the maximum extent permitted by applicable law) 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 (to the maximum extent permitted by applicable law)
any defenses against an action for specific performance of such




33









 





covenants except for a defense that
no Event of Default has occurred and is continuing under the Credit Agreement or a defense of
payment.




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




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




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




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




          (iv) execute, in connection with any sale provided for in Section 6.6 or 6.7, any
endorsements, 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



34









 






any Collateral; (3) sign and endorse
any invoices, freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral; (4) commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, give such discharges or
releases as the Administrative Agent may deem appropriate; (7) assign any Copyright, Patent
or Trademark (along with the goodwill of the business to which any such Copyright, Patent or
Trademark pertains), throughout the world for such term or terms, on such conditions, and in
such manner, as the Administrative Agent shall in its sole discretion determine; and (8)
generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Administrative Agent were
the absolute owner thereof for all purposes, and do, at the Administrative Agent’s option
and such Grantor’s expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and
the Secured Parties’ 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, except as provided in Section 7.1(b), 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; provided, however,
that unless and Event of Default has occurred and is continuing or time is of the essence, the
Administrative Agent shall not exercise this power without first making demand on the Grantor and
the Grantor failing to immediately comply therewith.




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




          (d) 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

35









 








Manner as the Administrative Agent deals with
similar property for its own account (which shall in no event be less than
commercially reasonable custody, safekeeping and physical preservation). Neither the
Administrative Agent, nor any other Secured Party nor any of their respective officers, directors,
partners, employees, agents, attorneys and other advisors, attorneys-in-fact or affiliates shall be
liable for failure to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action whatsoever with regard to
the Collateral or any part thereof. The powers conferred on the Secured Parties hereunder are
solely to protect the Secured Parties’ interests in the Collateral and shall not impose any duty
upon any Secured Party to exercise any such powers. The Secured Parties shall be accountable only
for amounts that they actually receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, partners, employees, agents, attorneys and other advisors,
attorneys-in-fact or affiliates shall be responsible to any Grantor for any act or failure to act
hereunder, except to the extent that any such act or failure to act is found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted directly from their
own gross negligence or willful misconduct.




          7.3.
Execution of Financing Statements. Each Grantor acknowledges that pursuant to Section 9-509(b) of the New York UCC and any other
applicable law, the Administrative Agent is authorized to file or record financing or continuation
statements, and amendments thereto, and other filing or recording documents or instruments with
respect to the Collateral in such form and in such offices as the Administrative Agent reasonably
determines appropriate to perfect or maintain the perfection of the security interests of the
Administrative Agent under this Agreement. Each Grantor agrees that such financing statements may
describe the collateral in the same manner as described in the Security Documents or as “all
assets” or “all personal property” of the undersigned, whether now owned or hereafter existing or
acquired by the undersigned or such other description as the Administrative Agent, in its sole
judgment, determines is necessary or advisable. A photographic or other reproduction of this
Agreement shall be sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction.




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




          7.5.
Appointment of Co-Collateral Agents. At any time or from time to time, in order to comply with any Requirement of Law, the
Administrative Agent may appoint another bank or trust company or one or more other persons, either
to act as co-agent or agents on behalf of the Secured Parties with such power and authority as may
be necessary for the effectual

36









 








operation of the provisions hereof and which may be specified in the
instrument of appointment (which may, in the discretion of the Administrative Agent, include
provisions for indemnification and similar protections of such co-agent or separate agent).




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 9.2 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 9.1 of the Credit Agreement;
provided that any such notice, request or demand to or upon any Guarantor shall be
addressed to such Guarantor at its notice address set forth on Schedule 1.




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




          8.4.
Enforcement Expenses; Indemnification. (a) Each Grantor agrees to pay or reimburse each Lender for all its costs and expenses incurred in
collecting against such Grantor under the guarantee contained in Section 2 or otherwise enforcing
or preserving any rights under this Agreement and the other Loan Documents to which such Grantor is
a party, including, without limitation, the fees and disbursements of counsel to each Secured Party
and of counsel to the Administrative Agent to the extent the Borrower would be required to do so
pursuant to Section 9.3 of the Credit Agreement.




          (a) Each Grantor agrees to pay, and to save each Secured Party 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,
except to the extent such liabilities are found by a final and non-appealable decision of a court
of competent jurisdiction to have resulted directly from the gross negligence or willful misconduct
of such Secured Party.




          (b) Each Grantor agrees to pay, and to save the Lenders, the Agents and Issuing Banks harmless
from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with




37









 




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 9.3 of the Credit Agreement.




          (c) 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.




          (d) Each Grantor agrees that the provisions of Section 2.20 of the Credit Agreement are hereby
incorporated herein by reference, mutatis mutandis, and each Lender, Agent and each
Issuing Bank shall be entitled to rely on each of them as if they were fully set forth herein.




          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 Secured Parties and their successors and assigns; provided that
no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement
without the prior written consent of the Administrative Agent.




          8.6. Set-Off. Each Grantor hereby irrevocably authorizes each Lender and their respective affiliates at any
time and from time to time, while an Event of Default pursuant to Section 7(a) of the Credit
Agreement 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 set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or final) (excluding
payroll, tax withholding and trust account maintained in the ordinary course of business) 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
Lender to or for the credit or the account of such Grantor, or any part thereof in such amounts as
such Lender may elect, against and on account of the obligations and liabilities of such Grantor to
such Lender hereunder and claims of every nature and description of such Lender against such
Grantor, in any currency, whether arising hereunder, under the Credit Agreement, any other Loan
Document or otherwise, as such Lender may elect, whether or not any Lender has made any demand for
payment and although such obligations, liabilities and claims may be contingent or unmatured. Each
Lender shall notify such Grantor promptly of any such set-off and the application made by 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 Lender under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which 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 other electronic transmission), 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




38









 




such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.




