<PAGE>   1

                                                               Exhibit 4.16

                          SUBSIDIARY SECURITY AGREEMENT


                  SUBSIDIARY SECURITY AGREEMENT, dated as of June 30, 2000, made
by RA BRANDS, L.L.C., a Delaware limited liability company (the "Grantor"), in
favor of THE CHASE MANHATTAN BANK, a New York banking corporation, as
administrative agent (in such capacity, the "Administrative Agent") for the
several banks and other financial institutions (the "Lenders") from time to time
parties to the Amended and Restated Credit Agreement, dated as of April 28, 2000
(as the same may be amended, supplemented, waived or otherwise modified from
time to time, the "Credit Agreement"), among the Remington Arms Company, Inc.
(the "Borrower"), Chase Securities Inc. and Banc of America Securities LLC, as
joint lead arrangers, Bank of America, N.A., as Syndication agent, Goldman Sachs
Credit Partners, L.P., as documentation agent (collectively the "Other
Representatives") and the Administrative Agent.


                              W I T N E S S E T H :
                              - - - - - - - - - -


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

                  WHEREAS, pursuant to Section 8.17(b) of the Credit Agreement,
the Borrower agreed not to create any new Subsidiary unless such Subsidiary
shall have executed and delivered a security agreement to the Administrative
Agent for the benefit of the Lenders;

                  NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent, the Other Representatives and the Lenders to continue
to make their respective Extensions of Credit to the Borrower under the Credit
Agreement, the Grantor hereby agrees with the Administrative Agent, for the
benefit of the Lenders, as follows:

        1. Defined Terms. (a) Unless otherwise defined herein, capitalized terms
defined in the Credit Agreement are used herein as defined therein. The
following terms are used herein as defined in the Uniform Commercial Code in
effect in the State of New York from time to time: Accounts, Chattel Paper,
Documents, Equipment, Farm Products, Fixtures, General Intangibles, Instruments,
Inventory and Proceeds. The following terms shall have the following meanings:

                "Agreement": this Security Agreement, as the same may be
        amended, supplemented, waived or otherwise modified from time to time.

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

                                       1
<PAGE>   2

                "Collateral": as defined in Section 2 of this Agreement.

                "Contracts": all contracts, agreements, instruments and
        indentures in any form, and portions thereof, to which the Grantor is a
        party or under which the Grantor has any right, title or interest or to
        which the Grantor or any property of the Grantor is subject, as the same
        may from time to time be amended, supplemented or otherwise modified,
        including, without limitation, (a) all rights of the Grantor to receive
        moneys due and to become due to it thereunder or in connection
        therewith, (b) all rights of the Grantor to damages arising out of, or
        for, breach or default in respect thereof and (c) all rights of the
        Grantor to perform and to exercise all remedies thereunder, in each case
        to the extent the grant by the Grantor of a security interest pursuant
        to this Agreement in its right, title and interest in such contract,
        agreement, instrument or indenture is not prohibited by such contract,
        agreement, instrument or indenture without the consent of any other
        party thereto, would not give any other party to such contract,
        agreement, instrument or indenture the right to terminate its
        obligations thereunder, or is permitted with consent if all necessary
        consents to such grant of a security interest have been obtained from
        the other parties thereto (it being understood that the foregoing shall
        not be deemed to obligate the Grantor to obtain such consents);
        provided, that the foregoing limitation shall not affect, limit,
        restrict or impair the grant by the Grantor of a security interest
        pursuant to this Agreement in any Account or any money or other amounts
        due or to become due under any such contract, agreement, instrument or
        indenture.

                "Copyright Licenses": all United States written license
        agreements with any unaffiliated Person in connection with any of the
        Copyrights or such other Person's copyrights, whether the Grantor is a
        licensor or a licensee under any such license agreement, subject, in
        each case, to the terms of such license agreements, and the right to
        prepare for sale, sell and advertise for sale, all Inventory now or
        hereafter covered by such licenses.

                "Copyrights": all United States copyrights, whether or not the
        underlying works of authorship have been published, and whether or not
        the copyrights have been registered, copyright registrations and
        applications, and all works of authorship and other intellectual
        property rights therein, including, without limitation, (a) all renewals
        thereof, (b) all income, royalties, damages and other payments now and
        hereafter due and/or payable with respect thereto (including, without
        limitation, payments under all licenses entered into in connection
        therewith, and damages and payments for past or future infringements
        thereof), (c) the right to sue for past, present and future
        infringements and misappropriations thereof, and (d) all rights
        corresponding thereto throughout the world and all other rights of any
        kind whatsoever of the Grantor accruing thereunder or pertaining
        thereto.

                "Obligations": the obligations and liabilities of the Grantor
        under the Subsidiary Guarantee, the Subsidiary Patent and Trademark
        Security Agreement and this Security Agreement.

                "Patent License": all United States written license agreements
        with any unaffiliated Person in connection with any of the Patents or
        such other Person's patents, whether the Grantor is a licensor or a
        licensee under any such license agreement,

                                       2
<PAGE>   3

        including, without limitation, the license agreements listed in Schedule
        II attached hereto and made a part hereof, subject, in each case, to the
        terms of such license agreements, and the right to prepare for sale,
        sell and advertise for sale, all Inventory now or hereafter covered by
        such licenses.

                "Patents": all United States patents, patents applications and
        patentable inventions, including, without limitation, all patents and
        patent applications identified in Schedule II attached hereto and made a
        part hereof, and including without limitation (a) all inventions and
        improvements described and claimed therein, and patentable inventions,
        (b) the right to sue or otherwise recover for any and all past, present
        and future infringements and misappropriations thereof, (c) all income,
        royalties, damages and other payments now and hereafter due and/or
        payable with respect thereto (including, without limitation, payments
        under all licenses entered into in connection therewith, and damages and
        payments for past or future infringements thereof), and (d) all rights
        corresponding thereto in the United States and all reissues, divisions,
        continuations, continuations-in-part, substitutes, renewals, and
        extensions thereof, all improvements thereon, and all other rights of
        any kind whatsoever of the Grantor accruing thereunder or pertaining
        thereto.

