Exhibit 10.7


EXECUTION COPY


 




 





 


 


GUARANTEE AND
COLLATERAL AGREEMENT

(with respect to the Revolving Credit Agreement)


made by


 


THE SERVICEMASTER
COMPANY,


CDRSVM HOLDING,
INC.,


THE U.S.
SUBSIDIARY BORROWERS,


 


and the Subsidiary
Guarantors,


 


in favor of


 


CITIBANK, N.A., 

as Administrative Agent and as Revolving Collateral Agent


 


Dated as of July
24, 2007




 





















TABLE OF CONTENTS


	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1 DEFINED TERMS

  	
  2

  
	
  1.1

  	
  Definitions

  	
  2

  
	
  1.2

  	
  Other Definitional Provisions

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 2 GUARANTEE

  	
  12

  
	
  2.1

  	
  Guarantee

  	
  12

  
	
  2.2

  	
  Right of Contribution

  	
  13

  
	
  2.3

  	
  No Subrogation

  	
  14

  
	
  2.4

  	
  Amendments, etc. with Respect to the Obligations

  	
  14

  
	
  2.5

  	
  Guarantee Absolute and Unconditional

  	
  15

  
	
  2.6

  	
  Reinstatement

  	
  16

  
	
  2.7

  	
  Payments

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 3 GRANT OF SECURITY INTEREST

  	
  17

  
	
  3.1

  	
  Grant

  	
  17

  
	
  3.2

  	
  Pledged Collateral

  	
  18

  
	
  3.3

  	
  Certain Exceptions

  	
  18

  
	
  3.4

  	
  Intercreditor Relations

  	
  19

  
	
   

  	
   

  	
   

  
	
  SECTION 4 REPRESENTATIONS AND WARRANTIES

  	
  20

  
	
  4.1

  	
  Representations and Warranties of Each Guarantor

  	
  20

  
	
  4.2

  	
  Representations and Warranties of Each Grantor

  	
  20

  
	
  4.3

  	
  Representations and Warranties of Each Pledgor

  	
  23

  
	
   

  	
   

  	
   

  
	
  SECTION 5 COVENANTS

  	
  25

  
	
  5.1

  	
  Covenants of Each Guarantor

  	
  25

  
	
  5.2

  	
  Covenants of Each Grantor

  	
  25

  
	
  5.3

  	
  Covenants of Each Pledgor

  	
  28

  
	
  5.4

  	
  [Covenants of Holding

  	
  32

  
	
   

  	
   

  	
   

  
	
  SECTION 6 REMEDIAL PROVISIONS

  	
  32

  
	
  6.1

  	
  Certain Matters Relating to Accounts

  	
  32

  
	
  6.2

  	
  Communications with Obligors; Grantors Remain Liable

  	
  34

  
	
  6.3

  	
  Pledged Stock

  	
  34

  
	
  6.4

  	
  Proceeds to Be Turned Over to the Revolving
  Collateral Agent

  	
  36

  
	
  6.5

  	
  Application of Proceeds

  	
  36

  
	
  6.6

  	
  Code and Other Remedies

  	
  36

  
	
  6.7

  	
  Registration Rights

  	
  37

  
	
  6.8

  	
  Waiver; Deficiency

  	
  39

  
	
   

  	
   

  	
   

  
	
  SECTION 7 THE COLLATERAL AGENT

  	
  39

  



 



 i
 









 


	
  7.1

  	
  Revolving Collateral Agent’s Appointment as
  Attorney-in-Fact, etc

  	
  39

  
	
  7.2

  	
  Duty of Revolving Collateral Agent

  	
  41

  
	
  7.3

  	
  Execution of Financing Statements

  	
  41

  
	
  7.4

  	
  Authority of Revolving Collateral Agent

  	
  41

  
	
  7.5

  	
  Right of Inspection

  	
  42

  
	
   

  	
   

  	
   

  
	
  SECTION 8 NON-LENDER SECURED PARTIES

  	
  42

  
	
  8.1

  	
  Rights to Collateral

  	
  42

  
	
  8.2

  	
  Appointment of Agent

  	
  43

  
	
  8.3

  	
  Waiver of Claims

  	
  43

  
	
   

  	
   

  	
   

  
	
  SECTION 9 MISCELLANEOUS

  	
  44

  
	
  9.1

  	
  Amendments in Writing

  	
  44

  
	
  9.2

  	
  Notices

  	
  44

  
	
  9.3

  	
  No Waiver by Course of Conduct; Cumulative Remedies

  	
  44

  
	
  9.4

  	
  Enforcement Expenses; Indemnification

  	
  45

  
	
  9.5

  	
  Successors and Assigns

  	
  45

  
	
  9.6

  	
  Set-Off

  	
  45

  
	
  9.7

  	
  Counterparts

  	
  46

  
	
  9.8

  	
  Severability

  	
  46

  
	
  9.9

  	
  Section Headings

  	
  46

  
	
  9.10

  	
  Integration

  	
  46

  
	
  9.11

  	
  GOVERNING LAW

  	
  46

  
	
  9.12

  	
  Submission to Jurisdiction; Waivers

  	
  47

  
	
  9.13

  	
  Acknowledgments

  	
  47

  
	
  9.14

  	
  WAIVER OF JURY TRIAL

  	
  48

  
	
  9.15

  	
  Additional Granting Parties

  	
  48

  
	
  9.16

  	
  Releases

  	
  48

  
	
  9.17

  	
  Judgment

  	
  49

  



 


SCHEDULES


1              Notice Addresses of Guarantors


2              Pledged Securities


3              Perfection Matters


4              Location of Jurisdiction of
Organization


5              Intellectual Property


6              Contracts


7              Commercial
Tort Claims


ANNEXES


1              Acknowledgement
and Consent of Issuers who are not Granting Parties



 ii
 









2              Assumption Agreement


3              Supplemental
Agreement


 


 



 iii















GUARANTEE AND COLLATERAL
AGREEMENT

(with respect to the Revolving Credit Agreement)


GUARANTEE AND COLLATERAL AGREEMENT, dated as of July
24, 2007, made by THE SERVICEMASTER COMPANY, a Delaware corporation (the “Parent
Borrower”), the U.S. Subsidiary Borrowers (as hereinafter defined, and
together with the Parent Borrower, the “U.S. Borrowers”), CDRSVM
HOLDING, INC., a Delaware corporation (“Holding”),  and certain Subsidiaries of the Parent
Borrower that are signatories hereto, in favor of CITIBANK, N.A., as collateral
agent (in such capacity, the “Revolving Collateral Agent”) and
administrative agent (in such capacity, the “Administrative Agent”) for
the banks and other financial institutions (collectively, the “Lenders”;
individually, a “Lender”) from time to time parties to the Revolving
Credit Agreement described below.


W I T N E S S E T
H:


WHEREAS, pursuant to that certain Revolving Credit
Agreement, dated as of the date hereof (as amended, amended and restated,
waived, supplemented or otherwise modified from time to time, together with any
agreement extending the maturity of, or restructuring, refunding, refinancing
or increasing the Indebtedness under such agreement or any successor
agreements, the “Revolving Credit Agreement”), among the Parent Borrower,
the U.S. Subsidiary Borrowers, the Foreign Subsidiary Borrowers (as defined in
the Revolving Credit Agreement) from time to time party thereto (together with
the U.S. Borrowers, the “Borrowers”), the Lenders, Citibank, N.A., as
Administrative Agent and Revolving Collateral Agent, and the other parties
party thereto, the Lenders have severally agreed to make extensions of credit
to the Borrowers upon the terms and subject to the conditions set forth
therein;


WHEREAS, pursuant to that certain Credit Agreement,
dated as of the date hereof (as amended, amended and restated, waived,
supplemented or otherwise modified from time to time, together with any
agreement extending the maturity of, or restructuring, refunding, refinancing
or increasing the Indebtedness under such agreement or any successor
agreements, the “Term Loan Credit Agreement”), among the Parent Borrower
(as successor by merger to CDRSVM Acquisition Co., a Delaware corporation), the
several banks and other financial institutions from time to time parties
thereto (as further defined in the Term Loan Credit Agreement, the “Term
Loan Lenders”), Citibank, N.A., as administrative agent (in its specific
capacity as administrative agent, the “Term Loan Administrative Agent”),
and collateral agent (in its specific capacity as collateral agent, the “Term
Loan Collateral Agent”) for the Term Loan Lenders thereunder, and the other
parties party thereto, the Term Loan Lenders have severally agreed to make extensions
of credit to the Parent Borrower upon the terms and subject to the conditions
set forth therein;


WHEREAS, pursuant to that certain Guarantee and
Collateral Agreement, dated as of the date hereof (as amended, amended and
restated, waived, supplemented or otherwise modified from time to time, the “Term
Loan Guarantee and Collateral Agreement”), among the Parent Borrower,
certain of its subsidiaries, the Term Loan Administrative Agent and the Term
Loan Collateral Agent, the Parent Borrower and such subsidiaries have granted a
Lien to the Term Loan Collateral Agent for the benefit of the Secured Parties
(as defined therein) on the Term Loan Collateral (as defined herein);













WHEREAS, the Parent Borrower is a member of an
affiliated group of companies that includes Holding, the U.S. Borrowers, the
Parent Borrower’s other Domestic Subsidiaries that are party hereto and any
other Domestic Subsidiary of the Parent Borrower (other than any Excluded
Subsidiary) that becomes a party hereto from time to time after the date hereof
(the U.S. Borrowers, Holding and such Domestic Subsidiaries (other than any
Excluded Subsidiary), collectively, the “Granting Parties”);


WHEREAS, the Revolving Collateral Agent, the
Administrative Agent, the Term Loan Collateral Agent and the Term Loan
Administrative Agent have entered into an Intercreditor Agreement, acknowledged
by the Granting Parties, dated as of the date hereof (as amended, amended and
restated, waived, supplemented or otherwise modified from time to time (subject
to Section 9.1 hereof), the “Intercreditor Agreement”);


WHEREAS, the Parent Borrower and the other Granting
Parties are engaged in related businesses, and each such Granting Party will
derive substantial direct and indirect benefit from the making of the
extensions of credit under the Revolving Credit Agreement; and


WHEREAS, it is a condition to the obligation of the
Lenders to make their respective extensions of credit under the Revolving
Credit Agreement that the Granting Parties shall execute and deliver this
Agreement to the Revolving Collateral Agent for the benefit of the Secured Parties.


NOW, THEREFORE, in consideration of the premises and
to induce the Administrative Agent and the Lenders to enter into the Revolving
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrowers thereunder, and in consideration of the receipt of
other valuable consideration (which receipt is hereby acknowledged), each Granting
Party hereby agrees with the Administrative Agent and the Revolving Collateral
Agent, for the ratable benefit of the Secured Parties (as defined below), as
follows:


SECTION 1            DEFINED TERMS


1.1        Definitions.


(a)           Unless otherwise defined herein, terms defined in the
Revolving Credit Agreement and used herein shall have the meanings given to
them in the Revolving Credit Agreement, and the following terms that are
defined in the Code (as in effect on the date hereof) are used herein as so
defined: Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents,
Electronic Chattel Paper, Equipment, Farm Products and Letter of Credit Rights.


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


“Accounts”: 
all accounts (as defined in the Code) of each Grantor, including,
without limitation, all Accounts (as defined in the Revolving Credit Agreement)
and Accounts Receivable of such Grantor, but excluding in any event (i) all
Accounts that have been sold or otherwise transferred (and not transferred back
to a Grantor) in connection with a Special Purpose Financing and (ii) all
Accounts constituting Restricted Assets.



 2
 









“Accounts Receivable”:  any right to payment for goods sold or leased
or for services rendered, which is not evidenced by an instrument (as defined
in the Code) or Chattel Paper.


“Additional Agent”:  as defined in the Intercreditor Agreement.


“Additional Collateral Documents”:  as defined in the Intercreditor Agreement.


“Additional Obligations”:  as defined in the Intercreditor Agreement.


“Adjusted Net Worth”:  of any Guarantor at any time, shall mean the
greater of (x) $0 and (y) the amount by which the fair saleable value of such
Guarantor’s assets on the date of the respective payment hereunder exceeds its
debts and other liabilities (including contingent liabilities, but without
giving effect to any of its obligations under this Agreement or any other Loan
Document, under the Term Loan Credit Agreement or any “Loan Document” as
defined therein, or pursuant to its guarantee with respect to any Indebtedness
then outstanding under the Senior Interim Facility or (if applicable) the
Existing Notes Indenture) on such date.


“Administrative Agent”:  as defined in the preamble hereto.


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


“Applicable Law”:  as defined in Section 9.8 hereof.


“Bank Products Agreement”:  any agreement pursuant to which a bank or
other financial institution agrees to provide treasury or cash management
services (including, without limitation, controlled disbursements, automated
clearinghouse transactions, return items, netting, overdrafts, debit or
purchase cards and interstate depository network services).


“Bankruptcy Case”:  (i) Holding or any of its Subsidiaries
commencing any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any substantial
part of its assets, or Holding, the Parent Borrower or any of the Parent
Borrower’s Subsidiaries making a general assignment for the benefit of its
creditors; or (ii) there being commenced against Holding, the Parent Borrower
or any of the Parent Borrower’s Subsidiaries any case, proceeding or other action
of a nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged or unbonded for a period of 60 days.


“Borrower Obligations”:  with respect to any Borrower, the collective
reference to:  all obligations and
liabilities of such Borrower in respect of the unpaid principal of and interest
on (including, without limitation, interest accruing after the maturity of the
Loans and Reimbursement Obligations and interest accruing after the filing of
any petition in bankruptcy, or the 



 3
 









commencement of any insolvency, reorganization or like
proceeding, relating to such Borrower, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) the Loans,
Reimbursement Obligations and all other obligations and liabilities of such
Borrower to the Secured Parties, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Revolving Credit Agreement,
the Loans, the Letters of Credit, the other Loan Documents, any Interest Rate
Agreement, Currency Agreement or Commodities Agreement designated by such
Borrower or entered into with any Person who was at the time of entry into such
agreement a Lender or an affiliate of any Lender, any Bank Products Agreement
entered into with any Person who was at the time of entry into such agreement a
Lender or an affiliate of any Lender, any Guarantee of Holding or any of its
Subsidiaries as to which any Secured Party is a beneficiary, the provision of
cash management services by any Lender or an Affiliate thereof to Holding or
any Subsidiary thereof, or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, amounts payable in connection with the provision of
such cash management services or a termination of any transaction entered into
pursuant to any such Interest Rate Agreement, Currency Agreement or Commodities
Agreement, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all reasonable fees, expenses and disbursements of counsel to the
Administrative Agent or any other Secured Party that are required to be paid by
such Borrower pursuant to the terms of the Revolving Credit Agreement or any
other Loan Document).


“Borrowers”: 
as defined in the preamble hereto.


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


“Collateral”: 
as defined in Section 3 hereof; provided that, for purposes of
subsection 6.5 and Section 8, “Collateral” shall have the meaning assigned to
such term in the Revolving Credit Agreement.


“Collateral Account Bank”:  Citibank, N.A., an Affiliate thereof or
another bank which at all times is a Lender as selected by the relevant Grantor
and consented to in writing by the Revolving Collateral Agent (such consent not
to be unreasonably withheld or delayed).


“Collateral Proceeds Account”:  shall mean a non-interest bearing cash
collateral account established and maintained by the relevant Grantor at an
office of the Collateral Account Bank in the name, and in the sole dominion and
control of, the Revolving Collateral Agent for the benefit of the Secured
Parties.


“Commercial Tort Action”:  any action, other than an action primarily
seeking declaratory or injunctive relief with respect to claims asserted or
expected to be asserted by Persons other than the Grantors, that is commenced
by a Grantor in the courts of the United States of America, any state or
territory thereof or any political subdivision of any such state or territory,
in which any Grantor seeks damages arising out of torts committed against it
that would reasonably be expected to result in a damage award to it exceeding
$3,000,000.



 4
 









“Contracts”: 
with respect to any Grantor, all contracts, agreements, instruments and
indentures in any form and portions thereof (except for contracts listed on Schedule
6 hereto), to which such Grantor is a party or under which such Grantor or
any property of such Grantor is subject, as the same may from time to time be
amended, supplemented, waived 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, but excluding in any event all
Restricted Assets.


“Copyright Licenses”:  with respect to any Grantor, all United
States written license agreements of such Grantor providing for the grant by or
to such Grantor of any right under any United States Copyright of such Grantor,
other than agreements with any Person that is an Affiliate or a Subsidiary of
the Parent Borrower or such Grantor, including, without limitation, any license
agreements listed on Schedule 5 hereto, subject, in each case, to the
terms of such license agreements, and the right to prepare for sale, sell and
advertise for sale, all Inventory now or hereafter covered by such licenses.