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




          8.10.
Integration. This Agreement and the other Loan Documents represent the agreement of the Grantors, the
Administrative Agent and the other Secured Parties with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties by any Secured
Party relative to subject matter hereof and thereof not expressly set forth or referred to herein
or in 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, to the fullest extent it may legally and effectively agree to do so, 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 in
the manner provided for notices in Section 8.2;




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




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




     8.13.
Acknowledgments. Each Grantor hereby acknowledges that:



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

39









 









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




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




          8.14. Additional Grantors. Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant
to Section 5.10 of the Credit Agreement shall become a Grantor for all purposes of this Agreement
upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex 1
hereto.




          8.15.
Releases. (a) At such time as the Loans, the Reimbursement Obligations and the other Obligations shall have
been paid in full, 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 (including all guarantee obligations) shall
terminate, all without delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors. At the request and sole expense of any
Grantor following any such termination, the Administrative Agent shall deliver to such Grantor any
Collateral held by the Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.




          (a) If any of the Collateral shall be Disposed of by any Grantor in a transaction permitted by
the Credit Agreement, then the Administrative Agent shall promptly take such actions as are set
forth in Section 9.14 of the Credit Agreement.




          (b) Each Grantor acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement originally filed by or
on behalf of the Administrative Agent in connection herewith without the prior written consent of
the Administrative Agent subject to such Grantor’s rights under Section 9-509(d)(2) of the New York
UCC.




40









 





          8.16. WAIVER OF JURY TRIAL. EACH GRANTOR AND THE ADMINISTRATIVE AGENT 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.




(signature pages follow)





41










 





     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.



	 	 	 	 	 
	 	GNC CORPORATION

 	 
	 	By:  	/s/ Mark L. Weintrub	 
	 	 	Name:  	Mark L. Weintrub	 
	 	 	Title:  	Senior Vice President, Chief Legal Officer and Secretary	 
	 



	 	 	 
	 

	 	GENERAL NUTRITION CENTERS, INC.
	 

	 	GENERAL NUTRITION INCORPORATED
	 

	 	GENERAL NUTRITION CORPORATION
	 

	 	NUTRA MANUFACTURING, INC.
	 

	 	GENERAL NUTRITION INTERNATIONAL, INC.
	 

	 	GENERAL NUTRITION INVESTMENT COMPANY
	 

	 	GENERAL NUTRITION SYSTEMS, INC.
	 

	 	GENERAL NUTRITION DISTRIBUTION COMPANY
	 

	 	GNC CANADA LIMITED
	 

	 	GNC (CANADA) HOLDING COMPANY
	 

	 	INFORMED NUTRITION, INC.
	 

	 	GENERAL NUTRITION GOVERNMENT SERVICES, INC.
	 

	 	GN INVESTMENT, INC.
	 

	 	GNC FRANCHISING, LLC
	 

	 	GNC US DELAWARE, INC.
	 

	 	GNC CARD SERVICES, INC.
	 

	 	GNC FUNDING, INC.
	 

	 	NUTRA SALES CORPORATION






	 	 	 	 	 
	 	 	 
	 	By:  	
/s/ Mark L. Weintrub	 
	 	 	Name:  	Mark L. Weintrub	 
	 	 	Title:  	Senior Vice President, Chief Legal Officer and Secretary	 
	 	 		for each of the above named Loan Parties 	 
	 




42









 





	 	 	 	 	 
	 	GENERAL NUTRITION DISTRIBUTION, L.P.





By:  General Nutrition Incorporated, its general

partner

 	 
	 	By:  	
/s/ Mark L. Weintrub	 
	 	 	Name:  	Mark L. Weintrub	 
	 	 	Title:  	Senior Vice President, Chief Legal Officer and Secretary	 
	 



	 	 	 	 	 
	 	GENERAL NUTRITION COMPANIES, INC.

 	 
	 	By:  	
/s/ Mark L. Weintrub	 
	 	 	Name:  	Mark L. Weintrub	 
	 	 	Title:  	Senior Vice President, Chief Legal Officer and Secretary	 
	 



	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 	 
	 	By:  	
/s/ Teri Streusand	 
	 	 	Name:  	Teri Streusand	 
	 	 	Title:  	Vice President	 
	 




43









 





Exhibit A to

Guarantee and Collateral Agreement




FORM OF ACKNOWLEDGMENT AND CONSENT




     Each of the undersigned hereby acknowledges receipt of a copy of the Guarantee and Collateral
Agreement dated as of March 16, 2007 (the “Agreement”), made by the Grantors parties
thereto for the benefit of JPMorgan Chase Bank, N.A., as administrative agent; capitalized terms
used but not defined herein have the meanings given such terms therein. Each of the undersigned
agrees for the benefit of the Administrative Agent and the Lenders as follows:



     1. The undersigned will be bound by the terms of the Agreement and will comply with such terms
insofar as such terms are applicable to the undersigned.



     2. The undersigned confirms the statements made in the Agreement with respect to the
undersigned including, without limitation, in Section 4.7 and Schedule 2.



     3. The undersigned will notify the Administrative Agent promptly in writing of the occurrence
of any of the events described in Section 5.8(a) of the Agreement.



     4. The terms of Sections 6.3(c) and 6.7 of the Agreement 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 of the Agreement.



     5. [This Acknowledgement may be executed by one or more of the parties hereto on any number of
separate counterparts (including by telecopy or other electronic transmission), and all of said
counterparts taken together shall be deemed to constitute one and the same instrument.]