                "Trademark License": all United States written license
        agreements with any unaffiliated Person in connection with any of the
        Trademarks or such other Person's names or trademarks, whether the
        Grantor is a licensor or a licensee under any such license agreement,
        including, without limitation, the license agreements listed in Schedule
        I attached hereto and made a part hereof, subject, in each case, to the
        terms of such license agreements, and the right to prepare for sale,
        sell and advertise for sale, all Inventory now or hereafter covered by
        such licenses.

                "Trademarks": all United States trademarks, service marks, trade
        names, trade dress or other indicia of trade origin, trademark and
        service mark registrations, and applications for trademark or service
        mark registrations (except for "intent to use" applications for
        trademark or service mark registrations filed pursuant to Section 1(b)
        of the Lanham Act, unless and until an Amendment to Allege Use or a
        Statement of Use under Sections 1(c) and 1(d) of said Act has been
        filed), and any renewals thereof, including, without limitation, each
        registration and application identified in Schedule I attached hereto
        and made a part hereof, and including without limitation (a) the right
        to sue or otherwise recover for any and all past, present and future
        infringements and misappropriations thereof, (b) all income, royalties,
        damages and other payments now and hereafter due and/or payable with
        respect thereto (including, without limitation, payments under all
        licenses entered into in connection therewith, and damages and payments
        for past or future infringements thereof), and (c) all rights
        corresponding thereto in the United States and all other rights of any
        kind whatsoever of the Grantor accruing thereunder or pertaining
        thereto, together in each case with the goodwill of the business
        connected with the use of, and symbolized by, each such trademark,
        service mark, trade name, trade dress or other indicia of trade origin.

                                       3
<PAGE>   4

                "Work": any work which is subject to copyright protection
        pursuant to Title 17 of the United States Code.

                (b) The words "hereof," "herein" and "hereunder" and words of
        similar import when used in this Agreement shall refer to this Agreement
        as a whole and not to any particular provision of this Agreement, and
        section and paragraph references are to this Agreement unless otherwise
        specified.

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

        2 Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, the Grantor hereby assigns,
pledges and grants, subject to existing licenses to use Patents or Trademarks
granted by the Grantor in the ordinary course of business, to the Administrative
Agent, for the benefit of the Lenders, a security interest in and Lien on all of
the following property now owned or at any time hereafter acquired by the
Grantor or in which the Grantor now has or at any time in the future may acquire
any right, title or interest (collectively, the "Collateral"):

                      (i)    all Accounts;

                     (ii)    all Chattel Paper;

                    (iii)    all Contracts;

                     (iv)    all Documents;

                      (v)    all Equipment (other than motor vehicles covered by
                             certificate of title statutes);

                     (vi)    all General Intangibles;

                    (vii)    all Instruments;

                   (viii)    all Inventory;

                     (ix)    all Patent Licenses;

                      (x)    all Patents;

                     (xi)    all Trademark Licenses;

                                       4
<PAGE>   5

                    (xii)    all Trademarks; and

                   (xiii)    to the extent not otherwise included, all Proceeds
                             and products of any and all of the foregoing;

provided, that the foregoing grant of a security interest with respect to
General Intangibles, Patent Licenses and Trademark Licenses shall not include a
security interest in, and the Collateral shall not include, any license or
permit with a Governmental Authority or Patent License or Trademark License with
or issued by Persons other than a Subsidiary of the Grantor that would otherwise
be included in the Collateral to the extent that the grant by the Grantor of
such security interest is prohibited by the terms and provisions of the written
agreement or document or instrument creating or evidencing such license or
permit or Patent License or Trademark License (or, if such grant of a security
interest is permitted with the consent of a Governmental Authority or any other
party thereto, to the extent all necessary consents to such grant have not been
obtained therefrom, it being understood that the Grantor shall not be deemed to
be obliged to obtain such consents), or such agreement, document or instrument
gives the other party thereto the right to terminate such license or permit with
a Governmental Authority or Patent License or Trademark License in the event of
the grant of a security interest with respect thereto. The Grantor shall use its
reasonable best efforts to (i) avoid entering into agreements or contracts which
would prohibit the Grantor from granting a security interest in such licenses or
permits, Patent Licenses or Trademark Licenses pursuant to the terms of this
Agreement and (ii) cause each such license, permit, Patent License or Trademark
License entered into, created or made by it after the Effective Date to be
subject to the Lien and security interest created pursuant to this Agreement.

        3 Rights of Administrative Agent, Other Representatives and Lenders;
Limitations on Administrative Agent's, Other Representative's and Lenders'
Obligations.

                (a) No Liability of Administrative Agent or Lenders under
        Accounts or Contracts. None of the Administrative Agent, any Other
        Representative nor any Lender shall have any obligation or liability
        under any Account (or any agreement giving rise thereto) or Contract by
        reason of or arising out of this Agreement or the receipt by the
        Administrative Agent, any Other Representative or any such Lender of any
        payment relating to such Account or Contract pursuant hereto, nor shall
        the Administrative Agent, any Other Representative or any Lender be
        obligated in any manner to perform any of the obligations of the Grantor
        under or pursuant to any Account (or any agreement giving rise thereto)
        or Contract, to make any payment, to make any inquiry as to the nature
        or the sufficiency of any payment received by it or as to the
        sufficiency of any performance by any party under any Account (or any
        agreement giving rise thereto) or Contract, to present or file any
        claim, to take any action to enforce any performance or to collect the
        payment of any amounts which may have been assigned to it or to which it
        may be entitled at any time or times.


                                       5
<PAGE>   6

                (b) Notice to Account Debtors. Upon the request of the
        Administrative Agent at any time after the occurrence and during the
        continuance of an Event of Default, the Grantor shall notify the account
        debtors on the Accounts and the parties to the Contracts that the
        Accounts and Contracts have been assigned to the Administrative Agent,
        for the benefit of the Lenders, and that payments in respect thereof
        shall be made directly to the Administrative Agent. At any time and from
        time to time after the occurrence and during the continuance of an Event
        of Default, the Administrative Agent may in its own name or in the name
        of others communicate with account debtors on the Accounts and the
        parties to the Contracts to verify with them to its satisfaction the
        existence, amount and terms of any Accounts or Contracts.

                (c) Collections on Accounts. If required by the Administrative
        Agent at any time when an Event of Default has occurred and is
        continuing, any payments of Accounts, when collected by the Grantor,
        shall be forthwith (and, in any event, within two Business Days of
        receipt by the Grantor) transferred by the Grantor to the Administrative
        Agent, subject to disposition by the Administrative Agent for the
        account of the Lenders only, as hereinafter provided. Until so turned
        over, all such payments shall be held by the Grantor in trust for the
        benefit of the Administrative Agent and the Lenders, segregated from
        other funds of the Grantor. All Proceeds constituting collections of
        Accounts while held by the Administrative Agent (or by the Grantor in
        trust for the benefit of the Administrative Agent, the Other
        Representatives and the Lenders) shall continue to be collateral
        security for all of the Obligations and shall not constitute payment
        thereof until applied as hereinafter provided. At any time when an Event
        of Default has occurred and is continuing, at the Administrative Agent's
        election, the Administrative Agent shall hold all or any part of such
        funds on account of the Obligations (whether matured or unmatured) and
        may apply such funds to the obligations then due and owing, and any part
        of such funds which the Administrative Agent does not so apply shall be
        paid over from time to time by the Administrative Agent to the Grantor
        or to whomsoever may be lawfully entitled to receive the same. At any
        time when an Event of Default has occurred and is continuing, at the
        Administrative Agent's request, the Grantor shall deliver to the
        Administrative Agent all original and other documents evidencing, and
        relating to, the agreements and transactions which gave rise to the
        Accounts, including, without limitation, all statements relating to the
        Accounts.

                                       6
<PAGE>   7

        4 Representations and Warranties. The Grantor hereby represents and
warrants that:

                (a) Title; No Other Liens. Except for the Lien granted to the
        Administrative Agent, for the benefit of the Lenders, pursuant to this
        Agreement and the other Liens permitted to exist on the Collateral
        pursuant to the Credit Agreement and the other Loan Documents, (
        including without limitation Liens permitted to exist pursuant to
        Section 8.3 of the Credit Agreement), the Grantor owns each item of the
        Collateral free and clear of any and all Liens. No security agreement,
        financing statement or other public notice similar in effect with
        respect to all or any part of the Collateral is on file or of record in
        any public office, except such as may have been filed in favor of the
        Administrative Agent, for the benefit of the Lenders, pursuant to this
        Agreement, or as may be permitted pursuant to the Loan Documents.

                (b) Perfected First Priority Liens. (i) This Agreement is
        effective to create, as collateral security for the Obligations, valid
        and enforceable Liens on the Collateral in favor of the Administrative
        Agent, for the benefit of the Lenders, except as enforceability may be
        affected by bankruptcy, insolvency, fraudulent conveyance,
        reorganization, moratorium and other similar laws relating to or
        affecting creditor's rights generally, general equitable principles
        (whether considered in a proceeding in equity or at law) and an implied
        covenant of good faith and fair dealing.

                (ii) Except with regard to Liens (if any) on Specified Assets,
        upon the completion of the Filings, and the delivery to and continuing
        possession by the Administrative Agent of all Instruments, Chattel Paper
        and Documents a security interest in which is perfected by possession,
        the Liens created pursuant to this Agreement will constitute valid Liens
        on and (to the extent provided herein) perfected security interests in
        the Collateral in favor of the Administrative Agent for the benefit of
        the Lenders, and will be prior to all other Liens of all other Persons
        other than Permitted Liens, and enforceable as such as against all other
        Persons other than Ordinary Course Buyers, except to the extent that the
        recording of an assignment or other transfer of title to the
        Administrative Agent or the recording of other applicable documents in
        the United States Patent and Trademark Office or United States Copyright
        Office may be necessary for perfection or enforceability, and except as
        enforceability may be limited by applicable bankruptcy, insolvency,
        reorganization, moratorium or similar laws affecting the enforcement of
        creditors' rights generally and by general equitable principles (whether
        enforcement is sought by proceedings in equity or at law) or by an
        implied covenant of good faith and fair dealing. As used in this Section
        4(b)(ii), the following terms shall have the following meanings:

                        "Filings": the filing or recording of the Financing
                Statements, any Patent and Trademark Security Agreement and any
                filings after the Closing Date in any other jurisdiction as may
                be necessary under any Requirement of Law.

                                       7
<PAGE>   8

                        "Financing Statements": the financing statements
                delivered to the Administrative Agent by the Borrower on the
                Closing Date for filing in the jurisdictions listed in Schedule
                6.1(e) to the Credit Agreement.

                        "Ordinary Course Buyers": with respect to goods only,
                buyers in the ordinary course of business to the extent provided
                in Section 9-307(1) of the Uniform Commercial Code as in effect
                from time to time in the relevant jurisdiction.

                        "Permitted Liens": Liens permitted pursuant to the Loan
                Documents, including without limitation those permitted to exist
                pursuant to subsection 8.3 of the Credit Agreement.

                        "Specified Assets": the following property and assets of
                the Grantor:

                                (1) Equipment constituting Fixtures;

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

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

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

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

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

                                       8
<PAGE>   9

                                (7) Proceeds of Accounts, receivables of
                        Inventory which do not themselves constitute Collateral
                        or which have not been transferred to or deposited in
                        the Collateral Proceeds Account (if any); and

                                (8) Equipment at various sales offices with a
                        fair market value of less than $10,000 per sales office
                        and mobile goods.

                (c) Accounts. The places where the Grantor keeps its records
        concerning the Accounts constituting Collateral are 870 Remington Drive,
        Madison, N.C. 27025 or such other location or locations of which the
        Grantor shall have provided prior written notice to the Administrative
        Agent pursuant to Section 5(p).

                (d) Consents. Except as set forth in Schedules I and II hereto
        no consent of any party (other than the Grantor) to any Patent License
        or Trademark License constituting Collateral or any obligor in respect
        of any material Account constituting Collateral or which owes in the
        aggregate a material portion of all the Accounts constituting Collateral
        is required, or purports to be required, to be obtained by or on behalf
        of the Grantor in connection with the execution, delivery and
        performance of this Agreement that has not been obtained. Each Patent
        License, Trademark License and Account constituting Collateral is in
        full force and effect and constitutes a valid and legally enforceable
        obligation of the Grantor and (to the knowledge of the Grantor) each
        other party thereto except as enforceability may be limited by
        bankruptcy, insolvency, reorganization, moratorium or similar laws
        affecting the enforcement of creditor's rights generally and by general
        equitable principles (whether enforcement is sought by proceedings in
        equity or at law) and except to the extent the failure of any such
        Patent License, Trademark License or Account to be in full force and
        effect or valid or legally enforceable would not be reasonably expected,
        in the aggregate, to have a material adverse effect on the value of the
        Collateral (as defined in the Credit Agreement). Except as set forth in
        Schedules I and II hereto, no consent or authorization of, filing with
        or other act by or in respect of any Governmental Authority is required
        in connection with the execution, delivery, performance, validity or
        enforceability of any of the Patent Licenses, Trademark Licenses or
        Accounts constituting Collateral by any party thereto other than those
        which have been duly obtained, made or performed and are in full force
        and effect and those the failure of which to make or obtain would not be
        reasonably expected, in the aggregate, to have a material adverse effect
        on the value of the Collateral (as defined in the Credit Agreement).
        Except as set forth in Schedules I and II hereto, neither the Grantor
        nor (to the knowledge of the Grantor) any other party to any Patent
        License, Trademark License or Account constituting Collateral is in
        default in the performance or observance of any of the terms thereof,
        except for such defaults as would not reasonably be expected, in the
        aggregate, to have a material adverse effect on the value of the
        Collateral (as defined in the Credit Agreement). The right, title and
        interest of the Grantor in, to and under each Patent License, Trademark
        License and Account constituting Collateral are not subject to any
        defense, offset, counterclaim or claim which would be reasonably
        expected, either

                                       9
<PAGE>   10

        individually or in the aggregate, to have a material adverse effect on
        the value of the Collateral (as defined in the Credit Agreement).

                (e) Location of Tangible Property. The Inventory constituting
        Collateral and the Equipment constituting Collateral are kept at the
        locations listed in Schedule III hereto and/or such other locations of
        which the Grantor shall provide written notice to the Administrative
        Agent pursuant to Section 5(p).

                (f) Chief Executive Office. The Grantor 's chief executive
        office and chief place of business is located at 870 Remington Drive,
        Madison, N.C. 27025 or such other location of which the Grantor shall
        have provided written notice to the Administrative Agent pursuant to
        Section 5(p).

                (g) Farm Products. None of the Collateral constitutes, or is the
        Proceeds of, Farm Products.

                (h) Patents and Trademarks. Schedules I and II hereto include
        all Trademarks and Patents owned by the Grantor in its own name as of
        the date hereof and all material Trademark Licenses and all material
        Patent Licenses owned by the Grantor in its own name as of the date
        hereof.

                (i) Governmental Obligors. As of the Effective Date, none of the
        Obligors on any Accounts, and none of the parties to any Contracts
        constituting Collateral, is a Governmental Authority, except for any
        such Accounts or Contracts that are not material in relation to the
        business of the Grantor.

                (j) Copyrights. As of the date hereof, the Grantor does not own
        any Copyrights and is not a party to any Copyright Licenses which are
        material to the business of the Grantor.

        The Grantor agrees that the foregoing representations and warranties
shall be deemed to have been made by the Grantor on and as of each date on which
an Extension of Credit is made by the Lenders to the Borrower under the Credit
Agreement, in each case as though made on and as of each such date (or, if any
such representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).

        5 Covenants. The Grantor covenants and agrees with the Administrative
Agent and the Lenders and, with respect to Section 5(a), the Administrative
Agent covenants and agrees with the Grantor, that, from and after the date of
this Agreement until the payment in full of the Notes, the Reimbursement
Obligations and the other Obligations then due and owing, the termination of the
Commitments and the expiration, termination or return to the Issuing Lender of
the Letters of Credit:

                                       10
<PAGE>   11

                (a) Further Documentation; Pledge of Instruments and Chattel
        Paper. At any time and from time to time, upon the written request of
        the Administrative Agent or the Grantor, as the case may be, and at the
        sole expense of the Grantor, the Grantor or the Administrative Agent, as
        the case may be, will promptly and duly execute and deliver such further
        instruments and documents and take such further action as the
        Administrative Agent or the Grantor may reasonably request for the
        purpose of obtaining or preserving the full benefits of this Agreement
        and of the rights and powers herein granted, including, without
        limitation, the filing of any financing or continuation statements under
        the Uniform Commercial Code in effect in any jurisdiction with respect
        to the Liens created hereby. The Grantor also hereby authorizes the
        Administrative Agent to file any such financing or continuation
        statement without the signature of the Grantor to the extent permitted
        by applicable law. A carbon, photographic or other reproduction of this
        Agreement shall be sufficient as a financing statement for filing in any
        jurisdiction. The Administrative Agent agrees to notify the Grantor and
        the Grantor agrees to notify the Administrative Agent of any financing
        or continuation statement filed by it pursuant to this Section 5(a),
        provided that any failure to give any such notice shall not affect the
        validity or effectiveness of any such filing. Unless an Event of Default
        shall have occurred and be continuing, the Grantor shall be entitled to
        retain possession of all Collateral evidenced by any Instrument or
        Chattel Paper, and shall hold all such Collateral in trust for the
        Administrative Agent, for the benefit of the Lenders, and shall not
        commingle any of such Collateral with any other assets of the Grantor.
        In the event an Event of Default shall have occurred and be continuing,
        upon the request of the Administrative Agent, such Collateral shall be
        immediately delivered to the Administrative Agent, duly endorsed in a
        manner satisfactory to the Administrative Agent, to be held as
        Collateral pursuant to this Agreement. The Grantor shall not permit any
        other Person to possess any such Collateral at any time other than in
        connection with a transaction permitted under Section 8.14 of the Credit
        Agreement.

                (b) Indemnification. The Grantor agrees to pay, and to save the
        Administrative Agent, the Other Representatives and the Lenders harmless
        from, any and all liabilities and reasonable costs and expenses
        (including, without limitation, reasonable legal fees and expenses) (i)
        with respect to, or resulting from, any delay by the Grantor in paying,
        any and all excise, sales or other similar taxes which may be payable or
        determined to be payable with respect to any of the Collateral, (ii)
        with respect to, or resulting from, any delay by the Grantor in
        complying with any material Requirement of Law applicable to any of the
        Collateral or (iii) in connection with any of the transactions
        contemplated by this Agreement, provided that such indemnity shall not,
        as to the Administrative Agent, any Other Representative or any Lender,
        be available to the extent that such liabilities, costs and expenses
        resulted from the gross negligence or willful misconduct of the
        Administrative Agent, any Other Representative or any Lender. In any
        suit, proceeding or action brought by the Administrative Agent, any
        Other Representative or any Lender under any Account for any sum owing
        thereunder, or to enforce any provisions of any Account, the Grantor
        will save, indemnify and keep the Administrative Agent, such Other
        Representative and such Lender harmless from and against all expense,
        loss or damage

                                       11
<PAGE>   12

        suffered by reason of any defense, setoff, counterclaim, recoupment or
        reduction or liability whatsoever of the account debtor thereunder,
        arising out of a material breach by the Grantor of any obligation
        thereunder.

                (c) Maintenance of Records. The Grantor will keep and maintain
        at its own cost and expense reasonably satisfactory and complete records
        of the Collateral, including, without limitation, a record of all
        payments received and all credits granted with respect to the Accounts
        constituting Collateral. For the Administrative Agent's and the Lenders'
        further security, the Administrative Agent, for the benefit of the
        Lenders, shall have a security interest in all of the Grantor's books
        and records pertaining to the Collateral, and the Grantor shall permit
        the Administrative Agent or its representatives to review such books and
        records upon reasonable advance notice during normal business hours at
        the location where such books and records are kept and at the reasonable
        request of the Administrative Agent.

                (d) Right of Inspection. Upon reasonable advance notice to the
        Grantor and at reasonable intervals, or at any time and from time to
        time after the occurrence and during the continuance of an Event of
        Default, the Administrative Agent and the Lenders shall have reasonable
        access during normal business hours to all the books, correspondence and
        records of the Grantor, and the Administrative Agent and the Lenders and
        their respective representatives may examine the same, and to the extent
        reasonable take extracts therefrom and make photocopies thereof, and the
        Grantor agrees to render to the Administrative Agent and the Lenders, at
        the Grantor's reasonable cost and expense, such clerical and other
        assistance as may be reasonably requested with regard thereto. The
        Administrative Agent and the Lenders and their respective
        representatives shall also have the right upon reasonable advance notice
        to the Grantor to enter during normal business hours into and upon any
        premises where any of the Inventory or Equipment constituting Collateral
        is located for the purpose of inspecting the same, observing its use or
        otherwise protecting its interests therein.

                (e) Compliance with Laws, etc. The Grantor will comply in all
        material respects with all Requirements of Law applicable to the
        Collateral or any part thereof, except to the extent that the failure to
        so comply would not be reasonably expected to materially adversely
        affect, in the aggregate, the Administrative Agent's or the Lenders'
        rights hereunder, the priority of their Liens on the Collateral or the
        value of the Collateral (as defined in the Credit Agreement).

                (f) Compliance with Contractual Obligations. The Grantor will
        perform and comply in all material respects with all its Contractual
        Obligations relating to the Collateral, unless (i) such performance or
        compliance is fully excused by breach by the other party or parties
        thereto or (ii) such failure to comply or perform would not be
        reasonably expected, in the aggregate, to have a material adverse effect
        on the value of the Collateral (as defined in the Credit Agreement).

                                       12
<PAGE>   13

                (g) Payment of Obligations. The Grantor will pay promptly when
        due all taxes, assessments and governmental charges or levies imposed
        upon the Collateral, as well as all claims of any kind (including,
        without limitation, claims for labor, materials and supplies) against or
        with respect to the Collateral, except that no such tax, assessment,
        charge or levy need be paid if (i) the validity thereof is being
        contested in good faith by appropriate proceedings diligently conducted
        and (ii) such tax, assessment, charge or levy is adequately reserved
        against on the Grantor's books in accordance with GAAP.

                (h) Limitation on Liens on Collateral. The Grantor will not
        create, incur or permit to exist, will defend the Collateral against,
        and will take such other action as is reasonably necessary to remove,
        any Lien or material adverse claim on or to any of the Collateral, other
        than the Liens created hereby and other than as permitted pursuant to
        the Loan Documents, and will defend the right, title and interest of the
        Administrative Agent and the Lenders in and to any of the Collateral
        against the claims and demands of all Persons whomsoever.

                (i) Limitations on Dispositions of Collateral. Without the prior
        written consent of the Administrative Agent, the Grantor will not sell,
        assign, transfer, exchange or otherwise dispose of, or grant any option
        with respect to, the Collateral, or attempt, offer or contract to do so,
        except with respect to exclusive licenses in the ordinary course of
        business or as permitted by this Agreement or the Loan Documents.

                (j) Limitations on Modifications, Waivers, Extensions of
        Contracts, Licenses and Accounts. The Grantor will not, except in the
        ordinary course of business, amend, modify, terminate or waive any
        provision of any material Trademark License or any agreement giving rise
        to a material Account constituting Collateral in any manner which would
        reasonably be expected to materially adversely affect the value of such
        Trademark License or Account as Collateral.

                (k) Limitations on Discounts, Compromises, Extensions of
        Accounts. At all times, the Grantor will not, except in the ordinary
        course of business, grant any extension of the time of payment of any
        material Account constituting Collateral, compromise, compound or settle
        the same for less than the full amount thereof, release, wholly or
        partially, any Person liable for the payment thereof, or allow any
        credit or discount whatsoever thereon, unless such extensions,
        compromises, compoundings, settlements, releases, credits or discounts
        are permitted by the Loan Documents.

                (l) Maintenance of Equipment. The Grantor will maintain each
        material item of Equipment constituting Collateral in good operating
        condition, ordinary wear and tear and immaterial impairments of value
        and damage by the elements excepted, and will provide all maintenance,
        service and repairs necessary for such purpose, except to the extent
        that the failure to do any of the foregoing would not be reasonably
        expected to have a Material Adverse Effect.

                                       13
<PAGE>   14

                (m) Maintenance of Insurance. The Grantor will maintain, with
        financially sound and reputable insurance companies, (i) insurance
        (including property insurance) in at least such amounts and against at
        least such risks (but including in any event public liability, product
        liability and business interruption where reasonably obtainable) as are
        usually insured against in the same general area by companies engaged in
        the same or a similar business; and furnish to the Administrative Agent,
        upon written request, information in reasonable detail as to the
        insurance carried and (ii) insurance policies relating to the Inventory
        and Equipment constituting Collateral (A) insuring the Inventory and
        Equipment constituting Collateral against loss by fire, explosion, theft
        and such other casualties as are usually insured against by companies
        engaged in the same or a similar business, (B) insuring the Grantor
        against liability for personal injury and property damage relating to
        such Inventory and Equipment, (C) providing that no cancellation,
        material reduction in amount or material change in the coverage referred
        to in clause (A) shall be effective until at least 15 days after receipt
        by the Administrative Agent of written notice thereof, (D) naming the
        Administrative Agent and the Lenders as additional insured parties and
        (E) being otherwise reasonably satisfactory in all material respects to
        the Administrative Agent.

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

                (o) Notices. The Grantor will advise the Administrative Agent
        and the Lenders promptly, in reasonable detail, at their respective
        addresses set forth in the Credit Agreement, (i) of any Lien (other than
        Liens created hereby or permitted under the Loan Documents) on, or
        material adverse claim asserted against, any of the Collateral and (ii)
        of the occurrence of any other event which would reasonably be expected,
        in the aggregate, to have a material adverse effect on the aggregate
        value of the Collateral (as defined in the Credit Agreement) or the
        Liens created hereunder.

                (p) Changes in Locations, Name, etc. The Grantor will not (i)
        change the location of its chief executive office/chief place of
        business from that specified in Section 4(f) or remove its books and
        records from the locations specified in Section 4(c), (ii) permit any of
        the Inventory or Equipment constituting Collateral to be kept at
        locations other than those listed in Schedule III hereto, unless such
        Inventory or Equipment is conveyed, sold, leased, transferred, assigned
        or otherwise disposed of as permitted by Section 8.6 of the Credit
        Agreement or (iii) change its name, identity or corporate structure to
        such an extent that any financing statement filed by the Administrative
        Agent in connection with this Agreement would become seriously
        misleading, unless the Grantor shall have complied with the following:

                                       14
<PAGE>   15

                        (A) with respect to clauses (i) and (iii) above, the
                Grantor (x) shall have given the Administrative Agent at least
                30 days' prior written notice thereof and (y) prior to effecting
                any such change, shall have taken such actions as may be
                necessary or, upon the reasonable request of the Administrative
                Agent, advisable to continue the perfection and priority of the
                Liens granted pursuant hereto, and

                        (B) with respect to clause (ii) above, the Grantor (x)
                shall have given the Administrative Agent at least fifteen days'
                prior written notice of the location thereof and (y) prior to
                keeping any Inventory or Equipment constituting Collateral at
                such new location shall have taken such actions as may be
                necessary or, upon the reasonable request of the Administrative
                Agent, advisable to perfect the Liens granted pursuant hereto
                with respect to such Inventory or Equipment;

                provided in each case under clauses (A)(y) and (B)(y), that the
                Administrative Agent shall have taken all actions required by
                Section 5(a) hereof in connection with such actions of the
                Grantor.

                (q) Copyrights. The Grantor will not own nor at any time in the
        future acquire any right, title or interest in or to any Copyright or
        Copyright License which is material to the business of the Grantor and
        its Subsidiaries, taken as a whole, other than (i) with respect to
        computer software or hardware licenses or other Copyright licenses
        granted to the Grantor in the ordinary course of business, (ii) in
        connection with any rights of the Grantor in respect of security
        interests in collateral or (iii) with respect to which (A) the
        Administrative Agent shall have been given prior written notice of the
        acquisition of any right, title or interest therein or thereto and (B)
        if reasonably requested by the Administrative Agent, a security
        agreement reasonably satisfactory to the Administrative Agent shall have
        been executed by the Grantor.

                6 Administrative Agent's Appointment as Attorney-in-Fact.

                (a) Powers. The Grantor hereby irrevocably constitutes and
        appoints the Administrative Agent and any officer or agent thereof, with
        full power of substitution, as its true and lawful attorney-in-fact with
        full irrevocable power and authority in the place and stead of the
        Grantor and in the name of the Grantor or in its own name, from time to
        time in the Administrative Agent's discretion, for the purpose of
        carrying out the terms of this Agreement, to take any and all
        appropriate action and to execute any and all documents and instruments
        which may be necessary or desirable to accomplish the purposes of this
        Agreement, and, without limiting the generality of the foregoing, the
        Grantor hereby gives the Administrative Agent the power and right, on
        behalf of the Grantor, without notice to or assent by the Grantor, to do
        the following at any time when any Event of Default shall have occurred
        and be continuing, and to the extent permitted by law:



                                       15
<PAGE>   16

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

                        (ii) to pay or discharge taxes and Liens levied or
                placed on the Collateral, other than Liens permitted under this
                Agreement or the Loan Documents, to effect any repairs or any
                insurance required by the terms of this Agreement and to pay all
                or any part of the premiums therefor and the costs thereof; and

                        (iii) (A) to direct any party liable for any payment
                under any of the Collateral to make payment of any and all
                moneys due or to become due thereunder directly to the
                Administrative Agent or as the Administrative Agent shall
                direct; (B) to ask for, or demand, collect, receive payment of
                and receipt for, any and all moneys, claims and other amounts
                due or to become due at any time in respect of or arising out of
                any Collateral; (C) to sign and indorse any invoices, freight or
                express bills, bills of lading, storage or warehouse receipts,
                drafts against debtors, assignments, verifications, notices and
                other documents in connection with any of the Collateral; (D) to
                commence and prosecute any suits, actions or proceedings at law
                or in equity in any court of competent jurisdiction to collect
                the Collateral or any thereof and to enforce any other right in
                respect of any Collateral; (E) to defend any suit, action or
                proceeding brought against the Grantor with respect to any of
                the Collateral; (F) to settle, compromise or adjust any suit,
                action or proceeding described in clause (E) above and, in
                connection therewith, to give such discharges or releases as the
                Administrative Agent may deem appropriate; (G) subject to any
                pre-existing rights or licenses, to assign any Patent or
                Trademark constituting Collateral (along with the goodwill of
                the business to which any such Patent or Trademark pertains),
                for such term or terms, on such conditions, and in such manner,
                as the Administrative Agent shall in its sole discretion
                determine; and (H) generally, to sell, transfer, pledge and make
                any agreement with respect to or otherwise deal with any of the
                Collateral as fully and completely as though the Administrative
                Agent were the absolute owner thereof for all purposes, and to
                do, at the Administrative Agent's option and the Grantor's
                expense, at any time, or from time to time, all acts and things
                which the Administrative Agent deems necessary to protect,
                preserve or realize upon the Collateral and the Administrative
                Agent's and the Lenders' Liens thereon and to

                                       16
<PAGE>   17

                effect the intent of this Agreement, all as fully and
                effectively as the Grantor might do.

The Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable until payment in full of the Notes, the
Reimbursement Obligations and the other Obligations then due and owing, the
termination of the Commitments and the expiration, termination or return to the
Issuing Lender of the Letters of Credit.

                (b) Other Powers. The Grantor also authorizes the Administrative
        Agent, from time to time if an Event of Default shall have occurred and
        be continuing, to execute, in connection with any sale provided for in
        Section 9 hereof, any endorsements, assignments or other instruments of
        conveyance or transfer with respect to the Collateral.

                (c) No Duty on the Part of Administrative Agent, Other
        Representatives or Lenders. The powers conferred on the Administrative
        Agent, the Other Representatives and the Lenders hereunder are solely to
        protect the Administrative Agent's, the Other Representatives' and the
        Lenders' interests in the Collateral and shall not impose any duty upon
        the Administrative Agent, any Other Representative or any Lender to
        exercise any such powers. The Administrative Agent, the Other
        Representatives and the Lenders shall be accountable only for amounts
        that they actually receive as a result of the exercise of such powers,
        and neither they nor any of their officers, directors, employees or
        agents shall be responsible to the Grantor for any act or failure to act
        hereunder, except for their own gross negligence or willful misconduct.

        7 Performance by Administrative Agent of Grantor's Obligations. If the
Grantor fails to perform or comply with any of its agreements contained herein
and the Administrative Agent, as provided for by the terms of this Agreement,
shall itself perform or comply, or otherwise cause performance or compliance,
with such agreement, the reasonable expenses of the Administrative Agent
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum 2% above the rate applicable to ABR Loans,
shall be payable by the Grantor to the Administrative Agent on demand and shall
constitute Obligations secured hereby.

        8 Proceeds. It is agreed that if an Event of Default shall occur and be
continuing, (a) all Proceeds of any Collateral received by the Grantor
consisting of cash, checks and other near-cash items shall be held by the
Grantor in trust for the Administrative Agent and the Lenders, segregated from
other funds of the Grantor, and at the request of the Administrative Agent
shall, forthwith upon receipt by the Grantor, be turned over to the
Administrative Agent in the exact form received by the Grantor (duly indorsed by
the Grantor to the Administrative Agent, if required by the Administrative
Agent), and (b) any and all such Proceeds received by the Administrative Agent
(whether from the Grantor or otherwise) may, in the sole discretion of the
Administrative Agent, be held by the Administrative Agent, for the benefit of
the Lenders, as collateral security for the Obligations (whether matured or
unmatured), and/or then or at any time thereafter may be applied by the
Administrative Agent against, the Obligations then due and owing. Any balance of
such Proceeds remaining after the payment in full of the Notes, the
Reimbursement Obligations and the other Obligations then due and

                                       17
<PAGE>   18

owing, the termination of the Commitments and the expiration, termination or
return to the Issuing Lender of the Letters of Credit shall be paid over to the
Grantor or to whomsoever may be lawfully entitled to receive the same.


        9 Remedies. If an Event of Default shall occur and be continuing, the
Administrative Agent, on behalf of the Lenders, may exercise all rights and
remedies of a secured party under the Code, and, to the extent permitted by law,
all other rights and remedies granted to them in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations.
Without limiting the generality of the foregoing, the Administrative Agent,
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Grantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances, to the extent permitted by law, forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), but subject to any pre-existing rights or licenses, in one or
more parcels at public or private sale or sales, at any exchange, broker's board
or office of the Administrative Agent, any Other Representative or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent, any Other
Representative or any Lender shall have the right, to the extent permitted by
law, upon any such sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the Grantor,
which right or equity is hereby waived or released. The Grantor further agrees,
at the Administrative Agent's request, upon the occurrence and during the
continuance of an Event of Default, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at the Grantor's premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Administrative Agent, the Other Representatives
and the Lenders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Obligations
then due and owing, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the Code, need the
Administrative Agent account for the surplus, if any, to the Grantor. To the
extent permitted by applicable law, the Grantor waives all claims, damages and
demands it may acquire against the Administrative Agent, any Other
Representative or any Lender arising out of the repossession, retention or sale
of the Collateral, other than any such claims, damages and demands that may
arise from the gross negligence or willful misconduct of any of them. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition. The Grantor shall remain liable for
any deficiency if the proceeds of any sale or other

                                       18
<PAGE>   19

disposition of the Collateral are insufficient to pay the then outstanding
Obligations, including the reasonable fees and disbursements of any attorneys
employed by the Administrative Agent, any Other Representative or any Lender to
collect such deficiency.

        10 Limitation on Duties Regarding Preservation of Collateral. The
Administrative Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. None of
the Administrative Agent, any Other Representative, any Lender, nor any of their
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Grantor or any other Person.

        11 Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are powers coupled with an
interest and are irrevocable until payment in full of the Notes, the
Reimbursement Obligations and the other Obligations then due and owing, the
termination of the Commitments and the expiration, termination or return to the
Issuing Lender of the Letters of Credit.

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

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

        14 No Waiver; Cumulative Remedies. None of the Administrative Agent, any
Other Representative nor any Lender shall by any act (except by a written
instrument pursuant to Section 15 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent, any Other Representative or
any Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent,
any Other Representative or any Lender of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent, such Other Representative or such Lender would otherwise
have on any future occasion. The rights and

                                       19
<PAGE>   20

remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.

        15. Amendments in Writing; No Waiver; Cumulative Remedies; Successors
and Assigns. None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Grantor and the Administrative Agent in accordance with Section
11.1 of the Credit Agreement. This Agreement shall be binding upon the
successors and assigns of the Grantor and shall inure to the benefit of the
Administrative Agent, the Other Representatives and the Lenders and their
respective successors and assigns, except that the Grantor may not assign,
transfer or delegate any of its rights or obligations under this Agreement
without the prior written consent of the Administrative Agent.

        16. Notices. All notices, requests and demands to or upon the respective
parties hereto shall be made in accordance with Section 11.2 of the Credit
Agreement.

        17. Authority of Administrative Agent. The Grantor acknowledges that the
rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as among the Administrative Agent, the Other
Representatives and the Lenders, be governed by the Loan Documents and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Administrative Agent and the Grantor, the Administrative
Agent shall be conclusively presumed to be acting as agent for the Lenders with
full and valid authority so to act or refrain from acting, and the Grantor shall
not be under any obligation to make any inquiry respecting such authority.

        18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

        19. Release of Collateral and Termination. (a) At such time as the
payment in full of the Notes, the Reimbursement Obligations and the other
Obligations then due and owing shall have occurred, the Commitments have been
terminated and the Letters of Credit have expired, terminated or been returned
to the Issuing Lender, the Collateral shall be released from the Liens created
hereby, and this Agreement and all obligations (other than those expressly
stated to survive such termination) of the Administrative Agent and the Grantor
hereunder shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert to the
Grantor. Upon request of the Grantor following any such termination, the
Administrative Agent shall deliver (at the sole cost and expense of the Grantor)
to the Grantor any Collateral held by the Administrative Agent hereunder, and
execute and deliver (at the sole cost and expense of the Grantor) to the Grantor
such documents as the Grantor shall reasonably request to evidence such
termination.

                                       20
<PAGE>   21

        (b If any of the Collateral shall be sold, transferred or otherwise
disposed of by the Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent shall execute and deliver to the Grantor (at the
sole cost and expense of the Grantor) all releases or other documents reasonably
necessary or desirable for the release of the Liens created hereby on such
Collateral.


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


                                             RA BRANDS, L.L.C.


                                             By:/s/Mark Little
                                                ------------------------
                                                 Name: Mark Little
                                                 Title: Vice President

ACKNOWLEDGED AND AGREED AS OF
THE DATE HEREOF BY:

THE CHASE MANHATTAN BANK, as Administrative Agent



By:/s/William J. Caggiano
   -----------------------------
   Title: Managing Director

                                       21