“Copyrights”: 
with respect to any Grantor, all of such Grantor’s right, title and
interest in and to all United States copyrights, whether or not the underlying
works of authorship have been published or registered, all United States
copyright registrations and copyright applications, including, without
limitation, any copyright registrations and copyright applications listed on Schedule
5 hereto, and (i) all renewals thereof, (ii) all income, royalties, damages
and payments now and hereafter due and/or payable with respect thereto, including,
without limitation, payments under all licenses entered into in connection
therewith, and damages and payments for past or future infringements thereof
and (iii) the right to sue or otherwise recover for past, present and future
infringements and misappropriations thereof.


“Excluded Assets”:  as defined in subsection 3.3.


“Existing Notes Indenture”:  the Indenture between The ServiceMaster
Company Limited Partnership, as issuer, and ServiceMaster Limited Partnership,
as guarantor, and the Existing Notes Trustee, dated as of August 15, 1997, as
supplemented by the First Supplemental Indenture thereto, between the same
parties, dated as of August 15, 1997, the Second Supplemental Indenture
thereto, between the Parent Borrower, as successor by merger to The
ServiceMaster Company Limited Partnership and ServiceMaster Limited
Partnership, and the Existing Notes Trustee, dated as of January 1, 1998, the
Third Supplemental Indenture thereto, between the Parent Borrower and the
Existing Notes Trustee, dated as of March 2, 1998 and the Fourth Supplemental
Indenture, between the Parent Borrower and the Existing Notes Trustee, dated as
of August 10, 1999, as in effect on the Closing Date.


“first priority”:  with respect to any Lien purported to be
created by this Agreement, that such Lien is the most senior Lien to which such
Collateral is subject (subject to Permitted Liens).


“Fixtures”: 
as defined in the Code (as in effect on the date hereof), but excluding
in any event all fixtures (as so defined) constituting Restricted Assets.



 5
 









“General Fund Account”:  the general fund account of the relevant
Grantor established at the same office of the Collateral Account Bank as the
Collateral Proceeds Account.


“General Intangibles”:
all “general intangibles”, as that term is defined in Section 9-102(a)(42)
of the Uniform Commercial Code in effect in the State of New York on the date
hereof, but excluding in any event all general intangibles (as so defined)
constituting Restricted Assets.


“Granting Parties”:  as defined in the recitals hereto.


“Grantor”:  the Parent Borrower and each Domestic
Subsidiary of the Parent Borrower that from time to time is a party hereto (it
being understood that no Excluded Subsidiary shall be required to be or become
a party hereto).


“Guarantor Obligations”:  with respect to any Guarantor, the collective
reference to (i) the Obligations guaranteed by such Guarantor pursuant to
Section 2 and (ii) all obligations and liabilities of such Guarantor that may
arise under or in connection with this Agreement or any other Loan Document to
which such Guarantor is a party, any Interest Rate Agreement, Currency
Agreement or Commodities Agreement designated by such Guarantor or entered into
with any Person who was at the time of entry into such agreement a Lender or an
affiliate of any Lender, any Bank Products Agreement entered into with any
Person who was at the time of entry into such agreement a Lender or an
affiliate of any Lender, any Guarantee of Holding or any of its Subsidiaries as
to which any Secured Party is a beneficiary, the provision of cash management
services by any Lender or an Affiliate thereof to the Parent Borrower or any
Subsidiary thereof, or any other document made, delivered or given in connection
therewith of such Guarantor, 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, to the Other Representatives or to the Lenders
that are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Loan Document).


“Guarantors”: 
the collective reference to each Granting Party, provided that, (i) when
referring to the Parent Borrower as a Guarantor, such reference shall be a
reference solely to a guaranty of the Obligations of the U.S. Subsidiary
Borrowers and the Foreign Subsidiary Borrowers and (ii) when referring to a
U.S. Subsidiary Borrower as a Guarantor, such reference shall be a reference
solely to a guaranty of the Obligations of the Parent Borrower, the other U.S.
Borrower, and the Foreign Subsidiary Borrowers.


“Holding”: 
as defined in the preamble hereto.


“Instar Entity”:  any of InStar Services Group, Inc. or any of
its Subsidiaries.


“Instar Group Pledge Agreement”:  Pledge Agreement, dated February 27, 2006 between
ServiceMaster Holding Corporation, a Delaware corporation, InStar Services
Group, Inc., a Delaware corporation, InStar Services Group, L.P., a Delaware
limited partnership, InStar Services Holdings, LLC, a Delaware limited
liability company, Instar Services Management, LLC, a 



 6
 









limited liability company and Steward, as amended,
restated, amended and restated, supplemented or otherwise modified or replaced
from time to time.


“Instar Pledged Stock”:  as of the date referred to in subsection
5.3.6, the Capital Stock of any Instar Entity, other than any Capital Stock (a)
that is being sold or otherwise disposed of in a transaction permitted under
the Revolving Credit Agreement pursuant to binding agreements, (b) of the type
described in the proviso to the definition of “Pledged Stock” (other than
clause (vii) thereof), including but not limited to any Capital Stock
constituting a Restricted Asset or (c) of any Excluded Subsidiary.


“Instruments”: 
has the meaning specified in Article 9 of the Code, but excluding in any
event (i) the Pledged Securities and (ii) all Restricted Assets.


“Intellectual Property”:  with respect to any Grantor, the collective
reference to such Grantor’s Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trade Secrets, Trade Secret Licenses, Trademarks and Trademark
Licenses.


“Intercompany Note”:  with respect to any Grantor, any promissory
note in a principal amount in excess of $3,000,000 evidencing loans made by
such Grantor to Holding or any of its Restricted Subsidiaries, but excluding in
any event all Restricted Assets (including but not limited to any promissory
notes evidencing loans made by any Grantor to any Significant Subsidiary).


“Intercreditor Agreement”:  as defined in the recitals hereto.


“Inventory”: 
with respect to any Grantor, all inventory (as defined in the Code) of
such Grantor, including, without limitation, all Inventory (as defined in the
Revolving Credit Agreement) of such Grantor.


“Investment Property”:  the collective reference to all “investment
property” as such term is defined in Section 9-102(a)(49) of the Uniform
Commercial Code in effect in the State of New York on the date hereof (other
than (a) Capital Stock of any Foreign Subsidiary in excess of 65% of any series
of such stock, (b) any Capital Stock excluded from the definition of “Pledged
Stock” (other than pursuant to clause (vii) of the proviso thereto) and (c) any
Restricted Asset (including but not limited to any Capital Stock of any
Significant Subsidiary)) and (ii) whether or not constituting “investment
property” as so defined, all Pledged Securities.


“Issuers”: 
the collective reference to the Persons identified on Schedule 2
as the issuers of Pledged Stock, together with any successors to such companies
(including, without limitation, any successors contemplated by subsection 7.3
of the Revolving Credit Agreement), provided that, notwithstanding that any
Significant Subsidiary may be identified on Schedule 2, no such Significant
Subsidiary is or shall be deemed an “Issuer” under this Agreement unless (x)
the Existing Notes Indenture ceases to be in full force and effect as a result
of the satisfaction and discharge thereof in accordance with its terms or (y) the
Pledgor that owns the Capital Stock of such Significant Subsidiary grants a
Lien to any Person on the Capital Stock of such Significant Subsidiary
resulting in the Existing Notes becoming equally and ratably secured by such
Capital 



 7
 









Stock pursuant to Section 5.03 of the Existing Notes
Indenture, for so long as the Existing Notes are so secured.


“Lender”: 
as defined in the preamble hereto.


“Management Loans”:  Indebtedness (including any extension,
renewal or refinancing thereof) outstanding at any time incurred by any
Management Investors in connection with any purchases by them of Management
Stock, which Indebtedness is entitled to the benefit of any Management
Guarantee of the Parent or any of its Subsidiaries.


“New Pledged Stock”:  the Capital Stock of any Captive Insurance
Subsidiary or Home Warranty Subsidiary that is no longer subject to regulation
(and that has no Subsidiary that is subject to regulation) as an insurance,
home warranty, service contract or similar company, as the case may be, other
than any Capital Stock (a) that is being sold or otherwise disposed of in a
transaction permitted under the Revolving Credit Agreement pursuant to binding
agreements, (b) of the type described in the proviso to the definition of “Pledged
Stock” (other than clause (v) thereof), including but not limited to any
Capital Stock constituting a Restricted Asset or (c) of any Excluded Subsidiary
(other than a Subsidiary described in clauses (f) (in the case of Capital Stock
of a Captive Insurance Subsidiary) or (h) (in the case of Capital Stock of a
Home Warranty Subsidiary) thereof).


“Non-Lender Secured Parties”:  the collective reference to the Secured
Parties referred to in clause (iii), (iv) and (v) of the definition thereof,
and their respective successors and assigns and their permitted transferees and
endorsees.


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


“Parent Borrower”:  as defined in the preamble hereto.


“Patent Licenses”:  with respect to any Grantor, all United
States written license  agreements of
such Grantor  providing for the grant by
or to such Grantor of any right under any United States patent, patent
application or patentable invention, other than agreements with any Person that
is an Affiliate or a Subsidiary of the Parent Borrower or such Grantor,
including, without limitation, the license agreements listed on Schedule 5
hereto, subject, in each case, to the terms of such license agreements, and the
right to prepare for sale, sell and advertise for sale, all Inventory now or
hereafter covered by such licenses.


“Patents”: 
with respect to any Grantor, all of such Grantor’s right, title and
interest in and to all United States patents, patent applications and
patentable inventions and all reissues and extensions thereof, including,
without limitation, all patents and patent applications identified in Schedule
5 hereto, and including, without limitation, (i) all inventions and improvements
described and claimed therein, (ii) the right to sue or otherwise recover for
any and all past, present and future infringements and misappropriations
thereof, (iii) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto (including, without
limitation, payments under all licenses entered into in connection therewith,
and damages and payments for past, present or future infringements thereof),
and (iv) all other rights corresponding



 8
 









thereto in the United States and all reissues,
divisions, continuations, continuations-in-part, substitutes, renewals, and
extensions thereof, all improvements thereon, and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto.


“Pledged Collateral”:  as to any Pledgor, the Pledged Securities now
owned or at any time hereafter acquired by such Pledgor, and any Proceeds
thereof.


“Pledged Notes”:  with respect to any Pledgor, all Intercompany
Notes at any time issued to, or held or owned by, such Pledgor.


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


“Pledged Stock”:  with respect to any Pledgor, the shares of
Capital Stock of any Issuer listed on Schedule 2 as held by such
Pledgor, together with any other shares of Capital Stock required to be pledged
hereunder by such Pledgor pursuant to subsection 6.9 of the Revolving Credit
Agreement, as well as any other shares, stock certificates, options or rights
of any nature whatsoever in respect of the Capital Stock of any Issuer that may
be issued or granted to, or held by, such Pledgor while this Agreement is in
effect (provided that in no event shall there be pledged, nor shall any
Pledgor be required to pledge, directly or indirectly, (i) more than 65% of any
series of the outstanding Capital Stock of any Foreign Subsidiary, (ii) any of
the Capital Stock of a Subsidiary of a Foreign Subsidiary, (iii) de minimis shares of a Foreign Subsidiary held by any
Pledgor as a nominee or in a similar capacity, (iv) any of the Capital Stock of
any Unrestricted Subsidiary, (v) subject to subsection 5.3.5(a), any Capital
Stock of any Home Warranty Subsidiary or Captive Insurance Subsidiary (or any
Subsidiary thereof) (other than (subject to the following clause (vi) of this
definition) the Capital Stock of Steward), (vi) any Restricted Asset, including
but not limited to any Capital Stock of any Significant Subsidiary) and (vii)
subject to subsection 5.3.5(b), any Capital Stock of any Instar Entity.


“Pledgor”: 
Holding (with respect to the Pledged Stock of the Parent Borrower and
all other Pledged Collateral of Holding) and each other Granting Party (with
respect to Pledged Securities held by such Granting Party and all other Pledged
Collateral of such Granting Party).


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


“Restricted Assets”:  any Equity Interests, indebtedness or other
obligations of a Significant Subsidiary held by any Grantor or any Principal
Property of the Parent Borrower or a Significant Subsidiary.  For purposes of the foregoing definition, the
terms “Equity Interests,” “Principal Property” and “Significant Subsidiary” are
used as defined in the Existing Notes Indenture, and the terms “indebtedness”
and “obligations” are used with the same meaning as such terms are used in
Section 5.03(b) of the Existing Notes Indenture.  It is understood and agreed that an asset of
a Grantor that would constitute Collateral but for the fact that it is a
Restricted Asset will cease to be a Restricted Asset (and will constitute “Collateral”
and be subject to the 



 9
 









Lien created hereby as and to the extent otherwise
provided herein) (x) if the Existing Notes Indenture ceases to be in full force
and effect as a result of the satisfaction and discharge thereof in accordance
with its terms or (y) if such Grantor grants a Lien (other than any Lien
arising pursuant to or by reason of any Loan Document) to any Person on such
asset resulting in the Existing Notes becoming equally and ratably secured by
such asset pursuant to Section 5.03 of the Existing Notes Indenture, for so
long as the Existing Notes are so secured (and when such Lien is no longer outstanding,
such asset thereafter shall constitute a Restricted Asset, and shall not constitute
‘Collateral” or be subject to the Lien Created hereby, and the Revolving
Collateral Agent shall take such action to evidence the absence of the Lien
created hereby on such asset as the Parent Borrower or such Grantor may
reasonably request.


“Restrictive Agreements”:  as defined in subsection 3.3(a).


“Revolving Collateral Agent”:  as defined in the recitals hereto.


“Revolving Credit Agreement”:  as defined in the recitals hereto.


“Revolving Credit Obligations”:  as defined in the Intercreditor Agreement.


“Secured Parties”:  the collective reference to (i) the
Administrative Agent, the Revolving Collateral Agent and each Other
Representative, (ii) the Lenders, (iii) with respect to any Interest Rate
Agreement, Currency Agreement or Commodities Agreement with Holdings or any of
its Subsidiaries, any counterparty thereto designated by the Parent Borrower or
that, at the time such agreement or arrangement was entered into, was a Lender
or an Affiliate of any Lender, (iv) with respect to any Bank Products Agreement
with Holding or any of its Subsidiaries, any counterparty thereto that, at the
time such agreement or arrangement was entered into, was a Lender or an Affiliate
of any Lender, (v) with respect to any Management Loans, any lender thereof
that, at the time such Indebtedness was extended (or agreement to extend such
Indebtedness was entered into), was a Lender or an Affiliate of any Lender and
(vi) their respective successors and assigns and their permitted transferees
and endorsees.


“Security Collateral”:  with respect to any Granting Party, means,
collectively, the Collateral (if any) and the Pledged Collateral (if any) of
such Granting Party.


“Significant Subsidiary”:  as defined in the Existing Notes Indenture.


“Specified Asset”:  as defined in subsection 4.2.2 hereof.


“Steward”: Steward Insurance Company, a Vermont
corporation.


“Term Loan Administrative Agent”:  as defined in the recitals hereto.


“Term Loan Collateral Agent”:  as defined in the recitals hereto.


“Term Loan Guarantee and Collateral Agreement”
as defined in the recitals hereto.


“Term Loan Collateral”:  all “Security Collateral” as defined in the
Term Loan Guarantee and Collateral Agreement.



 10
 









“Term Loan Credit Agreement”:  as defined in the recitals hereto.


“Term Loan Lenders”:  as defined in the recitals hereto.


“Term Loan Obligations”: as defined in the
Intercreditor Agreement.


“Trade Secret Licenses”:  with respect to any Grantor, all United
States written license agreements of such Grantor providing for the grant by or
to such Grantor of any right under any trade secrets, including, without
limitation, know how, processes, formulae, compositions, designs, and
confidential business and technical information, and all rights of any kind
whatsoever accruing thereunder or pertaining thereto, other than agreements
with any Person that is an Affiliate or a Subsidiary of the Parent Borrower or
such Grantor, subject, in each case, to the terms of such license agreements,
and the right to prepare for sale, sell and advertise for sale, all Inventory
now or hereafter covered by such licenses.


“Trade Secrets”:  with respect to any Grantor, all of such
Grantor’s right, title and interest in and to all United States trade secrets,
including, without limitation, know-how, processes, formulae,
compositions, designs, and confidential business and technical information, and
all rights of any kind whatsoever accruing thereunder or pertaining thereto,
including, without limitation, (i) all income, royalties, damages and payments
now and hereafter due and/or payable with respect thereto, including, without
limitation, payments under all licenses, non-disclosure agreements and
memoranda of understanding entered into in connection therewith, and damages
and payments for past or future misappropriations thereof, and (ii) the right
to sue or otherwise recover for past, present or future misappropriations
thereof.


“Trademark Licenses”:  with respect to any Grantor, all United
States written license agreements of such Grantor providing for the grant by or
to such Grantor of any right under any United States trademarks, service marks,
trade names, trade dress or other indicia of trade origin or business
identifiers, other than agreements with any Person that is an Affiliate or a Subsidiary
of the Parent Borrower or such Grantor, including, without limitation, the
license agreements listed on Schedule 5 hereto, subject, in each
case, to the terms of such license agreements, and the right to prepare for
sale, sell and advertise for sale, all Inventory now or hereafter covered by
such licenses.