	 	 	 	 	 	 	 
	 	 	[NAME OF ISSUERS]	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Fax:	 	 	 	 
	 

	 	 	 	 

	 	 






A-1









 





Exhibit B-1 to

Guarantee and Collateral Agreement




FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT




     This INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of March 16, 2007 (as amended,
supplemented, replaced or otherwise modified from time to time, the “Intellectual Property
Security Agreement”), is made by each of the signatories hereto (collectively, the
“Grantors”) in favor of JPMorgan Chase Bank, N.A., as administrative agent (in such
capacity, the “Administrative Agent”) for the Secured Parties (as defined in the Credit
Agreement referred to below).



     WHEREAS, GNC Corporation, a Delaware corporation, and General Nutrition Centers, Inc., a
Delaware corporation, have entered into a Credit Agreement, dated as of March 16, 2007 (as amended,
supplemented, replaced or otherwise modified from time to time, the “Credit Agreement”),
with the banks and other financial institutions and entities from time to time party thereto,
JPMorgan Chase Bank, N.A., as administrative agent, J.P. Morgan Securities Inc. and Goldman Sachs
Credit Partners L.P., as joint lead arrangers and joint book runners and Goldman Sachs Credit
Partners L.P. as syndication agent. Capitalized terms used and not defined herein have the
meanings given such terms in the Credit Agreement.



     WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective
extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have
executed and delivered that certain Guarantee and Collateral Agreement, dated as of March 16, 2007,
in favor of the Administrative Agent (as amended, supplemented, replaced or otherwise modified from
time to time, the “Guarantee and Collateral Agreement”).



     WHEREAS, under the terms of the Guarantee and Collateral Agreement, the Grantors have assigned
and transferred to the Administrative Agent, and granted to the Administrative Agent, for the
ratable benefit of the Secured Parties, a security interest in all of the Grantor’s right, title,
and interest in and to certain Property, including, without limitation, certain Intellectual
Property of the Grantors, and have agreed as a condition thereof to execute this Intellectual
Property Security Agreement with respect to certain of its Intellectual Property in order to record
the security interests granted therein with the United States Patent and Trademark Office, the
United States Copyright Office, and any other applicable Governmental Authorities.



     NOW, THEREFORE, in consideration of the premises and to induce the Arrangers (as defined in
the Guarantee and Collateral Agreement), the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, the Grantors hereby agree with the Administrative Agent, for the ratable
benefit of the Secured Parties, as follows:



     SECTION 1. Grant of Security. Each Grantor hereby assigns and transfers to the
Administrative Agent, and grants to the Administrative Agent, for the ratable benefit of the
Secured Parties, a security interest in all of such Grantor’s right, title and interest in and to
the following (the “Intellectual Property Collateral”), as collateral security for the
prompt and



B-1-1









 




complete payment and performance when due (whether at the stated maturity, by acceleration or
otherwise) of such Grantor’s Obligations:




     (a) (i) all United States, state and foreign trademarks, service marks, trade names, corporate
names, company names, business names, trade dress, trade styles, logos, or other indicia of origin
or source identification, Internet domain names, trademark and service mark registrations, and
applications for trademark or service mark registrations and any renewals thereof, including,
without limitation, each registration and application identified in Schedule 1, (ii) the
right to sue or otherwise recover for any and all past, present and future infringements and
misappropriations thereof, (iii) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto, and (iv) all other rights of any kind whatsoever
of such Grantor accruing thereunder or pertaining thereto, together in each case with the goodwill
of the business connected with the use of, and symbolized by, each of the above (collectively, the
“Trademarks”);



     (b) (i) all United States and foreign patents, patent applications and patentable inventions,
including, without limitation, each issued patent and patent application identified in Schedule
1, and all certificates of invention or similar property rights (ii) all inventions and
improvements described and claimed therein, (iii) the right to sue or otherwise recover for any and
all past, present and future infringements and misappropriations thereof, (iv) all income,
royalties, damages and other payments now and hereafter due and/or payable with respect thereto,
and (v) all reissues, divisions, reexaminations, continuations, continuations-in-part, substitutes,
renewals, and extensions thereof, all improvements thereon and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto (collectively, the
“Patents”);



     (c) (i) all United States and foreign copyrights, whether or not the underlying works of
authorship have been published, including but not limited to copyrights in software and databases,
all Mask Works (as defined in 17 U.S.C. 901 of the U.S. Copyright Act) and all works of authorship
and other intellectual property rights therein, all right, title and interest to make and exploit
all derivative works based on or adopted from works covered by such copyrights, and all copyright
registrations, copyright applications, mask works registrations and mask works applications, and
any renewals or extensions thereof, including, without limitation, each registration and
application identified in Schedule 1, (ii) the rights to print, publish and distribute any
of the foregoing, (iii) the right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (iv) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto, and (v) all other rights of any
kind whatsoever of such Grantor accruing thereunder or pertaining thereto (“Copyrights”);



     (d) (i) all trade secrets and all confidential and proprietary information, including
know-how, manufacturing and production processes and techniques, inventions, research and
development information, technical data, financial, marketing and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and information,
formulae, parts, diagrams, drawings, specifications, blue prints, lists of materials, and
production manuals, (ii) the right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (iii) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto, and (iv) all other



B-1-4









 







rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto
(collectively, the “Trade Secrets”); and



     (e) (i) all Trademark Licenses (as defined in the Guarantee and Collateral Agreement), Trade
Secret Licenses (as defined in the Guaranty and Collateral Agreement), Patent Licenses (as defined
in the Guaranty and Collateral Agreement), and Copyright Licenses (as defined in the Guaranty and
Collateral Agreement), in each case, to the extent Grantor is not the granting party, including,
without limitation, any of the foregoing identified in Schedule 1, and (ii) all rights to sue at
law or in equity for any past, present and future infringement or impairment thereof, including the
right to receive all proceeds and damages therefrom.



