GUARANTEE AND COLLATERAL AGREEMENT


                                     made by


                           GENERAL SEMICONDUCTOR, INC.


                         and certain of its Subsidiaries


                                   in favor of


                            THE CHASE MANHATTAN BANK,
                             as Administrative Agent


                           Dated as of August 15, 1999



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                                     - ii -                      guarantee.doc

                                TABLE OF CONTENTS

                                                                           Page

SECTION 1.  DEFINED TERMS....................................................4
   1.1  Definitions..........................................................4
   1.2  Other Definitional Provisions........................................8

SECTION 2.  GUARANTEE........................................................8
   2.1  Guarantee............................................................8
   2.2  Right of Contribution................................................9
   2.3  No Subrogation.......................................................9
   2.4  Amendments, etc. with respect to the Company Obligations............10
   2.5  Guarantee Absolute and Unconditional................................10
   2.6  Reinstatement.......................................................11
   2.7  Payments............................................................11

SECTION 3.  GRANT OF SECURITY INTEREST......................................12

SECTION 4.  REPRESENTATIONS AND WARRANTIES..................................13
   4.1  Title; No Other Liens...............................................13
   4.2  Perfected First Priority Liens......................................13
   4.3  Chief Executive Office..............................................14
   4.4  Inventory and Equipment.............................................14
   4.5  Farm Products.......................................................14
   4.6  Investment Property.................................................14
   4.7  Receivables.........................................................14
   4.8  Intellectual Property...............................................15

SECTION 5.  COVENANTS.......................................................15
   5.1  Delivery of Instruments, Certificated Securities and Chattel Paper..15
   5.2  Maintenance of Insurance............................................16
   5.3  Payment of Obligations..............................................16
   5.4  Maintenance of Perfected Security Interest; Further Documentation...16
   5.5  Changes in Locations, Name, Etc.....................................17
   5.6  Notices.............................................................17
   5.7  Investment Property.................................................18
   5.8  Receivables.........................................................19
   5.9  Intellectual Property...............................................19
   5.10  Vehicles...........................................................21

SECTION 6.  REMEDIAL PROVISIONS.............................................21
   6.1  Certain Matters Relating to Receivables.............................21
   6.2  Communications with Obligors: Grantors Remain Liable................22
   6.3  Pledged Stock.......................................................23
   6.4  Proceeds to be Turned Over To Administrative Agent..................24
   6.5  Application of Proceeds.............................................24
   6.6  Code and Other Remedies.......................................... ..25
   6.7  Registration Rights.................................................26
   6.8  Waiver; Deficiency..................................................27

SECTION 7.  THE ADMINISTRATIVE AGENT........................................27
   7.1  Administrative Agent's Appointment as Attorney-in-Fact, etc.........27
   7.2  Duty of Administrative Agent........................................29
   7.3  Execution of Financing Statements...................................30
   7.4  Authority of Administrative Agent...................................30

SECTION 8.  MISCELLANEOUS...................................................30
   8.1  Amendments in Writing...............................................30
   8.2  Notices.............................................................30
   8.3  No Waiver by Course of Conduct; Cumulative Remedies.................30
   8.4  Enforcement Expenses; Indemnification...............................31
   8.5  Successors and Assigns..............................................31
   8.6  Set-Off.............................................................32
   8.7  Counterparts........................................................32
   8.8  Severability........................................................32
   8.9  Section Headings....................................................32
   8.10  Integration........................................................33
   8.11  GOVERNING LAW......................................................33
   8.12  Submission to Jurisdiction; Waivers................................33
   8.13  Acknowledgments....................................................33
   8.14  Additional Grantors................................................34
   8.15  Releases...........................................................34
   8.16  WAIVER OF JURY TRIAL...............................................35


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SCHEDULES

Schedule 1........Notice Addresses
Schedule 2........Investment Property
Schedule 3........Perfection Matters
Schedule 4........Jurisdictions of Organization and Chief Executive Offices
Schedule 5........Inventory and Equipment Locations
Schedule 6........Intellectual Property



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                                                                  guarantee.doc


     GUARANTEE AND COLLATERAL  AGREEMENT,  dated as of August 15, 1999, 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 THE  CHASE
MANHATTAN BANK, as Administrative  Agent (in such capacity,  the "Administrative
Agent") for the banks and other financial  institutions  (the "Banks") from time
to time parties to the Credit Agreement described below. This Agreement replaces
and supercedes the Pledge Agreements and Guarantee  Agreements as defined in the
Credit Agreement referred to below.

                              W I T N E S S E T H:

     WHEREAS,   General   Semiconductor,   Inc.,  a  Delaware  corporation  (the
"Company"), is a party to the Credit Agreement,  dated as of July 23, 1997, with
the Administrative Agent, the Banks and the Co-Agents named therein (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement");

     WHEREAS,  the Credit Agreement was amended by the Second Amendment dated as
of  June  22,  1999  (the  "Second  Amendment"),  and,  pursuant  to the  Second
Amendment,  the Company agreed to cause the Grantors to execute and deliver this
Agreement;

     WHEREAS, pursuant to the terms of the Credit Agreement and the other Credit
Documents (as defined below),  the Banks have severally  agreed to hold and make
certain  Extensions  of Credit (as  defined  below) to or for the benefit of the
Company;
     WHEREAS,  the Company owns, directly or indirectly,  at least a majority of
the issued and outstanding stock of each of the Guarantors;

     WHEREAS, the proceeds of Extensions of Credit may be used in part to enable
the Company to make valuable  transfers to the Guarantors in connection with the
operation of their respective businesses;

     WHEREAS, each Guarantor will derive substantial direct and indirect benefit
from the holding and making of the Extensions of Credit; and

     WHEREAS,  the  obligation  of the Banks to hold and make the  Extensions of
Credit is conditioned  upon,  among other things,  the execution and delivery by
each of the  Grantors  of this  Agreement  to the  Administrative  Agent for the
ratable benefit of the Banks;

     NOW, THEREFORE, in consideration of the premises and to induce the Banks to
enter into the Second  Amendment  to the Credit  Agreement  and to hold and make
Extensions of Credit, each Grantor hereby agrees with and for the benefit of the
Administrative Agent, the Co-Agents and the Banks as follows:

                            SECTION 1 DEFINED TERMS

     1.1 Definitions.  (a) Unless otherwise defined herein, terms defined in the
Credit  Agreement  and used herein shall have the meanings  given to them in the
Credit Agreement,  and the following terms are used herein as defined in the New
York UCC: Accounts,  Certificated Security, Chattel Paper, Documents, Equipment,
Farm Products, Instruments and Inventory.

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

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

     "Bank Hedge Agreements": all interest rate swaps, caps or collar agreements
or  similar  arrangements  entered  into by the  Company  with  any Bank (or any
Affiliate of any Bank) providing for protection against fluctuations in interest
rates  or  currency   exchange  rates  or  the  exchange  of  nominal   interest
obligations, either generally or under specific contingencies.

     "Capital Stock":  any and all shares,  interests,  participations  or other
equivalents (however designated) of capital stock of a corporation,  any and all
equivalent ownership interests, in any Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.

     "Collateral": as defined in Section 3.

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

     "Company   Obligations":   means  the   Obligations   (including,   without
limitation, interest accruing at the then applicable rate provided in the Credit
Agreement  after the  maturity of the Loans and  Reimbursement  Obligations  and
interest  accruing at the then applicable rate provided in the Credit  Agreement
after the filing of any  petition  in  bankruptcy,  or the  commencement  of any
insolvency,  reorganization or like proceeding, relating to the Company, whether
or not a claim for  post-filing  or  post-petition  interest  is allowed in such
proceeding).

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

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

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

     "Extensions  of Credit":  shall mean (i) all  Loans or advances made to the
Company  under any Credit  Document,  (ii) all  Letters of Credit issued for the
account of the Company  under any Credit  Document,  and (iii) to the extent not
otherwise  included in the foregoing,  all other  extensions of credit to or for
the benefit of the Company under any Credit Document.

     "Foreign  Subsidiary  Voting  Stock":  the  Capital  Stock  of any  Foreign
Subsidiary

     "General Intangibles": all "general intangibles" as such term is defined in
Section  9-106  of the New  York  UCC  and,  in any  event,  including,  without
limitation, with respect to any Grantor, all contracts, agreements,  instruments
and  indentures 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 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 damages  arising  thereunder and (iii) all  rights of such Grantor to perform
and to exercise all remedies thereunder.

     "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  Credit
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 the  Administrative  Agent,  the  Co-Agents  or the Banks that are
required to be paid by such Guarantor pursuant to the terms of this Agreement or
any other Credit Document).

     "Guarantors":  the  collective  reference  to each  Grantor  other than the
Company.

     "Intellectual Property": the collective reference to all rights, priorities
and privileges relating to intellectual  property,  whether arising under United
States,   multinational  or  foreign  laws  or  otherwise,   including,  without
limitation,  the Copyrights,  the Copyright  Licenses,  the Patents,  the Patent
Licenses,  the Trademarks and the Trademark  Licenses,  and all rights to sue at
law or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.

     "Intercompany  Note":  any  promissory  note  evidencing  loans made by any
Grantor to any of its Affiliates.

     "Investment  Property":  the  collective  reference to (i) all  "investment
property"  as such term is defined  in Section  9-115 of the New York UCC (other
than any  Foreign  Subsidiary  Voting  Stock  excluded  from the  definition  of
"Pledged Stock") and (ii) whether or not constituting  "investment  property" as
so defined, all Pledged Notes and all Pledged Stock.

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

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

     "Obligations": (i) in the case of the Company, the Company Obligations, and
(ii) in the case of each Guarantor, its Guarantor Obligations.

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

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

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

     "Pledged Stock": the shares of Capital Stock listed on Schedule 2, together
with any other  shares,  stock  certificates,  options  or rights of any  nature
whatsoever  in respect of the Capital  Stock of any Person that may be issued or
granted to, or held by, any Grantor while this Agreement is in effect;  provided
that in no event shall more than 65% of the total outstanding Foreign Subsidiary
Voting  Stock of any Foreign  Subsidiary  be  required  to be pledged  hereunder
except to the extent required by subsection 6.8 of the Credit Agreement.

     "Proceeds":  all "proceeds" as such term is defined in Section  9-306(1) of
the New York UCC and,  in any event,  shall  include,  without  limitation,  all
dividends or other income from the Investment  Property,  collections thereon or
distributions or payments with respect thereto.

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

     "Reimbursement  Obligations":  the  obligations of the Company to reimburse
the Issuing Banks pursuant to subsection 2.6 of the Credit Agreement for amounts
drawn under Letters of Credit.

                  "Securities Act": the Securities Act of 1933, as amended.

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

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

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

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

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

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


                              SECTION 2. GUARANTEE

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

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

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

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

     (e) No  payment  made by the  Company,  any of the  Guarantors,  any  other
guarantor or any other  Person or received or  collected  by the  Administrative
Agent or any Bank from the Company,  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 Company 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 Company  Obligations or any payment received or collected from
such  Guarantor in respect of the Company  Obligations),  remain  liable for the
Company  Obligations  up to the maximum  liability of such  Guarantor  hereunder
until the Company  Obligations  are paid in full,  no Letter of Credit  shall be
outstanding and the Commitments are terminated.

     2.2 Right of Contribution.  Each Guarantor hereby agrees that to the extent
that a  Guarantor  shall  have  paid more  than its  proportionate  share of any
payment made  hereunder,  such  Guarantor  shall be entitled to seek and receive
contribution  from and against any other Guarantor  hereunder which has not paid
its proportionate share of such payment.  Each Guarantor's right of contribution
shall be subject to the terms and  conditions of Section 2.3. The  provisions of
this Section 2.2 shall in no respect limit the  obligations  and  liabilities of
any  Guarantor to the  Administrative  Agent and the Banks,  and each  Guarantor
shall  remain  liable  to the  Administrative  Agent  and the Banks for the full
amount guaranteed by such Guarantor hereunder.

     2.3 No  Subrogation.  Notwithstanding  any  payment  made by any  Guarantor
hereunder  or any  set-off  or  application  of  funds of any  Guarantor  by the
Administrative  Agent  or  any  Bank,  no  Guarantor  shall  be  entitled  to be
subrogated to any of the rights of the Administrative  Agent or any Bank against
the Company or any other  Guarantor or any  collateral  security or guarantee or
right of offset held by the Administrative  Agent or any Bank for the payment of
the Company Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from the Company or any other Guarantor in respect
of payments  made by such  Guarantor  hereunder,  until all amounts owing to the
Administrative  Agent and the Banks by the  Company on  account  of the  Company
Obligations  are paid in full, no Letter of Credit shall be outstanding  and the
Commitments  are  terminated.  If any amount  shall be paid to any  Guarantor on
account  of  such  subrogation  rights  at any  time  when  all  of the  Company
Obligations  shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Administrative  Agent and the Banks,  segregated from
other  funds of such  Guarantor,  and  shall,  forthwith  upon  receipt  by such
Guarantor, be turned over to the Administrative Agent in the exact form received
by such Guarantor (duly indorsed by such Guarantor to the Administrative  Agent,
if required), to be applied against the Company Obligations,  whether matured or
unmatured, in such order as the Administrative Agent may determine.

     2.4  Amendments,  etc.  with  respect  to  the  Company  Obligations.  Each
Guarantor shall remain obligated  hereunder  notwithstanding  that,  without any
reservation  of rights  against any Guarantor  and without  notice to or further
assent  by any  Guarantor,  any  demand  for  payment  of  any  of  the  Company
Obligations made by the Administrative Agent or any Bank may be rescinded by the
Administrative Agent or such Bank and any of the Company Obligations  continued,
and the Company  Obligations,  or the  liability of any other Person upon or for
any part thereof,  or any collateral  security or guarantee therefor or right of
offset with respect  thereto,  may,  from time to time,  in whole or in part, be
renewed,  extended,  amended,  modified,   accelerated,   compromised,   waived,
surrendered or released by the Administrative  Agent or any Bank, and the Credit
Agreement and the other Credit  Documents and any other  documents  executed and
delivered in connection  therewith  may be amended,  modified,  supplemented  or
terminated,  in whole or in part, as the  Administrative  Agent (or the Required
Banks or all Banks,  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
the Administrative  Agent or any Bank for the payment of the Company Obligations
may  be  sold,  exchanged,   waived,   surrendered  or  released.   Neither  the
Administrative Agent nor any Bank shall have any obligation to protect,  secure,
perfect or insure any Lien at any time held by it as  security  for the  Company
Obligations  or for the  guarantee  contained  in this Section 2 or any property
subject thereto.

     2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any and all
notice of the  creation,  renewal,  extension  or accrual of any of the  Company
Obligations  and notice of or proof of reliance by the  Administrative  Agent or
any Bank upon the  guarantee  contained in this Section 2 or  acceptance  of the
guarantee contained in this Section 2; the Company 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  Company  and any of the
Guarantors,  on the one hand, and the Administrative Agent and the Banks, 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 Company or any of the  Guarantors  with
respect to the Company Obligations.  Each Guarantor  understands and agrees that
the  guarantee  contained in this Section 2 shall be construed as a  continuing,
absolute  and  unconditional  guarantee  of  payment  without  regard to (a) the
validity or enforceability of the Credit Agreement or any other Credit Document,
any of the Company  Obligations  or any other  collateral  security  therefor or
guarantee  or right of offset with  respect  thereto at any time or from time to
time held by the Administrative  Agent or any Bank, (b) any defense,  set-off or
counterclaim  (other than a defense of payment or performance)  which may at any
time be available  to or be asserted by the Company or any other Person  against
the Administrative  Agent or any Bank, or (c) any other circumstance  whatsoever
(with or without notice to or knowledge of the Company or such Guarantor)  which
constitutes,  or  might  be  construed  to  constitute,  an  equitable  or legal
discharge of the Company for the Company Obligations, or of such Guarantor under
the  guarantee  contained  in this  Section  2, in  bankruptcy  or in any  other
instance.  When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor,  the Administrative  Agent or any Bank
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  Company,  any other
Guarantor  or any other Person or against any  collateral  security or guarantee
for the Company Obligations or any right of offset with respect thereto, and any
failure  by the  Administrative  Agent or any Bank to make any such  demand,  to
pursue  such other  rights or  remedies  or to  collect  any  payments  from the
Company,  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  Company,  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 the  Administrative  Agent or any Bank against any  Guarantor.
For the purposes hereof "demand" shall include the  commencement and continuance
of any legal proceedings.

     2.6 Reinstatement. The guarantee contained in this Section 2 shall continue
to be effective,  or be reinstated,  as the case may be, if at any time payment,
or any part  thereof,  of any of the Company  Obligations  is  rescinded or must
otherwise be restored or returned by the  Administrative  Agent or any Bank upon
the insolvency,  bankruptcy,  dissolution,  liquidation or reorganization of the
Company  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
Company or any Guarantor or any substantial part of its property,  or otherwise,
all as though such payments had not been made.

     2.7 Payments. Each Guarantor hereby guarantees that payments hereunder will
be paid to the  Administrative  Agent without set-off or counterclaim in Dollars
or any other currency in which the underlying obligations are denominated at the
office of the  Administrative  Agent located at 270 Park Avenue,  New York,  New
York 10017.


                      SECTION 3. GRANT OF SECURITY INTEREST

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

                  (a)  all Accounts;

                  (b)  all Chattel Paper;

                  (c)  all Deposit Accounts;

                  (d)  all Documents;

                  (e)  all Equipment;

                  (f)  all General Intangibles;

                  (g)  all Instruments;

                  (h)  all Intellectual Property;

                  (i)  all Inventory;

                  (j)  all Investment Property;

                  (k)  all Vehicles;

                  (l)  all other property not otherwise described above;

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

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

     Notwithstanding the foregoing the Company and its Subsidiaries shall not be
required to grant any such security interest in any contract, agreement, license
or instrument,  in each case to the extent, and only to the extent, the grant by
the Company or such Subsidiary of a security interest pursuant to this Agreement
in its  right,  title and  interest  in such  contract,  agreement,  license  or
instrument  is  prohibited by such  contract,  agreement,  license or instrument
without the consent of any other  party  thereto,  would give any other party to
such  contract,  agreement,  license or  instrument  the right to terminate  its
obligations  thereunder,  or is permitted with consent if all necessary consents
to such  grant of a  security  interest  have not been  obtained  from the other
parties  thereto (it being  understood that the foregoing shall not be deemed to
obligate  the  Company or such  Subsidiary  to obtain such  consents);  provided
further,  that the foregoing  limitation  shall not affect,  limit,  restrict or
impair the grant of by the  Company or such  Subsidiary  of a security  interest
pursuant to this  Agreement in any  receivable or any money or other amounts due
or to become due under any such contract,  agreement,  license or instrument. In
addition,  any property  subject to a Lien  expressly  permitted  by  subsection
7.2(g),  (i),  (n) or (o) of the  Credit  Agreement  shall not be subject to the
security  interest  created  by this  Agreement  as long as such  other  Lien is
effective.


                    SECTION 4. REPRESENTATIONS AND WARRANTIES

     To induce the Administrative Agent, the Co-Agents and the Banks to hold and
make  Extensions of Credit and to enter into the Second  Amendment to the Credit
Agreement,  each Grantor hereby  represents  and warrants to the  Administrative
Agent, each Co-Agent and each Bank that:

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

     4.2 Perfected First Priority Liens. The security interests granted pursuant
to this Agreement (a) upon completion of the filings and other actions specified
on Schedule 3 (which, in the case of all filings and other documents referred to
on said Schedule,  have been delivered to the Administrative  Agent in completed
and duly executed form) will constitute  valid perfected  security  interests in
all of the  Collateral  in favor of the  Administrative  Agent,  for the ratable
benefit of the Banks,  as collateral  security for such  Grantor's  Obligations,
enforceable  in accordance  with the terms hereof  against all creditors of such
Grantor and any Persons  purporting to purchase any Collateral from such Grantor
and (b) are prior to all other Liens on the  Collateral in existence on the date
hereof  except  for  Liens  permitted  by the  Credit  Agreement  which may have
priority over the Liens on the Collateral, if any.

     4.3 Chief Executive Office. On the date hereof, such Grantor's jurisdiction
of organization  and the location of such Grantor's  chief  executive  office or
sole place of business are specified on Schedule 4.

     4.4  Inventory  and  Equipment.  On the date hereof,  the Inventory and the
Equipment  (other  than  mobile  goods and other  than  consigned  Inventory  as
permitted  under  Section  7.2(o) of the Credit  Agreement and any Inventory and
Equipment at locations  where there is less than $3,000  aggregate book value of
Inventory and Equipment) are kept at the locations listed on Schedule 5.

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

     4.6  Investment  Property.  (a) The shares of Pledged Stock pledged by such
Grantor  hereunder  constitute  all the  issued  and  outstanding  shares of all
classes of the  Capital  Stock of each Issuer  owned by such  Grantor or, in the
case of Foreign Subsidiary Voting Stock, if less, 65% of the outstanding Foreign
Subsidiary  Voting  Stock of each  relevant  Issuer  (unless  such  Guarantor is
required  to  pledge  a higher  percentage  of such  Voting  Stock  pursuant  to
subsection 6.8 of the Credit Agreement).

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

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

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

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

     (b) None of the obligors on any Receivables is a Governmental Authority.

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

     4.8 Intellectual  Property.  (a) Schedule 6 lists all Intellectual Property
owned by such Grantor in its own name on the date hereof.

     (b) On the date  hereof,  all  material  Intellectual  Property  is, to the
knowledge of such Grantor, valid, subsisting, unexpired and enforceable, has not
been  abandoned and does not infringe the  intellectual  property  rights of any
other  Person,  except as would  not  reasonably  be  expected  to have,  in the
aggregate,  a material  adverse  effect on the  business,  financial  condition,
properties,  results of operations, value or prospects of the Company and any of
its Subsidiaries taken as a whole ("Material Adverse Effect").

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

     (d) No holding,  decision or judgment has been rendered by any Governmental
Authority  which  would  limit,  cancel or  question  the  validity  of, or such
Grantor's rights in, any Intellectual Property.

     (e) No action or  proceeding  is  pending,  or,  to the  knowledge  of such
Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual  Property or such Grantor's  ownership interest
therein, or (ii) which,  if adversely determined,  would have a Material Adverse
Effect on the value of the Intellectual Property taken as a whole.


                              SECTION 5. COVENANTS

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

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

     5.2  Maintenance  of  Insurance.  (a)  Such  Grantor  will  maintain,  with
financially sound and reputable companies,  insurance policies  (i) insuring the
Inventory,  Equipment and Vehicles  against loss by fire,  explosion,  theft and
such other casualties  comparable in scope and coverage as insurance  maintained
by companies  engaged in the same or similar  businesses  and (ii) to the extent
requested by the Administrative Agent, insuring such Grantor, the Administrative
Agent,  the Co-Agents and the Banks  against  liability for personal  injury and
property  damage  relating  to such  Inventory,  Equipment  and  Vehicles,  such
policies  to be in such form and  amounts  comparable  in scope and  coverage as
insurance maintained by companies engaged in the same or similar businesses.

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

     (c) The Company shall deliver to the  Administrative  Agent and the Banks a
report  of  a  reputable   insurance  broker  with  respect  to  such  insurance
substantially  concurrently  with each delivery of the Company's  audited annual
financial  statements and such supplemental  reports with respect thereto as the
Administrative Agent may from time to time reasonably request.

     5.3  Payment  of  Obligations.  Such  Grantor  will  pay and  discharge  or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes,  assessments and governmental  charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
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.

     5.4 Maintenance of Perfected Security Interest; Further Documentation.  (a)
Such Grantor shall maintain the security interest created by this Agreement as a
perfected  security  interest having at least the priority  described in Section
4.2 and shall defend such  security  interest  against the claims and demands of
all Persons whomsoever.

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

     (c) At any time and from  time to time,  upon the  written  request  of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will
promptly  and  duly  execute  and  deliver,  and  have  recorded,  such  further
instruments  and documents and take such further  actions as the  Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits  of  this  Agreement  and of the  rights  and  powers  herein  granted,
including,   without  limitation,  (i)  filing  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 and any other relevant
Collateral,  taking any actions necessary to enable the Administrative  Agent to
obtain "control" (within the meaning of the applicable  Uniform Commercial Code)
with respect thereto.

     5.5 Changes in Locations,  Name, Etc. Such Grantor will not, except upon 15
days'  prior  written  notice to the  Administrative  Agent and  delivery to the
Administrative  Agent of (a) all additional  executed  financing  statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity,  perfection and priority of the security interests provided for herein
and (b) if applicable, a written supplement to Schedule 5 showing any additional
location at which Inventory or Equipment shall be kept:

     (i) permit any of the Inventory or Equipment to be kept at a location other
than those listed on Schedule 5;

     (ii) change its  jurisdiction  of organization or the location of its chief
executive office or sole place of business from that referred to in Section 4.3;
or

     (iii) change its name,  identity or  corporate  structure to such an extent
that any financing  statement  filed by the  Administrative  Agent in connection
with this Agreement would become misleading.

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

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

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

     5.7  Investment  Property.  (a) If such Grantor  shall  become  entitled to
receive or shall receive any stock certificate  (including,  without limitation,
any  certificate  representing a stock dividend or a distribution  in connection
with any  reclassification,  increase or reduction of capital or any certificate
issued in connection  with any  reorganization),  option or rights in respect of
the Capital Stock of any Issuer,  whether in addition to, in substitution of, as
a  conversion  of, or in  exchange  for,  any shares of the  Pledged  Stock,  or
otherwise in respect thereof, such Grantor shall accept the same as the agent of
the  Administrative  Agent, the Co-Agents and the Banks,  hold the same in trust
for the  Administrative  Agent, the Co-Agents and the Banks and deliver the same
forthwith to the Administrative Agent in the exact form received,  duly indorsed
by such  Grantor to the  Administrative  Agent,  if required,  together  with an
undated  stock power  covering such  certificate  duly executed in blank by such
Grantor and with, if the Administrative Agent so requests, signature guaranteed,
to be  held  by the  Administrative  Agent,  subject  to the  terms  hereof,  as
additional  collateral  security for the  Obligations.  Any sums paid upon or in
respect of the  Investment  Property upon the  liquidation or dissolution of any
Issuer shall be paid over to the Administrative Agent to be held by it hereunder
as  additional  collateral  security  for  the  Obligations,  and  in  case  any
distribution  of  capital  shall  be made  on or in  respect  of the  Investment
Property  or any  property  shall be  distributed  upon or with  respect  to the
Investment Property pursuant to the  recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall,  unless otherwise subject to a perfected security interest in
favor of the Administrative  Agent, be delivered to the Administrative  Agent to
be held by it hereunder as additional  collateral  security for the Obligations.
If any  sums of money or  property  so paid or  distributed  in  respect  of the
Investment Property shall be received by such Grantor, such Grantor shall, until
such money or property is paid or delivered to the  Administrative  Agent,  hold
such money or  property in trust for the Banks,  segregated  from other funds of
such Grantor, as additional collateral security for the Obligations.

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

     (c) In the case of each Grantor which is an Issuer, such Issuer agrees that
(i) it will be bound by the terms of this  Agreement  relating to the Investment
Property  issued by it and will comply with such terms insofar as such terms are
applicable  to it,  (ii) it  will notify the  Administrative  Agent  promptly in
writing of the occurrence of any of the events  described in Section 5.7(a) with
respect to the Investment  Property issued by it and (iii) the terms of Sections
6.3(c) and 6.7 shall apply to it, mutatis mutandis,  with respect to all actions
that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Investment Property issued by it.

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

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

     5.9  Intellectual  Property.  (a) Such  Grantor  (either  itself or through
licensees) will  (i) continue  to use each material  Trademark on each and every
trademark  class of goods  applicable  to its current  line as  reflected in its
current  catalogs,  brochures and price lists in order to maintain such material
Trademark  in full  force  free  from any  claim  of  abandonment  for  non-use,
(ii) maintain  as in the past the quality of products and services offered under
such material Trademark,  (iii) use such material Trademark with the appropriate
notice of registration  and all other notices and legends required by applicable
Requirements of Law, (iv) not adopt or use any mark which is confusingly similar
or a colorable  imitation of such material  Trademark unless the  Administrative
Agent, for the ratable benefit of the Banks,  shall obtain a perfected  security
interest in such mark  pursuant to this  Agreement,  and (v) not (and not permit
any licensee or  sublicensee  thereof to) do any act or knowingly omit to do any
act whereby such material  Trademark may become  invalidated  or impaired in any
way.

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

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

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

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

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

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

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

     5.10  Vehicles.  (a) No Vehicle  shall be removed  from the state which has
issued the  certificate  of  title/ownership  therefor for a period in excess of
four months.

     (b) Within 30 days after the date hereof, and, with respect to any Vehicles
acquired by such Grantor subsequent to the date hereof, within 30 days after the
date  of   acquisition   thereof,   all   applications   for   certificates   of
title/ownership  indicating the  Administrative  Agent's first priority security
interest in the Vehicle  covered by such  certificate,  and any other  necessary
documentation,  shall be filed in each  office  in each  jurisdiction  which the
Administrative  Agent shall deem advisable to perfect its security  interests in
the Vehicles.

     (c)  Notwithstanding  the foregoing,  the Grantors shall not be required to
take any action to perfect the  security  interest  in  Vehicles  created by the
Agreement (except filing Uniform  Commercial Code financing  statements)  unless
requested by the Administrative Agent or the Required Banks.


                         SECTION 6. REMEDIAL PROVISIONS

     6.1 Certain  Matters  Relating to  Receivables.  (a)  Following an Event of
Default and continuance  thereof,  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 require in
connection with such test verifications. At any time and from time to time, upon
the  Administrative  Agent's request and at the expense of the relevant Grantor,
such Grantor shall cause independent public  accountants or others  satisfactory
to the  Administrative  Agent to furnish  to the  Administrative  Agent  reports
showing  reconciliations,  aging and test  verifications  of, and trial balances
for, the Receivables.

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

     (c) At any time after the occurrence and during the continuance of an Event
of Default, at the Administrative  Agent's request,  each Grantor shall, deliver
to the  Administrative  Agent all original 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) At any time
after the  occurrence  and during the  continuance  of an Event of Default,  the
Administrative  Agent in its own name or in the name of  others  may at any time
communicate  with obligors under the Receivables and parties to the Contracts to
verify  with them to the  Administrative  Agent's  satisfaction  the  existence,
amount and terms of any Receivables or Contracts.

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

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

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

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

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

     6.4 Proceeds to be Turned Over To Administrative  Agent. In addition to the
rights of the  Administrative  Agent,  the Co-Agents and the Banks  specified in
Section  6.1 with  respect to payments  of  Receivables,  if an Event of Default
shall occur and be continuing,  all Proceeds received by any Grantor  consisting
of cash, checks and other near-cash items shall be held by such Grantor in trust
for the Administrative Agent and the Banks,  segregated from other funds of such
Grantor,  and shall,  forthwith upon receipt by such Grantor,  be turned over to
the  Administrative  Agent in the exact  form  received  by such  Grantor  (duly
indorsed by such Grantor to the Administrative Agent, if required). All Proceeds
received  by  the   Administrative   Agent   hereunder  shall  be  held  by  the
Administrative  Agent in a Collateral Account maintained under its sole dominion
and control. All Proceeds while held by the Administrative Agent in a Collateral
Account (or by such Grantor in trust for the Administrative Agent, the Co-Agents
and the Banks)  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
Company  and the  Administrative  Agent,  or, if an Event of Default  shall have
occurred and be continuing,  at any time at the Administrative Agent's election,
the  Administrative  Agent  may apply  all or any part of  Proceeds  held in any
Collateral  Account  in  payment  of  the  Obligations  in  such  order  as  the
Administrative   Agent  may  elect,  and  any  part  of  such  funds  which  the
Administrative Agent elects not so to apply and deems not required as collateral
security  for the  Obligations  shall  be  paid  over  from  time to time by the
Administrative Agent to the Company or to whomsoever may be lawfully entitled to
receive the same. Any balance of such Proceeds  remaining  after the Obligations
shall have been paid in full, no Letters of Credit shall be outstanding  and the
Commitments  shall  have  terminated  shall be paid  over to the  Company  or to
whomsoever may be lawfully entitled to receive the same.

     6.6 Code and Other  Remedies.  If an Event of  Default  shall  occur and be
continuing,  the Administrative  Agent, on behalf of the Banks, may exercise, in
addition to all other rights and remedies  granted to them in this Agreement and
in any other  instrument  or agreement  securing,  evidencing or relating to the
Obligations,  all rights and remedies of a secured  party under the New York UCC
or any other  applicable law.  Without limiting the generality of the foregoing,
the  Administrative  Agent,  without  demand  of  performance  or other  demand,
presentment,  protest,  advertisement  or notice of any kind  (except any notice
required by law  referred  to below) to or upon any Grantor or any other  Person
(all and each of which demands, defenses,  advertisements and notices are hereby
waived), may in such circumstances forthwith collect,  receive,  appropriate and
realize upon the  Collateral,  or any part thereof,  and/or may forthwith  sell,
lease,  assign, give option or options to purchase,  or otherwise dispose of and
deliver  the  Collateral  or any  part  thereof  (or  contract  to do any of the
foregoing),  in one or more parcels at public or private  sale or sales,  at any
exchange,  broker's board or office of the  Administrative  Agent or any Bank 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.  The  Administrative  Agent,  any Co-Agent or any
Bank shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales,  to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption in
any Grantor,  which right or equity is hereby waived and released.  Each Grantor
further  agrees,  at  the  Administrative   Agent's  request,  to  assemble  the
Collateral and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Grantor's premises
or  elsewhere.  The  Administrative  Agent shall  apply the net  proceeds of any
action taken by it pursuant to this Section 6.6, after  deducting all reasonable
costs and expenses of every kind incurred in connection  therewith or incidental
to the care or  safekeeping  of any of the  Collateral or in any way relating to
the Collateral or the rights of the Administrative  Agent, the Co-Agents and the
Banks hereunder,  including, without limitation,  reasonable attorneys' fees and
disbursements,  to the payment in whole or in part of the  Obligations,  in such
order as the Administrative Agent may elect, and only after such application and
after the payment by the  Administrative  Agent of any other amount  required by
any provision of law, including, without limitation,  Section 9-504(l)(c) of the
New York UCC, need the Administrative  Agent account for the surplus, if any, to
any Grantor.  To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Administrative Agent, any
Co-Agent  or any  Bank  arising  out of  the  exercise  by  them  of any  rights
hereunder.  If any notice of a proposed sale or other  disposition of Collateral
shall be required by law, such notice shall be deemed  reasonable  and proper if
given at least 10 days before such sale or other disposition. The application of
any Collateral shall be subject to subsection 10.14 of the Credit Agreement.

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

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

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

     6.8 Waiver;  Deficiency.  Each Grantor  waives and agrees not to assert any
rights or  privileges  which it may acquire  under Section 9-112 of the New York
UCC. 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 the
Administrative Agent, any Co-Agent or any Bank to collect such deficiency.


                       SECTION 7. THE ADMINISTRATIVE AGENT

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

     (i) in the  name of  such  Grantor  or its own  name,  or  otherwise,  take
possession of and indorse and collect any checks, drafts, notes,  acceptances or
other instruments for the payment of moneys due under any Receivable or Contract
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  Contract  or with  respect to any
other Collateral whenever payable;

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

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

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

     (c) The expenses of the  Administrative  Agent incurred in connection  with
actions  undertaken  as provided in this Section  7.1,  together  with  interest
thereon  at a rate per  annum  equal  to the  highest  rate  per  annum at which
interest  would then be payable on any  category of past due 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) Each Grantor hereby  ratifies all that said attorneys shall lawfully do
or cause to be done by virtue  hereof All powers,  authorizations  and  agencies
contained in this  Agreement  are coupled  with an interest and are  irrevocable
until this Agreement is terminated and the security interests created hereby are
released.

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

     7.3 Execution of Financing Statements. Pursuant to Section 9-402 of the New
York  UCC  and  any  other   applicable   law,  each  Grantor   authorizes   the
Administrative  Agent to file or record financing statements and other filing or
recording  documents or instruments  with respect to the Collateral  without the
signature of such Grantor in such form and in such offices as the Administrative
Agent  determines   appropriate  to  perfect  the  security   interests  of  the
Administrative Agent under this Agreement.  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, the Co-Agents
and the Banks, 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 Banks  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.


                            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 subsection 10.1 of the Credit Agreement.

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

     8.3 No Waiver  by  Course of  Conduct;  Cumulative  Remedies.  Neither  the
Administrative  Agent,  any  Co-Agent nor any Bank shall by any act (except by a
written  instrument  pursuant to Section 8.1),  delay,  indulgence,  omission or
otherwise  be deemed to have  waived  any right or remedy  hereunder  or to have
acquiesced in any Default or Event of Default.  No failure to exercise,  nor any
delay in exercising,  on the part of the  Administrative  Agent, any Co-Agent or
any Bank,  any right,  power or privilege  hereunder  shall  operate as a waiver
thereof.  No  single  or  partial  exercise  of any  right,  power or  privilege
hereunder shall preclude any other or further  exercise  thereof or the exercise
of any other right, power or privilege.  A waiver by the  Administrative  Agent,
any  Co-Agent or any Bank of any right or remedy  hereunder  on any one occasion
shall not be construed as a bar to any right or remedy which the  Administrative
Agent,  such Co-Agent or such Bank would otherwise have on any future  occasion.
The rights and remedies herein provided are cumulative,  may be exercised singly
or concurrently  and are not exclusive of any other rights or remedies  provided
by law.

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

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

     (c) Each Guarantor agrees to pay, and to save the Administrative Agent, the
Co-Agents and the 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 respect to the execution,
delivery,  enforcement,  performance and administration of this Agreement to the
extent the Company would be required to do so pursuant to subsection 10.5 of the
Credit Agreement.

     (d) The  agreements  in this  Section 8.4 shall  survive  repayment  of the
Obligations  and all other amounts  payable  under the Credit  Agreement and the
other Credit Documents.

     8.5  Successors  and  Assigns.  This  Agreement  shall be binding  upon the
successors  and  assigns of each  Grantor  and shall inure to the benefit of the
Administrative  Agent,  the  Co-Agents  and the Banks 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 the Administrative
Agent,  each  Co-Agent  and each Bank at any time and from time to time while an
Event of Default  specified in subsection  8(a) or 8(f) 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),  in any  currency,  and any other  credits,
indebtedness  or  claims,  in any  currency,  in each  case  whether  direct  or
indirect,  absolute or  contingent,  matured or  unmatured,  at any time held or
owing by the  Administrative  Agent,  such  Co-Agent  or such Bank to or for the
credit or the account of such  Grantor,  or any part  thereof in such amounts as
the Administrative  Agent, such Co-Agent or such Bank may elect,  against and on
account of the obligations and liabilities of such Grantor to the Administrative
Agent,  such  Co-Agent  or such Bank  hereunder  and claims of every  nature and
description of the Administrative Agent, such Co-Agent or such Bank against such
Grantor, in any currency, whether arising hereunder, under the Credit Agreement,
any other  Credit  Document or  otherwise,  as the  Administrative  Agent,  such
Co-Agent or such Bank may elect,  whether or not the  Administrative  Agent, any
Co-Agent  or any  Bank has  made  any  demand  for  payment  and  although  such
obligations,  liabilities  and  claims  may  be  contingent  or  unmatured.  The
Administrative  Agent,  each  Co-Agent  and each Bank shall  notify such Grantor
promptly of any such  set-off  and the  application  made by the  Administrative
Agent,  such  Co-Agent or such Bank of the proceeds  thereof,  provided that the
failure to give such notice  shall not affect the  validity of such  set-off and
application. The rights of the Administrative Agent, each Co-Agent and each Bank
under this Section 8.6 are in addition to other rights and remedies  (including,
without  limitation,  other rights of set-off) which the  Administrative  Agent,
such Co-Agent or such Bank may have.

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

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

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

     8.10 Integration.  This Agreement and the other Credit Documents  represent
the  agreement  of the  Grantors,  the  Administrative  Agent and the Banks with
respect to the subject  matter  hereof and  thereof,  and there are no promises,
undertakings,  representations or warranties by the Administrative  Agent or any
Bank  relative to subject  matter  hereof and thereof not expressly set forth or
referred to herein or in the other Credit 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  Credit  Documents  to which it is a
party, or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive  general  jurisdiction of the Courts of the State of New York,
the courts of the United  States of America  for the  Southern  District  of New
York, and appellate courts from any thereof;

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

     (c) agrees that service of process in any such action or proceeding  may be
effected  by mailing a copy  thereof by  registered  or  certified  mail (or any
substantially  similar form of mail),  postage  prepaid,  to such Grantor at its
address  referred  to in  Section  8.2 or at such  other  address  of which  the
Administrative Agent shall have been notified pursuant thereto;

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

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

     8.13  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  Credit  Documents  to which it is a
party;

     (b) neither the  Administrative  Agent,  any  Co-Agent nor any Bank has any
fiduciary  relationship  with  or  duty  to  any  Grantor  arising  out of or in
connection  with this  Agreement or any of the other Credit  Documents,  and the
relationship  between  the  Grantors,  on the one hand,  and the  Administrative
Agent,  the  Co-Agents and Banks,  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 Credit  Documents or
otherwise  exists by virtue of the  transactions  contemplated  hereby among the
Banks or among the Grantors and the Banks.

     8.14 Additional  Grantors.  Each Subsidiary of the Company that is required
to become a party to this  Agreement  pursuant to  subsection  6.8 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  Commitments  have
been  terminated and no Letters of Credit shall be  outstanding,  the Collateral
shall be released  from the Liens  created  hereby,  and this  Agreement and all
obligations  (other than those expressly stated to survive such  termination) of
the Administrative Agent and each Grantor hereunder shall terminate, all without
delivery  of any  instrument  or  performance  of any act by any party,  and all
rights to the Collateral  shall revert to the Grantors.  At the request and sole
expense of any Grantor following any such termination,  the Administrative Agent
shall deliver to such Grantor any Collateral  held by the  Administrative  Agent
hereunder,  and execute  and  deliver to such  Grantor  such  documents  as such
Grantor shall reasonably request to evidence such termination.

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

     (c) If any  property of a Grantor  does not  constitute  Collateral  to the
extent  provided  in the last  sentence  of Section 3 because it is subject to a
Lien  expressly  permitted by subsection  7.2(g),  (i), (n) or (o) of the Credit
Agreement,  then the  Administrative  Agent,  at the sole expense and request of
such  Grantor,  shall  execute and deliver to such Grantor all releases or other
documents  reasonably  necessary for the release of the Liens created  hereby on
such property.

     8.16  WAIVER  OF  JURY  TRIAL.   EACH  GRANTOR   HEREBY   IRREVOCABLY   AND
UNCONDITIONALLY  WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.


                     [REST OF PAGE INTENTIONALLY LEFT BLANK]


     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.



                                GENERAL SEMICONDUCTOR, INC.

                                By:/s/ Andrew M. Caggia
                                Title:   Sr. Vice President, Chief
                                Financial Officer


                                ATC CORP.

                                By:/s/ Andrew M. Caggia
                                Title:   Director



                                CENTURY COMPONENTS, INC.

                                By:/s/ Andrew M. Caggia
                                Title:   Director



                                GENERAL SEMICONDUCTOR (ARIZONA), INC.

                                By:/s/ Andrew M. Caggia
                                Title:   Director



                                GENERAL SEMICONDUCTOR REMITTANCE PRODUCTS, INC.

                                By:/s/ Andrew M. Caggia
                                Title:   Director

<PAGE>

                                                                 guarantee.doc

                                                                     Schedule 1


                         NOTICE ADDRESSES OF GUARANTORS



The address of each Guarantor is:

                  c/o General Semiconductor, Inc.
                  10 Melville Park Road
                  Melville, New York 11747-3 113




<PAGE>
                                                                  guarantee.doc

                                                                     Schedule 2


                       DESCRIPTION OF INVESTMENT PROPERTY

<TABLE>
<CAPTION>

Pledged Stock:

Issuer                                                   Class of Stock         Stock           No. of Shares
                                                                            Certificate No.
<S>                                                         <C>                   <C>            <C>
General Semiconductor International, Inc. (a New York       Common
   corporation)**

ATC Corp. (a Delaware corporation)                          Common                2                 100

Century Components, Inc. (a Delaware corporation)           Common                2               1,000

General Semiconductor (Arizona), Inc.                       Common                1               1,942
   (a Delaware corporation)

General Semiconductor Industries, Inc.                      Common                2                  65
   (a Delaware corporation)*

General Semiconductor Remittance Products, Inc.             Common                1               1,000
   (a Florida corporation)

General Semiconductor (China) Holdings, Inc.                Common                                  650
   a Delaware corporation)*

General Semiconductor of Taiwan, Ltd. (an entity            Common           1, 8, 9-1, 9-2,    1, 903, 574
   organized under the laws of Taiwan)*                                            10

GSI - General Semiconductor Industries, Inc.                Common                2                  65
    (a Delaware Corporation)*

General Semiconductor Korea Co., Ltd.                       Common
   (a Korean Corporation)**

General Semiconductor France, S.A.                          N/A                   N/A               N/A
   (an entity organized under the laws of France)*

General Semiconductor (Singapore) Pte. Ltd.  (an entity     Common
   organized under the laws of Singapore)**

General Semiconductor (UK) Ltd.  (an entity organized       Common
   under the laws of the United Kingdom)**

General Semiconductor Hongkong Ltd. (an entity organized    Common
   under the laws of Hong Kong)**

General Semiconductor (Deutschland) GmbH (an entity         Common
   organized under the laws of Germany)**

*    65% of shares owned pledged under original Pledge Agreement.
**   Denotes a subsidiary considered to be a Foreign Subsidiary under the
         Credit Agreement of which 65% of equity interest owned is
         to be pledged.

</TABLE>
<PAGE>

                                                                    Schedule 2


                       DESCRIPTION OF INVESTMENT PROPERTY


Pledged Notes:

Issuer                               Payee                     Principal Amount


General Semiconductor (Europe) Ltd. Century Components, Inc.    $3,387,000
Century Components, Inc.            General Semiconductor, Inc. $3,387,000



<PAGE>


                                                                  guarantee.doc

                                                                     Schedule 3

                            FILINGS AND OTHER ACTIONS
                     REQUIRED TO PERFECT SECURITY INTERESTS
                         Uniform Commercial Code Filings

         Grantor                                Filing Office

1.  ATC Corp.                            Central Filing Office, Delaware
                                         State of New York
                                         Suffolk County, New York

2.  Century Components, Inc.             Central Filing Office, Delaware
                                         State of New York
                                         Suffolk County, New York

3.  General Semiconductor                Central Filing Office, Delaware
      (Arizona), Inc.                    State of New York
                                         Suffolk County, New York

4.  General Semiconductor Remittance     Central Filing Office, Florida
      Products, Inc.                     State of New York
                                         Suffolk County, New York

5.  General Semiconductor, Inc.          Central Filing Office, Delaware
                                         Central Filing Office, California
                                         Los Angeles County, California
                                         State of New York
                                         Nassau County, New York
                                         City Register, Queens County, New York
                                         Suffolk County, New York

                                         Patent and Trademark Filings

      This Agreement shall be filed with the U.S. Patent and Trade Office.

                      Actions with respect to Pledged Stock

 Perfection achieved upon the Administrative Agent receiving possession
                             of the Pledged Stock.

                                  Other Actions

                                     [None]

<PAGE>

                                                                 guarantee.doc

                                                                     Schedule 4


       LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE


        Grantor                                    Jurisdiction of Organization
General Semiconductor, Inc.                                  Delaware
ATC CORP.                                                    Delaware
Century Components, Inc.                                     Delaware
General Semiconductor (Arizona), Inc.                        Delaware
General Semiconductor Remittance Products, Inc.              Florida


The chief executive office of each Grantor is:

                  10 Melville Park Road
                  Melville, New York, 11747-3113

<PAGE>

                                                                 guarantee.doc

                                                                     Schedule 5



                       LOCATION OF INVENTORY AND EQUIPMENT

Grantor                                       Location

General Semiconductor, Inc.               Dimerco Express
                                          145-45 156th Street
                                          Jamaica, NY 11434
                                          (Queens County)

                                          Dimerco Express
                                          406 North Oak Street
                                          Inglewood, CA 90302
                                          (Los Angeles County)

                                          General Semiconductor, Inc.
                                          10 Melville Park Road
                                          Melville, NY 11747
                                          (Suffolk County)

                                          General Semiconductor, Inc.
                                          172 Spruce Street
                                          Westbury, NY 11590
                                          (Nassau County)

General Semiconductor, Inc.               c/o Dimerco Air
                                          Forwarder (HK) Ltd.
                                          Unit 505 HK
                                          International Distribution Centre
                                          18 Container Port Rd., Kwai Chung
                                          N.T., Hong Kong

                                          General Semiconductor of Tawain, Ltd.
                                          Distribution Center
                                          233 Pao Chiao Road, Hsin-Tien
                                          Taipei, Taiwan, ROC



                       LOCATION OF INVENTORY AND EQUIPMENT

Grantor                                             Location

General Semiconductor, Inc.                         General Semiconductor, Inc.
                                                    10 Melville Park Road
                                                    Melville, NY 11747
                                                    (Suffolk County)

General Semiconductor, Inc.                         General Semiconductor, Inc.
                                                    172 Spruce Street
                                                    Westbury, NY 11590
                                                    (Nassau County)


<PAGE>


                                                                  guarantee.doc

                                                                     Schedule 6


                           PATENTS AND PATENT LICENSES

                        TRADEMARKS AND TRADEMARK LICENSES

<TABLE>
<CAPTION>
<S>                      <C>         <C>            <C>         <C>            <C>          <C>
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
         Short             Status     Application     Filing     U.S. Patent      Issue
      Description                       Number         Date        Number         Date                    Title
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
EPI Vapor Dep             granted       140,293      4/14/80      4,293,755      10/6/81    Method for cooling
                                                                                            induction-heated vapor dep.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
CVD-EPI                   granted       10,746        2/9/79      4,284,867      8/18/81    Chemical vapor dep. reactor with
                                                                                            infrared reflector.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Poli-Si                   granted      6/037864      5/10/79      4,238,436      12/9/80    Separation of polycrystalline
                                                                                            silicon.
in EPI reactor            granted      6/106767      12/26/79     4,271,235      6/2/81     Method of obtaining polysilicon
                                                                                            and ...
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
EPI suscept. Imp...       granted       433,158      10/6/82      4,499,354      2/12/85    Susceptor for radiant absorption
                                                                                            heater system.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Schottky                  granted       703,703      2/12/85      4,638,551      1/27/87    Schottky barrier device & method
                                                                                            of manufacture.
Guardring                 granted       922,532      10/23/86     4,742,377      5/3/88     Schottky barrier device with
                                                                                            doped composite guarding.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
EPI suscept imp.          granted       553,962      11/21/83     4,522,149      6/11/85    Reactor and susceptor for
                                                                                            chemical vapor.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Brazed Melf               granted       648,672      9/10/84      4,564,885      1/14/86    Rectifier with slug construction
                                                                                            and mold.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Opto package              granted                                 4,590,667      5/27/86    Method and apparatus for
                                                                                            assembling semi...LED's.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Epi                       granted       750,488      6/27/85      4,659,400      4/21/87    Method of forming epitaxial
                                                                                            wafers.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Epi-PAR                   granted       784,451      10/4/85      4,740,477      4/26/88    Method for fabricating a
                                                                                            rectifying P-N junction having ...
                          granted       142,737      1/11/88      4,891,685      1/2/90     Rectifying P-N junction having
                                                                                            improved breakdown.
                          granted       404,604      9/27/89      5,010,023      4/23/91
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
MOSFET                    granted       150,755       2/1/88      4,859,621      8/22/89    Method for setting the threshold
                                                                                            voltage of a power...
                          granted       358,883      5/30/89      4,929,987      5/29/90
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Opto patent               granted        5,412       1/20/87      4,789,886      12/6/88    Method and apparatus for
                                                                                            insulating high voltage.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Brazed GPP                granted       151,066       2/1/88      4,942,139      7/17/90    Method...brazed glass
                                                                                            prepassivated chip rectifier.
                          granted       480,367      12/14/90     4,987,476      1/22/91    Brazed glass prepassivated chip
                                                                                            rectifier.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Salastic passiv.          granted                                 4,904,610      2/27/90    Water level process for
                                                                                            fabricating passivated
                                                                                            sem...devices.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Square MELF               granted       164,219       3/4/88      4,829,406      5/9/89     Square body leadless electrical
                                                                                            device.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Non epi PAR                aband        219,071      7/18/88                                Passivated p-n junction in mesa
                                                                                            semiconductor structure.
                          granted       365,519      6/13/89      4,980,315     12/25/90    Method...passivated P-N junction
                                                                                            in mesa.
                          granted       884,325      5/11/92      5,166,769     11/14/92    Passivated mesa semiconductor
                                                                                            and...
                          granted       921,900      7/29/92      5,278,095      1/11/94    Method for making passivated mesa
                                                                                            semiconductor.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Brazing material          granted       314,808      2/24/89      4,921,158      5/1/90     Brazing material.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Si-Ge Epi                 granted       492,117      3/13/90      5,097,308      3/17/92    Method for controlling the
                                                                                            switching speed of bipolar...
                          granted       684,682      4/11/91      5,102,810      4/7/92
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
SiC package               granted       447,213      12/7/89      5,008,735      4/16/91    Package diode for high temp.
                                                                                            operation.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Cupped moly               pending       737,401      7/29/91                                Rectifier construction.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
GF1                       granted       748,876      8/23/91      5,151,846      9/29/92    Method of making surface mount
                                                                                            superectifier.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
E-Pak                     granted       917,778      7/21/92      5,371,647      12/6/94    Surge protection circuit module
                                                                                            and...
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Melf with notches (for    granted       752,749      8/30/91      5,248,902      9/28/93    Surface mounting diode.
Taiwan only)
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Melf with notches         pending       821,683      1/16/92                                Semiconductor diode construction.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Surge pack case           pending       148,875      11/8/93                                Plastic hollow case for
                                                                                            encapsulation of a ...
                          pending       218,802      3/28/94

------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
A-Pak                     granted       229,555      4/19/94      5,512,784      4/30/96    Surge protector subassembly for
                                                                                            3-lead...package.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Lead straightening        granted       856,715      3/24/92      5,304,429      4/19/94    Semiconductor devices having
                                                                                            copper terminal leads
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Smart epi                 granted       15,384        2/9/93      5,324,685      6/28/94    Method for fabricating a
                                                                                            multilayer epitaxial structure.
                          granted       66,538       5/24/93
                          granted       242,877      5/16/94      5,432,121      7/11/95
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Smart epi reactor          aband        15,658        2/9/93
                          granted       411,408      3/28/95      5,571,329      11/5/96    Gas flow system for CVD reactor.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
TVS (GSI)                 granted       836,491      2/18/92      5,245,412      9/14/93    Low capacitance silicon transient
                                                                                            suppressor.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
2 chip pkg. (GSI)         granted                                 5,528,079      6/18/96    ...package for a two terminal
                                                                                            semiconductor device.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
TVS Array (GSI)           pending       814,379      12/26/91                               Multilead small outline diode
                                                                                            array package.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Surgepack (GSI)           granted                                 4,599,636      7/8/86     Two terminal axial lead
                                                                                            suppressor
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Low-cost epi              granted       21,130        3/8/93      5,360,509      11/1/94    Low cost method of fabricating
                                                                                            epi. semicond. Devices.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Ni plating tool           pending      08/282914     7/29/94                                Containing apparatus for
                                                                                            electronic parts.
                          pending      08/541605     10/10/95
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Beta-smart epi            granted       82,952        7/1/93      5,298,457      3/29/94    Method...epi techniques to form
                                                                                            Si-Ge interfaces...
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Mega-smart epi            granted       82,951        7/1/93      5,342,805      8/30/94    Method...semiconductor material
                                                                                            by epitaxi.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Biframe                   granted       274,009      1/12/94      5,506,174      4/9/96     Automated assembly...a pair of
                                                                                            lead frames.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Triframe                  granted       273,854      7/12/94      5,484,097      1/16/96    Fabrication of hybrid
                                                                                            semiconductor devices.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Epi PAR corner            granted       230,299      4/20/94      5,399,901      3/21/95    Semiconductor...for improved
                                                                                            surface voltage breakdown...
                          pending       406,515      3/17/95                                Semiconductor...for improved
                                                                                            surface voltage breakdown...
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Slit in Tab               allowed       509,378         95                                  Lead with slits for improved
                                                                                            solder joints.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Si-Ge FER                 pending      08/580071     Dec. '95                               TVS FER with optimized placing of
                                                                                            Si-GE layers.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
L.C. Epi for Sky          allowed       409762          96                                  Improved method...LCE...and
                                                                                            Schottky devices.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Waffle chip               pending      08/554749     11/7/95                                Mesa semiconductor structure with
                                                                                            depressed region.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Planar FER                pending      08/649135     5/14/96                                Planar P-N junction structure
                                                                                            with multilayer passivation.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Liquid epoxy              pending      21487794      11/4/94                                Method of encapsulating
                                                                                            semiconductors.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Liquid epoxy              pending     08/580,070     12/20/95                               Method & apparatus for injection
                                                                                            molding of...
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Imp rev energy            pending                                                           Diode with improved rev energy
                                                                                            char and method for...
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Epi (GS 100)              pending     09/010,471     11/24/98                               Epitaxial-type semicond. with
                                                                                            improved resistance to
                                                                                            transient...
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
switching diode (ITT)     granted                                 5,814,874      9/29/99    Semicond. Device having shorter
                                                                                            switching time with low VF
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
MESA Structure            granted       50,106       3/30/98      5,885,986      3/16/99    Semi Chips having MESA Structure
                                                                                            provided by Sawing.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------
Fabricating Diode         granted                                 5,930,660                 Fabricating Diode with Improved
                                                                                            Reverse Energy.
------------------------ ----------- -------------- ----------- -------------- ------------ -----------------------------------

------------------------ ----------- -------------- ----------- ----------------- --------- -----------------------------------
         Short             Status     Application     Filing         Patent        Issue
      Description                       Number         Date          Number         Date                  Title
------------------------ ----------- -------------- ----------- ----------------- --------- -----------------------------------
------------------------ ----------- -------------- ----------- ----------------- --------- -----------------------------------
Low-cost Epi MY           granted                                 MY-110854-A     5/31/99   Low cost method of Fabricating
                                                                                            Expitaxial Semiconductor Devices.
------------------------ ----------- -------------- ----------- ----------------- --------- -----------------------------------
</TABLE>

<PAGE>




                                                                    Schedule 6

                          PATENTS AND PATENT LICENSES

                        TRADEMARKS AND TRADEMARK LICENSES


<TABLE>
<CAPTION>
<S>                     <C>                      <C>        <C>             <C>           <C>          <C>
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
      REFERENCES                 MARK              FILED        APPL #         REGDT         REG #        STATUS
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
65375-0064              GENERAL SEMICONDUCTOR    12/23/96   75/217,340      10/13/98      2,194,144    Registered
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
65375-0061              GENFET                                                                         Mailed
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
65375-0065              GS & DESIGN              7/9/97     75/321,569                                 Allowed
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
65375-0066              GSI                      12/23/96   76/217,341                                 Allowed
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
65375-0006              SUPERECTIFIER            1/28/85    73/519,608      8/27/85       1,356,394    Registered
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
65375-0027              THYZORB                  12/20/84   73/514,475      7/2/85        1,345,882    Registered
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
653375-0002             TRANSZORB                7/28/98    7/28/96         75/526,580                 Pending
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
65376-0076              ZORB                     2/17/88    73/712,184      9/13/88       1,503,773    Registered
----------------------- ------------------------ ---------- --------------- ------------- ------------ -------------
</TABLE>


<PAGE>



                                                                  guarantee.doc

                           ACKNOWLEDGMENT AND CONSENT

     The undersigned hereby acknowledges  receipt of a copy of the Guarantee and
Collateral Agreement dated as of August 15, 1999 (the "Agreement"),  made by the
Grantors  parties  thereto  for the  benefit  of The Chase  Manhattan  Bank,  as
Administrative   Agent.   The   undersigned   agrees  for  the  benefit  of  the
Administrative Agent, the Co-Agents and the Banks 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 will notify the Administrative Agent promptly in writing
of the  occurrence  of any of the  events  described  in  Section  5.7(a) of the
Agreement.

     3. 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.

                                             [NAME OF ISSUER]

                                             By:
                                             Name:
                                             Title:



                                             Address for Notices:






                                             Fax:

<PAGE>

                                                                             2
                                                                  guarantee.doc

                                                                     Annex 1 to
                                             Guarantee and Collateral Agreement



     ASSUMPTION    AGREEMENT,    dated   as   of____________,    __,   made   by
__________________________________,    a   ________________   corporation   (the
"Additional  Grantor"),  in favor of THE CHASE MANHATTAN BANK, as administrative
agent (in such  capacity,  the  "Administrative  Agent") for the banks and other
financial institutions (the "Banks") parties to the Credit Agreement referred to
below. All capitalized  terms not defined herein shall have the meaning ascribed
to them in such Credit Agreement.

                              W I T N E S S E T H:

     WHEREAS,   General   Semiconductor,   Inc.,  a  Delaware  corporation  (the
"Company"), is a party to the Credit Agreement,  dated as of July 23, 1997, with
the Administrative Agent, the Banks and the Co-Agents named therein (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement");

     WHEREAS,  in connection with the Credit Agreement,  the Company and certain
of its  Subsidiaries  (other than the Additional  Grantor) have entered into the
Guarantee  and  Collateral  Agreement,  dated as of August 15, 1999 (as amended,
supplemented  or  otherwise  modified  from  time to time,  the  "Guarantee  and
Collateral  Agreement") in favor of the Administrative  Agent for the benefit of
the Banks;

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

     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:


                                                                   Annex 1-A to
                                                           Assumption Agreement

                            Supplement to Schedule 1
                            Supplement to Schedule 2
                            Supplement to Schedule 3
                            Supplement to Schedule 4
                            Supplement to Schedule 5
                            Supplement to Schedule 6
                            Supplement to Schedule 7
                            Supplement to Schedule 8