“Trademarks”: 
with respect to any Grantor, all of such Grantor’s right, title and
interest in and to all United States trademarks, service marks, trade names,
trade dress or other indicia of trade origin or business identifiers, trademark
and service mark registrations, and applications for trademark or service mark
registrations (except for “intent to use” applications for trademark or service
mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C.
§ 1051, unless and until an Amendment to Allege Use or a Statement of Use
under Sections 1(c) and 1(d) of said Act has been filed), and any renewals
thereof, including, without limitation, each registration and application identified
in Schedule 5 hereto, and including, without limitation, (i) the right
to sue or otherwise recover for any and all past, present and future
infringements or dilutions thereof, (ii) all income, royalties, damages and
other payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all licenses entered into in
connection therewith, and damages and payments for past or future infringements
thereof), and (iii) all other rights corresponding thereto in the United
States and all other rights of 



 11
 









any kind whatsoever of such Grantor accruing thereunder
or pertaining thereto in the United States, together in each case with the
goodwill of the business connected with the use of, and symbolized by, each
such trademark, service mark, trade name, trade dress or other indicia of trade
origin or business identifiers.


“U.S. Borrowers”:  as defined in the Preamble hereto.


“U.S. Subsidiary Borrowers”: means TruGreen
Limited Partnership and The Terminix International Company Limited Partnership.


“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, Schedule and Annex 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, Pledged Collateral or Security Collateral, or any part thereof,
when used in relation to a Granting Party shall refer to such Granting Party’s
Collateral, Pledged Collateral or Security Collateral or the relevant part
thereof.


(d)           All references in this Agreement to any of the property
described in the definition of the term “Collateral” or “Pledged Collateral”,
or to any Proceeds thereof, shall be deemed to be references thereto only to
the extent the same constitute Collateral or Pledged Collateral, respectively.


SECTION 2            GUARANTEE


2.1        Guarantee.


(a)           Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent, for
the ratable benefit of the Secured Parties, the prompt and complete payment and
performance by each Borrower when due and payable (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations of such Borrower.


(b)           Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount that can be
guaranteed by such Guarantor under applicable law, including applicable federal
and state laws relating to the insolvency of debtors; provided that, to 



 12
 









the maximum extent permitted under applicable
law, it is the intent of the parties hereto that (x) the amount of the
liability of any of the Guarantors or any guarantee in respect of Indebtedness
represented by the Senior Interim Loan Facility shall be reduced before the
amount of the liability of the respective Guarantor is reduced hereunder and
(y) the rights of contribution of each Guarantor provided in following
subsection 2.2 be included as an asset of the respective Guarantor in determining
the maximum liability of such Guarantor hereunder.


(c)           Each Guarantor agrees that the Borrower Obligations
guaranteed by it hereunder 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 other Secured Party hereunder.


(d)           The guarantee contained in this Section 2 shall remain in
full force and effect until the earliest to occur of (i) the first date on
which all the Loans, any Reimbursement Obligations, all other Borrower
Obligations then due and owing, and the obligations of each Guarantor under the
guarantee contained in this Section 2 then due and owing shall have been
satisfied by payment in full in cash, no Letter of Credit shall be outstanding
(except for Letters of Credit that have been cash collateralized in a manner
satisfactory to the Issuing Bank), and the Revolving Commitments shall be
terminated, notwithstanding that from time to time during the term of the Revolving
Credit Agreement any of the Borrowers may be free from any Borrower
Obligations, (ii) as to any Guarantor, the sale or other disposition of all of
the Capital Stock of such Guarantor (to a Person other than the Parent Borrower
or a Restricted Subsidiary) as permitted under the Revolving Credit Agreement
or (iii) as to any Guarantor, the designation of such Guarantor as an
Unrestricted Subsidiary.


(e)           No payment made by any Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by the
Administrative Agent or any other Secured Party from any of the Borrowers, 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 any of the Borrower
Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of any Guarantor hereunder which shall, notwithstanding any such
payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or any payment received or collected from such Guarantor
in respect of any of the Borrower Obligations), remain liable for the Borrower
Obligations of each Borrower guaranteed by it hereunder up to the maximum
liability of such Guarantor hereunder until the earliest to occur of (i) the
first date on which all the Loans, and Reimbursement Obligations and all other
Borrower Obligations then due and owing, are paid in full in cash, no Letter of
Credit shall be outstanding  (except for
Letters of Credit that have been cash collateralized in a manner satisfactory
to the Issuing Bank)  and the
Revolving Commitments are terminated, (ii) the sale or other disposition of all
of the Capital Stock of such Guarantor (to a Person other than the Parent
Borrower or a Restricted Subsidiary) as permitted under the Revolving Credit
Agreement or (iii) the designation of such Guarantor as an Unrestricted Subsidiary.


2.2           Right of Contribution.  Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share
(based, to the maximum extent permitted by law, on the respective Adjusted Net
Worths of the Guarantors on the date the respective payment is made) of any payment
made hereunder, such Guarantor shall be entitled to seek 



 13
 









and receive contribution
from and against any other Guarantor hereunder that has not paid its
proportionate share of such payment. 
Each Guarantor’s right of contribution shall be subject to the terms and
conditions of subsection 2.3.  The
provisions of this subsection 2.2 shall in no respect limit the obligations and
liabilities of any Guarantor to the Administrative Agent and the other Secured
Parties, and each Guarantor shall remain liable to the Administrative Agent and
the other Secured Parties 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 Revolving Collateral Agent or any other Secured Party, no Guarantor shall
be entitled to be subrogated to any of the rights of the Revolving Collateral
Agent or any other Secured Party against any Borrower or any other Guarantor or
any collateral security or guarantee or right of offset held by the Revolving
Collateral Agent or any other Secured Party for the payment of the Borrower
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from any Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing
to the Revolving Collateral Agent and the other Secured Parties by the
Borrowers on account of the Borrower Obligations are paid in full in cash, no
Letter of Credit shall be outstanding (except for Letters of Credit that have
been cash collateralized in a manner satisfactory to the Issuing Bank) and the
Revolving 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 Borrower Obligations shall not have been paid in
full in cash or any Letter of Credit shall remain outstanding (except for
Letters of Credit that have been cash collateralized in a manner satisfactory
to the Issuing Bank) or Revolving Commitments shall remain in effect, such
amount shall be held by such Guarantor in trust for the Revolving Collateral
Agent and the other Secured Parties, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Revolving Collateral Agent in the exact form received by such Guarantor
(duly indorsed by such Guarantor to the Revolving Collateral Agent, if
required), to be held as collateral security for all of the Borrower
Obligations (whether matured or unmatured) guaranteed by such Guarantor and/or
then or at any time thereafter may be applied against any Borrower Obligations,
whether matured or unmatured, in such order as the Revolving Collateral Agent
may determine.


2.4           Amendments, etc. with respect to
the Obligations.  To the maximum
extent permitted by law, each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and without
notice to or further assent by any Guarantor, any demand for payment of any of
the Borrower Obligations made by the Revolving Collateral Agent, the
Administrative Agent or any other Secured Party may be rescinded by the
Revolving Collateral Agent, the Administrative Agent or such other Secured
Party and any of the Borrower Obligations continued, and the Borrower Obligations,
or the liability of any other Person upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, waived, modified, accelerated, compromised, subordinated, waived,
surrendered or released by the Revolving Collateral Agent, the Administrative
Agent or any other Secured Party, and the Revolving Credit Agreement and the
other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, waived, modified, supplemented or
terminated, in whole or in part, as the Revolving Collateral Agent or the
Administrative



 14
 









Agent (or the Required
Lenders under the Revolving Credit Agreement or the applicable Lenders(s), 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 Revolving
Collateral Agent, the Administrative Agent or any other Secured Party for the
payment of any of the Borrower Obligations may be sold, exchanged, waived,
surrendered or released.  None of the
Revolving Collateral Agent, the Administrative Agent nor any other Secured
Party shall have any obligation to protect, secure, perfect or insure any Lien
at any time held by it as security for any of the Borrower Obligations or for
the guarantee contained in this Section 2 or any property subject thereto,
except to the extent required by applicable law.


2.5           Guarantee Absolute and
Unconditional.  Each Guarantor
waives, to the maximum extent permitted by applicable law, any and all notice
of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by the Revolving Collateral
Agent, the Administrative Agent or any other Secured Party upon the guarantee
contained in this Section 2 or acceptance of the guarantee contained in this
Section 2; each of the Borrower Obligations, and any obligation contained
therein, 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 any of the
Borrowers and any of the Guarantors, on the one hand, and the Revolving
Collateral Agent, the Administrative Agent and the other Secured Parties, on
the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2.  Each Guarantor waives, to the maximum extent
permitted by applicable law, diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon any Borrower or any of
the other Guarantors with respect to any of the Borrower Obligations.  Each Guarantor understands and agrees, to the
extent permitted by law, that the guarantee contained in this Section 2 shall
be construed as a continuing, absolute and unconditional guarantee of payment
and not of collection.  Each Guarantor
hereby waives, to the maximum extent permitted by applicable law, any and all
defenses (other than any suit for breach of a contractual provision of any of
the Loan Documents) that it may have arising out of or in connection with any
and all of the following:  (a) the
validity or enforceability of the Revolving Credit Agreement or any other Loan
Document, any of the Borrower Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Revolving Collateral Agent, the Administrative
Agent or any other Secured Party, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) that may at any time be
available to or be asserted by any of the Borrowers against the Revolving
Collateral Agent, the Administrative Agent or any other Secured Party, (c) any
change in the time, place, manner or place of payment, amendment, or waiver or
increase in any of the Obligations, (d) any exchange, taking, or release of
Security Collateral, (e) any change in the structure or existence of any of the
Borrowers, (f) any application of Security Collateral to any of the
Obligations, (g) any law, regulation or order of any jurisdiction, or any other
event, affecting any term of any Obligation or the rights of the Revolving
Collateral Agent, the Administrative Agent or any other Secured Party with
respect thereto, including, without limitation: 
(i) the application of any such law, regulation, decree or order,
including any prior approval, which would prevent the exchange of any currency
(other than Dollars) for Dollars or the remittance of funds outside of such
jurisdiction or the unavailability of Dollars in any legal exchange market in
such jurisdiction in accordance with normal commercial practice, (ii) a
declaration of banking moratorium or any suspension of 



 15
 









payments by banks in such
jurisdiction or the imposition by such jurisdiction or any Governmental
Authority thereof of any moratorium on, the required rescheduling or
restructuring of, or required  approval
of payments on, any indebtedness in such jurisdiction, (iii) any expropriation,
confiscation, nationalization or requisition by such country or any
Governmental Authority that directly or indirectly deprives any Borrower of any
assets or their use, or of the ability to operate its business or a material
part thereof, or (iv) any war (whether or not declared), insurrection,
revolution, hostile act, civil strife or similar events occurring in such
jurisdiction which has the same effect as the events described in clause (i),
(ii) or (iii) above (in each of the cases contemplated in clauses (i) through
(iv) above, to the extent occurring or existing on or at any time after the
date of this Agreement), or (h) any other circumstance whatsoever (other than
payment in full in cash of the Borrower Obligations guaranteed by it hereunder)
(with or without notice to or knowledge of the Borrowers or such Guarantor)
that constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrowers for the Borrower Obligations, or of such Guarantor under
the guarantee contained in this Section 2, in bankruptcy or in any other
instance.  When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, the Revolving Collateral Agent, the Administrative Agent and any other
Secured Party may, but shall be under no obligation to, make a similar demand
on or otherwise pursue such rights and remedies as it may have against the
Borrowers, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations guaranteed by such Guarantor
hereunder or any right of offset with respect thereto, and any failure by the
Revolving Collateral Agent, the Administrative Agent or any other Secured Party
to make any such demand, to pursue such other rights or remedies or to collect
any payments from any Borrower, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of any of the Borrowers, 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 Revolving Collateral Agent, the
Administrative Agent or any other Secured Party against any Guarantor.  For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.


2.6           Reinstatement.  The guarantee of any Guarantor contained in
this Section 2 shall continue to be effective, or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any of the Borrower
Obligations guaranteed by such Guarantor hereunder is rescinded or must otherwise
be restored or returned by the Revolving Collateral Agent, the Administrative
Agent or any other Secured Party upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Borrower or any Guarantor, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrowers 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 in the case of any amount required to be paid in
any other currency pursuant to the requirements of the Revolving Credit
Agreement or other agreement relating to the respective Obligations, such other
currency), at the Administrative Agent’s office specified in subsection 10.2 of
the Revolving Credit 



 16
 









Agreement or such other
address as may be designated in writing by the Administrative Agent to such
Guarantor from time to time in accordance with subsection 10.2 of the Revolving
Credit Agreement.


SECTION 3            GRANT OF
SECURITY INTEREST


3.1           Grant.  Each Grantor hereby grants, subject to
existing licenses to use the Copyrights, Patents, Trademarks and Trade Secrets
granted by such Grantor in the ordinary course of business, to the Revolving
Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in all of the Collateral of such Grantor, as collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations of such Grantor,
except as provided in subsection 3.3. 
The term “Collateral”, as to any Grantor, means the following
property (wherever located) 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, except as provided in subsection 3.3:


(a)           all Accounts;


(b)           all Chattel Paper;


(c)           all Contracts;


(d)           all Documents;


(e)           all Equipment (other than Vehicles);


(f)            all General Intangibles;


(g)           all Instruments;


(h)           all Intellectual Property;


(i)            all Inventory;


(j)            all Investment Property;


(k)           all Letter of Credit Rights;


(l)            all Fixtures;


(m)          all Commercial Tort Claims
constituting Commercial Tort Actions described in Schedule 7 (together with any
Commercial Tort Actions subject to a further writing provided in accordance
with subsection 5.2.12);


(n)           all books and records pertaining to
any of the foregoing;


(o)           the Collateral Proceeds Account; and



 17
 









(p)           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;


provided that, in the case of each
Grantor, Collateral shall not include (i) any Pledged Collateral, or any
property or assets specifically excluded from Pledged Collateral (including any
Capital Stock of any Foreign Subsidiary in excess of 65% of any series of such
stock) or (ii) any Restricted Asset.


3.2           Pledged Collateral.  Each Granting Party that is a Pledgor hereby
grants to the Revolving Collateral Agent, for the ratable benefit of the Secured
Parties, a security interest in all of the Pledged Collateral of such Pledgor
now owned or at any time hereafter acquired by such Pledgor, and any Proceeds
thereof, as collateral security for the prompt and complete performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations of such Pledgor, except as provided in subsection 3.3; provided
that Pledged Collateral shall not include any Restricted Asset.


3.3           Certain Exceptions.  No security interest is or will be granted
pursuant hereto in any right, title or interest of any Granting Party under or
in (collectively, the “Excluded Assets”):


(a)           any Instruments, Contracts, Chattel
Paper, General Intangibles, Copyright Licenses, Patent Licenses, Trademark
Licenses, Trade Secret Licenses or other contracts or agreements with or issued
by Persons other than Holding, Parent Borrower, a Restricted Subsidiary or an
Affiliate thereof, (collectively, “Restrictive Agreements”) that would
otherwise be included in the Security Collateral (and such Restrictive
Agreements shall not be deemed to constitute a part of the Security Collateral)
for so long as, and to the extent that, the granting of such a security
interest pursuant hereto would result in a breach, default or termination of
such Restrictive Agreements (in each case, except to the extent that, pursuant
to the Code or other applicable law, the granting of security interests therein
can be made without resulting in a breach, default or termination of such
Restrictive Agreements);


(b)           any Equipment or other property that
would otherwise be included in the Security Collateral (and such Equipment or
other property shall not be deemed to constitute a part of the Security
Collateral) if such Equipment or other property (x) is subject to a Lien
described in subsection 7.2(h) of the Revolving Credit Agreement in respect of
Purchase Money Obligations or Capitalized Lease Obligations or a Lien described
in subsection 7.2(o) (with respect to such a Lien described in subsection 7.2(h)
of the Revolving Credit Agreement, and consists of Equipment or other property
financed or refinanced thereby (including through any financing or refinancing
of the acquisition, leasing, construction or improvement of any such
assets) and/or any improvements, accessions, proceeds, dividends or
distributions in respect of any such assets, and/or any other assets relating
to any such assets (including to any such acquisition, leasing, construction or
improvement thereof) or any such improvements, accessions, proceeds,
dividends or distributions, or (y) is subject to a Lien described in subsection 7.2(h)
of the Revolving Credit Agreement in respect of Hedging Obligations, or a Lien
described in subsection 7.2(o) (with respect to such a Lien described in
subsection 7.2(h) of the Revolving Credit Agreement, and consists of (i) cash,
Cash Equivalents, Investment Grade Securities and Temporary Cash Investments,
together with proceeds, dividends and distributions in respect thereof, (ii)
any assets relating to such assets, proceeds, dividends or distributions or to
any Hedging 



 18
 









Obligations, and/or (iii) any other assets
consisting of, relating to or arising under or in connection with (A) any
Interest Rate Agreements, Currency Agreements or Commodities Agreements or (B)
any other agreements, instruments or documents related to any Hedging
Obligations or to any of the assets referred to in any of subclauses (i)
through (iii) of this clause (y);


(c)           any property that would otherwise be
included in the Security Collateral (and such property shall not be deemed to
constitute a part of the Security Collateral) if such property (x) has been
sold or otherwise transferred in connection with (i) a Special Purpose
Financing, (ii) a Sale and Leaseback Transaction the proceeds of which are applied
pursuant to subsection 3.4 of the Revolving Credit Agreement if and to the
extent required thereby or (iii) an Exempt Sale and Leaseback Transaction, or
(y) constitutes the Proceeds or products of any property that has been sold or
otherwise transferred pursuant to such Special Purpose Financing, Sale and
Leaseback Transaction or Exempt Sale and Leaseback Transaction (other than any
payments received by such Granting Party in payment for the sale and transfer
of such property in such Special Purpose Financing, Sale and Leaseback
Transaction or Exempt Sale and Leaseback Transaction) or (z) is subject to any
Liens securing Indebtedness incurred in compliance with subsection 7.1(b)(ix)
of the Revolving Credit Agreement, or Liens permitted under subsection
7.2(k)(iv) or 7.2(p)(xii) of the Revolving Credit Agreement;


(d)           Capital Stock which is specifically
excluded from the definition of “Pledged Stock” by virtue of the proviso
contained in the parenthetical to such definition.


3.4           Intercreditor Relations.  Notwithstanding anything herein to the
contrary, it is the understanding of the parties that the Liens granted
pursuant to subsections 3.1 and 3.2 hereof shall (x) prior to the
Discharge of Term Loan Obligations (as defined in the Intercreditor Agreement),
be pari passu and equal in priority to the
Liens granted to the Term Loan Collateral Agent for the benefit of the holders
of the Term Loan Obligations to secure the Term Loan Obligations pursuant to
the applicable Term Loan Document (as defined in the Intercreditor Agreement)
and (y) prior to the Discharge of Additional Obligations (as defined in
the Intercreditor Agreement), be pari passu and
equal in priority to the Liens granted to any Additional Agent for the benefit
of the holders of the applicable Additional Obligations to secure such
Additional Obligations pursuant to the applicable Additional Collateral
Documents (as defined in the Intercreditor Agreement).  The Revolving Collateral Agent acknowledges
and agrees that the relative priority of such Liens granted to the Revolving
Collateral Agent, the Term Loan Collateral Agent and any Additional Agent may
be determined solely pursuant to the Intercreditor Agreement, and not by priority
as a matter of law or otherwise. 
Notwithstanding anything herein to the contrary, the Liens and security
interest granted to the Revolving Collateral Agent pursuant to this Agreement
and the exercise of any right or remedy by the Revolving Collateral Agent
hereunder are subject to the provisions of the Intercreditor Agreement.  In the event of any conflict between the
terms of the Intercreditor Agreement and this Agreement, the terms of the
Intercreditor Agreement shall govern and control as among the Revolving
Collateral Agent, the Term Loan Collateral Agent and any Additional Agent.  Notwithstanding any other provision hereof,
subject to the terms of the Intercreditor Agreement, (x ) for so long as any
Term Loan Obligations remain 



 19
 









outstanding, any obligation hereunder to physically
deliver to the Revolving Collateral Agent any Security Collateral may be
satisfied by causing such Security Collateral to be physically delivered to the
Term Loan Collateral Agent to be held in accordance with the Intercreditor Agreement
and (y) for so long as any Additional Obligations remain outstanding, any
obligation hereunder to physically deliver to the Revolving Collateral Agent
any Security Collateral may be satisfied by causing such Security Collateral to
be physically delivered to any Additional Agent to be held in accordance with
the Intercreditor Agreement.


SECTION 4            REPRESENTATIONS
AND WARRANTIES


4.1           Representations and Warranties of
Each Guarantor.  To induce the
Revolving Collateral Agent and the Lenders to enter into the Revolving Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrowers thereunder, each Guarantor hereby represents and
warrants to the Revolving Collateral Agent and each other Secured Party that
the representations and warranties set forth in Section 4 of the Revolving
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which representations and warranties
is hereby incorporated herein by reference, are true and correct in all
material respects, and the Revolving Collateral Agent and each other Secured
Party shall be entitled to rely on each of such representations and warranties
as if fully set forth herein; provided that each reference in each such
representation and warranty to the Parent Borrower’s knowledge shall, for the
purposes of this subsection 4.1, be deemed to be a reference to such Guarantor’s
knowledge.


4.2           Representations and Warranties of
Each Grantor.  To induce the
Revolving Collateral Agent and the Lenders to enter into the Revolving Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrowers thereunder, each Grantor hereby represents and warrants
to the Revolving Collateral Agent and each other Secured Party that, in each
case after giving effect to the Transactions:


4.2.1        Title; No Other Liens.  Except for the security interests granted to
the Revolving Collateral Agent for the ratable benefit of the Secured Parties
pursuant to this Agreement and the other Liens permitted to exist on such
Grantor’s Collateral by the Revolving Credit Agreement (including, without limitation,
subsection 7.2 thereof), such Grantor owns each item of such Grantor’s
Collateral free and clear of any and all Liens. 
Except as set forth on Schedule 3, no currently effective
financing statement or other similar public notice with respect to any Lien on
all or any part of such Grantor’s Collateral is on file or of record in any public
office in the United States of America, any state, territory or dependency
thereof or the District of Columbia, except such as have been filed in favor of
the Revolving Collateral Agent for the ratable benefit of the Secured Parties
pursuant to this Agreement or as are in respect of Liens permitted by the
Revolving Credit Agreement (including, without limitation, subsection 7.2
thereof) or any other Loan Document or for which termination statements will be
delivered on the Closing Date.



 20
 









4.2.2        Perfected
Liens.


(a)           This Agreement is effective to
create, as collateral security for the Obligations of such Grantor, valid and
enforceable Liens on such Grantor’s Security Collateral in favor of the
Revolving Collateral Agent for the benefit of the Secured Parties, except as
enforceability may be affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditor’s 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.


(b)           Except with regard to (i) Liens (if
any) on Specified Assets and (ii) any rights reserved in favor of the United
States government as required by law (if any), upon the completion of the
Filings and the delivery to and continuing possession by the Revolving
Collateral Agent or the Term Loan Collateral Agent acting as agent of the Revolving
Collateral Agent for purposes of perfection, as applicable, in accordance with
the Intercreditor Agreement, of all Instruments, Chattel Paper and Documents a
security interest in which is perfected by possession, and the obtaining and
maintenance of “control” (as described in the Code) by the Revolving Collateral
Agent or the Term Loan Collateral Agent acting as agent of the Revolving
Collateral Agent for purposes of perfection, as applicable (or their respective
agents appointed for purposes of perfection), in accordance with the
Intercreditor Agreement of the Collateral Proceeds Account, Electronic Chattel
Paper and Letter of Credit Rights a security interest in which is perfected by “control”
and in the case of Commercial Tort Actions (other than such Commercial Tort
Actions listed on Schedule 7 on the date of this Agreement), the taking of the
actions required by subsection 5.2.12 herein, the Liens created pursuant to
this Agreement will constitute valid Liens on and (to the extent provided
herein) perfected security interests in such Grantor’s Security Collateral in
favor of the Revolving Collateral Agent for the benefit of the Secured Parties,
and will be prior to all other Liens of all other Persons other than Permitted
Liens, and enforceable as such as against all other Persons other than Ordinary
Course Transferees, except to the extent that the recording of an assignment or
other transfer of title to the Revolving Collateral Agent or the Term Loan
Collateral Agent or the recording of other applicable documents in the United
States Patent and Trademark Office or United States Copyright Office may be
necessary for perfection or enforceability, and except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law) or by an implied covenant of good faith and fair dealing. As
used in this subsection 4.2.2(b), the following terms shall have the following
meanings:


“Filings”:  the filing or recording of (i) the Financing
Statements as set forth in Schedule 3, (ii) this Agreement or a notice
thereof with respect to Intellectual Property as set forth in Schedule 3,  and (iii) any filings after the Closing Date
in any other jurisdiction as may be necessary under any Requirement of Law.



 21















“Financing
Statements”:  the financing
statements delivered to the Revolving Collateral Agent by such Grantor on the
Closing Date for filing in the jurisdictions listed in Schedule 4.


“Ordinary
Course Transferees”:  (i) with
respect to goods only, buyers in the ordinary course of business and lessees in
the ordinary course of business to the extent provided in Section 9-320(a) and
9-321 of the Uniform Commercial Code as in effect from time to time in the
relevant jurisdiction, (ii) with respect to general intangibles only, licensees
in the ordinary course of business to the extent provided in Section 9-321 of
the Uniform Commercial Code as in effect from time to time in the relevant
jurisdiction and (iii) any other Person who is entitled to take free of the Lien
pursuant to the Uniform Commercial Code as in effect from time to time in the
relevant jurisdiction.


“Permitted
Liens”:  Liens permitted pursuant to
the Loan Documents, including, without limitation, those permitted to exist
pursuant to subsection 7.2 of the Revolving Credit Agreement.


“Specified
Assets”:  the following property and
assets of such Grantor:


(1)                                  Patents,
Patent Licenses, Trademarks and Trademark Licenses to the extent that (a) Liens
thereon cannot be perfected by the filing of financing statements under the
Uniform Commercial Code or by the filing and acceptance thereof in the United
States Patent and Trademark Office or (b) such Patents, Patent Licenses,
Trademarks and Trademark Licenses are not, individually or in the aggregate,
material to the business of the Parent Borrower and its Subsidiaries taken as a
whole;


(2)                                  Copyrights
and Copyright Licenses and Accounts or receivables arising therefrom to the
extent that the Uniform Commercial Code as in effect from time to time in the
relevant jurisdiction is not applicable to the creation or perfection of Liens
thereon;


(3)                                  Collateral
for which the perfection of Liens thereon requires filings in or other actions
under the laws of jurisdictions outside of the United States of America, any
State, territory or dependency thereof or the District of Columbia;


(4)                                  goods
included in Collateral received by any Person for “sale or return” within the
meaning of Section 2-326 of the Uniform Commercial Code of the applicable
jurisdiction, to the extent of claims of creditors of such Person;


(5)                                  Proceeds
of Accounts, receivables or Inventory which do not themselves constitute
Collateral or which have not been transferred to or deposited in the Collateral
Proceeds Account (if any) or a Deposit Account of a Grantor subject to the
Revolving Collateral Agent’s control;



 22
 









(6)                                  Contracts,
Accounts or receivables subject to the Assignment of Claims Act;


(7)                                  Fixtures;
and


(8)                                  uncertificated
securities (to the extent a security interest is not perfected by the filing of
a financing statement).


4.2.3                        Jurisdiction
of Organization.  On the date hereof,
such Grantor’s jurisdiction of organization is specified on Schedule 4.


4.2.4                        Farm
Products.  None of such Grantor’s
Collateral constitutes, or is the Proceeds of, Farm Products.


4.2.5                        Accounts
Receivable.  The amounts represented
by such Grantor to the Administrative Agent or the other Secured Parties from
time to time as owing by each account debtor or by all account debtors in
respect of such Grantor’s Accounts Receivable constituting Security Collateral
will at such time be the correct amount, in all material respects, actually
owing by such account debtor or debtors thereunder, except to the extent that
appropriate reserves therefor have been established on the books of such
Grantor in accordance with GAAP.  Unless
otherwise indicated in writing to the Administrative Agent, each Account
Receivable of such Grantor arises out of a bona fide sale and delivery of goods
or rendition of services by such Grantor. 
Such Grantor has not given any account debtor any deduction in respect
of the amount due under any such Account, except in the ordinary course of
business or as such Grantor may otherwise advise the Administrative Agent in
writing.


4.2.6                        Patents,
Copyrights and Trademarks.  Schedule
5 lists all material Trademarks, material Copyrights and material Patents,
in each case, registered in the United States Patent and Trademark Office or
the United States Copyright Office, as applicable, and owned by such Grantor in
its own name as of the date hereof, and all material Trademark Licenses, all
material Copyright Licenses and all material Patent Licenses (including,
without limitation, material Trademark Licenses for registered Trademarks, material
Copyright Licenses for registered Copyrights and material Patent Licenses for
registered Patents) owned by such Grantor in its own name as of the date
hereof, in each case, that is solely United States Intellectual Property.


4.3                                 Representations
and Warranties of Each Pledgor.   To
induce the Revolving Collateral Agent, the Administrative Agent and the Lenders
to enter into the Revolving Credit Agreement and to induce the Lenders to make
their respective extensions of credit to the Borrowers thereunder, each Pledgor
hereby represents and warrants to the Revolving Collateral Agent and each other
Secured Party that:


4.3.1                        Except as provided in
subsection 3.3, the shares of Pledged Stock pledged by such Pledgor hereunder
constitute (i) in the case of shares of a Domestic Subsidiary, all the issued
and outstanding shares of all classes of the Capital Stock of such Domestic
Subsidiary owned by such Pledgor and (ii) in the case of any Pledged Stock
constituting 



 23
 









Capital Stock of any Foreign Subsidiary, such percentage (not more than
65%) as is specified on Schedule 2 of all the issued and outstanding
shares of all classes of the Capital Stock of each such Foreign Subsidiary
owned by such Pledgor.


4.3.2                        All the shares of the Pledged
Stock pledged by such Pledgor hereunder have been duly and validly issued and
are fully paid and nonassessable (or the equivalent, if any, under applicable
foreign law).


4.3.3                        Such Pledgor is the record and
beneficial owner of, and has good title to, the Pledged Securities 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 and
Liens arising by operation of law or permitted by the Revolving Credit Agreement
(or described in the definition of “Permitted Lien” in the Revolving Credit
Agreement).


4.3.4                        Except with respect to security
interests in Pledged Securities (if any) constituting Specified Assets, upon
delivery to the Revolving Collateral Agent, or the Term Loan Collateral Agent
acting as agent of the Revolving Collateral Agent for purposes of perfection,
or any Additional Agent acting as agent of the Revolving Collateral Agent for
purposes of perfection, as applicable, in accordance with the Intercreditor
Agreement, of the certificates evidencing the Pledged Securities held by such
Pledgor together with executed undated stock powers or other instruments of
transfer, the security interest created in such Pledged Securities constituting
certificated securities by this Agreement, assuming the continuing possession of
such Pledged Securities by the Revolving Collateral Agent, or the Term Loan
Collateral Agent so acting as agent, or such Additional Agent so acting as
agent, as applicable, in accordance with the Intercreditor Agreement, will constitute
a valid, perfected first priority (subject, in terms of priority only, to the
priority of the Liens of the Term Loan Collateral Agent or any Additional
Agent) security interest in such Pledged Securities to the extent provided in
and governed by the Code, enforceable in accordance with its terms against all
creditors of such Pledgor and any Persons purporting to purchase such Pledged
Securities from such Pledgor, except as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.


4.3.5                        Except with respect to security
interests in Pledged Securities (if any) constituting Specified Assets,
upon the obtaining and maintenance of “control” (as described in the Code)
by the Revolving Collateral Agent, the Term Loan Collateral Agent acting as
agent of the Revolving Collateral Agent for purposes of perfection, or any
Additional Agent acting as agent of the Revolving Collateral Agent for purposes
of perfection (or their respective agents appointed for purposes of
perfection), as applicable, in accordance with the Intercreditor Agreement of
all Pledged Securities that constitute uncertificated securities, the security
interest created by this Agreement in such Pledged Securities that constitute
uncertificated securities, will constitute a valid, perfected first priority
(subject, in terms of priority only, to the priority of the Liens of the Term
Loan Collateral Agent or any Additional Agent) security interest in such
Pledged Securities constituting uncertificated 



 24
 









securities, enforceable in accordance with its terms against all
creditors of such Pledgor and any persons purporting to purchase such Pledged
Securities from such Pledgor, to the extent provided in and governed by the
Code, except as enforceability may be affected by 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.


SECTION 5                                   COVENANTS


5.1                                 Covenants
of Each Guarantor.  Each Guarantor
covenants and agrees with the Revolving Collateral Agent and the other Secured
Parties that, from and after the date of this Agreement until the earliest to
occur of (i) the date upon which the Loans, any Reimbursement Obligations and
all other Obligations then due and owing, shall have been paid in full in cash,
no Letter of Credit shall be outstanding (except for Letters of Credit that
have been cash collateralized in a manner satisfactory to the Issuing Bank)  and the Revolving Commitments shall have terminated, (ii)
as to any Guarantor, the date upon which all the Capital Stock of such
Guarantor shall have been sold or otherwise disposed of (to a Person other than
the Parent Borrower or a Restricted Subsidiary) in accordance with the terms of
the Revolving Credit Agreement or (iii) as to any Guarantor, the designation of
such Guarantor as an Unrestricted Subsidiary, such Guarantor shall take, or
shall refrain from taking, as the case may be, each action that is necessary to
be taken or not taken, as the case may be, so that no Default or Event of
Default is caused by the failure to take such action or to refrain from taking
such action by such Guarantor or any of its Restricted Subsidiaries.


5.2                                 Covenants
of Each Grantor.  Each Grantor
covenants and agrees with the Revolving Collateral Agent and the other Secured
Parties that, from and after the date of this Agreement until the earlier to
occur of (i) the date upon which the Loans, Reimbursement Obligations and all
other Obligations then due and owing shall have been paid in full in cash, no
Letter of Credit shall be outstanding (except for Letters of Credit that have
been cash collateralized in a manner satisfactory to the Issuing Bank)  and the Revolving Commitments shall have terminated, (ii)
as to any Grantor, the date upon which all the Capital Stock of such Grantor
shall have been sold or otherwise disposed of (to a Person other than the
Parent Borrower or a Restricted Subsidiary) in accordance with the terms of the
Revolving Credit Agreement or (iii) as to any Grantor, the designation of such
Grantor as an Unrestricted Subsidiary:


5.2.1                        Delivery
of Instruments and Chattel Paper.  If
any amount payable under or in connection with any of such Grantor’s Collateral
shall be or become evidenced by any Instrument or Chattel Paper, such Grantor
shall (except as provided in the following sentence) be entitled to retain
possession of all Collateral of such Grantor evidenced by any Instrument or
Chattel Paper, and shall hold all such Collateral in trust for the Revolving
Collateral Agent, for the ratable benefit of the Secured Parties.  In the event that an Event of Default shall
have occurred and be continuing, upon the request of the Revolving Collateral Agent,
or the Term Loan Collateral Agent, or any Additional Agent, as applicable, in
accordance with the Intercreditor Agreement, such Instrument or Chattel Paper
shall be promptly delivered to the Revolving Collateral Agent, or the Term Loan
Collateral Agent, or any Additional Agent, as applicable, in accordance with
the Intercreditor 



 25
 









Agreement, duly indorsed
in a manner satisfactory to the Revolving Collateral Agent, or the Term Loan
Collateral Agent, or any Additional Agent, as applicable, in accordance with
the Intercreditor Agreement, to be held as Collateral pursuant to this
Agreement.  Such Grantor shall not permit
any other Person to possess any such Collateral at any time other than in
connection with any sale or other disposition of such Collateral in a transaction
permitted by the Revolving Credit Agreement.


5.2.2                        Maintenance
of Insurance.  Such Grantor will
maintain with financially sound and reputable insurance companies insurance on,
or self insure, all property material to the business of the Parent Borrower
and its Subsidiaries, taken as a whole, in at least such amounts and against at
least such risks (but including in any event public liability, product
liability and business interruption) as are consistent with the past practices
of the Parent Borrower and its Subsidiaries and otherwise as are usually
insured against in the same general area by companies engaged in the same or a
similar business; furnish to the Revolving Collateral Agent, upon written
request, information in reasonable detail as to the insurance carried.


5.2.3                        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 material taxes, assessments and
governmental charges or levies imposed upon such Grantor’s Collateral or in
respect of income or profits therefrom, as well as all material claims of any
kind (including, without limitation, material claims for labor, materials and
supplies) against or with respect to such Grantor’s Collateral, except where
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of such Grantor and except to the extent
that failure to do so, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.


5.2.4                        Maintenance
of Perfected Security Interest; Further Documentation.


(a)                                  Such
Grantor shall maintain the security interest created by this Agreement in such
Grantor’s Collateral as a security interest having at least the perfection and
priority described in subsection 4.2.2 of this Agreement and shall defend such
security interest against the claims and demands of all Persons whomsoever.


(b)                                 Such
Grantor will furnish to the Revolving Collateral Agent from time to time
statements and schedules further identifying and describing such Grantor’s
Collateral and such other reports in connection with such Grantor’s Collateral
as the Revolving Collateral Agent may reasonably request in writing, all in
reasonable detail.


(c)                                  At
any time and from time to time, upon the written request of the Revolving
Collateral Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver such further instruments and documents
and take such further actions as the Revolving Collateral 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 by such Grantor,
including, without limitation, the filing of any financing 



 26
 









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.


5.2.5                        Changes
in Name, Jurisdiction of Organization, etc. 
Such Grantor will not, except upon not less than 30 days’ prior written
notice to the Revolving Collateral Agent, change its name or jurisdiction of
organization (whether by merger of otherwise); provided that, promptly
after receiving a written request therefor from the Revolving Collateral Agent,
such Grantor shall deliver to the Revolving Collateral Agent all additional
financing statements and other documents reasonably requested by the Revolving
Collateral Agent to maintain the validity, perfection and priority of the
security interests as and to the extent provided for herein.


5.2.6                        Notices.  Such Grantor will advise the Revolving
Collateral Agent promptly, in reasonable detail, of:


(a)                                  any
Lien (other than security interests created hereby or Liens permitted under the
Revolving Credit Agreement or Liens described in the definition of “Permitted
Lien” in the Revolving Credit Agreement) on any of such Grantor’s Collateral
which would materially adversely affect the ability of the Revolving Collateral
Agent to exercise any of its remedies hereunder; and


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


5.2.7                        Pledged
Stock.  In the case of each Grantor
that is an Issuer, such Issuer agrees that (i) it will be bound by the terms of
this Agreement relating to the Pledged Stock issued by it and will comply with
such terms insofar as such terms are applicable to it, (ii) it will notify the
Revolving Collateral Agent promptly in writing of the occurrence of any of the
events described in subsection 5.3.1 with respect to the Pledged Stock issued
by it and (iii) the terms of subsections 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 subsection 6.3(c) or 6.7 with respect to the Pledged
Stock issued by it.


5.2.8                        Accounts
Receivable.


(a)                                  With
respect to Accounts Receivable constituting Collateral, other than in the
ordinary course of business or as permitted by the Loan Documents, such Grantor
will not (i) grant any extension of the time of payment of any of such Grantor’s
Accounts Receivable, (ii) compromise or settle any such Account Receivable for
less than the full amount thereof, (iii) release, wholly or partially, any
Person liable for the payment of any Account Receivable, (iv) allow any credit
or discount whatsoever on any such Account Receivable or (v) amend, supplement
or modify any Account Receivable unless such extensions, compromises,
settlements, releases, credits or discounts would not reasonably be expected to
materially adversely affect the value of the Accounts Receivable constituting
Collateral taken as a whole.



 27
 









(b)                                 Such
Grantor will deliver to the Revolving Collateral 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 10% of the aggregate amount of the
then outstanding Accounts Receivable.


5.2.9                        Maintenance
of Records.  Such Grantor will keep
and maintain at its own cost and expense reasonably satisfactory and complete
records of its Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to such Collateral, and
shall mark such records to evidence this Agreement and the Liens and the
security interests created hereby.


5.2.10                  Acquisition
of Intellectual Property.  Within 90
days after the end of each calendar year, such Grantor will notify the
Revolving Collateral Agent of any acquisition by such Grantor of (i) any
registration of any material Copyright, Patent or Trademark or (ii) any
exclusive rights under a material Copyright License, Patent License or
Trademark License constituting Collateral, and shall take such actions as may
be reasonably requested by the Revolving Collateral Agent (but only to the
extent such actions are within such Grantor’s control) to perfect the security
interest granted to the Revolving Collateral Agent and the other Secured
Parties therein, to the extent provided herein in respect of any Copyright,
Patent or Trademark constituting Collateral on the date hereof, by (x) the
execution and delivery of an amendment or supplement to this Agreement (or amendments
to any such agreement previously executed or delivered by such Grantor) and/or
(y) the making of appropriate filings (I) of financing statements under the
Uniform Commercial Code of any applicable jurisdiction and/or (II) in the
United States Patent and Trademark Office, or with respect to Copyrights and
Copyright Licenses, another applicable office.


5.2.11                  Protection of
Trade Secrets.  Such Grantor shall
take all steps which it deems commercially reasonable to preserve and protect
the secrecy of all material Trade Secrets of such Grantor.


5.2.12                  Commercial
Tort Actions.  All Commercial Tort
Actions of each Grantor in existence on the date of this Agreement, known to
such Grantor after reasonable inquiry, are described in Schedule 7
hereto.  If any Grantor shall at any time
after the date of this Agreement acquire a Commercial Tort Action in an amount
(taking the greater of the aggregate claimed damages thereunder or the
reasonably estimated value thereof) of $3,000,000, such Grantor shall promptly
notify the Revolving Collateral Agent thereof in a writing signed by such
Grantor and describing the details thereof and shall grant to the Revolving
Collateral Agent in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to the Revolving Collateral
Agent.


5.3                                 Covenants
of Each Pledgor.  Each Pledgor
covenants and agrees with the Revolving Collateral Agent and the other Secured
Parties that, from and after the date of this Agreement until the earliest to
occur of (i) the Loans and all other Obligations then due and owing shall have
been paid in full in cash, no Letter of Credit shall be outstanding (except for
Letters of Credit that have been cash collateralized in a manner satisfactory
to the Issuing Bank)  and the 



 28
 









Revolving Commitments
shall have terminated, (ii) as to any Pledgor, all the Capital Stock of
such Pledgor shall have been sold or otherwise disposed of (to a Person other
than the Parent Borrower or a Restricted Subsidiary) as permitted under the
terms of the Revolving Credit Agreement or (iii) the designation of such
Pledgor as an Unrestricted Subsidiary:


5.3.1                        Additional
Shares.  If such Pledgor shall, as a
result of its ownership of its Pledged Stock, become entitled to receive or
shall receive any stock certificate (including, without limitation, any stock
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), stock option or similar 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 Pledgor shall accept the
same as the agent of Revolving Collateral Agent and the other Secured Parties,
hold the same in trust for the Revolving Collateral Agent and the other Secured
Parties and deliver the same forthwith to the Revolving Collateral Agent (who
will hold the same on behalf of the Secured Parties), or the Term Loan
Collateral Agent or any Additional Agent, as applicable, in accordance with the
Intercreditor Agreement, in the exact form received, duly indorsed by such
Pledgor to the Revolving Collateral Agent, or the Term Loan Collateral Agent or
any Additional Agent, as applicable, in accordance with the Intercreditor
Agreement, if required, or accompanied by an undated stock power covering such
certificate duly executed in blank by such Pledgor, to be held by the Revolving
Collateral Agent, the Term Loan Collateral Agent or any Additional Agent, as
applicable, in accordance with the Intercreditor Agreement, subject to the
terms hereof, as additional collateral security for the Obligations (subject to
subsection 3.3 and provided that in no event shall there be pledged, nor
shall any Pledgor be required to pledge, (i) more than 65% of any series of the
outstanding Capital Stock of any Foreign Subsidiary pursuant to this Agreement
or (ii) any Restricted Assets).  Any sums
paid upon or in respect of the Pledged Stock upon the liquidation or
dissolution of any Issuer (except any liquidation or dissolution of any
Subsidiary of the Parent Borrower permitted by the Revolving Credit Agreement)
shall be paid over to the Revolving Collateral Agent, or the Term Loan
Collateral Agent or any Additional Agent, as applicable, in accordance with the
Intercreditor Agreement to be held by the Revolving Collateral Agent, or the
Term Loan Collateral Agent or any Additional Agent, as applicable, in
accordance with the Intercreditor Agreement subject to the terms hereof as
additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Pledged Stock or
any property shall be distributed upon or with respect to the Pledged Stock
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 Revolving Collateral Agent, be delivered to the Revolving Collateral Agent,
the Term Loan Collateral Agent or any Additional Agent, as applicable, in
accordance with the Intercreditor Agreement, to be held by the Revolving
Collateral Agent, the Term Loan Collateral Agent or any Additional Agent, as
applicable, in accordance with the Intercreditor Agreement subject to the terms
hereof as additional collateral security for the Obligations, in each case
except as otherwise provided by the Intercreditor Agreement.  If any sums of money or property so paid or
distributed in respect of the Pledged Stock shall be 



 29
 









received by such Pledgor,
such Pledgor shall, until such money or property is paid or delivered to the
Revolving Collateral Agent, the Term Loan Collateral Agent or any Additional
Agent, as applicable, in accordance with the Intercreditor Agreement, hold such
money or property in trust for the Secured Parties, segregated from other funds
of such Pledgor, as additional collateral security for the Obligations.


5.3.2                        Maintenance
of Pledged Stock.  Without the prior
written consent of the Revolving Collateral Agent, such Pledgor will not
(except as permitted by the Revolving Credit Agreement) (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 Pledged
Securities or Proceeds thereof, (iii) create, incur or permit to exist any Lien
or option in favor of, or any material adverse claim of any Person with respect
to, any of the Pledged Securities or Proceeds thereof, or any interest therein,
except for the security interests created by this Agreement or Liens arising by
operation of law or (iv) enter into any agreement or undertaking restricting
the right or ability of such Pledgor or the Revolving Collateral Agent to sell,
assign or transfer any of the Pledged Securities or Proceeds thereof.


5.3.3                        Pledged
Notes.  Such Pledgor shall, on the
date of this Agreement (or on such later date upon which it becomes a party
hereto pursuant to subsection 9.15), deliver to the Revolving Collateral Agent,
or the Term Loan Collateral Agent or any Additional Agent, as applicable, in accordance
with the Intercreditor Agreement, all Pledged Notes then held by such Pledgor
(excluding any Pledged Note the principal amount of which does not exceed
$3,000,000), endorsed in blank or, at the request of the Revolving Collateral
Agent, or the Term Loan Collateral Agent or any Additional Agent, as
applicable, in accordance with the Intercreditor Agreement, endorsed to the
Revolving Collateral Agent, the Term Loan Collateral Agent or any Additional
Agent, as applicable, in accordance with the Intercreditor Agreement.  Furthermore, within ten Business Days after
any Pledgor obtains a Pledged Note with a principal amount in excess of
$3,000,000, such Pledgor shall cause such Pledged Note to be delivered to the
Revolving Collateral Agent, the Term Loan Collateral Agent, or any Additional
Agent, as applicable, in accordance with the Intercreditor Agreement, endorsed
in blank or, at the request of the Revolving Collateral Agent, the Term Loan
Collateral Agent or any Additional Agent, as applicable, in accordance with the
Intercreditor Agreement, endorsed to the Revolving Collateral Agent, the Term
Loan Collateral Agent or any Additional Agent, as applicable, in accordance
with the Intercreditor Agreement.


5.3.4                        Maintenance
of Security Interest.  Such Pledgor
shall maintain the security interest created by this Agreement in such Pledgor’s
Pledged Collateral as a security interest having at least the perfection and
priority described in subsection 4.3.4 or 4.3.5, as applicable, and shall
defend such security interest against the claims and demands of all Persons
whomsoever.  At any time and from time to
time, upon the written request of the Revolving Collateral Agent and at the
sole expense of such Pledgor, such Pledgor will promptly and duly execute and
deliver such further instruments and documents and take 



 30
 









such further actions as
the Revolving Collateral 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 by such Pledgor.


5.3.5                        Additional Pledged Stock.  (a)   
At such time as any Home Warranty Subsidiary or Captive Insurance
Subsidiary is no longer subject to regulation (and that has no Subsidiary
that is subject to regulation) as an insurance, home warranty, service contract
or similar company, as the case may be, (1) within 60 days of such time,
the relevant Pledgors shall deliver the certificates, if any, constituting the
New Pledged Stock, if any, issued by such Home Warranty Subsidiary or Captive Insurance
Subsidiary to the Revolving Collateral Agent (who will hold the same on behalf
of the Secured Parties), or the Term Loan Collateral Agent or any Additional
Agent, as applicable, in accordance with the Intercreditor Agreement, in the
exact form received, duly indorsed by such Pledgor to the Revolving Collateral
Agent, or the Term Loan Collateral Agent or any Additional Agent, as
applicable, in accordance with the Intercreditor Agreement, if required, or accompanied
by an undated stock power covering such certificate duly executed in blank by
such Pledgor, to be held by the Revolving Collateral Agent, or the Term Loan
Collateral Agent or any Additional Agent, as applicable, in accordance with the
Intercreditor Agreement, subject to the terms hereof, as additional collateral
security for the Obligations (subject to subsection 3.3 and provided
that in no event shall there be pledged, nor shall any Pledgor be required to
pledge, (i)  more than 65% of any series
of the outstanding Capital Stock of any Foreign Subsidiary pursuant to this
Agreement or (ii) any Restricted Assets) and (2) on the date that is 60 days
after such time, such New Pledged Stock shall be deemed “Pledged Stock” for all
purposes under this Agreement, and Schedule 2 shall be deemed amended to include
the issuers of such New Pledged Stock as “Issuers” hereunder.


(b)                               At
such time as (i) the Instar Group Pledge Agreement is terminated (provided it
is not replaced by any new agreement granting a Lien on the Capital Stock of
any Instar Entity in favor of Steward or any of its Subsidiaries)  and (ii) the Liens on all Capital Stock of
the Instar Entities created thereunder are permanently released, (1) within 60
days of such termination and release, the relevant Pledgors shall deliver the
certificates, if any, constituting the Instar Pledged Stock to the Revolving
Collateral Agent (who will hold the same on behalf of the Secured Parties), or
the Term Loan Collateral Agent or any Additional Agent, as applicable, in
accordance with the Intercreditor Agreement, in the exact form received, duly
indorsed by such Pledgor to the Revolving Collateral Agent, or the Term Loan
Collateral Agent or any Additional Agent, as applicable, in accordance with the
Intercreditor Agreement, if required, or accompanied by an undated stock power
covering such certificate duly executed in blank by such Pledgor, to be held by
the Revolving Collateral Agent, or the Term Loan Collateral Agent or any
Additional Agent, as applicable, in accordance with the Intercreditor
Agreement, subject to the terms hereof, as additional collateral security for
the Obligations (subject to subsection 3.3 and provided that in no event
shall there be pledged, nor shall any Pledgor be required to pledge, (i)  more than 65% of any series of the outstanding
Capital Stock of any Foreign Subsidiary pursuant to this Agreement or (ii) any
Restricted Assets) and (2) on the date that is 60 days after such termination
and release, the Instar Pledged Stock 



 31
 









shall be
deemed “Pledged Stock” for all purposes under this Agreement, and Schedule 2
shall be deemed amended to include the issuers of the Instar Pledged Stock as “Issuers”
hereunder.


5.4                                 Covenants
of Holding.  Holding covenants and
agrees with the Revolving Collateral Agent and the other Secured Parties that,
from and after the date of this Agreement until the Loans, and all other
Obligations then due and owing, shall have been paid in full in cash, no Letter
of Credit shall be outstanding (except for Letters of Credit that have been
cash collateralized in a manner satisfactory to the Issuing Bank)  and the Revolving Commitments shall have
terminated, Holding: shall not conduct, transact or otherwise engage, or commit
to conduct, transact or otherwise engage, in any business or operations other
than (i) transactions contemplated by the Loan Documents or the provision of
administrative, legal, accounting and management services to, or on behalf of,
any of its Subsidiaries, (ii) the acquisition and ownership of the Capital
Stock of any of its Subsidiaries and the exercise of rights and performance of
obligations in connection therewith, (iii) the entry into, and exercise of
rights and performance of obligations in respect of (A) the Transaction
Documents, this Agreement and any other Loan Documents to which it is a party;
any other agreement to which it is a party on the date hereof; and any
guarantee of Indebtedness or other obligations of any of its Subsidiaries
permitted pursuant to the Loan Documents; in each case as amended, supplemented
waived or otherwise modified from time to time, and any refinancings,
refundings, renewals or extensions thereof, (B) contracts and agreements with
officers, directors and employees of it or any Subsidiary thereof relating to
their employment or directorships, (C) insurance policies and related contracts
and agreements, and (D) subscription agreements, registration rights
agreements, voting and other stockholder agreements, engagement letters,
underwriting agreements and other agreements in respect of its securities or
any offering, issuance or sale thereof, including but not limited to in respect
of the Management Subscription Agreements, (iv) the offering, issuance, sale
and repurchase or redemption of, and dividends or distributions on its
securities, (v) the filing of registration statements, and compliance with
applicable reporting and other obligations, under federal, state or other
securities laws, (vi) the listing of its securities and compliance with
applicable reporting and other obligations in connection therewith, (vii) the
retention of (and the entry into, and exercise of rights and performance of obligations
in respect of, contracts and agreements with) transfer agents, private
placement agents, underwriters, counsel, accountants and other advisors and
consultants, (viii) the performance of obligations under and compliance with
its certificate of incorporation and by-laws, or any applicable law, ordinance,
regulation, rule, order, judgment, decree or permit, including, without
limitation, as a result of or in connection with the activities of its
Subsidiaries, (ix) the incurrence and payment of its operating and business
expenses and any taxes for which it may be liable, (x) making loans to or other
Investments in, or incurrence of Indebtedness from, its Subsidiaries, as and to
the extent not prohibited by the Revolving Credit Agreement and (xi) other
activities incidental or related to the foregoing.  This subsection 5.4 shall not be construed to
limit the incurrence of Indebtedness by Holding to any Person (subject to the
preceding clause (x)).



 32
 









SECTION 6                                   REMEDIAL
PROVISIONS


6.1                                 Certain
Matters Relating to Accounts.


(a)                                  At
any time and from time to time after the occurrence and during the continuance
of an Event of Default, the Revolving Collateral Agent shall have the right to
make test verifications of the Accounts Receivable in any reasonable manner and
through any reasonable medium that it reasonably considers advisable, and the
relevant Grantor shall furnish all such assistance and information as the
Revolving Collateral Agent may reasonably require in connection with such test
verifications.  At any time and from time
to time after the occurrence and during the continuance of an Event of Default,
upon the Revolving Collateral Agent’s reasonable request and at the expense of
the relevant Grantor, such Grantor shall cause independent public accountants
or others reasonably satisfactory to the Revolving Collateral Agent to furnish
to the Revolving Collateral Agent reports showing reconciliations, aging and
test verifications of, and trial balances for, the Accounts Receivable
constituting Collateral.


(b)                                 The
Revolving Collateral Agent hereby authorizes each Grantor to collect such
Grantor’s Accounts Receivable and the Revolving Collateral Agent may curtail or
terminate said authority at any time after the occurrence and during the continuance
of an Event of Default specified in subsection 8(a) of the Revolving Credit
Agreement.  If required by the Revolving
Collateral Agent at any time after the occurrence and during the continuance of
an Event of Default specified in subsection 8(a) of the Revolving Credit
Agreement, any Proceeds constituting payments or other cash proceeds of
Accounts Receivable constituting Collateral, when collected by such Grantor,
(i) shall be forthwith (and, in any event, within two Business Days of receipt
by such Grantor) deposited in, or otherwise transferred by such Grantor to, the
Collateral Proceeds Account, subject to withdrawal by the Revolving Collateral
Agent for the account of the Secured Parties only as provided in subsection
6.5, and (ii) until so turned over, shall be held by such Grantor in trust for
the Revolving Collateral Agent and the other Secured Parties, segregated from
other funds of such Grantor.  All
Proceeds constituting collections or other cash proceeds of Accounts Receivable
constituting Collateral while held by the Collateral Account Bank (or by any
Grantor in trust for the benefit of the Revolving Collateral Agent and the
other Secured Parties) shall continue to be collateral security for all of the
Obligations and shall not constitute payment thereof until applied as
hereinafter provided.  At any time when
an Event of Default specified in subsection 8(a) of the Revolving Credit
Agreement has occurred and is continuing, at the Revolving Collateral Agent’s
election, each of the Revolving Collateral Agent and the Administrative Agent
may apply all or any part of the funds on deposit in the Collateral Proceeds Account
established by the relevant Grantor to the payment of the Obligations of such
Grantor then due and owing, such application to be made as set forth in
subsection 6.5 hereof.  So long as
no Event of Default has occurred and is continuing, the funds on deposit
in the Collateral Proceeds Account shall be remitted as provided in subsection
6.1(d) hereof.


(c)                                  At
any time and from time to time after the occurrence and during the continuance
of an Event of Default specified in subsection 8(a) of the Revolving Credit
Agreement, at the Revolving Collateral Agent’s request, each Grantor shall
deliver to the Revolving Collateral Agent copies or, if required by the
Revolving Collateral Agent for the enforcement thereof or foreclosure thereon,
originals of all documents held by such Grantor evidencing, and relating to,
the agreements and transactions which gave rise to such Grantor’s Accounts
Receivable constituting Collateral, including, without limitation, all
statements relating to such Grantor’s Accounts Receivable constituting
Collateral and all orders, invoices and shipping receipts.



 33
 









(d)                                 So
long as no Event of Default has occurred and is continuing, the Revolving Collateral
Agent shall instruct the Collateral Account Bank to promptly remit any funds on
deposit in each Grantor’s Collateral Proceeds Account to such Grantor’s General
Fund Account or any other account designated by such Grantor.  In the event that an Event of Default has
occurred and is continuing, the Revolving Collateral Agent and the Grantors
agree that the Revolving Collateral Agent, at its option, may require that each
Collateral Proceeds Account and the General Fund Account of each Grantor be
established at the Revolving Collateral Agent. 
Each Grantor shall have the right, at any time and from time to time, to
withdraw such of its own funds from its own General Fund Account, and to
maintain such balances in its General Fund Account, as it shall deem to be
necessary or desirable.


6.2                                 Communications
with Obligors; Grantors Remain Liable.


(a)                                  The
Revolving Collateral Agent in its own name or in the name of others, may at any
time and from time to time after the occurrence and during the continuance of
an Event of Default specified in subsection 8(a) of the Revolving Credit
Agreement, communicate with obligors under the Accounts Receivable and parties
to the Contracts (in each case, to the extent constituting Collateral) to
verify with them to the Revolving Collateral Agent’s satisfaction the existence,
amount and terms of any Accounts Receivable or Contracts.


(b)                                 Upon
the request of the Revolving Collateral Agent at any time after the occurrence
and during the continuance of an Event of Default specified in subsection 8(a)
of the Revolving Credit Agreement, each Grantor shall notify obligors on such
Grantor’s Accounts Receivable and parties to such Grantor’s Contracts (in each
case, to the extent constituting Collateral) that such Accounts Receivable and
such Contracts have been assigned to the Revolving Collateral Agent, for the
ratable benefit of the Secured Parties, and that payments in respect thereof
shall be made directly to the Revolving Collateral Agent.


(c)                                  Anything
herein to the contrary notwithstanding, each Grantor shall remain liable under
each of such Grantor’s Accounts Receivable 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.  None of the Revolving Collateral Agent, the
Administrative Agent or any other Secured Party shall have any obligation or
liability under any Account Receivable (or any agreement giving rise thereto)
by reason of or arising out of this Agreement or the receipt by the Revolving
Collateral Agent or any other Secured Party of any payment relating thereto,
nor shall the Revolving Collateral Agent or any other Secured Party be
obligated in any manner to perform any of the obligations of any Grantor under
or pursuant to any Account Receivable (or any agreement giving rise thereto) to
make any payment, to make any inquiry as to the nature or the sufficiency of
any payment received by it or as to the sufficiency of any performance by any
party thereunder, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts that 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 Revolving
Collateral Agent shall have given notice to the relevant Pledgor of the
Revolving Collateral 



 34
 









Agent’s intent to
exercise its corresponding rights pursuant to subsection 6.3(b) of this Agreement,
each Pledgor shall be permitted to receive all cash dividends and distributions
paid in respect of the Pledged Stock (subject to the last two sentences of
subsection 5.3.1 of this Agreement) and all payments made in respect of the
Pledged Notes, to the extent permitted in the Revolving Credit Agreement, and
to exercise all voting and corporate rights with respect to the Pledged Stock; provided,
however, that no vote shall be cast or corporate right exercised or such
other action taken (other than in connection with a transaction expressly
permitted by the Revolving Credit Agreement) which, in the Revolving Collateral
Agent’s reasonable judgment, would materially impair the Pledged Stock or the
related rights or remedies of the Secured Parties or which would be
inconsistent with or result in any violation of any provision of the Revolving
Credit Agreement, this Agreement or any other Loan Document.


(b)                                 If
an Event of Default shall occur and be continuing and the Revolving Collateral
Agent shall give notice of its intent to exercise such rights to the relevant
Pledgor or Pledgors, (i) the Revolving Collateral Agent, the Term Loan
Collateral Agent or any Additional Agent, as applicable, in accordance with the
terms of the Intercreditor Agreement, shall have the right to receive any and
all cash dividends, payments or other Proceeds paid in respect of the Pledged
Stock and make application thereof to the Obligations of the relevant Pledgor
in such order as is provided in subsection 6.5, and (ii) any or all of the
Pledged Stock shall be registered in the name of the Revolving Collateral Agent
or its nominee, the Term Loan Collateral Agent or any Additional Agent or the
respective nominee thereof, and the Revolving Collateral Agent or its nominee,
the Term Loan Collateral Agent or any Additional Agent or the respective
nominee thereof, as applicable, in accordance with the terms of the
Intercreditor Agreement, may thereafter exercise (x) all voting, corporate and
other rights pertaining to such Pledged Stock at any meeting of shareholders of
the relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange, subscription and any other rights, privileges or options
pertaining to such Pledged Stock as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and
all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by the relevant Pledgor or the Revolving
Collateral Agent, the Term Loan Collateral Agent or any Additional Agent, as
applicable, in accordance with the terms of the Intercreditor Agreement, of any
right, privilege or option pertaining to such Pledged Stock, and in connection
therewith, the right to deposit and deliver any and all of the Pledged Stock
with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as the Revolving Collateral Agent, the
Term Loan Collateral Agent or any Additional Agent, as applicable, in
accordance with the terms of the Intercreditor Agreement, may reasonably
determine), all without liability (other than for its gross negligence or
willful misconduct) except to account for property actually received by it, but
the Revolving Collateral Agent, or the Term Loan Collateral Agent or any
Additional Agent, as applicable, shall have no duty to any Pledgor to exercise
any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing, provided that the Revolving
Collateral Agent, the Term Loan Collateral Agent or any Additional Agent, as
applicable, shall not exercise any voting or other consensual rights pertaining
to the Pledged Stock in any way that would constitute an exercise of the
remedies described in subsection 6.6 other than in accordance with subsection
6.6.



 35
 









(c)                                  Each
Pledgor hereby authorizes and instructs each Issuer or maker of any Pledged
Securities pledged by such Pledgor hereunder to (i) comply with any instruction
received by it from the Revolving Collateral 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 Pledgor, and each Pledgor agrees that each Issuer or
maker shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to the Revolving Collateral Agent.


6.4                                 Proceeds
to Be Turned Over to the Revolving Collateral Agent.  In addition to the rights of the Revolving Collateral
Agent and the other Secured Parties specified in subsection 6.1 with respect to
payments of Accounts Receivable constituting Collateral, if an Event of Default
shall occur and be continuing, and the Revolving Collateral Agent shall have
instructed any Grantor to do so, all Proceeds of Collateral received by such
Grantor consisting of cash, checks and other Cash Equivalent items shall be
held by such Grantor in trust for the Revolving Collateral Agent and the other
Secured Parties hereto, or the Term Loan Collateral Agent and the other Secured
Parties (as defined in the Term Loan Guarantee and Collateral Agreement) or any
Additional Agent and the other applicable Additional Secured Parties (as
defined in the Intercreditor Agreement), as applicable, in accordance with the
terms of the Intercreditor Agreement, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to
the Revolving Collateral Agent, the Term Loan Collateral Agent or any Additional
Agent, as applicable, in accordance with the terms of the Intercreditor
Agreement (or their respective agents appointed for purposes of perfection), in
the exact form received by such Grantor (duly indorsed by such Grantor to the
Revolving Collateral Agent, Term Loan Collateral Agent or any Additional Agent,
as applicable, in accordance with the terms of the Intercreditor Agreement, if
required).  Subject to the terms of the
Intercreditor Agreement, all Proceeds of Collateral received by the Revolving
Collateral Agent hereunder shall be held by the Revolving Collateral Agent in
the relevant Collateral Proceeds Account maintained under its sole dominion and
control.  All Proceeds of Collateral
while held by the Revolving Collateral Agent in such Collateral Proceeds
Account (or by the relevant Grantor in trust for the Revolving Collateral Agent
and the other Secured Parties) shall continue to be held as collateral security
for all the Obligations of such Grantor and shall not constitute payment
thereof until applied as provided in subsection 6.5.


6.5                                 Application
of Proceeds.  It is agreed that if an
Event of Default shall occur and be continuing, any and all Proceeds of the
relevant Granting Party’s Collateral (as defined in the Revolving Credit
Agreement) received by the Revolving Collateral Agent (whether from the
relevant Granting Party or otherwise) shall be held by the Revolving Collateral
Agent for the benefit of the Secured Parties as collateral security for the
Obligations of the relevant Granting Party (whether matured or unmatured),
and/or then or at any time thereafter may, in the sole discretion of the
Revolving Collateral Agent, be applied by the Revolving Collateral Agent
against the Obligations of the relevant Granting Party then due and owing in
the order of priority set forth in the Intercreditor Agreement.


6.6                                 Code
and Other Remedies.  If an Event of
Default shall occur and be continuing, the Revolving Collateral Agent, on
behalf of the Secured Parties, may exercise, in addition to all 



 36
 









other rights and remedies
granted to them in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations to the extent permitted by
applicable law, all rights and remedies of a secured party under the Code or
any other applicable law.  Without limiting
the generality of the foregoing, to the extent permitted by applicable law, the
Revolving Collateral 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 Granting Party or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances, forthwith (subject to the terms of any
documentation governing any Special Purpose Financing) collect, receive, appropriate
and realize upon the Security Collateral, or any part thereof, and/or may
forthwith, subject to any existing reserved rights or licenses, sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver
the Security 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 Revolving Collateral Agent or any other Secured
Party or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. 
The Revolving Collateral Agent or any other Secured Party shall have the
right, to the extent permitted by law, upon any such sale or sales, to purchase
the whole or any part of the Security Collateral so sold, free of any right or
equity of redemption in such Granting Party, which right or equity is hereby
waived and released.  Each Granting Party
further agrees, at the Revolving Collateral Agent’s request (subject to the
terms of any documentation governing any Special Purpose Financing), to
assemble the Security Collateral and make it available to the Revolving
Collateral Agent at places which the Revolving Collateral Agent shall reasonably
select, whether at such Granting Party’s premises or elsewhere.  The Revolving Collateral Agent shall apply
the net proceeds of any action taken by it pursuant to this subsection 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
Security Collateral or in any way relating to the Security Collateral or the
rights of the Revolving Collateral Agent and the other Secured Parties
hereunder, including, without limitation, reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Obligations of the
relevant Granting Party then due and owing, in the order of priority specified
in subsection 6.5 above, and only after such application and after the payment
by the Revolving Collateral Agent of any other amount required by any provision
of law, including, without limitation, Section 9-615(a)(3) of the Code, need
the Revolving Collateral Agent account for the surplus, if any, to such
Granting Party.  To the extent permitted
by applicable law, (i) such Granting Party waives all claims, damages and
demands it may acquire against the Revolving Collateral Agent or any other
Secured Party arising out of the repossession, retention or sale of the Security
Collateral, other than any such claims, damages and demands that may arise from
the gross negligence or willful misconduct of any of the Revolving Collateral
Agent or such other Secured Party, and (ii) if any notice of a proposed sale or
other disposition of Security Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such
sale or other disposition.


6.7                                 Registration
Rights.


(a)                                  If
the Revolving Collateral Agent shall determine to exercise its right to sell
any or all of the Pledged Stock pursuant to subsection 6.6, and if in the
reasonable opinion of the 



 37
 









Revolving Collateral
Agent it is necessary or reasonably advisable to have the Pledged Stock, or
that portion thereof to be sold, registered under the provisions of the
Securities Act, the relevant Pledgor will use its reasonable best efforts to
cause the Issuer thereof to (i) execute and deliver, and use its best efforts
to 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 reasonable opinion of the Revolving Collateral Agent,
necessary or advisable to register such Pledged Stock, or that portion thereof
to be sold, under the provisions of the Securities Act, (ii) use its reasonable
best efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of not more than one year from
the date of the first public offering of such Pledged Stock, or that portion
thereof to be sold, and (iii) make all amendments thereto and/or to the related
prospectus which, in the reasonable opinion of the Revolving Collateral 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.  Such Pledgor agrees
to use its reasonable best efforts to cause such Issuer to comply with the
provisions of the securities or “Blue Sky” laws of any and all states and the
District of Columbia that the Revolving Collateral Agent shall reasonably designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) that will satisfy the provisions
of Section 11(a) of the Securities Act.


(b)                                 Such
Pledgor recognizes that the Revolving Collateral Agent may be unable to effect
a public sale of any or all such 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.  Such Pledgor 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, to the
extent permitted by applicable law, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner.  The Revolving Collateral Agent shall not be
under any 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)                                  Such
Pledgor agrees to use its reasonable 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 such Pledged Stock pursuant to this subsection 6.7 valid and binding and in
compliance with any and all other applicable Requirements of Law.  Such Pledgor further agrees that a breach of
any of the covenants contained in this subsection 6.7 will cause irreparable
injury to the Revolving Collateral Agent and the Lenders, that the Revolving
Collateral Agent and the Lenders have no adequate remedy at law in respect of
such breach and, as a consequence, that each and every covenant contained in
this subsection 6.7 shall be specifically enforceable against such Pledgor,
and, to the extent permitted by applicable law, such Pledgor 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 or is
continuing under the Revolving Credit Agreement.



 38
 









6.8                                 Waiver;
Deficiency  Each Granting Party shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Security Collateral are insufficient to pay in full, the
Loans, Reimbursement Obligations constituting Obligations of such Granting
Party and, to the extent then due and owing, all other Obligations of such
Granting Party and the reasonable fees and disbursements of any attorneys
employed by the Revolving Collateral Agent or any other Secured Party to
collect such deficiency.


SECTION 7                                   THE
COLLATERAL AGENT


7.1                                 Revolving
Collateral Agent’s Appointment as Attorney-in-Fact, etc.


(a)                                  Each
Granting Party hereby irrevocably constitutes and appoints the Revolving
Collateral Agent and any authorized 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 Granting Party and in the
name of such Granting Party 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 that may be reasonably necessary
or desirable to accomplish the purposes of this Agreement to the extent
permitted by applicable law, provided that the Revolving Collateral
Agent agrees not to exercise such power except upon the occurrence and during
the continuance of any Event of Default. 
Without limiting the generality of the foregoing, at any time when an
Event of Default has occurred and is continuing (in each case to the extent
permitted by applicable law), (x) each Pledgor hereby gives the Revolving Collateral
Agent the power and right, on behalf of such Pledgor, without notice or assent
by such Pledgor, to execute, in connection with any sale provided for in
subsection 6.6(a) or 6.7, any indorsements, assessments or other instruments of
conveyance or transfer with respect to such Pledgor’s Pledged Collateral, and
(y) each Grantor hereby gives the Revolving Collateral 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)                  subject to the terms of any
documentation governing any Special Purpose Financing, 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 Account Receivable of such Grantor that
constitutes Collateral or with respect to any other Collateral of such Grantor
and file any claim or take any other action or institute any proceeding in any
court of law or equity or otherwise deemed appropriate by the Revolving
Collateral Agent for the purpose of collecting any and all such moneys due
under any Account Receivable of such Grantor that constitutes Collateral or
with respect to any other Collateral of such Grantor whenever payable;


(ii)               in the case of any Copyright, Patent, or
Trademark constituting Collateral of such Grantor, execute and deliver any and
all agreements, instruments, documents and papers as the Revolving Collateral
Agent may reasonably request to such Grantor to evidence the Revolving
Collateral Agent’s and the Lenders’ security interest in such Copyright,
Patent, or Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby;



 39
 









(iii)            pay or discharge taxes and Liens, other
than Liens permitted under this Agreement or the other Loan Documents, levied
or placed on the Collateral of such Grantor, 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; and


(iv)           subject to the terms of any documentation
governing any Special Purpose Financing, (A) direct any party liable for any
payment under any of the Collateral of such Grantor to make payment of any and
all moneys due or to become due thereunder directly to the Revolving Collateral
Agent or as the Revolving Collateral Agent shall direct; (B) ask or demand for,
collect, 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 of such Grantor; (C) 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 of such Grantor; (D) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral of such Grantor or any portion thereof
and to enforce any other right in respect of any Collateral of such Grantor;
(E) defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral of such Grantor; (F) settle, compromise or adjust any
such suit, action or proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as the Revolving Collateral
Agent may deem appropriate; (G) subject to any existing reserved rights or licenses,
assign any Copyright, Patent or Trademark constituting Collateral of such
Grantor (along with the goodwill of the business to which any such Copyright,
Patent or Trademark pertains), for such term or terms, on such conditions, and
in such manner, as the Revolving Collateral Agent shall in its sole discretion
determine; and (H) generally, sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral of such Grantor as
fully and completely as though the Revolving Collateral Agent were the absolute
owner thereof for all purposes, and do, at the Revolving Collateral Agent’s
option and such Grantor’s expense, at any time, or from time to time, all acts
and things which the Revolving Collateral Agent deems necessary to protect,
preserve or realize upon the Collateral of such Grantor and the Revolving
Collateral Agent’s and the other Secured Parties’ security interests therein
and to effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.


(b)                                 The
reasonable expenses of the Revolving Collateral Agent incurred in connection
with actions undertaken as provided in this subsection 7.1, together with
interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due ABR Loans, from the date of payment
by the Revolving Collateral Agent to the date reimbursed by the relevant
Granting Party, shall be payable by such Granting Party to the Revolving Collateral
Agent on demand.



 40















(c)                                  Each Granting Party
hereby ratifies all that said attorney 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 as to the relevant Granting Party until this
Agreement is terminated as to such Granting Party, and the security interests
in the Security Collateral of such Granting Party created hereby are released.


7.2                                 Duty of Revolving
Collateral Agent.  The Revolving
Collateral Agent’s sole duty with respect to the custody, safekeeping and
physical preservation of the Security Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in the same
manner as the Revolving Collateral Agent deals with similar property for its
own account.  None of the Revolving Collateral
Agent, any other Secured Party nor any of their respective officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Security Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Security Collateral
upon the request of any Granting Party or any other Person or, except as
otherwise provided herein, to take any other action whatsoever with regard to
the Security Collateral or any part thereof. 
The powers conferred on the Revolving Collateral Agent and the other
Secured Parties hereunder are solely to protect the Revolving Collateral Agent’s
and the other Secured Parties’ interests in the Security Collateral and shall
not impose any duty upon the Revolving Collateral Agent or any other Secured
Party to exercise any such powers.  The
Revolving Collateral Agent and the other Secured Parties shall be accountable
only for amounts that they actually receive as a result of the exercise of such
powers, and neither they nor any of their officers, directors, employees or
agents shall be responsible to any Granting Party for any act or failure to act
hereunder, except as otherwise provided herein or for their own gross
negligence or willful misconduct.


7.3                                 Execution
of Financing Statements.  Pursuant to
any applicable law, each Granting Party authorizes the Revolving Collateral
Agent to file or record financing statements and other filing or recording
documents or instruments with respect to such Granting Party’s Security
Collateral without the signature of such Granting Party in such form and in
such filing offices as the Revolving Collateral Agent reasonably determines
appropriate to perfect the security interests of the Revolving Collateral Agent
under this Agreement.  Each Granting
Party authorizes the Revolving Collateral Agent to use the collateral
description “all personal property” or “all assets” in any such financing
statements.  The Revolving Collateral
Agent agrees to notify the relevant Granting Party of any financing or
continuation statement filed by it; provided that any failure to give such
notice shall not affect the validity or effectiveness of any such filing.


7.4                                 Authority
of Revolving Collateral Agent.  Each
Granting Party acknowledges that the rights and responsibilities of the
Revolving Collateral Agent under this Agreement with respect to any action
taken by the Revolving Collateral Agent or the exercise or non-exercise by the
Revolving Collateral Agent of any option, voting right, request, judgment or
other right or remedy provided for herein or resulting or arising out of this
Agreement or any amendment, supplement or other modification of this Agreement
shall, as between the Revolving Collateral Agent and the Secured Parties, be
governed by the Revolving Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Revolving Collateral Agent and the Granting Parties, the Revolving Collateral
Agent shall be conclusively presumed to be acting as agent for the Secured
Parties with full and valid 



 41
 









authority so to act or
refrain from acting, and no Granting Party shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.


7.5                                 Right
of Inspection.  Upon reasonable
written advance notice to any Grantor and as often as may reasonably be
desired, or at any time and from time to time after the occurrence and during
the continuation of an Event of Default, the Revolving Collateral Agent shall
have reasonable access during normal business hours to all the books,
correspondence and records of such Grantor, and the Revolving Collateral Agent
and its representatives may examine the same, and to the extent reasonable take
extracts therefrom and make photocopies thereof, and such Grantor agrees to
render to the Revolving Collateral Agent, at such Grantor’s reasonable cost and
expense, such clerical and other assistance as may be reasonably requested with
regard thereto.  The Revolving Collateral
Agent and its representatives shall also have the right, upon reasonable
advance written notice to such Grantor subject to any lease restrictions, to
enter during normal business hours into and upon any premises owned, leased or
operated by such Grantor where any of such Grantor’s Inventory or Equipment is
located for the purpose of inspecting the same, observing its use or otherwise
protecting its interests therein.


SECTION 8                                   NON-LENDER
SECURED PARTIES


8.1                                 Rights
to Collateral.


(a)                                  The
Non-Lender Secured Parties shall not have any right whatsoever to do any of the
following:  (i) exercise any rights or
remedies with respect to the Collateral (such term, as used in this Section 8,
having the meaning assigned to it in the Revolving Credit Agreement),
including, without limitation, the right to (A) enforce any Liens or sell or
otherwise foreclose on any portion of the Collateral, (B) request any action,
institute any proceedings, exercise any voting rights, give any instructions,
make any election, notice account debtors or make collections with respect to
all or any portion of the Collateral or (C) release any Guarantor under this
Agreement or release any Collateral from the Liens of any Security Document or
consent to or otherwise approve any such release; (ii) demand, accept or obtain
any Lien on any Collateral (except for Liens arising under, and subject to the
terms of, this Agreement); (iii) vote in any Bankruptcy Case or similar
proceeding in respect of Holding  or any
of its Subsidiaries (any such proceeding, for purposes of this clause (a), a “Bankruptcy”)
with respect to, or take any other actions concerning, the Collateral; (iv)
receive any proceeds from any sale, transfer or other disposition of any of the
Collateral (except in accordance with this Agreement); (v) oppose any sale,
transfer or other disposition of the Collateral; (vi) object to any
debtor-in-possession financing in any Bankruptcy which is provided by one or
more Lenders among others (including on a priming basis under Section 364(d) of
the Bankruptcy Code); (vii) object to the use of cash collateral in respect of
the Collateral in any Bankruptcy; or (viii) seek, or object to the Lenders
seeking on an equal and ratable basis, any adequate protection or relief from
the automatic stay with respect to the Collateral in any Bankruptcy.


(b)                                 Each Non-Lender
Secured Party, by its acceptance of the benefits of this Agreement and the
other Security Documents, agrees that in exercising rights and remedies with respect
to the Collateral, the Revolving Collateral Agent and the Lenders, with the
consent of the Revolving Collateral Agent, may enforce the provisions of the
Security Documents and exercise remedies thereunder and under any other Loan
Documents (or refrain from enforcing rights and 



 42
 









exercising remedies), all in such order and in such manner as they may
determine in the exercise of their sole business judgment.  Such exercise and enforcement shall include,
without limitation, the rights to collect, sell, dispose of or otherwise
realize upon all or any part of the Collateral, to incur expenses in connection
with such collection, sale, disposition or other realization and to exercise
all the rights and remedies of a secured lender under the Uniform Commercial
Code of any applicable jurisdiction.  The
Non-Lender Secured Parties by their acceptance of the benefits of this
Agreement and the other Security Documents hereby agree not to contest or
otherwise challenge any such collection, sale, disposition or other realization
of or upon all or any of the Collateral. 
Whether or not a Bankruptcy Case has been commenced, the Non-Lender
Secured Parties shall be deemed to have consented to any sale or other disposition
of any property, business or assets of Holding or any of its Subsidiaries and
the release of any or all of the Collateral from the Liens of any Security
Document in connection therewith.


(c)                                  Notwithstanding any
provision of this subsection 8.1, the Non-Lender Secured Parties shall be
entitled to file any necessary responsive or defensive pleadings in opposition
to any motion, claim, adversary proceeding or other pleadings (A) in order to
prevent any Person from seeking to foreclose on the Collateral or supersede the
Non-Lender Secured Parties’ claim thereto or (B) in opposition to any motion,
claim, adversary proceeding or other pleading made by any Person objecting to
or otherwise seeking the disallowance of the claims of the Non-Lender Secured
Parties.


(d)                                 Each Non-Lender
Secured Party, by its acceptance of the benefit of this Agreement, agrees that
the Revolving Collateral Agent and the Lenders may deal with the Collateral,
including any exchange, taking or release of Collateral, may change or increase
the amount of the Borrower Obligations and/or the Guarantor Obligations, and
may release any Guarantor from its Obligations hereunder, all without any
liability or obligation (except as may be otherwise expressly provided herein)
to the Non-Lender Secured Parties.


8.2                                 Appointment
of Agent.  Each Non-Lender Secured
Party, by its acceptance of the benefits of this Agreement and the other
Security Documents, shall be deemed irrevocably to make, constitute and appoint
the Revolving Collateral Agent, as agent under the Revolving Credit Agreement
(and all officers, employees or agents designated by the Revolving Collateral
Agent) as such Person’s true and lawful agent and attorney-in-fact, and in such
capacity, the Revolving Collateral Agent shall have the right, with power of
substitution for the Non-Lender Secured Parties and in each such Person’s name
or otherwise, to effectuate any sale, transfer or other disposition of the
Collateral.  It is understood and agreed
that the appointment of the Revolving Collateral Agent as the agent and attorney-in-fact
of the Non-Lender Secured Parties for the purposes set forth herein is coupled
with an interest and is irrevocable.  It
is understood and agreed that the Revolving Collateral Agent has appointed the
Administrative Agent as its agent for purposes of perfecting certain of the
security interests created hereunder and for otherwise carrying out certain of
its obligations hereunder.


8.3                                 Waiver
of Claims.  To the maximum extent
permitted by law, each Non-Lender Secured Party waives any claim it might have
against the Revolving Collateral Agent or the Lenders with respect to, or
arising out of, any action or failure to act or any error of judgment,
negligence, or mistake or oversight whatsoever on the part of the Revolving
Collateral Agent or the Lenders or their respective directors, officers,
employees or agents with respect to any exercise



 43
 









of rights or remedies
under the Loan Documents or any transaction relating to the Collateral
(including, without limitation, any such exercise described in subsection
8.1(b) above), except for any such action or failure to act which constitutes
willful misconduct or gross negligence of such Person.  None of the Revolving Collateral Agent or any
Lender or any of their respective directors, officers, 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 Holding, any
Subsidiary of Holding, any Non-Lender Secured Party or any other Person or to
take any other action or forbear from doing so whatsoever with regard to the
Collateral or any part thereof, except for any such action or failure to act
which constitutes willful misconduct or gross negligence of such Person.


SECTION 9                                   MISCELLANEOUS


9.1                                 Amendments
in Writing.  None of the terms or provisions
of this Agreement may be waived, amended, supplemented or otherwise modified
except by a written instrument executed by each affected Granting Party and the
Revolving Collateral Agent; provided that (a) any provision of this Agreement
imposing obligations on any Granting Party may be waived by the Revolving
Collateral Agent in a written instrument executed by the Revolving Collateral
Agent and (b) notwithstanding anything to the contrary in subsection 10.1 of
the Revolving Credit Agreement, no such waiver and no such amendment or
modification shall amend, modify or waive the definition of “Secured Party” or
subsection 6.5 if such waiver, amendment, or modification would adversely
affect a Secured Party without the written consent of each such affected
Secured Party.  For the avoidance of
doubt, it is understood and agreed that any amendment, amendment and restatement,
waiver, supplement or other modification of or to the Intercreditor Agreement
that would have the effect, directly or indirectly, through any reference
herein to the Intercreditor Agreement or otherwise, of waiving, amending,
supplementing or otherwise modifying this Agreement, or any term or provision
hereof, or any right or obligation of any Granting Party hereunder or in
respect hereof, shall not be given such effect except pursuant to a written
instrument executed by each affected Granting Party and the Revolving
Collateral Agent in accordance with this subsection 9.1.


9.2                                 Notices.  All notices, requests and demands to or upon
the Revolving Collateral Agent or any Granting Party hereunder shall be
effected in the manner provided for in subsection 10.2 of the Revolving 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, unless and until such Guarantor shall change such address
by notice to the Revolving Collateral Agent and the Administrative Agent given
in accordance with subsection 10.2 of the Revolving Credit Agreement.


9.3                                 No
Waiver by Course of Conduct; Cumulative Remedies.  None of the Revolving Collateral Agent or any
other Secured Party shall by any act (except by a written instrument pursuant
to subsection 9.1), 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 Revolving Collateral
Agent or any other Secured Party, any right, power or privilege hereunder shall
operate as a waiver thereof.  No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.  A waiver by the 



 44
 









Revolving Collateral
Agent or any other Secured Party of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Revolving Collateral Agent or such other Secured Party would otherwise have on
any future occasion.  The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
law.


9.4                                 Enforcement
Expenses; Indemnification.


(a)                                  Each
Guarantor jointly and severally agrees to pay or reimburse each Secured Party
and the Revolving Collateral Agent for all their respective reasonable costs
and expenses incurred in collecting against any Guarantor under the guarantee
contained in Section 2 or otherwise enforcing or preserving any rights under
this Agreement against such Guarantor and the other Loan Documents to which
such Guarantor is a party, including, without limitation, the reasonable fees
and disbursements of counsel to the Secured Parties, the Revolving Collateral
Agent and the Administrative Agent.


(b)                                 Each Grantor jointly
and severally agrees to pay, and to save the Revolving Collateral Agent, the
Administrative Agent and the other Secured Parties harmless from, (x) any and
all liabilities with respect to, or resulting from any delay in paying, any and
all stamp, excise, sales or other similar taxes which may be payable or
determined to be payable with respect to any of the Security Collateral or in
connection with any of the transactions contemplated by this Agreement and (y)
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 (collectively, the “indemnified liabilities”), in each
case to the extent the Parent Borrower would be required to do so pursuant to
subsection 10.5 of the Revolving Credit Agreement, and in any event excluding
any taxes or other indemnified liabilities arising from gross negligence or
willful misconduct of the Revolving Collateral Agent, the Administrative Agent
or any other Secured Party.


(c)                                  The agreements in
this subsection 9.4 shall survive repayment of the Obligations and all other
amounts payable under the Revolving Credit Agreement and the other Loan Documents.


9.5                         Successors
and Assigns.  This Agreement shall be
binding upon and shall inure to the benefit of the Granting Parties, the
Revolving Collateral Agent and the Secured Parties and their respective
successors and assigns; provided that no Granting Party may assign, transfer or
delegate any of its rights or obligations under this Agreement without the
prior written consent of the Revolving Collateral Agent.


9.6                         Set-Off.  Each Guarantor hereby irrevocably authorizes
each of the Administrative Agent and the Revolving Collateral Agent and each
other Secured Party at any time and from time to time without notice to such
Guarantor, any other Guarantor or any of the Borrowers, any such notice being
expressly waived by each Guarantor and by such Borrower, to the extent
permitted by applicable law, upon the occurrence and during the continuance of
an Event of Default under subsection 8(a) of the Revolving Credit Agreement so
long as any amount remains unpaid after it becomes due and payable by such
Guarantor hereunder, to set off and appropriate and apply against any such amount
any and all deposits (general or special, time or demand, 



 45
 









provisional or final) (other than the Collateral Proceeds Account), 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 Revolving Collateral Agent, the
Administrative Agent or such other Secured Party to or for the credit or the
account of such Guarantor, or any part thereof in such amounts as the Revolving
Collateral Agent, the Administrative Agent or such other Secured Party may
elect.  The Revolving Collateral Agent,
the Administrative Agent and each other Secured Party shall notify such
Guarantor promptly of any such set-off and the application made by the
Revolving Collateral Agent, the Administrative Agent or such other Secured
Party 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 Revolving Collateral Agent,
the Administrative Agent and each other Secured Party under this subsection 9.6
are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Revolving Collateral Agent, the Administrative
Agent or such other Secured Party may have.


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


9.8                                 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; provided that, with
respect to any Pledged Stock issued by a Foreign Subsidiary, all rights, powers
and remedies provided in this Agreement may be exercised only to the extent
that they do not violate any provision of any law, rule or regulation of any
Governmental Authority applicable to any such Pledged Stock or affecting the
legality, validity or enforceability of any of the provisions of this Agreement
against the Pledgor (such laws, rules or regulations, “Applicable Law”)
and are intended to be limited to the extent necessary so that they will not
render this Agreement invalid, unenforceable or not entitled to be recorded,
registered or filed under the provisions of any Applicable Law.


9.9                                 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.


9.10                           Integration.  This Agreement and the other Loan Documents
represent the entire agreement of the Granting Parties, the Revolving
Collateral Agent, the Administrative Agent and the other Secured Parties with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Granting Parties, the Revolving Collateral
Agent or any other Secured Party relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.


9.11                           GOVERNING
LAW.  THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.



 46
 









9.12                           Submission
to Jurisdiction; Waivers.  Each party
hereto hereby irrevocably and unconditionally:


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


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


(c)                                  agrees that service
of process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to such party at its address referred to in subsection
9.2 or at such other address of which the Revolving Collateral Agent and the
Administrative Agent (in the case of any other party hereto) or the Parent Borrower
(in the case of the Revolving Collateral Agent and 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 punitive damages.


9.13                           Acknowledgments.  Each Granting Party hereby acknowledges that:


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


(b)                                 none of the Revolving
Collateral Agent, the Administrative Agent or any other Secured Party has any
fiduciary relationship with or duty to any Guarantor arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Guarantors, on the one hand, and the Revolving
Collateral Agent, the Administrative Agent and the other Secured Parties, on
the other hand, in connection herewith or therewith is solely that of debtor
and creditor; and


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



 47
 









9.14                           WAIVER OF JURY TRIAL.  EACH PARTY
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.


9.15                           Additional Granting
Parties.  Each new Subsidiary of the
Parent Borrower that is required to become a party to this Agreement pursuant to
subsection 6.9(b) of the Revolving Credit Agreement shall become a Granting
Party for all purposes of this Agreement upon execution and delivery by such
Subsidiary of an Assumption Agreement in substantially the form of Annex 2
hereto.  Each existing Granting Party
that is required to become a Pledgor with respect to Capital Stock of any new
Subsidiary of the Parent Borrower that is not a Significant Subsidiary pursuant
to subsection 6.9(b) of the Revolving Credit Agreement shall become a Pledgor
with respect thereto upon execution and delivery by such Granting Party of a
Supplemental Agreement in substantially the form of Annex 3 hereto.


9.16                           Releases.


(a)                                  At such time as the
Loans, the Reimbursement Obligations and the other Obligations (other than any
Obligations owing to a Non-Lender Secured Party) then due and owing shall have
been paid in full and the Revolving Commitments have been terminated and no Letters
of Credit shall be outstanding (except for Letters of Credit that have been
cash collateralized in a manner satisfactory to the Issuing Bank), all Security
Collateral shall be automatically released from the Liens created hereby, and
this Agreement and all obligations (other than those expressly stated to
survive such termination) of the Revolving Collateral Agent and each Granting
Party hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Security Collateral
shall revert to the Granting Parties.  At
the request and sole expense of any Granting Party following any such
termination, the Revolving Collateral Agent shall deliver to such Granting
Party any Security Collateral held by the Revolving Collateral Agent hereunder,
and the Revolving Collateral Agent and the Administrative Agent shall execute
and deliver to such Granting Party such documents (including without limitation
UCC termination statements) as such Granting Party shall reasonably request to
evidence such termination.


(b)                                 In connection with any
sale or other disposition of Security Collateral permitted by the Revolving
Credit Agreement (other than any sale or disposition to another Grantor), the
Lien pursuant to this Agreement on such sold or disposed of Security Collateral
shall be automatically released.  In
connection with the sale or other disposition of all of the Capital Stock of
any Guarantor (other than to the Parent Borrower or a Restricted Subsidiary) or
the sale or other disposition of Security Collateral (other than a sale or
disposition to another Grantor) permitted under the Revolving Credit Agreement,
the Revolving Collateral Agent shall, upon receipt from the Parent Borrower of
a written request for the release of such Guarantor from its Guarantee or the
release of the Security Collateral subject to such sale or other disposition,
identifying such Guarantor or the relevant Security Collateral 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
Parent Borrower stating that such transaction is in compliance with the Revolving
Credit Agreement and the other Loan Documents, deliver to the Parent Borrower
or the relevant Granting Party any of the relevant Security Collateral held by
the Revolving Collateral



 48
 









Agent hereunder and the Revolving Collateral Agent and the
Administrative Agent shall execute and deliver to the relevant Granting Party
(at the sole cost and expense of such Granting Party) all releases or other
documents (including without limitation UCC termination statements) necessary
or reasonably desirable for the release of such Guarantee or the Liens created
hereby on such Security Collateral, as applicable, as such Granting Party may
reasonably request.


(c)                                  Upon the designation
of any Granting Party as an Unrestricted Subsidiary in accordance with the
provisions of the Revolving Credit Agreement, the Lien pursuant to this
Agreement on all Security Collateral of such Granting Party (if any) shall be
automatically released, and the Guarantee (if any) of such Granting Party, and
all obligations of such Granting Party hereunder, shall terminate, all without
delivery of any instrument or performance of any act by any party and the
Revolving Collateral Agent shall, upon the request of the Parent Borrower,
deliver to such Granting Party any Security Collateral of such Granting Party
held by the Revolving Collateral Agent hereunder and the Revolving Collateral
Agent and the Administrative Agent shall execute and deliver to such Granting Party
(at the sole cost and expense of such Granting Party) all releases or other
documents (including without limitation UCC termination statements) necessary
or reasonably desirable for the release of such Granting Party from its
Guarantee (if any) or the Liens created hereby (if any) on such Granting Party’s
Security Collateral, as applicable, as such Granting Party may reasonably request.


(d)                                 Upon the designation
of any Issuer that is a Subsidiary of any Granting Party as an Unrestricted
Subsidiary in accordance with the provisions of the Revolving Credit Agreement,
the Lien pursuant to this Agreement on all Pledged Stock issued by such Issuer
shall be automatically released, all without delivery of any instrument or
performance of any act by any party and the Revolving Collateral Agent shall,
upon the request of the Parent Borrower, deliver to such Granting Party any
such Pledged Stock held by the Revolving Collateral Agent hereunder and the
Revolving Collateral Agent and the Administrative Agent shall execute and deliver
to the relevant Granting Party (at the sole cost and expense of such Granting
Party) all releases or other documents (including without limitation UCC
termination statements) necessary or reasonably desirable for the release of
the Liens created hereby on such Pledged Stock, as applicable, as such Granting
Party may reasonably request.


9.17                           Judgment.


(a)                                  If for the purpose of
obtaining judgment in any court it is necessary to convert a sum due hereunder
in one currency into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Revolving
Collateral Agent could purchase the first currency with such other currency on
the Business Day preceding the day on which final judgment is given.


(b)                                 The obligations of any
Guarantor in respect of this Agreement to the Revolving Collateral Agent, for
the benefit of each holder of Secured Obligations, shall, notwithstanding any
judgment in a currency (the “judgment currency”) other than the currency
in which the sum originally due to such holder is denominated (the “original
currency”), be discharged only to the extent that on the Business Day
following receipt by the Revolving Collateral Agent of any sum adjudged to be
so due in the judgment currency, the Revolving Collateral Agent may in 



 49
 









accordance with normal banking procedures purchase the original
currency with the judgment currency; if the amount of the original currency so
purchased is less than the sum originally due to such holder in the original
currency, such Guarantor agrees, as a separate obligation and notwithstanding
any such judgment, to indemnify the Revolving Collateral Agent for the benefit
of such holder, against such loss, and if the amount of the original currency
so purchased exceeds the sum originally due to the Revolving Collateral Agent,
the Revolving Collateral Agent agrees to remit to the Parent Borrower, such
excess.  This covenant shall survive the
termination of this Agreement and payment of the Obligations and all other
amounts payable hereunder.


[Remainder
of page left blank intentionally; Signature pages follow.]



 50















IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed, all as of the date first written above.


	
  

  	
  CDRSVM HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Theresa A. Gore

  
	
   

  	
   

  	
  Name:

  	
  Theresa A. Gore

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE SERVICEMASTER COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President & Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INSTAR SERVICES GROUP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Demos

  
	
   

  	
   

  	
  Name:

  	
  David J. Demos

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer, President & Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard J. Augustine

  
	
   

  	
   

  	
  Name:

  	
  Richard J. Augustine

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 













 


	
  

  	
  INSTAR SERVICES GROUP, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  INSTAR SERVICES MANAGEMENT, LLC, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INSTAR SERVICES HOLDINGS, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INSTAR SERVICES MANAGEMENT, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 



 2
 









 


	
  

  	
  MERRY MAIDS LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  MM MAIDS L.L.C., its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Vice President & Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MM MAIDS L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Vice President & Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SERVICEMASTER CONSUMER SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  President & Chief Operating Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 



 3
 









 


	
  

  	
  SERVICEMASTER CONSUMER SERVICES LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  SERVICEMASTER CONSUMER SERVICES, INC., its general
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  President & Chief Operating Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SERVICEMASTER HOLDING CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SERVICEMASTER MANAGEMENT CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 



 4
 









 


	
  

  	
  SERVICEMASTER RESIDENTIAL/COMMERCIAL SERVICES
  LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SM CLEAN L.L.C., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SM CLEAN L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TERMINIX INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 



 5
 









 


	
  

  	
  THE TERMINIX INTERNATIONAL COMPANY LIMITED
  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TERMINIX INTERNATIONAL, INC., its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TRUGREEN COMPANIES L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TRUGREEN, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jim L. Kaput

  
	
   

  	
   

  	
  Name:

  	
  Jim L. Kaput

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 



 6
 









 


	
  

  	
  TRUGREEN LANDCARE L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ernest J. Mrozek

  
	
   

  	
   

  	
  Name:

  	
  Ernest J. Mrozek

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Vice President & Assistant Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TRUGREEN LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TRUGREEN, INC., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jim L. Kaput

  
	
   

  	
   

  	
  Name:

  	
  Jim Kaput

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Zarnikow

  
	
   

  	
   

  	
  Name:

  	
  Eric Zarnikow

  
	
   

  	
   

  	
  Title:

  	
  Assistant Treasurer

  



 


 



 7
 









 


	
  Acknowledged and Agreed to as of

  	
   

  	
   

  
	
  the date hereof by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CITIBANK, N.A.,

  	
   

  	
   

  
	
  as Administrative Agent and Collateral Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Edward T. Crook

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Edward T. Crook

  	
   

  	
   

  
	
   

  	
  Title: Managing Director

  	
   

  	
   

  
							



 



 8