     SECTION 2. Excluded Assets. Notwithstanding anything to the contrary in this
Intellectual Property Security Agreement, (i) none of the Excluded Assets (as defined in the
Guarantee and Collateral Agreement) shall constitute Intellectual Property Collateral and (ii)
there shall be no requirement on any Grantor to grant or maintain a perfected security interest in,
or Lien on, any Agreed Unperfected Collateral.



     SECTION 3. Recordation. Each Grantor authorizes and requests that the Register of
Copyrights, the Commissioner of Patents and Trademarks and any other applicable government officer
record this Intellectual Property Security Agreement.



     SECTION 4. Execution in Counterparts. This Intellectual Property Security Agreement
may be executed in any number of counterparts (including by telecopy or other electronic
transmission), each of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.



     SECTION 5. Governing Law. This Intellectual Property Security Agreement shall be
governed by, and construed and interpreted in accordance with, the law of the State of New York.



     SECTION 6. Conflict Provision. This Intellectual Property Security Agreement has been
entered into in conjunction with the provisions of the Guarantee and Collateral Agreement and the
Credit Agreement. The rights and remedies of each party hereto with respect to the security
interest granted herein are without prejudice to, and are in addition to those set forth in the
Guarantee and Collateral Agreement and the Credit Agreement, all terms and provisions of which are
incorporated herein by reference. In the event that any provisions of this Intellectual Property
Security Agreement are in conflict with the Guarantee and Collateral Agreement or the Credit
Agreement, the provisions of the Guarantee and Collateral Agreement or the Credit Agreement shall
govern.



B-1-4









 





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



	 	 	 	 	 
	 	[NAME OF GRANTOR]

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




B-1-4









 







State of   
       
           





	 
			
	County of      
         
      
	 	                    , 2007






     Then
personally appeared the above named
                    , as                      of [COMPANY], and
acknowledged the foregoing instrument to be her free act and deed as                      of
[COMPANY], before me,



                                                            




Notary Public




My commission expires:





B-1-4









 








Schedule 1




COPYRIGHTS




PATENTS




TRADEMARKS




INTELLECTUAL PROPERTY LICENSES














 





Exhibit B-2 to

Guarantee and Collateral Agreement




FORM OF AFTER-ACQUIRED INTELLECTUAL PROPERTY SECURITY AGREEMENT




(FIRST SUPPLEMENTAL FILING)




     This INTELLECTUAL PROPERTY SECURITY AGREEMENT (FIRST SUPPLEMENTAL FILING), dated as of
___, 200___(as amended, supplemented, replaced or otherwise modified from time to time,
the “First Supplemental Intellectual Property Security Agreement”), is made by each of the
signatories hereto (collectively, the “Grantors”) in favor of JPMorgan Chase Bank, N.A., as
administrative agent (in such capacity, the “Administrative Agent”) for the Secured Parties
(as defined in the Credit Agreement referred to below).



     WHEREAS, GNC Corporation, a Delaware corporation, and General Nutrition Centers, Inc., a
Delaware corporation, have entered into a Credit Agreement, dated as of March 16, 2007 (as amended,
supplemented, replaced or otherwise modified from time to time, the “Credit Agreement”),
with the banks and other financial institutions and entities from time to time party thereto, J.P.
Morgan Securities Inc., as advisor, lead arranger and book manager and JPMorgan Chase Bank, N.A.,
as administrative agent. Capitalized terms used and not defined herein have the meanings given
such terms in the Credit Agreement.



     WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective
extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have
executed and delivered that certain Guarantee and Collateral Agreement, dated as of March 16, 2007,
in favor of the Administrative Agent (as amended, supplemented, replaced or otherwise modified from
time to time, the “Guarantee and Collateral Agreement”).



     WHEREAS, under the terms of the Guarantee and Collateral Agreement, the Grantors have assigned
and transferred to the Administrative Agent, and granted to the Administrative Agent, for the
ratable benefit of the Secured Parties, a security interest in all of the Grantors’ right, title
and interest in and to certain Property, including, without limitation, certain Intellectual
Property, including but not limited to After-Acquired Intellectual Property of the Grantors, and
have agreed as a condition thereof to execute this First Supplemental Intellectual Property
Security Agreement with respect to certain of its After-Acquired Intellectual Property in order to
record the security interests granted therein with the United States Patent and Trademark Office,
the United States Copyright Office, and any other applicable Governmental Authorities.



     WHEREAS, the Intellectual Property Security Agreement was recorded against certain United
States Intellectual Property at [INSERT REEL/FRAME NUMBER] [IF SECOND OR LATER SUPPLEMENTAL, ADD
PRIOR REEL/FRAME NUMBERS].



     NOW, THEREFORE, in consideration of the premises and to induce the Arrangers (as defined in
the Guarantee and Collateral Agreement), the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their



B-2-1









 







respective extensions of credit to the Borrower thereunder, the Grantors hereby agree with the
Administrative Agent, for the ratable benefit of the Secured Parties, as follows:



     SECTION 1. Grant of Security. Each Grantor hereby assigns and transfers to the
Administrative Agent, and grants to the Administrative Agent, for the ratable benefit of the
Secured Parties, a security interest in all of such Grantor’s right, title and interest in and to
the following (the “Intellectual Property 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) (i) all United States, state and foreign trademarks, service marks, trade names, corporate
names, company names, business names, trade dress, trade styles, logos, or other indicia of origin
or source identification, Internet domain names, trademark and service mark registrations, and
applications for trademark or service mark registrations and any renewals thereof, including,
without limitation, each registration and application identified in Schedule 1, (ii) the
right to sue or otherwise recover for any and all past, present and future infringements and
misappropriations thereof, (iii) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto, and (iv) all other rights of any kind whatsoever
of such Grantor accruing thereunder or pertaining thereto, together in each case with the goodwill
of the business connected with the use of, and symbolized by, each of the above (collectively, the
“Trademarks”);



