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                                                                     EXHIBIT 4.2

                     BORROWER PLEDGE AND SECURITY AGREEMENT


     THIS PLEDGE AND SECURITY AGREEMENT, dated as of the 6th day of October,
1997 (this "Agreement"), is made by PETERSEN PUBLISHING COMPANY, L.L.C., a
Delaware limited liability company (the "Pledgor"), in favor of FIRST UNION
NATIONAL BANK, as administrative agent for the banks and other financial
institutions (collectively, the "Lenders") party to the Credit Agreement
referred to below (in such capacity, the "Administrative Agent"), for the
benefit of the Secured Parties (as hereinafter defined).  Capitalized terms used
herein without definition shall have the meanings given to them in the Credit
Agreement referred to below.


                                   RECITALS

     A.   The Petersen Companies, Inc., the Pledgor, the Lenders, First Union
National Bank, as Administrative Agent, and CIBC Inc., as Documentation Agent,
are parties to a Credit Agreement, dated as of October 6, 1997 (as amended,
modified or supplemented from time to time, the "Credit Agreement"), providing
for the availability of certain credit facilities to the Pledgor upon the terms
and subject to the conditions set forth therein.

     B.   It is a condition to the extension of credit to the Pledgor under the
Credit Agreement that the Pledgor shall have agreed, by executing and delivering
this Agreement, to secure the payment in full of its Obligations under the
Credit Agreement and the other Credit Documents.  The Secured Parties are
relying on this Agreement in their decision to extend credit to the Pledgor
under the Credit Agreement, and would not enter into the Credit Agreement
without this Agreement.


                             STATEMENT OF AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to induce the Secured Parties to enter into the Credit Agreement
and to induce the Lenders to extend credit to the Pledgor thereunder, the
Pledgor hereby agrees as follows:


                                   ARTICLE I

                                  DEFINITIONS

     1.1  Defined Terms.  For purposes of this Agreement, in addition to the
          -------------                                                     
terms defined elsewhere herein, the following terms shall have the meanings set
forth below:

     "Accounts" shall mean, collectively, all of the Pledgor's accounts, as
defined in the Uniform Commercial Code, whether now owned or existing or
hereafter acquired or arising, including, without limitation, all of the
Pledgor's accounts receivable, all rights to payment for goods sold or leased or
to be sold or to be leased (including all rights to returned or repossessed
goods) or for services rendered at any time or for services to be rendered
(including any rights to stoppage in transit, repossession and reclamation and
other rights of an unpaid vendor or secured party), all rights 
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under or evidenced by book debts, notes, bills, drafts or acceptances, all
Instruments evidencing or relating to any of the foregoing, and all rights under
security agreements, guarantees, indemnities and other instruments and contracts
securing or otherwise relating to any of the foregoing, in each case whether now
owned or existing or hereafter acquired or arising.

     "Collateral" shall have the meaning given to such term in SECTION 2.1.

     "Collateral Accounts" shall have the meaning given to such term in SECTION
6.3.

     "Contracts" shall mean, collectively, all rights of the Pledgor under all
leases, contracts and agreements to which the Pledgor is now or hereafter a
party, including, without limitation, all rights, privileges and powers, whether
for payment or performance, under distribution agreements, printing service
agreements and promotional and marketing agreements, and all rights, privileges
and powers under Investment Agreements and Licenses as more particularly
described in the definitions of such terms herein, together with any and all
extensions, modifications, amendments and renewals of such contracts and
agreements and all rights of the Pledgor to receive moneys due or to become due
thereunder or pursuant thereto and to amend, modify, terminate or exercise
rights under such contracts and agreements, but excluding rights under (but not
excluding proceeds of) any lease, agreement, license (including without
limitation any License) or contract that by the terms thereof, or under
applicable law, cannot be assigned or a security interest granted therein in the
manner contemplated by this Agreement unless consent from the relevant party or
parties has been obtained and under the terms of which lease, agreement or
contract any such assignment or grant of a security interest therein in the
absence of such consent would, or could, result in the termination thereof, but
only to the extent that (y) such rights are subject to such contractual or legal
restriction and (z) such restriction has not been rendered ineffective pursuant
to the Uniform Commercial Code of any relevant jurisdiction or any other
applicable law (including the Bankruptcy Code) or principles of equity.

     "Copyrights" shall mean, collectively, all of the Pledgor's copyrights,
copyright registrations and applications for copyright registration, whether
under the laws of the United States or any other country or jurisdiction,
including all recordings, supplemental registrations and derivative or
collective work registrations, and all renewals and extensions thereof, in each
case whether now owned or existing or hereafter acquired or arising.

     "Copyright Collateral" shall mean, collectively, (i) all Copyrights and
(ii) all Copyright Licenses to which the Pledgor is or hereafter becomes a party
and all other General Intangibles embodying, incorporating, evidencing or
otherwise relating or pertaining to any Copyrights, in each case whether now
owned or existing or hereafter acquired or arising.

     "Copyright License" shall mean any agreement now or hereafter in effect
granting any right to any third party under any Copyright now or hereafter owned
by the Pledgor or which the Pledgor otherwise has the right to license, or
granting any right to the Pledgor under any property of the type described in
the definition of Copyright herein now or hereafter owned by any third party,
and all rights of the Pledgor under any such agreement.

     "Deposit Accounts" shall mean, collectively, all of the Pledgor's deposit
accounts, whether maintained with the Administrative Agent or any other bank or
depository institution, in each case whether now owned or existing or hereafter
acquired or arising and including, without limitation, any 

                                      -2-
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Collateral Account, together with all funds held from time to time therein and
all certificates and instruments from time to time representing, evidencing or
deposited into such accounts.

     "Equipment" shall mean, collectively, all of the Pledgor's equipment, as
defined in the Uniform Commercial Code, whether now owned or existing or
hereafter acquired or arising, including, without limitation, all machinery,
equipment, computer equipment and software, parts, supplies, appliances,
fittings, furniture and fixtures of every kind and nature, wherever located and
whether or not affixed to any real property, all Mobile Goods, and all
accessions, accessories, additions, attachments, improvements, modifications and
upgrades to, replacements of and substitutions for the foregoing, in each case
whether now owned or existing or hereafter acquired or arising.

     "General Intangibles" shall mean, collectively, all of the Pledgor's
general intangibles, as defined in the Uniform Commercial Code, whether now
owned or existing or hereafter acquired or arising, including, without
limitation, all Contracts, all Copyright Collateral, Patent Collateral and
Trademark Collateral, all inventions, designs, trade secrets, trade processes,
confidential or proprietary technical or business information, know-how,
registrations, licenses, permits and franchises, all rights under or evidenced
by book debts, notes, bills, drafts, acceptances, chooses in action, causes of
action or Instruments, all indebtedness, obligations and other amounts at any
time owing to the Pledgor from any Person and all interest, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such indebtedness,
obligations or other amounts (including, without limitation, all Intercompany
Obligations), all judgments, tax refund claims, claims against carriers and
shippers, claims under liens and insurance policies, all rights under security
agreements, guarantees, indemnities and other instruments and contracts securing
or otherwise relating to any of the foregoing, all invoices, customer lists,
books and records, ledger and account cards, computer tapes, disks, software,
printouts and other corporate or business records relating to the foregoing, and
all other intangible personal property of every kind and nature, and all
accessions, additions, improvements, modifications and upgrades to, replacements
of and substitutions for the foregoing, in each case whether now owned or
existing or hereafter acquired or arising, but excluding Accounts and excluding
leases, agreements, licenses (including without limitation Licenses) and
contracts to the extent excluded from Contracts under the definition of such
term herein.

     "Instruments" shall mean, collectively, all instruments, chattel paper or
documents, each as defined in the Uniform Commercial Code, of the Pledgor,
whether now owned or existing or hereafter acquired or arising, evidencing,
representing, securing, arising from or otherwise relating to any Accounts,
General Intangibles, Intercompany Obligations or other Collateral, including,
without limitation, any promissory notes, drafts, bills of exchange, documents
of title and receipts.

     "Intercompany Obligations" shall mean, collectively, all indebtedness,
obligations and other amounts at any time owing to the Pledgor from its
Subsidiaries and Affiliates and all interest, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness, obligations or
other amounts.

     "Interests" shall mean, collectively, all partnership, joint venture,
limited liability company or other equity interests in any Person not a
corporation (including, without limitation, any such Person that is or hereafter
becomes a Subsidiary of the Pledgor) at any time owned by the Pledgor, and all
rights, powers and privileges relating thereto or arising therefrom, including,
without limitation, the 

                                      -3-
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Pledgor's right to vote and to manage and administer the business of any such
Person pursuant to the applicable Investment Agreement, together with all other
rights, interests, claims and other property of the Pledgor in any manner
arising out of or relating to any such interests, whether now existing or
hereafter arising or acquired, of whatever kind or character (including any
tangible or intangible property or interests therein), and further including,
without limitation (but subject to the provisions of SECTION 5.3), all rights of
the Pledgor to receive amounts due and to become due (including, without
limitation, dividends, distributions, interest, income and returns of capital)
under or in respect of any Investment Agreement, to receive payments or other
amounts upon termination of any Investment Agreement, and to receive any other
payments or distributions, whether in cash, securities, property, or a
combination thereof, in respect of any such interests, all of the Pledgor's
rights of access to the books and records of any such Person, and all rights
granted or available under applicable law in connection therewith, all options,
warrants and other rights exercisable for any of the foregoing, and all
securities convertible into any of the foregoing, in each case whether now or
hereafter existing and any time owned by the Pledgor, together with all
certificates, instruments and entries upon the books of financial intermediaries
at any time evidencing any of the foregoing.

     "Inventory" shall mean, collectively, all of the Pledgor's inventory, as
defined in the Uniform Commercial Code, whether now owned or existing or
hereafter acquired or arising, including, without limitation, all goods
manufactured, acquired or held for sale or lease, all raw materials, component
materials, work-in-process and finished goods, all supplies, goods and other
items and materials used or consumed in the manufacture, production, packaging,
shipping, selling, leasing or furnishing of such inventory or otherwise in the
operation of the business of the Pledgor, all goods in which the Pledgor now or
at any time hereafter has any interest or right of any kind, and all goods that
have been returned to or repossessed by or on behalf of the Pledgor, in each
case whether or not the same is in transit or in the constructive, actual or
exclusive occupancy or possession of the Pledgor or is held by the Pledgor or by
others for the account of the Pledgor, and in each case whether now owned or
existing or hereafter acquired or arising.

     "Investment Agreement" shall mean any partnership agreement, joint venture
agreement, limited liability company operating agreement or other agreement
creating, governing or evidencing any Interests and to which the Pledgor is now
or hereafter becomes a party, as any such agreement may be amended, modified,
supplemented, restated or replaced from time to time.

     "Investments" shall mean, collectively, the Stock and the Interests.

     "License" shall mean any Copyright License, Patent License or Trademark
License.

     "Material Contracts" shall have the meaning given to such term in SECTION
3.8.

     "Mobile Goods" shall mean, collectively, all of the Pledgor's motor
vehicles, tractors, trailers, aircraft, rolling stock and other like property,
whether or not the title thereto is governed by a certificate of title or
ownership), in each case whether now owned or existing or hereafter acquired or
arising.

     "Patents" shall mean, collectively, all of the Pledgor's letters patent,
whether under the laws of the United States or any other country or
jurisdiction, all recordings and registrations thereof and applications
therefor, including, without limitation, the inventions described therein, all
reissues, 

                                      -4-
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continuations, divisions, renewals, extensions, continuations-in-part thereof,
in each case whether now owned or existing or hereafter acquired or arising.

     "Patent Collateral" shall mean, collectively, (i) all Patents and (ii) all
Patent Licenses to which the Pledgor is or hereafter becomes a party and all
other General Intangibles embodying, incorporating, evidencing or otherwise
relating or pertaining to any Patents, in each case whether now owned or
existing or hereafter acquired or arising.

     "Patent License" shall mean any agreement now or hereafter in effect
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by the Pledgor or which the Pledgor
otherwise has the right to license, is in existence, or granting to the Pledgor
any right to make, use or sell any invention on which property of the type
described in the definition of Patent herein, now or hereafter owned by any
third party, is in existence, and all rights of the Pledgor under any such
agreement.

     "Proceeds" shall have the meaning given to such term in SECTION 2.1.

     "Secured Parties" shall mean, collectively, the Lenders (including the
Issuing Lender and the Swingline Lender in their capacities as such, and
including any Lender in its capacity as a counterparty to any Interest Rate
Protection Agreement with the Pledgor), the Documentation Agent and the
Administrative Agent.

     "Securities Act" shall have the meaning given to such term in SECTION 6.5.

     "Stock" shall mean, collectively, all of the issued and outstanding shares,
interests or other equivalents of capital stock of any corporation (including,
without limitation, any corporation that is or hereafter becomes a Subsidiary of
the Pledgor) at any time owned by the Pledgor, whether voting or non-voting and
whether common or preferred, all options, warrants and other rights to acquire,
and all securities convertible into, any of the foregoing, all interest,
dividends, distributions and other amounts, and all additional stock, warrants,
options, securities and other property, from time to time paid or payable or
distributed or distributable in respect of any of the foregoing, in each case
whether now or hereafter existing and any time owned by the Pledgor, together
with all certificates, instruments and entries upon the books of financial
intermediaries at any time evidencing any of the foregoing.

     "Trademarks" shall mean, collectively, all of the Pledgor's trademarks,
service marks, trade names, corporate and company names, business names, logos,
trade dress, trade styles, other source or business identifiers, designs and
general intangibles of a similar nature, whether under the laws of the United
States or any other country or jurisdiction, all recordings and registrations
thereof and applications therefor, all renewals and extensions thereof, all
rights corresponding thereto, and all goodwill associated therewith or
symbolized thereby, in each case whether now owned or existing or hereafter
acquired or arising.

     "Trademark Collateral" shall mean, collectively, (i) all Trademarks and
(ii) all Trademark Licenses to which the Pledgor is or hereafter becomes a party
and all other General Intangibles embodying, incorporating, evidencing or
otherwise relating or pertaining to any Trademarks, in each case whether now
owned or existing or hereafter acquired or arising.

                                      -5-
<PAGE>
 
     "Trademark License" shall mean any agreement now or hereafter in effect
granting any right to any third party under any Trademark now or hereafter owned
by the Pledgor or which the Pledgor otherwise has the right to license, or
granting any right to the Pledgor under any property of the type described in
the definition of Trademark herein now or hereafter owned by any third party,
and all rights of the Pledgor under any such agreement.

     1.2  Other Terms.  All terms in this Agreement that are not capitalized
          -----------                                                       
shall have the meanings provided by the applicable Uniform Commercial Code to
the extent the same are used or defined therein.


                                   ARTICLE II

                         CREATION OF SECURITY INTEREST

     2.1  Pledge and Grant of Security Interest.  The Pledgor hereby pledges,
          -------------------------------------                              
assigns and delivers to the Administrative Agent, for the ratable benefit of the
Secured Parties, and grants to the Administrative Agent, for the ratable benefit
of the Secured Parties, a Lien upon and security interest in, all of the
Pledgor's right, title and interest in and to the following, in each case
whether now owned or existing or hereafter acquired or arising (collectively,
the "Collateral"):

             (i)  all Accounts;

            (ii)  all Contracts;

           (iii)  all Deposit Accounts;

            (iv)  all Equipment;

             (v)  all General Intangibles;

            (vi)  all Inventory;

           (vii)  all Instruments;

            (vi)  subject to the provisions of SECTION 5.1(a), all Investments;

            (ix)  to the extent not covered or not specifically excluded by
     clauses (i) through (viii) above, all of the Pledgor's other personal
     property, whether now owned or existing or hereafter arising or acquired;
     and

             (x)  any and all proceeds, as defined in the Uniform Commercial
     Code, products, rents and profits of or from any and all of the foregoing
     and, to the extent not otherwise included, (w) all payments under any
     insurance (whether or not the Administrative Agent is the loss payee
     thereunder), indemnity, warranty or guaranty with respect to any of the
     foregoing Collateral, (x) all payments in connection with any requisition,
     condemnation, seizure or forfeiture with respect to any of the foregoing
     Collateral, (y) all claims and rights to recover for any past, present or
     future infringement or dilution of or injury to any 

                                      -6-
<PAGE>
 
     Copyright Collateral, Patent Collateral or Trademark Collateral, and (z)
     all other amounts from time to time paid or payable under or with respect
     to any of the foregoing Collateral (collectively, "Proceeds"). For purposes
     of this Agreement, the term "Proceeds" includes whatever is receivable or
     received when Collateral or Proceeds are sold, exchanged, collected or
     otherwise disposed of, whether voluntarily or involuntarily.

     2.2  Security for Obligations.  This Agreement and the Collateral secure
          ------------------------                                           
the full and prompt payment, at any time and from time to time as and when due
(whether at the stated maturity, by acceleration or otherwise), of all
Obligations of the Pledgor under the Credit Agreement and the other Credit
Documents, including, without limitation, all principal of and interest on the
Loans, all Reimbursement Obligations in respect of Letters of Credit, all fees,
expenses, indemnities and other amounts payable by the Pledgor under the Credit
Agreement or any other Credit Document (including interest accruing after the
filing of a petition or commencement of a case by or with respect to the Pledgor
seeking relief under any applicable federal and state laws pertaining to
bankruptcy, reorganization, arrangement, moratorium, readjustment of debts,
dissolution, liquidation or other debtor relief, specifically including, without
limitation, the Bankruptcy Code and any fraudulent transfer and fraudulent
conveyance laws, whether or not the claim for such interest is allowed in such
proceeding), all obligations of the Pledgor to any Lender under any Interest
Rate Protection Agreement, all Obligations that, but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, would become due,
and all fees, costs and expenses payable by the Pledgor under SECTION 8.1, in
each case whether now existing or hereafter created or arising and whether
direct or indirect, absolute or contingent, due or to become due.


                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     The Pledgor represents and warrants as follows:

     3.1  Ownership of Collateral.  The Pledgor owns, or has valid rights as a
          -----------------------                                             
lessee or licensee with respect to, all Collateral purported to be pledged by it
hereunder, free and clear of any Liens except for the Liens granted to the
Administrative Agent, for the benefit of the Secured Parties, pursuant to this
Agreement, and except for other Permitted Liens.  No security agreement,
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any government or public office, and
the Pledgor has not filed or consented to the filing of any such statement or
notice, except (i) Uniform Commercial Code financing statements naming the
Administrative Agent as secured party, (ii) security instruments filed in the
U.S. Copyright Office or the U.S. Patent and Trademark Office naming the
Administrative Agent as secured party and (iii) as may be otherwise permitted by
the Credit Agreement.

     3.2  Security Interests; Filings.  This Agreement, together with (i) the
          ---------------------------                                        
filing of duly completed and executed Uniform Commercial Code financing
statements naming the Pledgor as debtor, the Administrative Agent as secured
party, and describing the Collateral, in the jurisdictions set forth on Annex B
                                                                        -------
hereto, which have been duly executed and delivered by the Pledgor and delivered
to the Administrative Agent for filing, (ii) to the extent required by
applicable law, the filing of duly completed and executed collateral assignments
in the forms set forth as Exhibits B and C with the U.S. Copyright Office or the
                          ----------     -                                      
U.S. Patent and Trademark Office, as appropriate, with 

                                      -7-
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regard to registered Copyright Collateral, Patent Collateral and Trademark
Collateral, as the case may be, (iii) in the case of uncertificated Investments,
compliance with Section 8-313 (or its successor provision) of the applicable
Uniform Commercial Code, (iv) as to Mobile Goods covered by a certificate of
title or ownership, the notation of the Administrative Agent's security interest
therein on the applicable certificates of title or ownership, and (v) the
delivery to the Administrative Agent of all chattel paper, promissory notes and
other Instruments included in the Collateral, creates, and at all times shall
constitute, a valid and perfected security interest in and Lien upon the
Collateral in favor of the Administrative Agent, for the benefit of the Secured
Parties, to the extent a security interest therein can be perfected by such
filings or possession of such chattel paper, promissory notes or Instruments, as
applicable, superior and prior to the rights of all other Persons therein
(except for Permitted Liens), and no other or additional filings, registrations,
recordings or actions are or shall be necessary or appropriate in order to
maintain the perfection and priority of such Lien and security interest, other
than actions required with respect to Collateral of the types excluded from
Article 9 of the applicable Uniform Commercial Code or from the filing
requirements under such Article 9 by reason of Section 9-104 or 9-302 of the
applicable Uniform Commercial Code and other than continuation statements
required under the applicable Uniform Commercial Code (it being specifically
noted that the Administrative Agent may at its option, but shall not be required
to, require that any bank or other depository institution at which a Deposit
Account is maintained enter into a written agreement or take such other action
as may be necessary to perfect the security interest of the Administrative Agent
in such Deposit Account and the funds therein, and it being specifically
understood that the security interest of the Administrative Agent in such
Deposit Account, absent such action, might not be perfected).

     3.3  Locations.  Annex C lists, as to the Pledgor, (i) the address of its
          ---------   -------                                                 
chief executive office and principal place of business and each other place of
business, (ii) the address of each location of all original invoices, ledgers,
chattel paper, Instruments and other records or information evidencing or
relating to the Accounts, General Intangibles or other Collateral, and (iii) the
address of each location at which any Equipment or Inventory (other than Mobile
Goods and goods in transit) is kept or maintained, in each instance except for
any new locations established in accordance with the provisions of SECTION 4.2.
Except as may be otherwise noted therein, all locations identified in Annex C
                                                                      -------
are leased by the Pledgor.  The Pledgor does not presently conduct business
under any prior or other limited liability company name or under any trade or
fictitious name, except as indicated on Annex C, and the Pledgor has not entered
                                        -------                                 
into any contract or granted any Lien within the past five years under any name
other than its legal limited liability company name or a trade or fictitious
name indicated on Annex C.
                  ------- 

     3.4  Authorization; Consent.  No authorization, consent or approval of, or
          ----------------------                                               
declaration or filing with, any Governmental Authority is required for the valid
execution, delivery and performance by the Pledgor of this Agreement, the grant
by it of the Lien and security interest in favor of the Administrative Agent
provided for herein, or the exercise by the Administrative Agent of its rights
and remedies hereunder, except for the filings described in SECTION 3.2, any
notices required under the Federal Assignment of Claims Act and similar state
statutes and any notice filing with state tax or revenue authorities required to
be made by account creditors in order to enforce any Accounts in such state,
and, in the case of Investments, except as may be required in connection with a
disposition of any such Collateral by laws affecting the offering and sale of
securities generally.

     3.5  No Restrictions.  There are no statutory or regulatory restrictions,
          ---------------                                                     
prohibitions or limitations on the Pledgor's ability to grant to the
Administrative Agent a Lien upon and security 

                                      -8-
<PAGE>
 
interest in the Collateral pursuant to this Agreement or on the exercise by the
Administrative Agent of its rights and remedies hereunder (including any
foreclosure upon or collection of the Collateral, assuming compliance with any
notice and other procedural requirements applicable to such action under law),
and there are no contractual restrictions on the Pledgor's ability so to grant
such Lien and security interest.

     3.6  Accounts.  Each Account is, or at the time it arises will be, a bona
          --------                                                            
fide, valid and legally enforceable indebtedness of the account debtor according
to its terms, arising out of or in connection with the sale, lease or
performance of goods or services by the Pledgor.

     3.7  Investments.  As of the date hereof, the Investments required to be
          -----------                                                        
pledged by the Pledgor hereunder consist of the number and type of shares of
capital stock (in the case of issuers that are corporations) or the percentage
and type of equity interests (in the case of issuers other than corporations) as
described in Annex A.  All of the Investments have been duly and validly issued
             -------                                                           
and are fully paid and nonassessable (or, in the case of Interests, not subject
to any capital call or other additional capital requirement) and not subject to
any preemptive rights, warrants, options or similar rights or restrictions in
favor of third parties or any contractual or other restrictions upon transfer.

     3.8  Material Contracts.  As to each Investment Agreement, each Contract
          ------------------                                                 
listed on Annex D, each Contract specified in writing by the Administrative
          -------                                                          
Agent to the Pledgor at any time after the date hereof, and each other Contract
to which the Pledgor is or hereafter becomes a party and that is material to its
business (the foregoing, collectively, "Material Contracts"), (i) the Pledgor is
not in default in any material respect under such Material Contract, and to the
knowledge of the Pledgor, none of the other parties to such Material Contract is
in default in any material respect thereunder (except as shall have been
disclosed in writing to the Administrative Agent), (ii) such Material Contract
is, or at the time of execution will be, the legal, valid and binding obligation
of all parties thereto, enforceable against such parties in accordance with the
respective terms thereof, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and no defense, offset, deduction or counterclaim will exist in any
material respect thereunder in favor of any such party, (iii) the performance by
the Pledgor of its obligations under such Material Contract in accordance with
its terms will not contravene any Requirement of Law or any contractual
restriction binding on or affecting the Pledgor or any of its properties, and
will not result in or require the creation of any Lien upon or with respect to
any of its properties, and (iv) the Pledgor has (or at the time of execution
will have) furnished the Administrative Agent with a correct and complete copy
of each Material Contract to which it is a party as then in effect.

     3.9  Intellectual Property.  Annexes E, F and G correctly set forth all
          ---------------------   ------------     -                        
registered Copyrights, Patents and Trademarks owned by the Pledgor and as of the
date hereof used or proposed to be used in its business.  The Pledgor owns or
possesses the valid right to use all such Copyrights, Patents and Trademarks
listed under its name; all registrations therefor have been validly issued under
applicable law and are in full force and effect; no claim has been made in
writing or, to the knowledge of the Pledgor, orally, that any of such
Copyrights, Patents or Trademarks is invalid or unenforceable or violates or
infringes the rights of any other Person, and there is no such violation or
infringement in existence; and to the knowledge of the Pledgor, no other Person
is presently infringing upon the rights of the Pledgor with regard to any of
such Copyrights, Patents or Trademarks.

                                      -9-
<PAGE>
 
     3.10 Documents of Title.  No bill of lading, warehouse receipt or other
          ------------------                                                
document or instrument of title is outstanding with respect to any Collateral
other than Mobile Goods and other than Inventory in transit in the ordinary
course of business to a location set forth on Annex C or to a customer of the
                                              -------                        
Pledgor.


                                   ARTICLE IV

                                   COVENANTS

     4.1  Use and Disposition of Collateral.  So long as no Event of Default
          ---------------------------------                                 
shall have occurred and be continuing, the Pledgor may, in any lawful manner not
inconsistent with the provisions of this Agreement and the other Credit
Documents, use, control and manage the Collateral in the operation of its
business, and receive and use the income, revenue and profits arising therefrom
and the Proceeds thereof, in the same manner and with the same effect as if this
Agreement had not been made; provided, however, that the Pledgor will not sell
                             --------  -------                                
or otherwise dispose of, grant any option with respect to, or mortgage, pledge,
grant any Lien with respect to or otherwise encumber any of the Collateral or
any interest therein, except for the security interest created in favor of the
Administrative Agent hereunder and except as may be otherwise expressly
permitted in accordance with the terms of this Agreement and the Credit
Agreement (including any applicable provisions therein regarding delivery of
proceeds of sale or disposition to the Administrative Agent).

     4.2  Change of Name, Locations, etc.  The Pledgor will not (i) change its
          -------------------------------                                     
name, identity or corporate structure, (ii) change its chief executive office or
principal place of business from the location thereof listed on Annex C, or
                                                                -------    
(iii) remove any Collateral (other than Mobile Goods and goods in transit), or
any books, records or other information relating to Collateral, from the
applicable location thereof listed on Annex C, or keep or maintain any
                                      -------                         
Collateral at a location not listed on Annex C, unless in each case the Pledgor
                                       -------                                 
has (1) given twenty (20) days' prior written notice to the Administrative Agent
of its intention to do so, together with information regarding any such new
location and such other information in connection with such proposed action as
the Administrative Agent may reasonably request, and (2) delivered to the
Administrative Agent ten (10) days prior to any such change or removal such
documents, instruments and financing statements as may be required by the
Administrative Agent, all in form and substance satisfactory to the
Administrative Agent, paid all necessary filing and recording fees and taxes,
and taken all other actions reasonably requested by the Administrative Agent
(including, at the reasonable request of the Administrative Agent, delivery of
opinions of counsel reasonably satisfactory to the Administrative Agent to the
effect that all such actions have been taken), in order to perfect and maintain
the Lien upon and security interest in the Collateral provided for herein in
accordance with the provisions of SECTION 3.2.

     4.3  Records; Inspection.  (a)  The Pledgor will keep and maintain at its
          -------------------                                                 
own cost and expense satisfactory and complete records of the Accounts and all
other Collateral, including, without limitation, records of all payments
received, all credits granted thereon, all merchandise returned and all other
documentation relating thereto, and will furnish to the Administrative Agent
from time to time such statements, schedules and reports (including, without
limitation, accounts receivable aging schedules) with regard to the Collateral
as the Administrative Agent may reasonably request.

                                      -10-
<PAGE>
 
     (b) The Pledgor shall, from time to time at such times as may be reasonably
requested and upon reasonable notice, (i) make available to the Administrative
Agent for inspection and review at the Pledgor's offices copies of all invoices
and other documents and information relating to the Collateral (including,
without limitation, itemized schedules of all collections of Accounts, showing
the name of each account debtor, the amount of each payment and such other
information as the Administrative Agent shall reasonably request), and (ii)
permit the Administrative Agent or its representatives to visit its offices or
the premises upon which any Collateral may be located, inspect its books and
records and make copies and memoranda thereof, inspect the Collateral, discuss
its finances and affairs with its officers, employees and independent
accountants and take any other actions necessary for the protection of the
interests of the Secured Parties in the Collateral.  At the request of the
Administrative Agent, the Pledgor will legend, in form and manner satisfactory
to the Administrative Agent, the books, records and materials evidencing or
relating to the Collateral with an appropriate reference to the fact that the
Collateral has been assigned to the Administrative Agent and that the
Administrative Agent has a security interest therein.  The Administrative Agent
shall have the right to make test verifications of Accounts in any reasonable
manner and through any reasonable medium, and the Pledgor agrees to furnish all
such reasonable assistance and information as the Administrative Agent may
require in connection therewith.

     4.4  Accounts.  Unless notified otherwise by the Administrative Agent in
          --------                                                           
accordance with the terms hereof, the Pledgor shall endeavor to collect its
Accounts and all amounts owing to it thereunder in the ordinary course of its
business consistent with reasonable business practices and shall apply forthwith
upon receipt thereof all such amounts as are so collected to the outstanding
balances thereof, and in connection therewith shall, at the request of the
Administrative Agent, take such action as the Administrative Agent may deem
necessary or advisable (within applicable laws) to enforce such collection.  The
Pledgor shall not, except to the extent done in the ordinary course of its
business consistent with reasonable business practices and in accordance with
sound business judgment and provided that no Event of Default shall have
occurred and be continuing, (i) grant any extension of the time for payment of
any Account, (ii) compromise or settle any Account for less than the full amount
thereof, (iii) release, in whole or in part, any Person or property liable for
the payment of any Account, or (iv) allow any credit or discount on any Account.
The Pledgor shall promptly inform the Administrative Agent of any disputes with
any account debtor or obligor and of any claimed offset and counterclaim that
may be asserted with respect thereto involving, in each case, $100,000 or more,
where the Pledgor reasonably believes that the likelihood of payment by such
account debtor is materially impaired, indicating in detail the reason for the
dispute, all claims relating thereto and the amount in controversy.

     4.5  Equipment.  The Pledgor will, in accordance with sound business
          ---------                                                      
practices, maintain all Equipment used by it in its business (other than
obsolete Equipment) in good repair, working order and condition (normal wear and
tear excepted) and make all necessary repairs and replacements thereof so that
the value and operating efficiency thereof shall at all times be maintained and
preserved.  The Pledgor shall not knowingly permit any Equipment to become a
fixture to any real property.

     4.6  Inventory.  The Pledgor will, in accordance with sound business
          ---------                                                      
practices, maintain all Inventory held by it or on its behalf in good saleable
or useable condition.  Unless notified otherwise by the Administrative Agent in
accordance with the terms hereof, the Pledgor may, in any lawful manner not
inconsistent with the provisions of this Agreement and the other Credit
Documents, process, use and, in the ordinary course of business but not
otherwise, sell its Inventory.  Without 

                                      -11-
<PAGE>
 
limiting the generality of the foregoing, the Pledgor agrees that it shall not
permit any material amount of Inventory to be in the possession of any bailee,
warehouseman, agent or processor at any time unless such bailee, warehouseman,
agent or processor shall have been notified of the security interest created by
this Agreement and the Pledgor shall have exercised its reasonable best efforts
to obtain, at the Pledgor's sole cost and expense, a written agreement to hold
such Inventory subject to the security interest created by this Agreement and
the instructions of the Administrative Agent and to waive and release any Lien
(whether arising by operation of law or otherwise) it may have with respect to
such Inventory, such agreement to be in form and substance reasonably
satisfactory to the Administrative Agent.

     4.7  Contracts.  The Pledgor will, at its expense, at all times perform and
          ---------                                                             
comply with, in all material respects, all terms and provisions of each Material
Contract to which it is or hereafter becomes a party required to be performed or
complied with by it and enforce in all material respects the terms and
provisions thereof in accordance with its terms, and will not waive, amend or
modify any provision thereof in any manner other than in the ordinary course of
business of the Pledgor in accordance with reasonable business practices and for
a valid economic reason benefitting the Pledgor (provided that in no event may
                                                 --------                     
any waiver, amendment or modification be made that would materially adversely
affect the interests of the Administrative Agent and the Secured Parties).  The
Pledgor will deliver copies of each Material Contract and each material
amendment or modification thereof to the Administrative Agent promptly upon the
execution and delivery thereof.  With regard to all leases, contracts, licenses
and agreements that are excluded from the definition of the term "Contracts,"
the Pledgor covenants and agrees to exercise all of its material rights and
remedies under such leases, agreements, licenses and contracts in a commercially
reasonable manner consistent with the interests of the Administrative Agent and
the Secured Parties.  The Pledgor will not enter into any Material Contract that
by its terms prohibits the assignment of the Pledgor's rights and interest
thereunder in the manner contemplated by this Agreement, other than as may be
entered into in the ordinary course of business of the Pledgor in accordance
with reasonable business practices and for a valid economic reason benefitting
the Pledgor.  The Pledgor further covenants and agrees to use its reasonable
best efforts to obtain any required consent to the collateral assignment of any
Material Contract, in form and substance reasonably satisfactory to the
Administrative Agent, upon the request of the Administrative Agent, and will
deliver copies thereof to the Administrative Agent promptly upon execution and
delivery thereof.  The Pledgor will notify the Administrative Agent promptly in
writing upon any termination of any Material Contract, in whole or in part, or
any material breach, default or event of default by any party thereunder.

     4.8  Taxes.  The Pledgor will pay and discharge (i) all taxes, assessments
          -----                                                                
and governmental charges or levies imposed upon it, upon its income or profits
or upon any of its properties, prior to the date on which penalties would attach
thereto, and (ii) all lawful claims that, if unpaid, might become a Lien upon
any of its properties; provided, however, that the Pledgor shall not be required
                       --------  -------                                        
to pay any such tax, assessment, charge, levy or claim that is being contested
in good faith and by proper proceedings and as to which the Pledgor has
maintained adequate reserves with respect thereto in accordance with Generally
Accepted Accounting Principles, unless and until any tax lien notice has become
effective with respect thereto or until any Lien resulting therefrom attaches to
its properties and becomes enforceable against its other creditors.

     4.9   Insurance.  (a)  The Pledgor will, and will cause each of its
           ---------                                                    
Subsidiaries to, maintain and pay for, or cause to be maintained and paid for,
insurance covering commercial general liability, property and casualty, business
interruption and such other risks, and in such amounts and with such 

                                      -12-
<PAGE>
 
financially sound and reputable insurance companies, as are usually and
customarily carried by companies of similar size engaged in similar businesses
(and in any event, insuring all Inventory and Equipment against such losses and
risks), and will, and will cause each of its Subsidiaries to, deliver
certificates of such insurance to the Administrative Agent with standard loss
payable endorsements naming the Administrative Agent as loss payee (on property
and casualty policies) and additional insured (on liability policies) as its
interests may appear. Each such policy of insurance shall contain a clause
requiring the insurer to give not less than thirty (30) days' prior written
notice to the Administrative Agent before any cancellation of the policies for
any reason whatsoever and shall provide that any loss shall be payable in
accordance with the terms thereof notwithstanding any act of the Pledgor or any
Subsidiary that might result in the forfeiture of such insurance.

     (b) The Pledgor will, and will cause each of its Subsidiaries to, direct
all insurers under policies of property and casualty insurance on the Collateral
to pay all proceeds payable thereunder in excess of $1,000,000 for each loss
directly to the Administrative Agent.  The Administrative Agent shall hold all
such proceeds for the account of the Pledgor.  So long as no Event of Default
has occurred and is continuing, and subject to SECTION 2.6(d) of the Credit
Agreement, the Administrative Agent shall, at the Pledgor's request, disburse
such proceeds as payment for the purpose of replacing or repairing destroyed or
damaged assets, as and when required to be paid and upon presentation of
evidence satisfactory to the Administrative Agent of such required payments and
such other documents as the Administrative Agent may reasonably request.  As and
to the extent required by SECTION 2.6(d) of the Credit Agreement, and in any
event upon and during the continuance of an Event of Default, the Administrative
Agent shall be entitled to receive all proceeds of property and casualty
insurance directly from the insurers and shall apply such proceeds as a
prepayment of the Loans in the order and manner provided in the Credit
Agreement.  The Pledgor hereby irrevocably makes, constitutes and appoints the
Administrative Agent at all times during the continuance of an Event of Default,
its true and lawful attorney (and agent-in-fact) for the purpose of making,
settling and adjusting claims under such policies of insurance, endorsing its
name on any check, draft, instrument or other item or payment for the proceeds
of such policies of insurance and for making all determinations and decisions
with respect to such policies of insurance.

     (c) If the Pledgor fails to, or to cause any of its Subsidiaries to, obtain
and maintain any of the policies of insurance required to be maintained
hereunder or to pay any premium in whole or in part, the Administrative Agent
may, without waiving or releasing any obligation or Default, at the Pledgor'
expense, but without any obligation to do so, procure such policies or pay such
premiums. All sums so disbursed by the Administrative Agent, including
reasonable attorneys' fees, court costs, expenses and other charges related
thereto, shall be payable by the Pledgor to the Administrative Agent on demand
and shall be additional Obligations hereunder, secured by the Collateral.

     (d) The Pledgor will, and will cause each of its Subsidiaries to, deliver
to the Administrative Agent, promptly as rendered, true copies of all material
claims and reports made in any reporting forms to insurance companies.  Not less
than 30 days prior to the expiration date of the insurance policies required to
be maintained by the Pledgor and its Subsidiaries hereunder, the Pledgor will,
and will cause each of its Subsidiaries to, deliver to the Administrative Agent
one or more certificates of insurance evidencing renewal of the insurance
coverage required hereunder plus such other evidence of payment of premiums
therefor as the Administrative Agent may request.  Upon the reasonable request
of the Administrative Agent from time to time, the Pledgor will, and will cause
each of its Subsidiaries to, deliver to the Administrative Agent evidence that
the insurance required to be maintained pursuant to this Section is in effect.

                                      -13-
<PAGE>
 
     4.10  Intellectual Property.  (a)  The Pledgor will, at its own expense,
           ---------------------                                             
execute, deliver and record, as promptly as possible (but in any event within 10
days) after the date hereof fully completed collateral assignments in the forms
of Exhibits B and C, as applicable, in the U.S. Copyright Office or the U.S.
   ----------     -                                                         
Patent and Trademark Office pursuant to 35 U.S.C. (S)261, 15 U.S.C. (S)1060 or
17 U.S.C. (S)205, as applicable, with regard to any Copyright Collateral, Patent
Collateral or Trademark Collateral, as the case may be, described in Annex E, F
                                                                     -------  -
or G hereto.  In the event that after the date hereof the Pledgor shall acquire
   -                                                                           
any registered Copyright, Patent or Trademark, or effect any registration of any
Copyright, Patent or Trademark or file any application for registration thereof,
whether within the United States or any other country or jurisdiction, the
Pledgor shall promptly furnish written notice thereof to the Administrative
Agent together with information sufficient to permit the Administrative Agent,
upon its receipt of such notice, to (and the Pledgor hereby authorizes the
Administrative Agent to) modify this Agreement, as appropriate, by amending
Annexes E, F and G hereto or to add additional exhibits hereto to include any
---------  -     -                                                           
Copyright, Patent or Trademark that becomes part of the Collateral under this
Agreement, and the Pledgor shall additionally, at its own expense, execute,
deliver and record, as promptly as possible (but in any event within 10 days)
after the date of such acquisition, registration or application, as applicable,
with regard to United States Patents, Trademarks and Copyrights, fully completed
collateral assignments in the forms of Exhibits B and C, as applicable, in the
                                       ----------     -                       
U.S. Copyright Office or the U.S. Patent and Trademark Office as more fully
described hereinabove (provided that, notwithstanding the foregoing, the Pledgor
                       --------                                                 
may at its election furnish such notices and execute, deliver and record such
documents and instruments on a quarterly basis with respect to all Copyrights,
Patents and Trademarks that become part of the Collateral during such quarter),
together in all instances with any other agreements, instruments and documents
that the Administrative Agent may reasonably request from time to time to
further effect and confirm the collateral assignment and security interest
created by this Agreement in such Copyrights, Patents and Trademarks, and the
Pledgor hereby appoints the Administrative Agent its attorney-in-fact to
execute, deliver and record any and all such agreements, instruments and
documents for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed and such power, being coupled with an interest, shall be
irrevocable for so long as this Agreement shall be in effect with respect to the
Pledgor (except that compliance with this subsection shall not be required with
respect to any Copyright, Patent or Trademark that the Pledgor has elected to
abandon).

     (b) The Pledgor (either itself or through its licensees or its
sublicensees) will, for each material Trademark used in the conduct of its
business, use its best efforts to (i) maintain such Trademark in full force and
effect, free from any claim of abandonment or invalidity for non-use, (ii)
maintain the quality of products and services offered under such Trademark,
(iii) display such Trademark with notice of federal registration to the extent
required by applicable law and (iv) not knowingly use or knowingly permit the
use of such Trademark in violation of any third-party rights.

     (c) The Pledgor (either itself or through its licensees or sublicensees)
will refrain from committing any act, or omitting any act, whereby any material
Patent used in the conduct of the Pledgor's business may become invalidated or
dedicated to the public, and shall continue to mark any products covered by a
material Patent with the relevant patent number as required by applicable patent
laws.

     (d) The Pledgor (either itself or through its licensees or sublicensees)
will, for each work covered by a material Copyright, continue to publish,
reproduce, display, adopt and distribute the work with appropriate copyright
notice as required under applicable copyright laws.

                                      -14-
<PAGE>
 
     (e) The Pledgor shall notify the Administrative Agent immediately if it
knows or has reason to know that any material Patent, Trademark or Copyright
used in the conduct of its business may become abandoned or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the U.S. Patent and Trademark Office, U.S. Copyright Office or any court)
regarding the Pledgor's ownership of any material Patent, Trademark or
Copyright, its right to register the same, or to keep and maintain the same.

     (f) The Pledgor will take all necessary steps that are consistent with the
practice in any proceeding before the U.S. Patent and Trademark Office, U.S.
Copyright Office or any office or agency in any political subdivision of the
United States or in any other country or any political subdivision thereof, to
maintain and pursue each application relating to any material Patents,
Trademarks or Copyrights (and to obtain the relevant grant or registration) and
to maintain each registration of any material Patents, Trademarks and Copyrights
used in the conduct of the Pledgor's business, including the filing of
applications for renewal, affidavits of use, affidavits of incontestability and
maintenance fees, and, if consistent with sound business judgment, to initiate
opposition, interference and cancellation proceedings against third parties.

     (g) In the event that any Collateral consisting of a material Patent,
Trademark or Copyright used in the conduct of the Pledgor's business is believed
infringed, misappropriated or diluted by a third party, the Pledgor shall notify
the Administrative Agent promptly after it learns thereof and shall, if
consistent with sound business judgment, promptly sue for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and take such other actions as are
appropriate under the circumstances to protect such Collateral.

     (h) Upon the occurrence and during the continuance of any Event of Default,
the Pledgor shall use its reasonable best efforts to obtain all requisite
consents or approvals from the licensor of each material License included within
the Copyright Collateral, Patent Collateral or Trademark Collateral to effect
the assignment of all of the Pledgor's right, title and interest thereunder to
the Administrative Agent or its designee.

     4.11  Mobile Goods.  Upon the request of the Administrative Agent at any
           ------------                                                      
time (and promptly upon the occurrence of any Event of Default), the Pledgor
will deliver to the Administrative Agent originals of the certificates of title
or ownership for all Mobile Goods owned by it, together (in the case of motor
vehicles) with the manufacturer's statement of origin with the Administrative
Agent listed as lienholder and odometer statements and together in all other
cases with appropriate instruments or certificates of transfer and delivery,
duly completed and executed, and will take such other action as the
Administrative Agent may deem necessary to perfect the security interest created
by this Agreement in all such Mobile Goods.

     4.12  Delivery of Collateral.  All certificates or instruments representing
           ----------------------                                               
or evidencing any Accounts, Intercompany Obligations or other Collateral (other
than checks or drafts, except during the continuance of an Event of Default)
shall be delivered to and held by or on behalf of the Administrative Agent
pursuant hereto, shall be in form suitable for transfer by delivery and shall be
delivered together with undated stock powers duly executed in blank, appropriate
endorsements or other necessary instruments of registration, transfer or
assignment, duly executed and in form and 

                                      -15-
<PAGE>
 
substance satisfactory to the Administrative Agent, and in each case such other
instruments or documents as the Administrative Agent may reasonably request.

     4.13  Protection of Security Interest.  The Pledgor agrees that it will, at
           -------------------------------                                      
its own cost and expense, take any and all actions necessary to warrant and
defend the right, title and interest of the Secured Parties in and to the
Collateral against the claims and demands of all other Persons.


                                   ARTICLE V

                   CERTAIN PROVISIONS RELATING TO INVESTMENTS

     5.1  Ownership; After-Acquired Investments.  (a)  If the Pledgor shall, at
          -------------------------------------                                
any time and from time to time after the date hereof, acquire any additional
capital stock or other equity interests in any Person of the types described in
the definition of the terms "Stock" or "Interests," the same shall be
automatically deemed to be Stock or Interests, as the case may be, and to be
pledged to the Administrative Agent pursuant to SECTION 2.1 (but subject, in the
case of Foreign Subsidiaries, to the provisions of SECTION 6.9 of the Credit
Agreement), and the Pledgor will forthwith pledge and deposit the same with the
Administrative Agent and deliver to the Administrative Agent any certificates or
instruments therefor, together with the endorsement of the Pledgor (in the case
of any promissory notes or other instruments), undated stock powers (in the case
of Stock evidenced by certificates) or other necessary instruments of transfer
or assignment, duly executed in blank and in form and substance satisfactory to
the Administrative Agent, together with such other certificates and instruments
as the Administrative Agent may reasonably request (including Uniform Commercial
Code financing statements or appropriate amendments thereto), and will promptly
thereafter deliver to the Administrative Agent a fully completed and duly
executed amendment to this Agreement in the form of Exhibit A (each, a "Pledge
                                                    ---------                 
Amendment") in respect thereof.  The Pledgor hereby authorizes the
Administrative Agent to attach each Pledge Amendment to this Agreement, and
agrees that all such Collateral listed on any Pledge Amendment shall for all
purposes be deemed Collateral hereunder and shall be subject to the provisions
hereof; provided that the failure of the Pledgor to execute and deliver any
        --------                                                           
Pledge Amendment with respect to any such additional Collateral as required
hereinabove shall not impair the security interest of the Administrative Agent
in such Collateral or otherwise adversely affect the rights and remedies of the
Administrative Agent hereunder with respect thereto.

     (b) If any Investments (whether now owned or hereafter acquired) included
in the Collateral are "uncertificated securities" within the meaning of the
applicable Uniform Commercial Code or are otherwise not evidenced by any
certificate or instrument, the Pledgor will promptly notify the Administrative
Agent thereof and will promptly take and cause to be taken all actions required
under applicable law, including, as applicable, under Article 8 or 9 of the
applicable Uniform Commercial Code, to perfect the security interest of the
Administrative Agent therein.

     5.2  Voting Rights.  So long as no Event of Default shall have occurred and
          -------------                                                         
be continuing, the Pledgor shall be entitled to exercise all voting and other
consensual rights pertaining to the Investments (subject to its obligations
under SECTION 5.1), and for that purpose the Administrative Agent will execute
and deliver or cause to be executed and delivered to the Pledgor all such
proxies and other instruments as the Pledgor may reasonably request in writing
to enable the Pledgor to exercise such voting and other consensual rights;
provided, however, that the Pledgor will not cast 
--------  -------                                                            

                                      -16-
<PAGE>
 
any vote, give any consent, waiver or ratification, or take or fail to take any
action, in any manner that would, or could reasonably be expected to, violate or
be inconsistent with any of the terms of this Agreement, the Credit Agreement or
any other Credit Document, or have the effect of impairing in any material
respect the position or interests of the Administrative Agent or any other
Secured Party.

     5.3  Dividends and Other Distributions.  So long as no Event of Default
          ---------------------------------                                 
shall have occurred and be continuing (or would occur as a result thereof), and
except as provided otherwise herein, all interest, income, dividends,
distributions and other amounts payable in cash in respect of the Investments
may be paid to and retained by the Pledgor; provided, however, that all such
                                            --------  -------               
interest, dividends, distributions and other amounts shall, at all times after
the occurrence and during the continuance of an Event of Default, be paid to the
Administrative Agent and retained by it as part of the Collateral (except to the
extent applied upon receipt to the repayment of the Obligations).  The
Administrative Agent shall also be entitled at all times (whether or not during
the continuance of an Event of Default) to receive directly, and to retain as
part of the Collateral, (i) all interest, income, dividends, distributions or
other amounts paid or payable in cash or other property in respect of any
Investments included in the Collateral in connection with the dissolution,
liquidation, recapitalization or reclassification of the capital of the
applicable issuer to the extent representing (in the reasonable judgment of the
Administrative Agent) an extraordinary, liquidating or other distribution in
return of capital, (ii) all additional membership interests, warrants, options
or other securities or property (other than cash) paid or payable or distributed
or distributable in respect of any Investments included in the Collateral in
connection with any noncash dividend, distribution, return of capital, spin-off,
stock split, split-up, reclassification, combination of shares or interests or
similar rearrangement, and (iii) without affecting any restrictions against such
actions contained in the Credit Agreement, all additional membership interests,
warrants, options or other securities or property (including cash) paid or
payable or distributed or distributable in respect of any Investments included
in the Collateral in connection with any consolidation, merger, exchange of
securities, liquidation or other reorganization.  All interest, income,
dividends, distributions or other amounts that are received by the Pledgor in
violation of the provisions of this Section shall be received in trust for the
benefit of the Administrative Agent, shall be segregated from other property or
funds of the Pledgor and shall be forthwith delivered to the Administrative
Agent as Collateral in the same form as so received (with any necessary
endorsements).


                                   ARTICLE VI

                                    REMEDIES

     6.1  Remedies.  If an Event of Default shall have occurred and be
          --------                                                    
continuing, the Administrative Agent shall be entitled to exercise in respect of
the Collateral all of its rights, powers and remedies provided for herein or
otherwise available to it under any other Credit Document, by law, in equity or
otherwise, including all rights and remedies of a secured party under the
Uniform Commercial Code as in effect in each relevant jurisdiction, and shall be
entitled in particular, but without limitation of the foregoing, to exercise the
following rights, which the Pledgor agrees to be commercially reasonable:

     (a) To notify any or all account debtors or obligors under any Accounts,
Contracts or other Collateral of the security interest in favor of the
Administrative Agent created hereby and to direct all such Persons to make
payments of all amounts due thereon or thereunder directly to the 

                                      -17-
<PAGE>
 
Administrative Agent or to an account designated by the Administrative Agent;
and in such instance and from and after such notice, all amounts and Proceeds
(including wire transfers, checks and other instruments) received by the Pledgor
in respect of any Accounts or other Collateral shall be received in trust for
the benefit of the Administrative Agent hereunder, shall be segregated from the
other funds of the Pledgor and shall be forthwith deposited into such account or
paid over or delivered to the Administrative Agent in the same form as so
received (with any necessary endorsements or assignments), to be held as
Collateral and applied to the Obligations as provided herein; and by this
provision, the Pledgor irrevocably authorizes and directs each Person who is or
shall be a party to or liable for the performance of any Contract, upon receipt
of notice from the Administrative Agent to the effect that an Event of Default
has occurred and is continuing, to attorn to or otherwise recognize the
Administrative Agent as owner under such Contract and to pay, observe and
otherwise perform the obligations under such Contract to or for the
Administrative Agent or the Administrative Agent's designee as though the
Administrative Agent or such designee were the Pledgor named therein, and to do
so until otherwise notified by the Administrative Agent;

     (b) To take possession of, receive, endorse, assign and deliver, in its own
name or in the name of the Pledgor, all checks, notes, drafts and other
instruments relating to any Collateral, including receiving, opening and
properly disposing of all mail addressed to the Pledgor concerning Accounts and
other Collateral; to verify with account debtors or other contract parties the
validity, amount or any other matter relating to any Accounts or other
Collateral, in its own name or in the name of the Pledgor; to accelerate any
indebtedness or other obligation constituting Collateral that may be accelerated
in accordance with its terms; to take or bring all actions and suits deemed
necessary or appropriate to effect collections and to enforce payment of any
Accounts or other Collateral; to settle, compromise or release in whole or in
part any amounts owing on Accounts or other Collateral; and to extend the time
of payment of any and all Accounts or other amounts owing under any Collateral
and to make allowances and adjustments with respect thereto, all in the same
manner and to the same extent as the Pledgor might have done;

     (c) To notify any or all depository institutions with which any Deposit
Accounts are maintained to remit and transfer all monies, securities and other
property on deposit in such Deposit Accounts or deposited or received for
deposit thereafter to the Administrative Agent, for deposit in a Collateral
Account or such other accounts as may be designated by the Administrative Agent,
for application to the Obligations as provided herein;

     (d) To transfer to or register in its name or the name of any of its agents
or nominees all or any part of the Collateral, without notice to the Pledgor and
with or without disclosing that such Collateral is subject to the security
interest created hereunder;

     (e) To assign any Copyright Collateral, Patent Collateral or Trademark
Collateral, for such term or terms, on such conditions and in such manner as the
Administrative Agent shall determine; and to license and (to the extent
permitted by applicable law) sublicense, whether general, special or otherwise,
and whether on an exclusive or nonexclusive basis, any Copyright Collateral,
Patent Collateral or Trademark Collateral, throughout the world, for such term
or terms, on such conditions and in such manner as the Administrative Agent
shall determine;

     (f) To require the Pledgor to, and the Pledgor hereby agrees that it will
at its expense and upon request of the Administrative Agent forthwith, assemble
all or any part of the Collateral as 

                                      -18-
<PAGE>
 
directed by the Administrative Agent and make it available to the Administrative
Agent at a place designated by the Administrative Agent;

     (g) To enter and remain upon the premises of any of the Pledgor and take
possession of all or any part of the Collateral, with or without judicial
process; to use the materials, services, books and records of the Pledgor for
the purpose of liquidating or collecting the Collateral, whether by foreclosure,
auction or otherwise; and to remove the same to the premises of the
Administrative Agent or any designated agent for such time as the Administrative
Agent may desire, in order to effectively collect or liquidate the Collateral;

     (h) To exercise (i) all voting, consensual and other rights and powers
pertaining to the Investments (whether or not transferred into the name of the
Administrative Agent), at any meeting of shareholders, partners, members or
otherwise, and (ii) any and all rights of conversion, exchange, subscription and
any other rights, privileges or options pertaining to the Investments as if it
were the absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all of the Investments upon the merger,
consolidation, reorganization, reclassification, combination of shares or
interests, similar rearrangement or other similar fundamental change in the
structure of the applicable issuer, or upon the exercise by the Pledgor or the
Administrative Agent of any right, privilege or option pertaining to such
Investments, and in connection therewith, the right to deposit and deliver any
and all of the Investments with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Administrative Agent may determine, and give all consents, waivers and
ratifications in respect of the Investments, all without liability except to
account for any property actually received by it, but the Administrative Agent
shall have no duty to exercise any such right, privilege or option or give any
such consent, waiver or ratification and shall not be responsible for any
failure to do so or delay in so doing; and for the foregoing purposes the
Pledgor will promptly execute and deliver or cause to be executed and delivered
to the Administrative Agent, upon request, all such proxies and other
instruments as the Administrative Agent may reasonably request to enable the
Administrative Agent to exercise such rights and powers; AND IN FURTHERANCE OF
THE FOREGOING AND WITHOUT LIMITATION THEREOF, THE PLEDGOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS THE ADMINISTRATIVE AGENT AS THE TRUE AND LAWFUL PROXY
AND ATTORNEY-IN-FACT OF THE PLEDGOR, WITH FULL POWER OF SUBSTITUTION IN THE
PREMISES, TO EXERCISE ALL SUCH VOTING, CONSENSUAL AND OTHER RIGHTS AND POWERS TO
WHICH ANY HOLDER OF ANY INVESTMENTS WOULD BE ENTITLED BY VIRTUE OF HOLDING THE
SAME, WHICH PROXY AND POWER OF ATTORNEY, BEING COUPLED WITH AN INTEREST, IS
IRREVOCABLE AND SHALL BE EFFECTIVE FOR SO LONG AS THIS AGREEMENT SHALL BE IN
EFFECT; and

     (i) To sell, resell, assign and deliver, in its sole discretion, all or any
of the Collateral, in one or more parcels, on any securities exchange on which
any Investments may be listed, at public or private sale, at any of the
Administrative Agent's offices or elsewhere, for cash, upon credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as the Administrative Agent may deem satisfactory.  If any of the
Collateral is sold by the Administrative Agent upon credit or for future
delivery, the Administrative Agent shall not be liable for the failure of the
purchaser to purchase or pay for the same and, in the event of any such failure,
the Administrative Agent may resell such Collateral.  In no event shall the
Pledgor be credited with any part of the Proceeds of sale of any Collateral
until and to the extent cash payment in respect thereof has actually been
received by the Administrative Agent.  Each purchaser at any such sale shall
hold 

                                      -19-
<PAGE>
 
the property sold absolutely, free from any claim or right of whatsoever kind,
including any equity or right of redemption of the Pledgor, and the Pledgor
hereby expressly waives all rights of redemption, stay or appraisal, and all
rights to require the Administrative Agent to marshal any assets in favor of the
Pledgor or any other party or against or in payment of any or all of the
Obligations, that it has or may have under any rule of law or statute now
existing or hereafter adopted. No demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law, as referred to below),
all of which are hereby expressly waived by the Pledgor, shall be required in
connection with any sale or other disposition of any part of the Collateral. If
any notice of a proposed sale or other disposition of any part of the Collateral
shall be required under applicable law, the Administrative Agent shall give the
Pledgor at least ten (10) days' prior notice of the time and place of any public
sale and of the time after which any private sale or other disposition is to be
made, which notice the Pledgor agrees is commercially reasonable. The
Administrative Agent shall not be obligated to make any sale of Collateral if it
shall determine not to do so, regardless of the fact that notice of sale may
have been given. The Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. Upon each public sale and, to the extent permitted by applicable law,
upon each private sale, the Administrative Agent may purchase all or any of the
Collateral being sold, free from any equity, right of redemption or other claim
or demand, and may make payment therefor by endorsement and application (without
recourse) of the Obligations in lieu of cash as a credit on account of the
purchase price for such Collateral.

     6.2  Application of Proceeds.  (a)  All Proceeds collected by the
          -----------------------                                     
Administrative Agent upon any sale, other disposition of or realization upon any
of the Collateral, together with all other moneys received by the Administrative
Agent hereunder, shall be applied as follows:

             (i) first, to the payment of all costs and expenses of such sale,
     disposition or other realization, including the reasonable costs and
     expenses of the Administrative Agent and the reasonable fees and expenses
     of its agents and counsel, all amounts advanced by the Administrative Agent
     for the account of the Pledgor, and all other amounts payable to the
     Administrative Agent under SECTION 8.1;

            (ii) second, after payment in full of the amounts specified in
     clause (i) above, to the ratable payment of all other Obligations owing to
     the Secured Parties; and

           (iii) third, after payment in full of the amounts specified in
     clauses (i) and (ii) above, and following the termination of this
     Agreement, to the Pledgor or any other Person lawfully entitled to receive
     such surplus.

     (b) For purposes of applying amounts in accordance with this Section, the
Administrative Agent shall be entitled to rely upon any Secured Party that has
entered into an Interest Rate Protection Agreement with the Pledgor for a
determination (which such Secured Party agrees to provide or cause to be
provided upon request of the Administrative Agent) of the outstanding
Obligations owed to such Secured Party under any such Interest Rate Protection
Agreement.  Unless it has actual knowledge (including by way of written notice
from any such Secured Party) to the contrary, the Administrative Agent, in
acting hereunder, shall be entitled to assume that no Interest Rate Protection
Agreements or Obligations in respect thereof are in existence between any
Secured Party and the Pledgor.

                                      -20-
<PAGE>
 
     (c) The Pledgor shall remain liable to the extent of any deficiency between
the amount of all Proceeds realized upon sale or other disposition of the
Collateral pursuant to this Agreement and the aggregate amount of the sums
referred to in clauses (i) and (ii) of subsection (a) above.  Upon any sale of
any Collateral hereunder by the Administrative Agent (whether by virtue of the
power of sale herein granted, pursuant to judicial proceeding, or otherwise),
the receipt of the Administrative Agent or the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the Collateral so sold,
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Administrative
Agent or such officer or be answerable in any way for the misapplication
thereof.

     6.3  Collateral Accounts.  Upon the occurrence and during the continuance
          -------------------                                                 
of an Event of Default, the Administrative Agent shall have the right to cause
to be established and maintained, at its principal office or such other location
or locations as it may establish from time to time in its discretion, one or
more cash collateral bank accounts (collectively, "Collateral Accounts") for the
collection of Proceeds of the Collateral.  Such Proceeds, when deposited, shall
continue to constitute Collateral for the Obligations and shall not constitute
payment thereof until applied as herein provided. The Administrative Agent shall
have sole dominion and control over all funds deposited in any Collateral
Account, and such funds may be withdrawn therefrom only by the Administrative
Agent. Upon the occurrence and during the continuance of an Event of Default,
the Administrative Agent shall have the right to (and, if directed by the
Required Lenders pursuant to the Credit Agreement, shall) apply amounts held in
the Collateral Accounts in payment of the Obligations in the manner provided for
in SECTION 6.2.

     6.4  Grant of License.  For the purpose of enabling the Administrative
          ----------------                                                 
Agent to exercise rights and remedies under SECTION 6.1 at such time as the
Administrative Agent shall be lawfully entitled to exercise such rights and
remedies, the Pledgor hereby grants to the Administrative Agent an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to the Pledgor) to use, license or sublicense any Patent
Collateral, Trademark Collateral or Copyright Collateral now owned or licensed
or hereafter acquired or licensed by the Pledgor, and wherever the same may be
located, and including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof.  The use of such
license or sublicense by the Administrative Agent shall be exercised, at the
option of the Administrative Agent, only upon the occurrence and during the
continuation of an Event of Default; provided that any license, sublicense or
                                     --------                                
other transaction entered into by the Administrative Agent in accordance
herewith shall be binding upon the Pledgor notwithstanding any subsequent cure
of an Event of Default.

     6.5  Registration; Private Sales.  (a)  If, at any time after the
          ---------------------------                                 
occurrence and during the continuance of an Event of Default, the Pledgor shall
have received from the Administrative Agent a written request or requests that
the Pledgor cause any registration, qualification or compliance under any
federal or state securities law or laws to be effected with respect to all or
any part of the Investments, the Pledgor will, as soon as practicable and at its
expense, use its best efforts to cause such registration to be effected and be
kept effective and will use its best efforts to cause such qualification and
compliance to be effected and be kept effective as may be so requested and as
would permit or facilitate the sale and distribution of such Investments,
including, without limitation, registration under the Securities Act of 1933, as
amended (the "Securities Act"), appropriate qualifications under applicable blue
sky or other state securities laws and appropriate compliance with any other
applicable requirements of Governmental Authorities; provided, that the
                                                     --------          
Administrative 

                                      -21-
<PAGE>
 
Agent shall furnish to the Pledgor such information regarding the Administrative
Agent as the Pledgor may reasonably request in writing and as shall be required
in connection with any such registration, qualification or compliance. The
Pledgor will cause the Administrative Agent to be kept reasonably advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Administrative
Agent such number of prospectuses, offering circulars or other documents
incident thereto as the Administrative Agent from time to time may reasonably
request, and will indemnify the Administrative Agent and all others
participating in the distribution of such Pledged Securities against all claims,
losses, damages and liabilities caused by any untrue statement (or alleged
untrue statement) of a material fact contained therein (or in any related
registration statement, notification or the like) or by any omission (or alleged
omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same may have been caused by an untrue statement or omission based upon
information furnished in writing to the Pledgor by the Administrative Agent or
any other Secured Party expressly for use therein.

     (b) The Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws as in
effect from time to time, the Administrative Agent may be compelled, with
respect to any sale of all or any part of the Investments conducted without
registration or qualification under the Securities Act and such state securities
laws, to limit purchasers to any one or more Persons who will represent and
agree, among other things, to acquire such Investments for their own account,
for investment and not with a view to the distribution or resale thereof.  The
Pledgor acknowledges that any such private sales may be made in such manner and
under such circumstances as the Administrative Agent may deem necessary or
advisable in its sole and absolute discretion, including at prices and on terms
less favorable than those obtainable through a public sale without such
restrictions (including, without limitation, a public offering made pursuant to
a registration statement under the Securities Act), and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and agrees that the Administrative
Agent shall have no obligation to conduct any public sales and no obligation to
delay the sale of any Investments for the period of time necessary to permit its
registration for public sale under the Securities Act and applicable state
securities laws, and shall not have any responsibility or liability as a result
of its election so not to conduct any such public sales or delay the sale of any
Investments, notwithstanding the possibility that a substantially higher price
might be realized if the sale were deferred until after such registration.  The
Pledgor hereby waives any claims against the Administrative Agent or any Secured
Party arising by reason of the fact that the price at which any Investments may
have been sold at any private sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount of the
Obligations, even if the Administrative Agent accepts the first offer received
and does not offer such Investments to more than one offeree.

     (c) The Pledgor agrees that a breach of any of the covenants contained in
this Section will cause irreparable injury to the Administrative Agent and the
other Secured Parties, that the Administrative Agent and the other Secured
Parties have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section shall be
specifically enforceable against the Pledgor.

     6.6  The Pledgor Remains Liable.  Notwithstanding anything herein to the
          --------------------------                                         
contrary, (i) the Pledgor shall remain liable under all Contracts included
within the Collateral (including, without 

                                      -22-
<PAGE>
 
limitation, all Investment Agreements) to perform all of its obligations
thereunder to the same extent as if this Agreement had not been executed, (ii)
the exercise by the Administrative Agent of any of its rights or remedies
hereunder shall not release the Pledgor from any of its obligations under any of
such Contracts, and (iii) except as specifically provided for hereinbelow, the
Administrative Agent shall not have any obligation or liability by reason of
this Agreement under any of such Contracts, nor shall the Administrative Agent
be obligated to perform any of the obligations or duties of the Pledgor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder. This Agreement shall not in any way be deemed to obligate
the Administrative Agent, any other Secured Party or any purchaser at a
foreclosure sale under this Agreement to assume any of the Pledgor's
obligations, duties or liabilities under any Investment Agreement, including,
without limitation, the Pledgor's obligations, if any, to manage the business
and affairs of the applicable partnership, joint venture, limited liability
company or other issuer (collectively, the "Partner Obligations"), unless the
Administrative Agent or such other Secured Party or purchaser otherwise agrees
in writing to assume any or all of such Partner Obligations. In the event of
foreclosure by the Administrative Agent hereunder, then except as provided in
the preceding sentence, the Pledgor shall remain bound and obligated to perform
its Partner Obligations and neither the Administrative Agent nor any other
Secured Party shall be deemed to have assumed any Partner Obligations. In the
event the Administrative Agent, any other Secured Party or any purchaser at a
foreclosure sale elects to become a substitute member in place of the Pledgor,
the party making such election shall adopt in writing such Investment Agreement
and agree to be bound by the terms and provisions thereof; and subject to the
execution of such written agreement, the Pledgor hereby irrevocably consents in
advance to the admission of the Administrative Agent, any other Secured Party or
any such purchaser as a substitute member to the extent of the Investments
acquired pursuant to such sale, and agrees to execute any documents or
instruments and take any other action as may be necessary or as may be
reasonably requested in connection therewith. The powers, rights and remedies
conferred on the Administrative Agent hereunder are solely to protect its
interest and privilege in such Contracts, as Collateral, and shall not impose
any duty upon it to exercise any such powers, rights or remedies.


                                  ARTICLE VII

                            THE ADMINISTRATIVE AGENT

     7.1  The Administrative Agent; Standard of Care.  The Administrative Agent
          ------------------------------------------                           
will hold all items of the Collateral at any time received under this Agreement
in accordance with the provisions hereof.  The obligations of the Administrative
Agent as holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement and the other Credit
Documents, are only those expressly set forth in this Agreement and the other
Credit Documents.  The Administrative Agent shall act hereunder at the
direction, or with the consent, of the Required Lenders on the terms and
conditions set forth in the Credit Agreement.  The powers conferred on the
Administrative Agent hereunder are solely to protect its interest, on behalf of
the Secured Parties, in the Collateral, and shall not impose any duty upon it to
exercise any such powers.  Except for treatment of the Collateral in its
possession in a manner substantially equivalent to that which the Administrative
Agent, in its individual capacity, accords its own property of a similar nature,
and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to the Collateral.  Neither the Administrative Agent nor any
other Secured Party shall be liable to the Pledgor (i) for any loss or damage
sustained by the Pledgor, or 

                                      -23-
<PAGE>
 
(ii) for any loss, damage, depreciation or other diminution in the value of any
of the Collateral that may occur as a result of or in connection with or that is
in any way related to any exercise by the Administrative Agent or any other
Secured Party of any right or remedy under this Agreement, any failure to
demand, collect or realize upon any of the Collateral or any delay in doing so,
or any other act or failure to act on the part of the Administrative Agent or
any other Secured Party, except to the extent that the same is caused by its own
gross negligence or willful misconduct.

     7.2  Further Assurances; Attorney-in-Fact.  (a)  The Pledgor agrees that it
          ------------------------------------                                  
will join with the Administrative Agent to execute and, at its own expense, file
and refile under any applicable Uniform Commercial Code such financing
statements, continuation statements and other documents and instruments in such
offices as the Administrative Agent may reasonably deem necessary or
appropriate, and wherever required or permitted by law, in order to perfect and
preserve the Administrative Agent's security interest in the Collateral, and
hereby authorizes the Administrative Agent to file financing statements and
amendments thereto relating to all or any part of the Collateral without the
signature of the Pledgor where permitted by law, and agrees to do such further
acts and things (including, without limitation, making any notice filings with
state tax or revenue authorities required to be made by account creditors in
order to enforce any Accounts in such state) and to execute and deliver to the
Administrative Agent such additional conveyances, assignments, agreements and
instruments as the Administrative Agent may reasonably require or deem advisable
to perfect, establish, confirm and maintain the security interest and Lien
provided for herein, to carry out the purposes of this Agreement or to further
assure and confirm unto the Administrative Agent its rights, powers and remedies
hereunder.

     (b) The Pledgor hereby irrevocably appoints the Administrative Agent its
lawful attorney-in-fact, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor, the Administrative Agent or otherwise,
and with full power of substitution in the premises (which power of attorney,
being coupled with an interest, is irrevocable for so long as this Agreement
shall be in effect), from time to time in the Administrative Agent's discretion
after the occurrence and during the continuance of an Event of Default to take
any action and to execute any instruments that the Administrative Agent may deem
necessary or advisable to accomplish the purpose of this Agreement, including,
without limitation:

             (i) to sign the name of the Pledgor on any financing statement,
     continuation statement, notice or other similar document that, in the
     Administrative Agent's opinion, should be made or filed in order to perfect
     or continue perfected the security interest granted under this Agreement
     (including, without limitation, any title or ownership applications for
     filing with applicable state agencies to enable any motor vehicles now or
     hereafter owned by the Company to be retitled and the Administrative Agent
     listed as lienholder thereon);

            (ii)  to ask, demand, collect, sue for, recover, compound, receive
     and give acquittance and receipts for moneys due and to become due under or
     in respect of any of the Collateral;

           (iii)  to receive, endorse and collect any checks, drafts,
     instruments, chattel paper and other orders for the payment of money made
     payable to the Pledgor representing any interest, income, dividend,
     distribution or other amount payable in respect of any of the Collateral
     and to give full discharge for the same;

                                      -24-
<PAGE>
 
            (iv)  to obtain, maintain and adjust any property or casualty
     insurance required to be maintained by the Pledgor under SECTION 4.9 and
     direct the payment of proceeds thereof to the Administrative Agent;

             (v) to pay or discharge taxes, Liens or other encumbrances levied
     or placed on or threatened against the Collateral, the legality or validity
     thereof and the amounts necessary to discharge the same to be determined by
     the Administrative Agent in its sole discretion, any such payments made by
     the Administrative Agent to become Obligations of the Pledgor to the
     Administrative Agent, due and payable immediately and without demand;

            (vi)  to file any claims or take any action or institute any
     proceedings that the Administrative Agent may deem necessary or advisable
     for the collection of any of the Collateral or otherwise to enforce the
     rights of the Administrative Agent with respect to any of the Collateral;
     and

           (vii)  to use, sell, assign, transfer, pledge, make any agreement
     with respect to or otherwise deal with any and all of the Collateral as
     fully and completely as though the Administrative Agent were the absolute
     owner of the Collateral for all purposes, and to do from time to time, at
     the Administrative Agent's option and the Pledgors' expense, all other acts
     and things deemed necessary by the Administrative Agent to protect,
     preserve or realize upon the Collateral and to more completely carry out
     the purposes of this Agreement.

     (c) If the Pledgor fails to perform any covenant or agreement contained in
this Agreement after written request to do so by the Administrative Agent
(provided that no such request shall be necessary at any time after the
 --------                                                              
occurrence and during the continuance of an Event of Default), the
Administrative Agent may itself perform, or cause the performance of, such
covenant or agreement and may take any other action that it deems necessary and
appropriate for the maintenance and preservation of the Collateral or its
security interest therein, and the reasonable expenses so incurred in connection
therewith shall be payable by the Pledgor under SECTION 8.1.


                                  ARTICLE VII

                                 MISCELLANEOUS

     8.1  Indemnity and Expenses.  The Pledgor agrees:
          ----------------------                      

     (a) To indemnify and hold harmless the Administrative Agent, each other
Secured Party and each of their respective directors, officers, employees,
agents and affiliates from and against any and all claims, damages, demands,
losses, obligations, judgments and liabilities (including, without limitation,
reasonable attorneys' fees and expenses) in any way arising out of or in
connection with this Agreement and the transactions contemplated hereby, except
to the extent the same shall arise as a result of the gross negligence or
willful misconduct of the party seeking to be indemnified; and

     (b) To pay and reimburse the Administrative Agent upon demand for all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) that the Administrative Agent may incur in
connection with (i) the custody, use or preservation of, or the sale of,
collection from or other realization upon, any of the Collateral, including the
reasonable expenses 

                                      -25-
<PAGE>
 
of re-taking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, (ii) the exercise or enforcement of
any rights or remedies granted hereunder (including, without limitation, under
ARTICLE VI), under any of the other Credit Documents or otherwise available to
it (whether at law, in equity or otherwise), or (iii) the failure by the Pledgor
to perform or observe any of the provisions hereof. The provisions of this
SECTION 8.1 shall survive the execution and delivery of this Agreement, the
repayment of any of the Obligations, the termination of the Commitments under
the Credit Agreement and the termination of this Agreement or any other Credit
Document.

     8.2  No Waiver.  The rights and remedies of the Secured Parties expressly
          ---------                                                           
set forth in this Agreement and the other Credit Documents are cumulative and in
addition to, and not exclusive of, all other rights and remedies available at
law, in equity or otherwise.  No failure or delay on the part of any Secured
Party in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege or be construed to be a waiver of any Default or
Event of Default.  No course of dealing between the Pledgor and the Secured
Parties or their agents or employees shall be effective to amend, modify or
discharge any provision of this Agreement or any other Credit Document or to
constitute a waiver of any Default or Event of Default. No notice to or demand
upon the Pledgor in any case shall entitle the Pledgor to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
right of any Secured Party to exercise any right or remedy or take any other or
further action in any circumstances without notice or demand.

     8.3  Enforcement.  By its acceptance of the benefits of this Agreement,
          -----------                                                       
each Lender agrees that this Agreement may be enforced only by the
Administrative Agent, acting upon the instructions or with the consent of the
Required Lenders as provided for in the Credit Agreement, and that no Lender
shall have any right individually to enforce or seek to enforce this Agreement
or to realize upon any Collateral or other security given to secure the payment
and performance of the Obligations.

     8.4  Amendments, Waivers, etc.  No amendment, modification, waiver,
          ------------------------                                      
discharge or termination of, or consent to any departure by the Pledgor from,
any provision of this Agreement, shall be effective unless in a writing executed
and delivered in accordance with SECTION 11.6 of the Credit Agreement, and then
the same shall be effective only in the specific instance and for the specific
purpose for which given.

     8.5  Continuing Security Interest; Term; Successors and Assigns;
          -----------------------------------------------------------
Assignment; Termination and Release; Survival.  This Agreement shall create a
---------------------------------------------                                
continuing security interest in the Collateral and shall secure the payment and
performance of all of the Obligations as the same may arise and be outstanding
at any time and from time to time from and after the date hereof, and shall (i)
remain in full force and effect until the occurrence of (x) the payment in full
of the Obligations (other than indemnity obligations not then due and payable
and that survive termination of the Credit Documents), (y) the termination or
expiration of all Letters of Credit under the Credit Agreement and (z) the
termination of the Commitments under the Credit Agreement (the events in clauses
(x), (y) and (z) above, collectively, the "Termination Requirements"), (ii) be
binding upon and enforceable against the Pledgor and its successors and assigns
(provided, however, that the Pledgor may not sell, assign or transfer any of its
 --------  -------                                                              
rights, interests, duties or obligations hereunder without the prior written
consent of the Lenders) and (iii) inure to the benefit of and be enforceable by
each Secured Party and its successors and assigns.  Upon any sale or other
disposition by the Pledgor of any Collateral in a 

                                      -26-
<PAGE>
 
transaction expressly permitted hereunder or under or pursuant to the Credit
Agreement or any other applicable Credit Document, the Lien and security
interest created by this Agreement in and upon such Collateral shall be
automatically released, and upon the satisfaction of all of the Termination
Requirements, this Agreement and the Lien and security interest created hereby
shall terminate; and in connection with any such release or termination, the
Administrative Agent, at the request and expense of the Pledgor, will execute
and deliver to the Pledgor such documents and instruments evidencing such
release or termination as the Pledgor may reasonably request and will assign,
transfer and deliver to the Pledgor, without recourse and without representation
or warranty, such of the Collateral as may then be in the possession of the
Administrative Agent (or, in the case of any partial release of Collateral, such
of the Collateral so being released as may be in its possession). All
representations, warranties, covenants and agreements herein shall survive the
execution and delivery of this Agreement and any Pledge Amendment.

     8.6  Notices.  All notices and other communications provided for hereunder
          -------                                                              
shall be given to the parties in the manner and subject to the other notice
provisions set forth in the Credit Agreement.

     8.7  Governing Law.  This Agreement shall be governed by and construed and
          -------------                                                        
enforced in accordance with the laws of the State of North Carolina (without
regard to the conflicts of law provisions thereof).

     8.8  Severability.  To the extent any provision of this Agreement is
          ------------                                                   
prohibited by or invalid under the applicable law of any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.

     8.9  Construction.  The headings of the various sections and subsections of
          ------------                                                          
this Agreement have been inserted for convenience only and shall not in any way
affect the meaning or construction of any of the provisions hereof.  Unless the
context otherwise requires, words in the singular include the plural and words
in the plural include the singular.

     8.10 Counterparts.  This Agreement may be executed in any number of
          ------------                                                  
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.

                                      -27-
<PAGE>
 
     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
under seal by their duly authorized officers as of the date first above written.


                         PETERSEN PUBLISHING COMPANY, L.L.C.


                         By:     /s/ Richard S Willis
                                --------------------------------------------

                         Title: Executive Vice President and Chief Financial
                                --------------------------------------------
                                Officer
                                -------



Accepted and agreed to:

FIRST UNION NATIONAL BANK, as
 Administrative Agent


By:     /s/ Bruce W. Loftin
       -----------------------------

Title: Senior Vice President
       -----------------------------

                                      -28-
<PAGE>
 
                                            Annex A to Pledge and               
                                             Security Agreement                 
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 



Pledged Investments
-------------------

<TABLE> 
<CAPTION>  
                                                                   Percentage of
                                                                    Outstanding
                               Type of  Certificate  No. of shares   Interests
    Name of Issuer            Interests   Number    (if applicable)  in Issuer
    --------------           ---------- ----------- ---------------  ---------
<S>                          <C>        <C>         <C>             <C> 



                                     None.
</TABLE> 
<PAGE>
 
                                            Annex B to Pledge and               
                                             Security Agreement                 
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 



                                FILING LOCATIONS


     Secretary of State of California


     Secretary of State of Colorado


     Secretary of State of Connecticut


     Secretary of State of Florida


     Fulton County, Georgia


     Secretary of State of Illinois


     Secretary of State of Michigan


     Secretary of State of New Jersey


     Secretary of State of New York
     New York County, New York

     Secretary of State of North Carolina


     Secretary of State of Ohio
<PAGE>
 
                                            Annex C to Pledge and               
                                             Security Agreement                 
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 



            LOCATIONS OF CHIEF EXECUTIVE OFFICE, PLACES OF BUSINESS,
          RECORDS RELATING TO COLLATERAL, AND EQUIPMENT AND INVENTORY


     1.   Chief executive office/principal place
          of business:

          6420 Wilshire Blvd.
          Los Angeles, California

     2.   Records relating to Collateral:

          a.   6420 Wilshire Blvd.
               Los Angeles, California

          b.   110 5th Avenue
               New York, New York  10022

          c.   333 West Fort Street
               Detroit, Michigan

          d.   5350 Manhattan Circle Suite 100
               Boulder, Colorado  80303

          e.   Corporate Center Five
               Five Concourse Pkwy.
               Fulton County, Georgia

          f.   815 N. LaSalle Street
               Chicago, Illinois

          g.   c/o Willis Stein & Partners, L.P.
               227 West Monroe
               Chicago, Illinois  60606

          h.   217 Braeside Drive
               Hamden, Connecticut 06514

          i.   6 West Laurelwood Drive
               Lawrenceville, New Jersey 08648

          j.   2 Sunset Court
               Montville, New Jersey 07045
<PAGE>
 
     3.   Equipment or Inventory:

          a.   6420 Wilshire Blvd.
               Los Angeles, California

          b.   110 5th Avenue
               New York, New York  10022

          c.   333 West Fort Street
               Detroit, Michigan

          d.   5350 Manhattan Circle Suite 100
               Boulder, Colorado  80303

          e.   Corporate Center Five
               Five Concourse Pkwy.
               Fulton County, Georgia

          f.   815 N. LaSalle Street
               Chicago, Illinois

          g.   inventory located at:
               Johnson & Hardin Company
               760 Fujitech Road
               Lebanon, Ohio 45036

          h.   inventory located at:
               3-Z Printing
               U.S. Route 40 West
               Teutopolis, Illinois 62467


     4.   Other places of business:

          None.
<PAGE>
 
                                            Annex D to Pledge and               
                                             Security Agreement                 
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 



                               CERTAIN CONTRACTS



 
     1.   License Agreement, dated as of August 15, 1996, by and between Robert
E. Petersen and Petersen Publishing Company, as licensor, and Brightview
Communications Group, Inc., as licensee.

     2.   Agreements, dated May 3, 1996, with World Color Press, Inc., regarding
paper purchasing program.

     3.   Agreement, dated December 19, 1995, with World Color Press, Inc., as
modified, regarding printing services.

     4.   Agreement, dated January 12, 1996, with Johnson & Hardin Company,
regarding printing services.

     5.   Circulation Fulfillment Agreement, dated September 1, 1995, with
Neodata Services, Inc.

     6.   Agreement, dated December 1981, with Compuname, Inc.

     7.   Distribution Agreement, dated January 10, 1994, with Warner Publisher
Services, Inc.

     8.   Distribution Agreement, dated October 18, 1995, with Worldwide
Distribution Services.

     9.   Publisher Distribution Agreement, dated May 21, 1996, with Retail
Vision.
<PAGE>
 
                                            Annex E to Pledge and               
                                             Security Agreement                 
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 



                     COPYRIGHTS AND COPYRIGHT APPLICATIONS


                            (see attachment hereto)
<PAGE>
 
                                            Annex F to Pledge and               
                                             Security Agreement                 
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 



                        PATENTS AND PATENT APPLICATIONS


<TABLE> 
<CAPTION> 
Application or                                            Issue or
Registration No.       Country          Inventor         Filing Date
----------------       -------          --------         -----------
<S>                    <C>              <C>              <C> 


                                  None.
</TABLE> 
<PAGE>
 
                                            Annex G to Pledge and               
                                             Security Agreement                 
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 




                     TRADEMARKS AND TRADEMARK APPLICATIONS


                            (see attachment hereto)
<PAGE>
 
                                            Exhibit A to Pledge and
                                             Security Agreement                 
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 



                                PLEDGE AMENDMENT


     THIS PLEDGE AMENDMENT, dated as of _______________, 19___, is delivered by
PETERSEN PUBLISHING COMPANY, L.L.C. (the "Pledgor") pursuant to SECTION 5.1 of
the Pledge Agreement referred to hereinbelow.  The Pledgor hereby agrees that
this Pledge Amendment may be attached to the Pledge and Security Agreement,
dated as of __________, 1997, made by the Pledgor in favor of First Union
National Bank, as Administrative Agent (as amended, modified, supplemented or
restated from time to time, the "Pledge Agreement," capitalized terms defined
therein being used herein as therein defined), and that the Investments listed
on Annex A to this Pledge Amendment shall be deemed to be part of the
   -------                                                           
Investments within the meaning of the Pledge Agreement and shall become part of
the Collateral and shall secure all of the Obligations as provided in the Pledge
Agreement.  This Pledge Amendment and its attachments are hereby incorporated
into the Pledge Agreement and made a part thereof.


                              PETERSEN PUBLISHING COMPANY, L.L.C.


                              By: ______________________________

                              Title: _____________________________
<PAGE>
 
                                            Annex A to Exhibit A (Pledge 
                                             Amendment)
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 



Pledged Investments
-------------------

<TABLE> 
<CAPTION> 
                                                            Percentage of
                                                             Outstanding
                      Type of  Certificate  No. of shares     Interests
    Name of Issuer   Interests    Number   (if applicable)    in Issuer
    --------------   --------- ----------- ---------------    ---------
    <S>              <C>       <C>         <C>              <C> 

</TABLE> 
<PAGE>
 
                                            Exhibit B to Pledge and
                                             Security Agreement                 
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 




              COLLATERAL ASSIGNMENT AND GRANT OF SECURITY INTEREST
                                 IN COPYRIGHTS


     WHEREAS, PETERSEN PUBLISHING COMPANY, L.L.C. (the "Grantor") is the owner
of the copyrights listed on Schedule A attached hereto, which copyrights are
                            ----------                                      
registered or have pending registrations in the United States Copyright Office
as set forth on Schedule A attached hereto (all such copyrights, registrations
                ----------                                                    
and applications, collectively, the "Copyrights"); and

     WHEREAS, the Grantor has entered into a Pledge and Security Agreement (as
amended, modified, restated or supplemented from time to time, the "Security
Agreement"), dated as of _____________, 1997, in which the Grantor has agreed
with First Union National Bank, as Administrative Agent (the "Administrative
Agent"), with offices at One First Union Center, 301 South College Street,
Charlotte, North Carolina 28288-0735, to execute this Assignment;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, as security for the payment and
performance of the Obligations (as defined in the Security Agreement), the
Grantor does hereby collaterally assign and grant to the Administrative Agent a
security interest in all of its right, title and interest in and to the
Copyrights, and the use thereof, together with all proceeds and products thereof
and the goodwill of the businesses symbolized by the Copyrights.  This
Assignment has been given in conjunction with the collateral assignment and
security interest granted to the Administrative Agent under the Security
Agreement, and the provisions of this Assignment are without prejudice to and in
addition to the provisions of the Security Agreement, which are incorporated
herein by this reference.

                              PETERSEN PUBLISHING COMPANY, L.L.C.


                              By: ______________________________

                              Title: _____________________________
 
<PAGE>
 
                                   Schedule A
                                   ----------



                     COPYRIGHTS AND COPYRIGHT APPLICATIONS


<TABLE> 
<CAPTION> 
                      Application or                      Issue or
       Grantor       Registration No.    Country         Filing Date
       -------       ----------------    -------         -----------
       <S>           <C>                 <C>             <C> 

</TABLE> 
<PAGE>
 
                                            Exhibit C to Pledge and
                                             Security Agreement                 
                                            First Union National Bank, as       
                                             Administrative Agent               
                                            Petersen Publishing Company, L.L.C. 
                                            October 6, 1997                     
                                            ___________________________________ 



              COLLATERAL ASSIGNMENT AND GRANT OF SECURITY INTEREST
                           IN PATENTS AND TRADEMARKS


     WHEREAS, PETERSEN PUBLISHING COMPANY, L.L.C. (the "Grantor") is the owner
of the trademarks and service marks listed on Schedule A attached hereto, which
                                              ----------                       
marks are registered or have pending registrations in the United States Patent
and Trademark Office as set forth on Schedule A attached hereto (all such
                                     ----------                          
trademarks, service marks, registrations and applications, collectively, the
"Trademarks") and is the owner of the patents listed on Schedule A attached
                                                        ----------         
hereto, which patents are registered or have pending applications in the United
States Patent and Trademark Office as set forth on Schedule A attached hereto
                                                   ----------                
(all such patents, registrations and applications, collectively, the "Patents");
and

     WHEREAS, the Grantor has entered into a Pledge and Security Agreement (as
amended, modified, restated or supplemented from time to time, the "Security
Agreement"), dated as of _____________, 1997, in which the Grantor has agreed
with First Union National Bank, as Administrative Agent (the "Administrative
Agent"), with offices at One First Union Center, 301 South College Street,
Charlotte, North Carolina 28288-0735, to execute this Assignment;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, as security for the payment and
performance of the Obligations (as defined in the Security Agreement), the
Grantor does hereby collaterally assign and grant to the Administrative Agent a
security interest in all of its right, title and interest in and to the
Trademarks and the Patents, and the use thereof, together with all proceeds and
products thereof and the goodwill of the businesses symbolized by the Trademarks
and the Patents.  This Assignment has been given in conjunction with the
collateral assignment and security interest granted to the Administrative Agent
under the Security Agreement, and the provisions of this Assignment are without
prejudice to and in addition to the provisions of the Security Agreement, which
are incorporated herein by this reference.

                              PETERSEN PUBLISHING COMPANY, L.L.C.


                              By: ________________________________

                              Title: _____________________________
<PAGE>
 
                                   Schedule A
                                   ----------



                     TRADEMARKS AND TRADEMARK APPLICATIONS

<TABLE> 
<CAPTION> 
                                  Application or                 Issue or
       Grantor        Mark       Registration No.   Country     Filing Date
       -------        ----       ----------------   -------     -----------
<S>                   <C>        <C>                <C>         <C> 


</TABLE> 
                        PATENTS AND PATENT APPLICATIONS


<TABLE> 
<CAPTION> 
      Patent No.        Date Issued         Country          Description
      ----------        -----------         -------          -----------
<S>                     <C>                 <C>              <C> 


</TABLE>