     (b) (i) all United States and foreign patents, patent applications and patentable inventions,
including, without limitation, each issued patent and patent application identified in Schedule
1, and all certificates of invention or similar property rights (ii) all inventions and
improvements described and claimed therein, (iii) the right to sue or otherwise recover for any and
all past, present and future infringements and misappropriations thereof, (iv) all income,
royalties, damages and other payments now and hereafter due and/or payable with respect thereto,
and (v) all reissues, divisions, reexaminations, continuations, continuations-in-part, substitutes,
renewals, and extensions thereof, all improvements thereon and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto (collectively, the
“Patents”);



     (c) (i) all United States and foreign copyrights, whether or not the underlying works of
authorship have been published, including but not limited to copyrights in software and databases,
all Mask Works (as defined in 17 U.S.C. 901 of the U.S. Copyright Act) and all works of authorship
and other intellectual property rights therein, all right, title and interest to make and exploit
all derivative works based on or adopted from works covered by such copyrights, and all copyright
registrations, copyright applications, mask works registrations and mask works applications, and
any renewals or extensions thereof, including, without limitation, each registration and
application identified in Schedule 1, (ii) the rights to print, publish and distribute any
of the foregoing, (iii) the right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (iv) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto, and (v) all other rights of any
kind whatsoever of such Grantor accruing thereunder or pertaining thereto (“Copyrights”);



B-2-2









 





     (d) (i) all trade secrets and all confidential and proprietary information, including
know-how, manufacturing and production processes and techniques, inventions, research and
development information, technical data, financial, marketing and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and information,
formulae, parts, diagrams, drawings, specifications, blue prints, lists of materials, and
production manuals, (ii) the right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (iii) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto, and (iv) all other rights of
any kind whatsoever of such Grantor accruing thereunder or pertaining thereto (collectively, the
“Trade Secrets”); and



     (e) (i) all Trademark Licenses (as defined in the Guaranty and Collateral Agreement), Trade
Secret Licenses (as defined in the Guaranty and Collateral Agreement), Patent Licenses (as defined
in the Guaranty and Collateral Agreement) and Copyright Licenses (as defined in the Guaranty and
Collateral Agreement), in each case, to the extent Grantor is not the granting party, including,
without limitation, any of the foregoing identified in Schedule 1, and (ii) all rights to sue at
law or in equity for any past, present and future infringement or impairment thereof, including the
right to receive all proceeds and damages therefrom.



     SECTION 2. Excluded Assets. Notwithstanding anything to the contrary in this First
Supplemental Intellectual Property Security Agreement, (i) none of the Excluded Assets (as defined
in the Guarantee and collateral Agreement) shall constitute Intellectual Property, and (ii) there
shall be no requirement on any Grantor to grant or maintain a perfected security interest in, or
Lien on, any Agreed Unperfected Collateral.



     SECTION 3. Recordation. Each Grantor authorizes and requests that the Register of
Copyrights, the Commissioner of Patents and Trademarks and any other applicable government officer
record this First Supplemental Intellectual Property Security Agreement.



     SECTION 4. Execution in Counterparts. This First Supplemental Intellectual Property
Security Agreement may be executed in any number of counterparts (including by telecopy or other
electronic transmission), each of which when so executed shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.



     SECTION 5. Governing Law. This First Supplemental Intellectual Property Security
Agreement shall be governed by, and construed and interpreted in accordance with, the law of the
State of New York.



     SECTION 6. Conflict Provision. This First Supplemental Intellectual Property Security
Agreement has been entered into in conjunction with the provisions of the Guarantee and Collateral
Agreement and the Credit Agreement. The rights and remedies of each party hereto with respect to
the security interest granted herein are without prejudice to, and are in addition to those set
forth in the Guarantee and Collateral Agreement and the Credit Agreement, all terms and provisions
of which are incorporated herein by reference. In the event that any provisions of this First
Supplemental Intellectual Property Security Agreement are in conflict with the Guarantee and
Collateral Agreement or the Credit Agreement, the provisions of the Guarantee and Collateral
Agreement or the Credit Agreement shall govern.



B-2-3









 





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



	 	 	 	 	 
	 	[NAME OF GRANTOR]

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




B-2-4









 





State of                     




 




			
	County of                     
	 	                    , 2007






     Then personally appeared the above named                      as                      of [COMPANY], and
acknowledged the foregoing instrument to be her free act and deed as                      of
[COMPANY], before me,



                                                            




Notary Public




My commission expires:




B-2-5









 





Schedule 1




COPYRIGHTS




PATENTS




TRADEMARKS




INTELLECTUAL PROPERTY LICENSES





B-2-6









 








Exhibit C to

Guarantee and Collateral Agreement




FORM OF INTERCOMPANY SUBORDINATED DEMAND PROMISSORY NOTE




			
	Note Number: 1
	 	Dated: March 16, 2007






     FOR VALUE RECEIVED, Holdings, the Borrower and each of its Subsidiaries (collectively, the
“Group Members” and each, a “Group Member”) which is a party to this intercompany
subordinated demand promissory note (the “Promissory Note”) promises to pay to the order of
such other Group Member as makes loans to such Group Member (each Group Member which borrows money
pursuant to this Promissory Note is referred to herein as a “Payor” and each Group Member
which makes loans and advances pursuant to this Promissory Note is referred to herein as a
“Payee”), on demand, in lawful money of the United States of America, in immediately
available funds and at the appropriate office of the Payee, the aggregate unpaid principal amount
of all loans and advances heretofore and hereafter made by such Payee to such Payor and any other
indebtedness now or hereafter owing by such Payor to such Payee as shown either on Schedule A
attached hereto (and any continuation thereof) or in the books and records of such Payee. The
failure to show any such Indebtedness or any error in showing such Indebtedness shall not affect
the obligations of any Payor hereunder. Capitalized terms used herein but not otherwise defined
herein shall have the meanings given such terms in the Credit Agreement, dated as of March 16, 2007
(as amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among General Nutrition Centers, Inc. (the “Borrower”), each bank and
other financial institution or entity from time to time party thereto, J.P. Morgan Securities Inc.
and Goldman Sachs Credit Partners L.P., as joint lead arrangers and joint book runners, Goldman
Sachs Credit Partners L.P., as syndication agent, and JPMorgan Chase Bank, N.A., as administrative
agent (in such capacity and including its successors and assigns, the “Administrative
Agent”).



     The unpaid principal amount hereof from time to time outstanding shall bear interest at a rate
equal to the rate as may be agreed upon in writing from time to time by the relevant Payor and
Payee or, at the Administrative Agent’s option following the occurrence and during the continuation
of an Event of Default, at the rate per annum then applicable to ABR Loans under the Revolving
Credit Facility or, following expiration or termination of the Revolving Credit Commitments, the
rate applicable to ABR Loans thereunder immediately prior to such expiration or termination, in
each case, plus 2.0% per annum. Interest shall be due and payable on the last day of each
month commencing after the date hereof or at such other times as may be agreed upon in writing from
time to time by the relevant Payor and Payee. Upon demand for payment of any principal amount
hereof, accrued but unpaid interest on such principal amount shall also be due and payable.
Interest shall be paid in lawful money of the United States of America and in immediately available
funds. Interest shall be computed for the actual number of days elapsed on the basis of a year
consisting of 365 days.



     Each Payor and any endorser of this Promissory Note hereby waives presentment, demand, protest
and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder
on the part of the holder hereof shall operate as a waiver of such rights.



C-1









 





     This Promissory Note has been pledged by each Payee (other than any Excluded Subsidiaries) to
the Administrative Agent, for the benefit of the Secured Parties, as security for such Payee’s
Obligations, if any, under the Credit Agreement, the Guarantee and Collateral Agreement and the
other Loan Documents to which such Payee is a party. Each Payor acknowledges and agrees that the
Administrative Agent and the other Secured Parties may exercise all the rights of the Payees under
this Promissory Note and will not be subject to any abatement, reduction, recoupment, defense,
setoff or counterclaim available to such Payor.



     Each Payee agrees that any and all claims of such Payee against any Payor that is a Loan Party
or any endorser of this Promissory Note which is a Loan Party, or against any of their respective
properties, shall be subordinate and subject in right of payment to the Obligations until all of
the Obligations have been paid in full in immediately available funds, of all of the Obligations
(excluding Obligations in respect of any Specified Hedge Agreements and contingent reimbursement
and indemnification obligations, in each case, that are not due and payable at or prior to the time
the Commitments have expired or have been terminated, the Loans and Reimbursement Obligations have
been paid in full and all Letters of Credit have been discharged or cash collateralized (in a
manner consistent with Section 2.8(j)) or backed (in a manner reasonably satisfactory to the
relevant Issuing Bank) with other letters of credit (“Paid in Full”); provided,
that each Payor may make payments to the applicable Payee so long as no Default or Event of Default
shall have occurred and be continuing; and provided, further, that all loans and
advances made by a Payee pursuant to this Promissory Note shall be received by the applicable Payor
subject to the provisions of the Credit Agreement including, without limitation, the provisions
thereof relating to mandatory prepayment. Notwithstanding any right of any Payee to ask, demand,
sue for, take or receive any payment from any Payor, all Liens and security interests of such
Payee, whether now or hereafter arising and howsoever existing, in any assets of any Payor that is
a Loan Party (whether constituting part of the security or collateral given to the Administrative
Agent or any Secured Party to secure payment of all or any part of the Obligations or otherwise)
shall be and hereby are subordinated to the rights of the Administrative Agent or any Secured Party
in such assets until the Obligations have been Paid in Full. Except as expressly permitted by the
Credit Agreement and the other Loan Documents, the Payees shall have no right to possession of any
such asset or to foreclose upon, or exercise any other remedy in respect of, any such asset,
whether by judicial action or otherwise, unless and until all of the Obligations shall have been
Paid in Full.



     If all or any part of the assets of any Payor, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of any Payor, whether partial or complete,
voluntary or involuntary, and whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or proceeding, or if the
business of any Payor is dissolved or if (except as expressly permitted by the Credit Agreement)
all or substantially all of the assets of any Payor are sold, then, and in any such event, any
payment or distribution of any kind or character, whether in cash, securities or other investment
property, or otherwise, which shall be payable or deliverable upon or with respect to any
indebtedness of such Payor to any Payee that is a Loan Party (but excluding any Excluded Assets)
(“Payor Indebtedness”) shall be paid or delivered directly to the Administrative Agent for
application in accordance with the Credit Agreement and the other Loan Documents to any of the
Obligations, due or to become due, until the date on which the Obligations shall have been Paid in
Full. Each Payee that is a Loan Party irrevocably authorizes, empowers and



C-2









 







appoints the Administrative Agent as such Payee’s attorney-in-fact (which appointment is
coupled with an interest and is irrevocable) to demand, sue for, collect and receive every such
payment or distribution and give acquittance therefor and to make and present for and on behalf of
such Payee such proofs of claim and take such other action, in the Administrative Agent’s own name
or in the name of such Payee or otherwise, as the Administrative Agent may deem necessary or
advisable for the enforcement of this Promissory Note. Each Payee that is a Loan Party also agrees
to execute, verify, deliver and file any such proofs of claim in respect of the Payor Indebtedness
requested by the Administrative Agent. After the occurrence and during the continuance of an Event
of Default the Administrative Agent may vote such proofs of claim in any such proceeding (and the
applicable Payee shall not be entitled to withdraw such vote), receive and collect any and all
dividends or other payments or disbursements made on Payor Indebtedness in whatever form the same
may be paid or issued and apply the same on account of any of the Obligations. Except as otherwise
expressly permitted under the Credit Agreement, should any payment, distribution, security or other
investment property or instrument or any proceeds thereof be received by any Payee that is a Loan
Party upon or with respect to Payor Indebtedness owing to such Payee prior to such time as the
Obligations have been Paid in Full, such Payee shall receive and hold the same in trust, as
trustee, for the benefit of the Administrative Agent and the Secured Parties, and shall forthwith
deliver the same to the Administrative Agent, for the benefit of the Secured Parties, in precisely
the form received (except for the endorsement or assignment of such Payee where necessary or
advisable in the Administrative Agent’s judgment), for application to any of the Obligations, due
or not due, and, until so delivered, the same shall be segregated from the other assets of such
Payee and held in trust by such Payee as the property of the Administrative Agent, for the benefit
of the Secured Parties. If such Payee fails to make any such endorsement or assignment to the
Administrative Agent, the Administrative Agent or any of its officers, employees or representatives
are hereby irrevocably authorized to make the same. Each Payee agrees that until the Obligations
have been Paid in Full, such Payee will not (i) assign or transfer, or agree to assign or transfer,
to any Person that is not a Loan Party (other than in favor of the Administrative Agent for the
benefit of the Secured Parties pursuant to the Guarantee and Collateral Agreement or otherwise) any
claim such Payee has or may have against any Payor, (ii) discount or extend the time for payment of
any Payor Indebtedness, or (iii) otherwise amend, modify, supplement, waive or fail to enforce any
provision of this Promissory Note.



     Notwithstanding anything to the contrary contained herein, in any other Loan Document or in
any such promissory note or other instrument, this Promissory Note (i) replaces and supersedes any
and all promissory notes or other instruments which create or evidence any loans or advances made
on or before the date hereof by any Group Member to any other Group Member, and (ii) shall not be
deemed replaced, superseded or in any way modified by any promissory note or other instrument
entered into on or after the date hereof which purports to create or evidence any loan or advance
by any Group Member to any other Group Member.



     THIS PROMISSORY NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS PROMISSORY NOTE
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.



C-3









 





     From time to time after the date hereof, additional Subsidiaries of the Group Members may
become parties hereto by executing a counterpart signature page to this Promissory Note (each
additional Subsidiary, an “Additional Payor”). Upon delivery of such counterpart signature
page to the Payees, notice of which is hereby waived by the other Payors, each Additional Payor
shall be a Payor and shall be as fully a party hereto as if such Additional Payor were an original
signatory hereof. Each Payor expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Payor hereunder. This Promissory
Note shall be fully effective as to any Payor that is or becomes a party hereto regardless of
whether any other Person becomes or fails to become or ceases to be a Payor hereunder.



     This Promissory Note may be executed in any number of counterparts and by different parties
hereto in separate counterparts (including by telecopy or other electronic transmission), each of
which when so executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.



[Signature page follows]




C-4









 





     IN WITNESS WHEREOF, each Payor and Payee has caused this Intercompany Subordinated Demand
Promissory Note to be executed and delivered by its proper and duly authorized officer as of the
date set forth above.



	 	 	 	 	 
	 	GNC CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 
	 

	 	GENERAL NUTRITION CENTERS, INC.
	 

	 	GENERAL NUTRITION INCORPORATED
	 

	 	GENERAL NUTRITION CORPORATION
	 

	 	NUTRA MANUFACTURING, INC.
	 

	 	GENERAL NUTRITION INTERNATIONAL, INC.
	 

	 	GENERAL NUTRITION INVESTMENT COMPANY
	 

	 	GENERAL NUTRITION SYSTEMS, INC.
	 

	 	GENERAL NUTRITION DISTRIBUTION COMPANY
	 

	 	GNC CANADA LIMITED
	 

	 	GNC (CANADA) HOLDING COMPANY
	 

	 	INFORMED NUTRITION, INC.
	 

	 	GENERAL NUTRITION GOVERNMENT SERVICES, INC.
	 

	 	GN INVESTMENT, INC.
	 

	 	GNC FRANCHISING, LLC
	 

	 	GNC US DELAWARE, INC.
	 

	 	GNC PUERTO RICO, INC.
	 

	 	GNC CARD SERVICES, INC.
	 

	 	GENERAL NUTRITION PTY LIMITED
	 

	 	GENERAL NUTRITION CENTRES COMPANY
	 

	 	GNC FRANCHISING CANADA, LTD.
	 

	 	GNC FUNDING, INC.
	 

	 	NUTRA SALES CORPORATION






	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	  	 	 
	 




 









 





	 	 	 	 	 
	 	 	 
	 	  	
 	 
	 	 	  	 	 
	 	 	Title:  	for each of the above named Loan
Parties 	 
	 



	 	 	 	 	 
	 	GENERAL NUTRITION DISTRIBUTION, L.P.





By:  General Nutrition Incorporated, its general
partner

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	GENERAL NUTRITION COMPANIES, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 









 








SCHEDULE A




TRANSACTIONS

ON

INTERCOMPANY SUBORDINATED DEMAND PROMISSORY NOTE




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Outstanding	 	 
	 	 	 	 	 	 	 	 	 	 	Principal	 	 
	 	 	 	 	 	 	 	 	Amount of	 	Balance	 	 
	 	 	 	 	 	 	Amount of	 	Principal	 	from Payor	 	 
	 	 	Name of	 	Name of	 	Advance	 	Paid This	 	to Payee	 	Notation Made
	Date	 	Payor	 	Payee	 	This Date	 	Date	 	This Date	 	By
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 








ENDORSEMENT




     FOR VALUE RECEIVED, each of the undersigned does hereby sell, assign and transfer to
                                        
all of its right, title and interest in and to the
Intercompany Subordinated Demand Promissory Note, dated March 16, 2007 (as amended, restated,
supplemented or otherwise modified from time to time, the “Promissory Note”), made by GNC
Corporation (“Holdings”)and General Nutrition Centers, Inc. (the “Borrower”), and
each other Subsidiary of the Borrower or any other Person that becomes a party thereto, and payable
to the undersigned. This endorsement is intended to be attached to the Promissory Note and, when
so attached, shall constitute an endorsement thereof.



     The initial undersigned shall be the Group Members (as defined in the Promissory Note) that
are Loan Parties on the date of the Promissory Note. From time to time after the date thereof,
additional Subsidiaries of the Group Members that are, or, immediately after the execution and
delivery hereof, will become, Loan Parties shall become parties to the Promissory Note (each, an
“Additional Payee”) and, if such Subsidiary is or becomes a Loan Party, a signatory to this
endorsement by executing a counterpart signature page to the Promissory Note and to this
endorsement. Upon delivery of such counterpart signature page to the Payors, notice of which is
hereby waived by the other Payees, each Additional Payee shall be a Payee and shall be as fully a
Payee under the Promissory Note and a signatory to this endorsement as if such Additional Payee
were an original Payee under the Promissory Note and an original signatory hereof. Each Payee
expressly agrees that its obligations arising under the Promissory Note and hereunder shall not be
affected or diminished by the addition or release of any other Payee under the Promissory Note or
hereunder. This endorsement shall be fully effective as to any Payee that is or becomes a
signatory hereto regardless of whether any other Person becomes or fails to become or ceases to be
a Payee to the Promissory Note or hereunder.



     Dated:                     



[Signature page follows]




 









 








	 	 	 	 	 
	 	GNC CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 
	 

	 	GENERAL NUTRITION CENTERS, INC.
	 

	 	GENERAL NUTRITION INCORPORATED
	 

	 	GENERAL NUTRITION CORPORATION
	 

	 	NUTRA MANUFACTURING, INC.
	 

	 	GENERAL NUTRITION INTERNATIONAL, INC.
	 

	 	GENERAL NUTRITION INVESTMENT COMPANY
	 

	 	GENERAL NUTRITION SYSTEMS, INC.
	 

	 	GENERAL NUTRITION DISTRIBUTION COMPANY
	 

	 	GNC CANADA LIMITED
	 

	 	GNC (CANADA) HOLDING COMPANY
	 

	 	INFORMED NUTRITION, INC.
	 

	 	GENERAL NUTRITION GOVERNMENT SERVICES, INC.
	 

	 	GN INVESTMENT, INC.
	 

	 	GNC FRANCHISING, LLC
	 

	 	GNC US DELAWARE, INC.
	 

	 	GNC CARD SERVICES, INC.
	 

	 	GNC FUNDING, INC.
	 

	 	NUTRA SALES CORPORATION






	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:   		 
	 	 	   	for each of the above named Loan Parties	 
	 




 









 







	 	 	 	 	 
	 	GENERAL NUTRITION DISTRIBUTION, L.P.

 	 
	 	By:  	General Nutrition Incorporated, its general partner
 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	GENERAL NUTRITION COMPANIES, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 









 





Annex 1 to

Guarantee and Collateral Agreement




    
 ASSUMPTION AGREEMENT, dated as of [        
             ]made by  
                   
,
a
                 
    (the “Additional Grantor”), in favor of JPMorgan Chase Bank, N.A., as
administrative agent (in such capacity, the “Administrative Agent”) for (i) the banks and
other financial institutions and entities (the “Lenders”) parties to the Credit Agreement
referred to below, and (ii) the other Secured Parties (as defined in the Guarantee and Collateral
Agreement (as hereinafter defined)). 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, GNC Corporation (“Holdings”), General Nutrition Centers, Inc (the
“Borrower”), the Lenders, J.P. Morgan Securities Inc. and Goldman Sachs Credit Partners L.P., as
joint lead arrangers and joint book runners, Goldman Sachs Credit Partners L.P., as syndication
agent, and JPMorgan Chase Bank, N.A., as Administrative Agent, have entered into a Credit
Agreement, dated as of March 16, 2007 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”);



    
 WHEREAS, in connection with the Credit Agreement, the Borrower and certain of its Affiliates
(other than the Additional Grantor) have entered into the Guarantee and Collateral Agreement, dated
as of March 16, 2007 (as amended, restated, supplemented or otherwise modified from time to time,
the “Guarantee and Collateral Agreement”) in favor of the Administrative Agent for the
benefit of the Secured Parties;



    
 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 and
Guarantor thereunder with the same force and effect as if originally named therein as a Grantor and
Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor and Guarantor thereunder. The information set forth in
Annex 1-A hereto is hereby added to the information set forth in Schedules
[           
          1] 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 in all material respects





 




			
	1	 	Refer to each Schedule which needs to be
supplemented.




 









 










on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and
as of such date (except for representations and warranties expressly stated to relate to a specific
earlier date, in which case such representations and warranties shall be true and correct in all
material respects as of such earlier date, and the Secured Parties 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 Borrower’s or Holdings’ knowledge shall, for the purposes
of Section 4.1 of the Guarantee and Collateral Agreement, be deemed to be a reference to such
Guarantor’s knowledge).



     The Additional Grantor hereby confirms the grant of a security interest set forth in Section 3
of the Guarantee and Collateral Agreement.



     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: