exhibit_10-2.htm


    
      
         

      

      
         

        
          

        

      

      
         

              

                  Exhibit
            10.2      
      

                  
      
      

                  Execution
            Version      
    

      

    


    


    


    


    


    


    


    


    


    GUARANTY
      AND COLLATERAL AGREEMENT

    


    dated
      as of September 28, 2007

    


    made
      by

    


    REX
      ENERGY CORPORATION

    


    and

    


    EACH
      OF THE OTHER GRANTORS (AS DEFINED HEREIN)

    


    in
      favor of

    


    KEYBANK
      NATIONAL ASSOCIATION,

    as
      Administrative Agent

    


    


     

    


     

    


     

    


    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    TABLE
      OF CONTENTS

     

    
      
        	 	
                Page

              
	
                Article
                  I

              
	
                Definitions

              
	 	 
	
                Section
                  1.01                                Definitions

              	
                1

              
	
                Section
                  1.02                                Other
                  Definitional Provisions

              	
                7

              
	
                Section
                  1.03                                Rules
                  of Interpretation

              	
                7

              
	 	 
	
                Article
                  II

              
	
                Guarantee

              
	 	 
	
                Section
                  2.01                                Guarantee

              	
                7

              
	
                Section
                  2.02                                Right
                  of Contribution

              	
                8

              
	
                Section
                  2.03                                No
                  Subrogation

              	
                8

              
	
                Section
                  2.04                                Guaranty
                  Amendments, Etc. with respect to the Borrower

                                                                        
                  Obligations

              	
                8

              
	
                Section
                  2.05                                Waivers

              	
                9

              
	
                Section
                  2.06                                Guaranty
                  Absolute and Unconditional

              	
                9

              
	
                Section
                  2.07                                Reinstatement

              	
                11

              
	
                Section
                  2.08                                Payments

              	
                11

              
	 	 
	
                Article
                  III

              
	
                Grant
                  of Security Interest

              
	 	 
	
                Section
                  3.01                                Grant
                  of Security Interest

              	
                11

              
	
                Section
                  3.02                                Transfer
                  of Pledged Securities

              	
                12

              
	 	 
	
                Article
                  IV

              
	
                Representations
                  and Warranties

              
	 	 
	
                Section
                  4.01                                Representations
                  in Credit Agreement

              	
                13

              
	
                Section
                  4.02                                Title;
                  No Other Liens

              	
                13

              
	
                Section
                  4.03                                Perfected
                  First Priority Liens

              	
                13

              
	
                Section
                  4.04                                Grantor
                  Information

              	
                13

              
	
                Section
                  4.05                                Inventory
                  and Equipment

              	
                14

              
	
                Section
                  4.06                                Farm
                  Products

              	
                14

              
	
                Section
                  4.07                                Investment
                  Property

              	
                14

              
	
                Section
                  4.08                                Receivables

              	
                15

              
	
                Section
                  4.09                                Intellectual
                  Property

              	
                15

              
	
                Section
                  4.10                                Commercial
                  Tort Claims

              	
                15

              
	
                Section
                  4.11                                Benefit
                  to the Guarantors

              	
                16

              
	 	 
	
                Article
                  V

              
	
                Covenants

              
	 	 
	
                Section
                  5.01                                Covenants
                  and Events of Default in Credit Agreement

              	
                16

              
	
                Section
                  5.02                                Delivery
                  of Instruments, Certificated Securities and Chattel Paper

              	
                16

              
	
                Section
                  5.03                                Maintenance
                  of Insurance

              	
                16

              
	
                Section
                  5.04                                Payment
                  of Obligations

              	
                16

              
	
                Section
                  5.05                                Maintenance
                  of Perfected Security Interest; Further Documentation

              	
                16

              
	
                Section
                  5.06                                Notices

              	
                17

              
	
                Section
                  5.07                                Investment
                  Property

              	
                17

              
	
                Section
                  5.08                                Receivables

              	
                19

              
	
                Section
                  5.09                                Intellectual
                  Property

              	
                19

              
	
                Section
                  5.10                                Commercial
                  Tort Claims

              	
                21

              
	 	 
	
                Article
                  VI

              
	
                Remedial
                  Provisions

              
	 	 
	
                Section
                  6.01                                Certain
                  Matters Relating to Receivables

              	
                21

              
	
                Section
                  6.02                                Communications
                  with Obligors; Grantors Remain Liable

              	
                22

              
	
                Section
                  6.03                                Pledged
                  Securities

              	
                22

              
	
                Section
                  6.04                                Proceeds
                  to be Turned Over to Administrative Agent

              	
                23

              
	
                Section
                  6.05                                Application
                  of Proceeds

              	
                24

              
	
                Section
                  6.06                                Code
                  and Other Remedies

              	
                24

              
	
                Section
                  6.07                                Registration
                  Rights

              	
                25

              
	
                Section
                  6.08                                Waiver;
                  Deficiency

              	
                26

              
	
                Section
                  6.09                                Non-Judicial
                  Enforcement

              	
                26

              
	 	 
	
                Article
                  VII

              
	
                The
                  Administrative Agent

              
	 	 
	
                Section
                  7.01                                Administrative
                  Agent’s Appointment as Attorney-in-Fact, Etc.

              	
                26

              
	
                Section
                  7.02                                Duty
                  of Administrative Agent

              	
                28

              
	
                Section
                  7.03                                Execution
                  of Financing Statements

              	
                29

              
	
                Section
                  7.04                                Authority
                  of Administrative Agent

              	
                29

              
	 	 
	
                Article
                  VIII

              
	
                Subordination
                  of Indebtedness

              
	 	 
	
                Section
                  8.01                                Subordination
                  of All Grantor Claims

              	
                29

              
	
                Section
                  8.02                                Claims
                  in Bankruptcy

              	
                30

              
	
                Section
                  8.03                                Payments
                  Held in Trust

              	
                30

              
	
                Section
                  8.04                                Liens
                  Subordinate

              	
                30

              
	
                Section
                  8.05                                Notation
                  of Records

              	
                30

              
	 	 
	
                Article
                  IX

              
	
                Miscellaneous

              
	 	 
	
                Section
                  9.01                                No
                  Waiver by Course of Conduct; Cumulative Remedies

              	
                31

              
	
                Section
                  9.02                                Notices

              	
                31

              
	
                Section
                  9.03                                Enforcement
                  Expenses; Indemnities

              	
                31

              
	
                Section
                  9.04                                Amendments
                  in Writing

              	
                32

              
	
                Section
                  9.05                                Successors
                  and Assigns

              	
                32

              
	
                Section
                  9.06                                Survival;
                  Revival; Reinstatement

              	
                32

              
	
                Section
                  9.07                                Counterparts;
                  Integration; Effectiveness

              	
                33

              
	
                Section
                  9.08                                Severability

              	
                33

              
	
                Section
                  9.09                                Set-Off

              	
                33

              
	
                Section
                  9.10                                Governing
                  Law; Submission to Jurisdiction; Waiver of Jury Trial

              	
                34

              
	
                Section
                  9.11                                Headings

              	
                35

              
	
                Section
                  9.12                                Acknowledgments

              	
                35

              
	
                Section
                  9.13                                Additional
                  Grantors and Additional Pledged Securities

              	
                36

              
	
                Section
                  9.14                                Releases

              	
                36

              
	
                Section
                  9.15                                Acceptance

              	
                37

              


      

    

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    SCHEDULES:

     

    1           Notice
      Addresses

    2           Investment
      Property

    3           Perfection
      Matters

    4           Location
      of Jurisdiction of Organization and Chief Executive Office

    5           Inventory
      and Equipment Locations

    6           Intellectual
      Property

    7           Receivables
      from Government Authorities

    


    ANNEXES:

    I           
      Form of Acknowledgment and Consent

    II          
      Form of Assumption Agreement

    III         
      Form of Supplement

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    This
      GUARANTY AND COLLATERAL AGREEMENT, dated as of September
      28, 2007, is
      made by Rex Energy Corporation, a corporation duly
      formed and
      existing under the laws of the State of Delaware (the “Borrower”),
      Rex Energy I, LLC, a limited liability
      company
      duly formed and existing under the laws of the State of Delaware (“Rex
      Energy I”), Rex Energy Operating Corp., a corporation duly
      formed and
      existing under the laws of the State of Delaware (“Rex Energy
      Operating”),
      Penn Tex Energy, Inc., a corporation
      duly formed and
      existing under the laws of the State of Delaware (“Penn Tex
      Energy”),
      PennTex Resources Illinois, Inc., a corporation
      duly formed and
      existing under the laws of the State of Delaware (“PennTex Resources
      Illinois”), Rex
      Energy IV, LLC, a limited liability
      company
      duly formed and existing under the laws of the State of Delaware (“Rex Energy
      IV”)
and
      PennTex Resources, L.P., a limited partnership duly formed and
      existing under the laws of the State of Texas (“Penn Tex Resources”) (the
      Borrower, Rex Energy I, Rex Energy Operating, Penn Tex Energy, Penn Tex
      Resources Illinois, Rex Energy IV, Penn Tex Resources and any other Person
      that
      becomes a party hereto from time to time after the date hereof, the
“Grantors”), in favor of KeyBank National
      Association, as administrative agent (in such capacity, together with its
      successors in such capacity, the “Administrative Agent”) for the banks
      and other financial institutions (the “Lenders”) from time to time
      parties to the Credit Agreement dated as of September 28, 2007 (as amended,
      supplemented or otherwise modified from time to time, the “Credit
      Agreement”), among the Borrower, the Administrative Agent and the
      Lenders.

     

    R
      E C I T A L S

     

    A.           It
      is a condition precedent to the obligation of the Lenders to make their
      respective loans to and extensions of credit on behalf of the Borrower under
      the
      Credit Agreement that the Grantors shall have executed and delivered this
      Agreement to the Administrative Agent for the ratable benefit of the
      Lenders.

     

    B.           Now,
      therefore, in consideration of the premises herein and to induce the
      Administrative Agent and the Lenders to enter into the Credit Agreement and
      to
      induce the Lenders to make their respective loans to and extensions of credit
      on
      behalf of the Borrower thereunder, each Grantor hereby agrees with the
      Administrative Agent, for the ratable benefit of the Lenders, as
      follows:

     

    ARTICLE
      I

     

    Definitions

     

    Section
      1.01                Definitions.

     

    (a)           Unless
      otherwise defined herein, terms defined in the Credit Agreement and used herein
      have the meanings given to them in the Credit Agreement, and all uncapitalized
      terms which are defined in the UCC (as defined herein) on the date hereof are
      used herein as so defined.

     

    (b)           The
      following terms are used herein as defined in the UCC on the date
      hereof:  Accounts, Certificated Security, Chattel Paper, Commercial
      Tort Claims, Documents, Electronic Chattel Paper, Equipment, Farm Products,
      Fixtures, General Intangibles,  Instruments,

     


    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    


    Inventory,
      Letter-of-Credit Rights, Payment Intangibles, Proceeds, Supporting Obligations,
      and Tangible Chattel Paper.

     

    (c)           The
      following terms have the following meanings:

     

    “Acknowledgment
      and Consent” means an Acknowledgement and Consent substantially in the form
      attached hereto as Annex I.

     

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

     

    “Assumption
      Agreement” means an Assumption Agreement substantially in the form attached
      hereto as Annex II.

     

    “Bankruptcy
      Code” means Title 11, United States Code, as amended from time to
      time.

     

    “Borrower
      Obligations” means the collective reference to the unpaid principal of and
      interest on the Loans and reimbursement obligations in respect of Letters of
      Credit, the Indebtedness, and all other obligations and liabilities of the
      Borrower and the other Grantors (including, without limitation, interest
      accruing at the then applicable rate provided in the Credit Agreement after
      the
      maturity of the Loans and LC Exposure and interest accruing at the then
      applicable rate provided in the Credit Agreement after the filing of any
      petition in bankruptcy, or the commencement of any insolvency, reorganization
      or
      like proceeding, relating to the Borrower, whether or not a claim for
      post-filing or post-petition interest is allowed in such proceeding) to the
      Secured Parties, whether direct or indirect, absolute or contingent, due or
      to
      become due, or now existing or hereafter incurred, which may arise under, out
      of, or in connection with, the Secured Documents, in each case, whether on
      account of principal, interest, reimbursement obligations, payments in respect
      of an early termination date, fees, indemnities, costs, expenses or otherwise
      (including, without limitation, all fees and disbursements of counsel to the
      Secured Parties that are required to be paid by the Borrower pursuant to the
      terms of any of the Secured Documents).

     

    “Collateral”
      has the meaning assigned such term in Section 3.01.

     

    “Collateral
      Account” means any collateral account established by the Administrative
      Agent as provided in Section 6.01 or Section 6.04.

     

    “Copyright
      Licenses” means any written agreement naming any Grantor as licensor or
      licensee, granting any right under any Copyright, including the grant of rights
      to manufacture, distribute, exploit and sell materials derived from any
      Copyright.

     

    “Copyrights”
      means the collective reference to (a) all copyrights arising under the laws
      of
      the United States, any other country or any political subdivision thereof,
      whether registered or unregistered and whether published or unpublished
      (including those listed in Schedule 6), all registrations and recordings
      thereof, and all applications in connection therewith, including all
      registrations, recordings and applications in the United States Copyright Office
      and (b) the right to obtain all renewals thereof.

     


    
      
         

      

      
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    “Deposit
      Account” has the meaning given such term in the Uniform Commercial Code of
      any applicable jurisdiction and, in any event, including any demand, time,
      savings, passbook or like account maintained with a depositary
      institution.

     

    “Excluded
      Property” means any of the following property or assets of any
      Grantor:

     

    (a)           only
      to the extent such prohibition is permitted pursuant to the Credit Agreement,
      any property or assets to the extent that such Grantor is prohibited from
      granting a security interest in, pledge of, or charge, mortgage or other Lien
      upon any such property or assets by reason of (i) an existing negative
      pledge provision or (ii) applicable law or regulation to which such Grantor
      is subject;

     

    (b)           General
      Intangibles, Investment Property and all other Collateral of a contractual
      nature which by their respective express terms (i) prohibit the grant of any
      Lien, (ii) provides that any such grant shall constitute or result in the
      unenforceability of any right, interest or benefit of such Grantor therein,
      or
      in a breach or termination thereof, or a default thereunder, or (iii) requires
      the consent of a third party thereto for a grant of a Lien therein;

     

    (c)           permits
      and licenses to the extent the grant of a Lien therein is prohibited under
      applicable law or regulation or by their express terms, except to the extent
      such prohibition is ineffective under the UCC;

     

    (d)           any
      deposit accounts (i) exclusively used for payroll, payroll taxes and other
      employee wage and benefit payments to or for the benefit of such Grantor’s
      employees or (ii) exclusively holding deposits made by any purchasers of
      Hydrocarbons in contemplation of the sale of such Hydrocarbons;

     

    (e)          
      any Vehicles; and

     

    (f)           34%
      of the Equity Interests in each direct Foreign Subsidiary of such Grantor that
      is a “controlled foreign corporation” under the Code.

     

    “Foreign
      Subsidiary” means any Subsidiary organized under the laws of any
      jurisdiction outside the United States of America.

     

    “Foreign
      Subsidiary Voting Stock” means the voting Equity Interests of any Foreign
      Subsidiary.

     

    “Grantor
      Claims” has the meaning assigned to such term in Section 8.01.

     

    “Guarantor
      Obligations” means with respect to any Guarantor, the collective reference
      to (a) the Borrower Obligations and (b) all obligations and liabilities of
      such
      Guarantor which may arise under or in connection with any Secured Document
      to
      which such Guarantor is a party (including, without limitation, Article II
      of
      this Agreement), in each case, whether on account of principal, interest,
      guarantee obligations, reimbursement obligations, payments in respect of an
      early termination date, fees, indemnities, costs, expenses or otherwise
      (including, without limitation, all fees and disbursements of counsel to any
      Secured Party under any Secured Document).

     


    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    


    “Guarantors”
      means the collective reference to all Grantors other than the
      Borrower.

     

    “Intellectual
      Property” means the collective reference to all rights, priorities and
      privileges relating to intellectual property, whether arising under United
      States, multinational or foreign laws or otherwise, including the Copyrights,
      the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and
      the
      Trademark Licenses, and all rights to sue at law or in equity for any
      infringement or other impairment thereof, including the right to receive all
      proceeds and damages therefrom.

     

    “Intercompany
      Note” means any promissory note evidencing loans made by any Grantor to the
      Borrower or any of its Subsidiaries.

     

    “Investment
      Property” means the collective reference to (a) all “investment property” as
      such term is defined in Section 9.102(a)(49) of the UCC (other than any Foreign
      Subsidiary Voting Stock excluded from the definition of “Pledged Securities”)
      and (b) whether or not constituting “investment property” as so defined, all
      Pledged Notes and all Pledged Securities.

     

    “Issuers”
      means the collective reference to each issuer of any Investment
      Property.

     

    “LLC”
      means, with respect to any Grantor, each limited liability company described
      or
      referred to in Schedule 2 in which such Grantor has an interest.

     

    “LLC
      Agreement” means each operating agreement relating to an LLC, as each
      agreement has heretofore been, and may hereafter be, amended, restated,
      supplemented or otherwise modified from time to time.

     

    “Obligations”
      means:  (a) in the case of the Borrower, the Borrower Obligations and
      (b) in the case of each Guarantor, its Guarantor Obligations.

     

    “Partnership”
      means, with respect to any Grantor, each partnership described or referred
      to in
      Schedule 2 in which such Grantor has an interest.

     

    “Partnership
      Agreement” means each partnership agreement governing a Partnership, as each
      such agreement has heretofore been, and may hereafter be, amended, restated,
      supplemented or otherwise modified.

     

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

     

    “Patents”
      means the collective reference to (a) all letters patent of the United States,
      any other country or any political subdivision thereof, all reissues and
      extensions thereof and all goodwill associated therewith, including any of
      the
      foregoing referred to in Schedule 6, (b) all applications for letters patent
      of
      the United States or any other country and all divisions, continuations and
      continuations-in-part thereof, including any of the foregoing referred to in
      Schedule 6 and (c) all rights to obtain any reissues or extensions of the
      foregoing.

     


    
      
         

      

      
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    “Pledged
      LLC Interests” means, with respect to any Grantor, all right, title and
      interest of such Grantor as a member of all LLCs and all right, title and
      interest of such Grantor in, to and under the LLC Agreements.

     

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

     

    “Pledged
      Partnership Interests” means, with respect to any Grantor, all right, title
      and interest of such Grantor as a limited or general partner in all Partnerships
      and all right, title and interest of such Grantor in, to and under the
      Partnership Agreements.

     

    “Pledged
      Securities” means: (a) the Equity Interests described or referred to in
      Schedule 2 (as the same may be supplemented from time to time pursuant to a
      Supplement), together with any other Equity Interests of any Person that may
      be
      issued or granted to, or held by, any Grantor while this Agreement is in effect;
      provided that in no event shall more than 66% of the total outstanding Foreign
      Subsidiary Voting Stock of any Foreign Subsidiary be required to be pledged
      hereunder; including, but not limited to, all Pledged LLC Interests and Pledged
      Partnership Interests related thereto; and (b) the certificates or instruments,
      if any, representing (i) such Equity Interests, (ii) all dividends (cash, Equity
      Interests or otherwise), cash, instruments, rights to subscribe, purchase or
      sell and all other rights and Property from time to time received, receivable
      or
      otherwise distributed in respect of or in exchange for any or all of such
      securities, (iii) all replacements, additions to and substitutions for any
      of
      the Property referred to in this definition, including, without limitation,
      claims against third parties, (iv) the proceeds, interest, profits and other
      income of or on any of the Property referred to in this definition, (v) all
      security entitlements in respect of any of the foregoing, if any, and (vi)
      all
      books and records relating to any of the Property referred to in this
      definition.

     

    “Proceeds”
      means all “proceeds” as such term is defined in the UCC on the date hereof and,
      in any event, shall include, without limitation, all dividends or other income
      from the Pledged Securities, collections thereon or distributions or payments
      with respect thereto.

     

    “Receivable”
      means any right to payment for goods sold or leased or for services rendered,
      whether or not such right is evidenced by an Instrument or Chattel Paper and
      whether or not it has been earned by performance (including any
      Account).

     

    “Secured
      Documents” means the collective reference to the Credit Agreement, the other
      Loan Documents, each Secured Swap Agreement and any other document made,
      delivered or given in connection with any of the foregoing.

     

    “Secured
      Parties” means the collective reference to the Administrative Agent, the
      Lenders, and the Lenders and Affiliates of Lenders that are parties to Secured
      Swap Agreements.  For the avoidance of doubt, (a) a Lender or an
      Affiliate of a Lender that is a party to a Swap Agreement between it and the
      Borrower or any or any Subsidiary ceases immediately and automatically to be
      a
      Secured Party when such Swap Agreement ceases to be a Secured Swap Agreement,
      and (b) a Person that is an Affiliate of a Lender when it became a party to
      a Swap

     


    
      
         

      

      
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    Agreement
      between it and the Borrower or any Subsidiary immediately and automatically
      ceases to be a Secured Party when it no longer is an Affiliate of a Lender,
      and
      in each case, it shall have no benefits, rights or other interests under this
      Agreement, including the Liens and guarantees provided herein, or then or
      thereafter be deemed a Secured Party hereunder for any purpose or
      reference.

     

    “Secured
      Swap Agreement” means any Swap Agreement between the Borrower or any of its
      Subsidiaries and any Lender or any Affiliate of any Lender  (as long
      as and solely for the period during which such Person is an Affiliate of a
      Lender) while such Person (or, in the case of an Affiliate of a Lender, the
      Person so affiliated therewith) is a Lender regardless of when such Swap
      Agreement was entered into.  For the avoidance of doubt, a Swap
      Agreement immediately and automatically ceases to be a Secured Swap Agreement
      if
      (a) the Person that is the counterparty to the Borrower or one of its
      Subsidiaries under a Swap Agreement ceases to be a Lender under the Credit
      Agreement (or, in the case of an Affiliate of a Lender, the Person affiliated
      therewith ceases to be a Lender under the Credit Agreement) or (b) all
      amounts owed under the Loan Documents are paid, no Letters of Credit are
      outstanding and all Commitments are terminated.

     

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

     

    “Trademark
      License” means any agreement, whether written or oral, providing for the
      grant by or to any Grantor of any right to use any Trademark.

     

    “Trademarks”
      means (a) all trademarks, trade names, corporate names, company names, business
      names, fictitious business names, trade styles, service marks, logos and other
      source or business identifiers, and all goodwill associated therewith, now
      existing or hereafter adopted or acquired, all registrations and recordings
      thereof, and all applications in connection therewith, whether in the United
      States Patent and Trademark Office or in any similar office or agency of the
      United States, any State thereof or any other country or any political
      subdivision thereof, or otherwise, and all common-law rights related thereto,
      including any of the foregoing referred to in Schedule 6 and (b) the right
      to
      obtain all renewals thereof.

     

    “Supplement”
      means a Supplement substantially in the form attached hereto as
      Annex III.

     

    “UCC”
      means the Uniform Commercial Code as from time to time in effect in the State
      of
      Texas; provided, however, that, in the event that, by reason of mandatory
      provisions of law, any of the attachment, perfection or priority of the
      Administrative Agent’s security interest in any Collateral is governed by the
      Uniform Commercial Code as in effect in a jurisdiction other than the State
      of
      Texas, the term “UCC” shall mean the Uniform Commercial Code as in effect in
      such other jurisdiction for purposes of the provisions hereof relating to such
      attachment, perfection, the effect thereof or priority and for purposes of
      definitions related to such provisions.

     

    “Vehicles”
      means all cars, trucks, trailers, construction and earth moving equipment and
      other vehicles covered by a certificate of title law of any state and, in any
      event including, without limitation, the vehicles listed on Schedule 7 and
      all
      tires and other appurtenances to any of the foregoing.

     


    
      
         

      

      
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    Section
      1.02                Other
      Definitional Provisions.  Where the context requires, terms
      relating to the Collateral or any part thereof, when used in relation to a
      Grantor, refer to such Grantor’s Collateral or the relevant part
      thereof.

     

    Section
      1.03                Rules
      of Interpretation.  Section 1.04 and Section 1.05 of the
      Credit Agreement are hereby incorporated herein by reference and shall apply
      to
      this Agreement, mutatismutandis.

     

    ARTICLE
      II

    Guarantee

     

    Section
      2.01                Guarantee.

     

    (a)           Each
      of the Guarantors hereby, jointly and severally, unconditionally and
      irrevocably, guarantees to the Secured Parties and each of their respective
      successors, indorsees, transferees and assigns, the prompt and complete payment
      in cash when due (whether at the stated maturity, by acceleration or otherwise)
      of the Borrower Obligations.  This is a guarantee of payment and not
      collection and the liability of each Guarantor is primary and not
      secondary.

     

    (b)           Anything
      herein or in any other Loan Document to the contrary notwithstanding, the
      maximum liability of each Guarantor hereunder and under the other Loan Documents
      shall in no event exceed the amount which can be guaranteed by such Guarantor
      under applicable federal and state laws relating to the insolvency of debtors
      (after giving effect to the right of contribution established in Section
      2.02).

     

    (c)           Each
      Guarantor agrees that the Borrower Obligations may at any time and from time
      to
      time exceed the amount of the liability of such Guarantor hereunder without
      impairing the guarantee contained in this Article II or affecting the
      rights and remedies of any Secured Party hereunder.

     

    (d)           Each
      Guarantor agrees that if the maturity of the Borrower Obligations is accelerated
      by bankruptcy or otherwise, such maturity shall also be deemed accelerated
      for
      the purpose of this guarantee without demand or notice to such
      Guarantor.  Unless released pursuant to Section 9.14, the guarantee of
      each Guarantor contained in this Article II shall remain in full force and
      effect until all the Borrower Obligations shall have been satisfied by payment
      in full in cash, no Letter of Credit shall be outstanding and all of the
      Commitments are terminated, notwithstanding that from time to time during the
      term of the Credit Agreement, no Borrower Obligations may be
      outstanding.

     

    (e)           No
      payment made by any Grantor, any other guarantor or any other Person or received
      or collected by any Secured Party from the Borrower, any of the Guarantors,
      any
      other guarantor or any other Person by virtue of any action or proceeding or
      any
      set-off or appropriation or application at any time or from time to time in
      reduction of or in payment of the Borrower Obligations shall be deemed to
      modify, reduce, release or otherwise affect the liability of any Guarantor
      hereunder which shall, notwithstanding any such payment (other than any payment
      made by such Guarantor in respect of the Borrower Obligations or any payment
      received or collected from such Guarantor in respect of the Borrower
      Obligations), remain liable for the Borrower Obligations up to the maximum
      liability of such Guarantor hereunder until the

     


    
      
         

      

      
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    Borrower
      Obligations are paid in full in cash, no Letter of Credit shall be outstanding
      and all of the Commitments are terminated.

     

    Section
      2.02                Right
      of Contribution.  Each Guarantor hereby agrees that to the extent
      that a Guarantor shall have paid more than its proportionate share of any
      payment made hereunder, such Guarantor shall be entitled to seek and receive
      contribution from and against any other Guarantor hereunder which has not paid
      its proportionate share of such payment.  Each Guarantor’s right of
      contribution shall be subject to the terms and conditions of Section
      2.03.  The provisions of this Section 2.02 shall in no respect limit
      the obligations and liabilities of any Guarantor to the Secured Parties, and
      each Guarantor shall remain liable to the Secured Parties for the full amount
      guaranteed by such Guarantor hereunder.

     

    Section
      2.03               No
      Subrogation.  Notwithstanding any payment made by any Guarantor
      hereunder or any set-off or application of funds of any Guarantor by any Secured
      Party, no Guarantor shall be entitled to exercise its rights to be subrogated
      to
      any of the rights of any Secured Party against the Borrower or any other
      Guarantor or any collateral security or guarantee or right of offset held by
      any
      Secured Party for the payment of the Borrower Obligations, nor shall any
      Guarantor seek any indemnity, exoneration, participation, contribution or
      reimbursement from the Borrower or any other Guarantor in respect of payments
      made by such Guarantor hereunder, until all amounts owing to the Secured Parties
      on account of the Borrower Obligations are irrevocably and indefeasibly paid
      in
      full in cash, no Letter of Credit shall be outstanding and all of the
      Commitments are terminated.  If any amount shall be paid to any
      Guarantor on account of such subrogation rights at any time when all of the
      Borrower Obligations shall not have been irrevocably and indefeasibly paid
      in
      full in cash, any Letter of Credit shall be outstanding or any of the
      Commitments are in effect, such amount shall be held by such Guarantor in trust
      for the Secured Parties, and shall, forthwith upon receipt by such Guarantor,
      be
      turned over to the Administrative Agent in the exact form received by such
      Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if
      required), to be applied against the Borrower Obligations in accordance with
      Section 10.02(c) of the Credit Agreement.

     

    Section
      2.04               Guaranty
      Amendments, Etc. with respect to the Borrower Obligations.  Each
      Guarantor shall remain obligated hereunder, and such Guarantor’s obligations
      hereunder shall not be released, discharged or otherwise affected,
      notwithstanding that, without any reservation of rights against any Guarantor
      and without notice to, demand upon or further assent by any Guarantor (which
      notice, demand and assent requirements are hereby expressly waived by such
      Guarantor):  (i) any demand for payment of any of the Borrower
      Obligations made by any Secured Party may be rescinded by such Secured Party
      or
      otherwise and any of the Borrower Obligations continued; (ii) the Borrower
      Obligations, the liability of any other Person upon or for any part thereof
      or
      any collateral security or guarantee therefor or right of offset with respect
      thereto, may, from time to time, in whole or in part, be renewed, extended,
      amended, modified, accelerated, compromised, waived, surrendered or released
      by,
      or any indulgence or forbearance in respect thereof granted by, any Secured
      Party; (iii) any Secured Document may be amended, modified, supplemented
      or terminated, in whole or in part, as the Secured Parties may deem advisable
      from time to time; (iv) any collateral security, guarantee or right of offset
      at
      any time held by any Secured Party for the payment of the Borrower Obligations
      may be sold, exchanged, waived, surrendered or released; (v) any additional
      guarantors, makers or endorsers of the

     


    
      
         

      

      
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    Borrower
      Obligations may from time to time be obligated on the Borrower Obligations
      or
      any additional security or collateral for the payment and performance of the
      Borrower Obligations may from time to time secure the Borrower Obligations;
      or
vi) any other event shall occur which constitutes a defense or release
      of
      sureties generally.  No Secured Party shall have any obligation to
      protect, secure, perfect or insure any Lien at any time held by it as security
      for the Borrower Obligations or for the guarantee contained in this
      Article II or any Property subject thereto.

     

    Section
      2.05               Waivers.  Each
      Guarantor hereby waives any and all notice of the creation, renewal, extension
      or accrual of any of the Borrower Obligations and notice of or proof of reliance
      by any Secured Party upon the guarantee contained in this Article II or
      acceptance of the guarantee contained in this Article II; the Borrower
      Obligations, and any of them, shall conclusively be deemed to have been created,
      contracted or incurred, or renewed, extended, amended or waived, in reliance
      upon the guarantee contained in this Article II and no notice of creation
      of the Borrower Obligations or any extension of credit already or hereafter
      contracted by or extended to the Borrower need be given to any Guarantor; and
      all dealings between the Borrower and any of the Guarantors, on the one hand,
      and the Secured Parties, on the other hand, likewise shall be conclusively
      presumed to have been had or consummated in reliance upon the guarantee
      contained in this Article II.  Each Guarantor waives diligence,
      presentment, protest, demand for payment and notice of default or nonpayment
      to
      or upon the Borrower or any of the Guarantors with respect to the Borrower
      Obligations.

     

    Section
      2.06                Guaranty
      Absolute and Unconditional.

     

    (a)           Each
      Guarantor understands and agrees that the guarantee contained in this
      Article II is, and shall be construed as, a continuing, completed, absolute
      and unconditional guarantee of payment, and each Guarantor hereby waives any
      defense of a surety or guarantor or any other obligor on any obligations arising
      in connection with or in respect of any of the following and hereby agrees
      that
      its obligations hereunder shall not be discharged or otherwise affected as
      a
      result of any of the following:

     

    (i)           the
      invalidity or unenforceability of any Secured Document, any of the Borrower
      Obligations or any other collateral security therefor or guarantee or right
      of
      offset with respect thereto at any time or from time to time held by any Secured
      Party;

     

    (ii)          any
      defense, set-off or counterclaim (other than a defense of payment or
      performance) which may at any time be available to or be asserted by the
      Borrower or any other Person against any Secured Party;

     

    (iii)         the
      insolvency, bankruptcy arrangement, reorganization, adjustment, composition,
      liquidation, disability, dissolution or lack of power of the Borrower or any
      other Guarantor or any other Person at any time liable for the payment of all
      or
      part of the Obligations, including any discharge of, or bar or stay against
      collecting, any Obligation (or any part of them or interest therein) in or
      as a
      result of such proceeding;

     


    
      
         

      

      
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    (iv)          any
      sale, lease or transfer of any or all of the assets of the Borrower or any
      other
      Guarantor, or any changes in the shareholders of the Borrower or any other
      Guarantor;

     

    (v)           any
      change in the corporate existence (including its constitution, laws, rules,
      regulations or power), structure or ownership of any Grantor or in the
      relationship between the Borrower and any Grantor;

     

    (vi)         the
      fact that any Collateral or Lien contemplated or intended to be given, created
      or granted as security for the repayment of the Obligations shall not be
      properly perfected or created, or shall prove to be unenforceable or subordinate
      to any other Lien, it being recognized and agreed by each of the Guarantors
      that
      it is not entering into this Agreement in reliance on, or in contemplation
      of
      the benefits of, the validity, enforceability, collectability or value of any
      of
      the Collateral for the Obligations;

     

    (vii)        the
      absence of any attempt to collect the Obligations or any part of them from
      any
      Grantor;

     

    (viii)       (1)
      any Secured Party’s election, in any proceeding instituted under chapter 11 of
      the Bankruptcy Code, of the application of Section 1111(b)(2) of the
      Bankruptcy Code; (a) any borrowing or grant of a Lien by the Borrower, as
      debtor-in-possession, or extension of credit, under Section 364 of the
      Bankruptcy Code; (b) the disallowance, under Section 502 of the Bankruptcy
      Code, of all or any portion of any Secured Party’s claim (or claims) for
      repayment of the Obligations; (c) any use of cash collateral under
      Section 363 of the Bankruptcy Code; (d) any agreement or stipulation as to
      the provision of adequate protection in any bankruptcy proceeding; (e) the
      avoidance of any Lien in favor of the Secured Parties or any of them for any
      reason; or (f) failure by any Secured Party to file or enforce a claim against
      the Borrower or its estate in any bankruptcy or insolvency case or proceeding;
      or

     

    (ix)         any
      other circumstance or act whatsoever, including any action or omission of the
      type described in Section 2.04 (with or without notice to or knowledge of the
      Borrower or such Guarantor), which constitutes, or might be construed to
      constitute, an equitable or legal discharge of the Borrower for the Borrower
      Obligations, or of such Guarantor under the guarantee contained in this
      Article II, in bankruptcy or in any other instance.

     

    (b)           When
      making any demand hereunder or otherwise pursuing its rights and remedies
      hereunder against any Guarantor, any Secured Party may, but shall be under
      no
      obligation to, join or make a similar demand on or otherwise pursue or exhaust
      such rights and remedies as it may have against the Borrower, any other
      Guarantor or any other Person or against any collateral security or guarantee
      for the Borrower Obligations or any right of offset with respect thereto, and
      any failure by any Secured Party to make any such demand, to pursue such other
      rights or remedies or to collect any payments from the Borrower, any other
      Guarantor or any other Person or to realize upon any such collateral security
      or
      guarantee or to exercise any such right of offset, or any release of the
      Borrower, any other Guarantor or any other Person or any such collateral
      security, guarantee or right of offset, shall not relieve any Guarantor of
      any
      obligation or liability hereunder, and shall not impair or affect the rights
      and
      remedies, whether express, implied or available as a matter of law, of any
      Secured Party against any Guarantor.  For

     


    
      
         

      

      
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    the
      purposes hereof “demand” shall include the commencement and continuance of any
      legal proceedings.

     

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

     

    Section
      2.08               Payments.  Subject
      to Section 5.03 of the Credit Agreement, each Guarantor hereby guarantees that
      payments hereunder will be paid to the Administrative Agent, for the ratable
      benefit of the Secured Parties, without set-off, deduction or counterclaim,
      in
      dollars, in immediately available funds, at the offices of the Administrative
      Agent specified in Section 12.01 of the Credit Agreement (or from time to
      time designated in accordance with the terms thereof).

     

    ARTICLE
      III

     

    Grant
      of Security Interest

     

    Section
      3.01                Grant
      of Security Interest.  Each Grantor hereby pledges, and
      collaterally assigns and transfers to the Administrative Agent, and hereby
      grants to the Administrative Agent, for the ratable benefit of the Secured
      Parties, a continuing security interest in, lien on and right of setoff against,
      all of the following Property now owned or at any time hereafter acquired by
      such Grantor or in which such Grantor now has or at any time in the future
      may
      acquire any right, title or interest and whether now existing or hereafter
      coming into existence (collectively, the “Collateral”), as security for
      the prompt and complete payment and performance when due (whether at the stated
      maturity, by acceleration or otherwise) of such Grantor’s
      Obligations:

     

      	
            	
              (a)

            	
                all
                Accounts;

            


    

     

    
      	
            	
              (b)

            	
               
                all Chattel Paper (whether Tangible Chattel Paper or Electronic Chattel
                Paper);

            


    

     

    
      	
            	
              (c)

            	
               
                all Commercial Tort Claims (including, without limitation, with respect
                to
                the matters set forth on Schedule
                3);

            


    

     

    
      	
            	
              (d)

            	
               
                all Deposit Accounts;

            


    

     

    
      	
            	
              (e)

            	
               
                all Documents;

            


    

     

    
      	
            	
              (f)

            	
               
                all Equipment;

            


    

     

    
      	
            	
              (g)

            	
               
                all Fixtures;

            


    

     

    
      	
            	
              (h)

            	
               
                all General Intangibles (including, without limitation, all rights
                in and
                under Swap Agreements);

            


    

     


    
      
         

      

      
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              (i)

            	
               
                all Instruments;

            


    

     

    
      	
            	
              (j)

            	
               
                all Intellectual Property;

            


    

     

    
      	
            	
              (k)

            	
               
                all Inventory;

            


    

     

    
      	
            	
              (l)

            	
               
                all Investment Property;

            


    

     

    
      	
            	
              (m)

            	
               
                all Letter-of-Credit Rights;

            


    

     

    
      	
            	
              (n)

            	
                
                all other Property not otherwise described above (except for the
                Excluded
                Property and any Property specifically excluded from any defined
                term used
                in any clause of this Section);

            


    

     

    
      	
            	
              (o)

            	
               
                all books and records pertaining to the Collateral;
                and

            


    

     

    
      	
            	
              (p)

            	
               
                to the extent not otherwise included, all Proceeds, Supporting Obligations
                and products of any and all of the foregoing and all collateral security
                and guarantees given by any Person with respect to any of the
                foregoing;

            


    

     

    provided,
      however, notwithstanding anything to the contrary contained herein or in an
      other Secured Document, this Agreement shall not grant, effect or constitute
      or
      evidence a grant of a security interest, collateral assignment or transfer
      or
      any other type of Lien in Excluded Property.

     

    Section
      3.02               Transfer
      of Pledged Securities.  All certificates or instruments
      representing or evidencing the Pledged Securities shall be delivered to and
      held
      pursuant hereto by the Administrative Agent or a Person designated by the
      Administrative Agent and shall be in suitable form for transfer by delivery,
      or
      shall be accompanied by duly executed instruments of transfer or assignment
      in
      blank, and accompanied by any required transfer tax stamps to effect the pledge
      of the Pledged Securities to the Administrative
      Agent.  Notwithstanding the preceding sentence, at the Administrative
      Agent’s discretion, all Pledged Securities must be delivered or transferred in
      such manner as to permit the Administrative Agent to be a “protected purchaser”
to the extent of its security interest as provided in Section 8.303 of the
      UCC (if the Administrative Agent otherwise qualifies as a protected
      purchaser).  During the continuance of an Event of Default, the
      Administrative Agent shall have the right, at any time in its discretion and
      without notice, to transfer to or to register in the name of the Administrative
      Agent or any of its nominees any or all of the Pledged Securities, subject
      only
      to the revocable rights of the relevant Grantor specified in Section
      6.03.  In addition, during the continuance of an Event of Default, the
      Administrative Agent shall have the right at any time to exchange certificates
      or instruments representing or evidencing Pledged Securities for certificates
      or
      instruments of smaller or larger denominations.

     

    ARTICLE
      IV

    Representations
      and Warranties

     

    To
      induce
      the Administrative Agent and the Lenders to enter into the Credit Agreement
      and
      to induce the Lenders to make their respective loans to and extensions of credit
      to the Borrower thereunder and to induce the Lenders (and their Affiliates)
      to
      enter into Swap

     


    
      
         

      

      
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    Agreements
      with the Borrower and its Subsidiaries, the Borrower and, solely with respect
      to
      itself and as applicable, each other Grantor hereby represents and warrants
      to
      the Administrative Agent and each Lender that:

     

    Section
      4.01                Representations
      in Credit Agreement.  In the case of each Grantor other than the
      Borrower, the representations and warranties set forth in Article VII of
      the Credit Agreement as they relate to such Grantor or to the Loan Documents
      to
      which such Grantor is a party, each of which is hereby incorporated be
      reference, are true and correct, and the Administrative Agent and the Lenders
      shall be entitled to rely on each of them, provided that each reference in
      each
      such representation and warranty to the Borrower’s knowledge shall, for the
      purposes of this Section 4.01, be deemed to be a reference to such Grantor’s
      knowledge.

     

    Section
      4.02                Title;
      No Other Liens.  Except for the security interest granted to the
      Administrative Agent for the ratable benefit of the Secured Parties pursuant
      to
      this Agreement and the other Liens permitted to exist on the Collateral by
      the
      Credit Agreement, such Grantor owns each item of the Collateral free and clear
      of any and all Liens or claims of others.  No financing statement or
      other public notice with respect to all or any part of the Collateral is on
      file
      or of record in any public office, except such as have been filed in favor
      of
      the Administrative Agent, for the ratable benefit of the Secured Parties,
      pursuant to this Agreement or as are permitted by the Credit Agreement, and
      such
      as shall be terminated substantially contemporaneous with the consummation
      of
      the Transactions.  For the avoidance of doubt, it is understood and
      agreed that any Grantor may, as part of its business, grant licenses to third
      parties to use Intellectual Property owned or developed by a
      Grantor.  For purposes of this Agreement and the other Loan Documents,
      such licensing activity shall not constitute a “Lien” on such Intellectual
      Property.  Each of the Administrative Agent and each Lender
      understands that any such licenses may be exclusive to the applicable licensees,
      and such exclusivity provisions may limit the ability of the Administrative
      Agent to utilize, sell, lease or transfer the related Intellectual Property
      or
      otherwise realize value from such Intellectual Property pursuant
      hereto.

     

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

     

    Section
      4.04                Grantor
      Information.  On the date hereof, the correct legal name of such
      Grantor, all names and trade names that such Grantor has used in the last five
      years, such Grantor’s jurisdiction of organization and each jurisdiction of
      organization of such Grantor over the last five years, such Grantor’s
      organizational number (if any), taxpayer identification number, and the
      location(s) of such Grantor’s chief executive office or sole place of business
      or principal residence, as the case may be, over the last five years are
      specified on Schedule 4.  Such Grantor has furnished to the
      Administrative Agent a certified charter, certificate of

     


    
      
         

      

      
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    incorporation
      or other organization document and long-form good standing certificate as of
      a
      date which is recent to the date hereof.

     

    Section
      4.05                Inventory
      and Equipment.  On the date hereof, the Inventory and the
      Equipment (other than mobile goods) are kept at the locations listed on Schedule
      5, other than Inventory or Equipment of an inconsequential value or nature
      or
      that is in transit to a purchaser or to one or more of the locations listed
      in
      Schedule 5.

     

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

     

    Section
      4.07                Investment
      Property.

     

    (a)           The
      Pledged Securities required to be pledged hereunder and under the Credit
      Agreement by such Grantor are listed in Schedule 2.  The shares of
      Pledged Securities pledged by such Grantor hereunder constitute all the issued
      and outstanding shares of all classes of the Equity Interests of each Issuer
      owned by such Grantor which is a Domestic Subsidiary of such Grantor and 66%
      of
      the issued and outstanding shares of all classes of the Equity Interests of
      each
      Issuer owned by such Grantor which is a Foreign Subsidiary.  All the
      shares of the Pledged Securities have been duly and validly issued and are
      fully
      paid and nonassessable; and such Grantor is the record and beneficial owner
      of,
      and has good and marketable title to, the Investment Property pledged by it
      hereunder, free of any and all Liens or options in favor of, or claims of,
      any
      other Person, except the security interest created by this Agreement, and has
      rights in or the power to transfer the Investment Property in which a Lien
      is
      granted by it hereunder, free and clear of any Lien.

     

    (b)           There
      are no restrictions on transfer (that have not been waived or otherwise
      consented to) in the LLC Agreement governing any Pledged LLC Interest or the
      Partnership Agreement governing any Pledged Partnership Interest or any other
      agreement relating thereto which would limit or restrict:  (1) the
      grant of a security interest in the Pledged LLC Interests or the Pledged
      Partnership Interests, (2) the perfection of such security interest or (3)
      the
      exercise of remedies in respect of such perfected security interest in the
      Pledged LLC Interests or the Pledged Partnership Interests, in each case, as
      contemplated by this Agreement.  Upon the exercise of remedies in
      respect of the Pledged LLC Interests or the Pledged Partnership Interests as
      provided for herein and otherwise as required by then applicable law, a
      transferee or assignee of a membership interest or a partnership interest,
      as
      the case may be, of such LLC or Partnership, as the case may be, shall become
      a
      member or partner, as the case may be, of such LLC or Partnership, as the case
      may be, entitled to participate in the management thereof to the extent
      immediately theretofore held by the assignor or transferor, as the case may
      be,
      and, upon the transfer of the entire interest of such Grantor, such Grantor
      shall cease to be a member or partner, as the case may be.

     

    (c)           Each
      of the Pledged Notes constitutes the legal, valid and binding obligation of
      the
      obligor with respect thereto, enforceable in accordance with its terms, subject
      to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
      moratorium and other similar laws relating to or affecting creditors’ rights
      generally, general equitable principles

     


    
      
         

      

      
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    (whether
      considered in a proceeding in equity or at law) and an implied covenant of
      good
      faith and fair dealing.

     

    Section
      4.08                Receivables.

     

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

     

    (b)           None
      of the obligors on any Receivables is a Governmental Authority, except as
      disclosed on Schedule 7.

     

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

     

    Section
      4.09                Intellectual
      Property.

     

    (a)           Schedule
      6 lists all Intellectual Property owned by such Grantor in its own name on
      the
      date hereof which consists of Patents, patent applications and registered
      copyrights.

     

    (b)           On
      the date hereof, all material Intellectual Property is valid, subsisting,
      unexpired and enforceable, has not been abandoned and does not infringe the
      intellectual property rights of any other Person.

     

    (c)           Except
      as set forth in Schedule 6 (and any implied warranties, resulting from product
      sales or services or implied licenses arising in the ordinary course of such
      Grantor’s business), on the date hereof, none of the Intellectual Property is
      the subject of any licensing or franchise agreement pursuant to which such
      Grantor is the licensor or franchisor.

     

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

     

    (e)           No
      action or proceeding is pending, or, to the knowledge of such Grantor,
      threatened, on the date hereof ii) seeking to limit, cancel or question the
      validity of any Intellectual Property or such Grantor’s ownership interest
      therein, or iii) which, if adversely determined, would have a material adverse
      effect on the value of any Intellectual Property.

     

    Section
      4.10                Commercial
      Tort Claims.

     

    (a)           On
      the date hereof, except to the extent listed in Schedule 3, no Grantor has
      rights in any Commercial Tort Claim with an asserted value in excess of
      $1,000,000.

     

    (b)           Upon
      the filing of a financing statement covering any Commercial Tort Claim referred
      to in Section 5.10 against such Grantor in the jurisdiction specified in
      Schedule 3, the security interest granted in such Commercial Tort Claim will
      constitute a valid perfected security interest in favor of the Administrative
      Agent, for the ratable benefit of the Secured

     


    
      
         

      

      
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    Parties,
      as collateral security for such Grantor’s Obligations, enforceable in accordance
      with the terms hereof against all creditors of such Grantor and any Persons
      purporting to purchase such Collateral from such Grantor, which security
      interest shall be prior to all other Liens on such Collateral except for
      unrecorded liens permitted by the Credit Agreement which have priority over
      the
      Liens on such Collateral by operation of law.

     

    Section
      4.11                Benefit
      to the Guarantors.  The Borrower is a member of an affiliated
      group of companies that includes such Grantor, and the Borrower and the other
      Grantors are engaged in related businesses.  Such Grantor may
      reasonably be expected to benefit, directly or indirectly, from the
      Transactions; and such Grantor has determined that this Agreement is necessary
      and convenient to the conduct, promotion and attainment of the business of
      such
      Grantor.

     

    ARTICLE
      V

    Covenants

     

    Each
      Grantor covenants and agrees with the Administrative Agent and the Lenders
      that,
      from and after the date of this Agreement until the Borrower Obligations shall
      have been indefeasibly paid in full in cash, no Letter of Credit shall be
      outstanding and all of the Commitments shall have terminated:

     

    Section
      5.01               Covenants
      and Events of Default in Credit Agreement.  Such Grantor shall
      take, or shall refrain from taking, as the case may be, each action that is
      necessary to be taken or not taken, as the case may be, by it so that no Default
      or Event of Default is caused by the failure to take such action or to refrain
      from taking such action by such Grantor.

     

    Section
      5.02                Delivery
      of Instruments, Certificated Securities and Chattel Paper.  If any
      amount payable under or in connection with any of the Collateral shall be or
      become evidenced by any Instrument, Certificated Security or Chattel Paper,
      such
      Instrument, Certificated Security or Chattel Paper shall be immediately
      delivered to the Administrative Agent, duly indorsed in a manner satisfactory
      to
      the Administrative Agent, to be held as Collateral pursuant to this
      Agreement.  Notwithstanding the foregoing, the Borrower shall not be
      required to deliver such Instrument, Certificated Security or Chattel Paper
      to
      the Administrative Agent as set forth in the immediately preceding sentence
      if
      the value of an Instrument, Certificated Security or Chattel Paper is less
      than
      $50,000 or if the aggregate value of all such Instruments, Certificated
      Securities and Chattel Paper is less than $200,000.

     

    Section
      5.03                Maintenance
      of Insurance.  Each Grantor agrees to maintain insurance on the
      Collateral as set forth in Section 8.07 of the Credit Agreement.

     

    Section
      5.04               Payment
      of Obligations.  Each Grantor agrees to comply with the provisions
      of Section 8.04 of the Credit Agreement with respect to its payment obligations
      in the same manner as the Borrower is required thereunder.

     

    Section
      5.05                Maintenance
      of Perfected Security Interest; Further Documentation.

     

    (a)           Such
      Grantor shall maintain the security interest created by this Agreement as a
      perfected security interest having at least the priority described in Section
      4.03

     


    
      
         

      

      
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    and
      shall
      defend such security interest against the claims and demands of all Persons
      whomsoever, subject to the rights of such Grantor under the Loan Documents
      to
      dispose of the Collateral.

     

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

     

    (c)           At
      any time and from time to time, upon the written request of the Administrative
      Agent, and at the sole expense of such Grantor, such Grantor will promptly
      and
      duly execute and deliver, and have recorded, such further instruments and
      documents and take such further actions as the Administrative Agent may
      reasonably request for the purpose of obtaining or preserving the full benefits
      of this Agreement and of the rights and powers herein granted, including,
      without limitation, (i) delivering certificated securities, (ii) filing any
      financing or continuation statements under the UCC (or other similar laws)
      in
      effect in any jurisdiction with respect to the security interests created hereby
      and (iii) in the case of Investment Property, Deposit Accounts, Letter-of-Credit
      Rights and any other relevant Collateral, taking any actions necessary to enable
      the Administrative Agent to obtain “control” (within the meaning of the
      applicable Uniform Commercial Code) with respect thereto.

     

    Section
      5.06                Notices.  Such
      Grantor or the Borrower will advise the Administrative Agent, in reasonable
      detail, of:

     

    (a)           any
      Lien (other than security interests created hereby or Liens permitted under
      the
      Credit Agreement) on any of the Collateral of such Grantor which would
      reasonably be expected to have an adverse affect on the ability of the
      Administrative Agent to exercise any of its remedies hereunder; and

     

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

     

    Section
      5.07                Investment
      Property.

     

    (a)           If
      such Grantor shall become entitled to receive or shall receive any certificate
      (including, without limitation, any certificate representing a dividend or
      a
      distribution in connection with any reclassification, increase or reduction
      of
      capital or any certificate issued in connection with any reorganization), option
      or rights in respect of the Equity Interests of any Issuer, whether in addition
      to, in substitution of, as a conversion of, or in exchange for, any shares
      of
      the Pledged Securities, or otherwise in respect thereof, such Grantor shall
      accept the same as the agent of the Secured Parties, hold the same in trust
      for
      the Secured Parties, segregated from other Property of such Grantor, and deliver
      the same forthwith to the Administrative Agent in the exact form received,
      duly
      indorsed by such Grantor to the Administrative Agent, if required, together
      with
      an undated stock power covering such certificate duly executed in blank by
      such
      Grantor and with, if the Administrative Agent so requests, signature guaranteed,
      to be held by the Administrative Agent, subject to the terms hereof,
      as

     


    
      
         

      

      
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    additional
      collateral security for the Obligations.  Any sums paid upon or in
      respect of the Investment Property upon the liquidation or dissolution of any
      Issuer shall be paid over to the Administrative Agent to be held by it hereunder
      as additional collateral security for the Obligations, and in case any
      distribution of capital shall be made on or in respect of the Investment
      Property or any property shall be distributed upon or with respect to the
      Investment Property pursuant to the recapitalization or reclassification of
      the
      capital of any Issuer or pursuant to the reorganization thereof, the property
      so
      distributed shall, unless otherwise subject to a perfected security interest
      in
      favor of the Administrative Agent, be delivered to the Administrative Agent
      to
      be held by it hereunder as additional collateral security for the
      Obligations.  If any sums of money or property so paid or distributed
      in respect of the Investment Property shall be received by such Grantor, such
      Grantor shall, until such money or property is paid or delivered to the
      Administrative Agent, hold such money or property in trust for the
      Administrative Agent and the Lenders, segregated from other funds of such
      Grantor, as additional collateral security for the Obligations.

     

    (b)           Without
      the prior written consent of the Administrative Agent, such Grantor will not
      (i)
      unless otherwise expressly permitted hereby or under the other Loan Documents,
      vote to enable, or take any other action to permit, any Issuer to issue any
      Equity Interests of any nature or to issue any other securities convertible
      into
      or granting the right to purchase or exchange for any Equity Interests of any
      nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise
      dispose of, or grant any option with respect to, the Investment Property or
      Proceeds thereof (except pursuant to a transaction expressly permitted by the
      Credit Agreement), (iii) create, incur or permit to exist any Lien or option
      in
      favor of, or any claim of any Person with respect to, any of the Investment
      Property or Proceeds thereof, or any interest therein, except for the security
      interests created by this Agreement or (iv) enter into any agreement or
      undertaking restricting the right or ability of such Grantor or the
      Administrative Agent to sell, assign or transfer any of the Investment Property
      or Proceeds thereof except as expressly permitted pursuant to Section 9.16
      of
      the Credit Agreement.

     

    (c)           In
      the case of each Grantor that is an Issuer, such Issuer agrees that (i) it
      will
      be bound by the terms of this Agreement relating to the Investment Property

      issued by it and will comply with such terms insofar as such terms are
      applicable to it, (ii) it will notify the Administrative Agent promptly in
      writing of the occurrence of any of the events described in Section 5.07(a)
      with
      respect to the Investment Property issued by it and (iii) the terms of Section
      6.03(c) and Section 6.07 shall apply to it, mutatismutandis, with
      respect to all actions that may be required of it pursuant to Section 6.03(c)
      or
      Section 6.07 with respect to the Investment Property issued by it.  In
      the case of any Issuer that is not a Grantor hereunder, such Grantor shall
      promptly cause such Issuer to execute and deliver to the Administrative Agent
      an
      Acknowledgment and Consent.

     

    (d)           In
      the case of each Grantor that is a partner in a Partnership, such Grantor hereby
      consents to the extent required by the applicable Partnership Agreement to
      the
      pledge by each other Grantor, pursuant to the terms hereof, of the Pledged
      Partnership Interests in such Partnership and to the transfer of such Pledged
      Partnership Interests to the Administrative Agent or its nominee and to the
      substitution of the Administrative Agent or its nominee as a substituted partner
      in such Partnership with all the rights, powers and duties of a general partner
      or a limited partner, as the case may be.  In the case of each Grantor
      that is a member of an LLC, such

     


    
      
         

      

      
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    Grantor
      hereby consents to the extent required by the applicable LLC Agreement to the
      pledge by each other Grantor, pursuant to the terms hereof, of the Pledged
      LLC
      Interests in such LLC and to the transfer of such Pledged LLC Interests to
      the
      Administrative Agent or its nominee and to the substitution of the
      Administrative Agent or its nominee as a substituted member of the LLC with
      all
      the rights, powers and duties of a member of such LLC.

     

    (e)           Such
      Grantor shall not agree to any amendment of a Partnership Agreement or an LLC
      Agreement that (i) in any way adversely affects the perfection of the security
      interest of the Administrative Agent in the Pledged Partnership Interests or
      Pledged LLC Interests pledged by such Grantor hereunder or (ii) causes any
      Partnership Agreement or LLC Agreement to include an election to treat the
      membership interests or partnership interests of such Grantor as a security
      under Section 8-103 of the UCC.

     

    (f)           With
      respect to Equity Interests in certificated form, such Grantor shall furnish
      to
      the Administrative Agent such stock or equity powers and other instruments
      as
      may be required by the Administrative Agent to assure the transferability of
      the
      Investment Property when and as often as may be reasonably requested by the
      Administrative Agent.

     

    (g)           The
      Pledged Securities set forth on Schedule 2 will at all times constitute not
      less
      than 100% of the Equity Interests of each Issuer which is a Domestic Subsidiary
      and not less than 66% of the Equity Interests of each Issuer which is a Foreign
      Subsidiary thereof owned by such Grantor.  Such Grantor will not
      permit any Issuer of any of the Pledged Securities set forth on Schedule 2
      to
      issue any new shares of any class of Equity Interests of such Issuer without
      the
      prior written consent of the Administrative Agent.

     

    Section
      5.08                Receivables.

     

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

     

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

     

    Section
      5.09                Intellectual
      Property.

     

    (a)           Such
      Grantor (either itself or through licensees) will (i) continue to use each
      material Trademark on each and every trademark class of goods applicable to
      its
      current line as reflected in its current catalogs, brochures and price lists
      in
      order to maintain such Trademark in full force free from any claim of
      abandonment for non-use, in each case if such Grantor deems that such use is
      appropriate under the circumstances, (ii) maintain as in the past the quality
      of
      products and services offered under such Trademark, (iii) use such Trademark
      with the appropriate notice of registration and all other notices and legends
      required of such Grantor by applicable Governmental Requirements, (iv) not
      knowingly adopt or use any mark

     


    
      
         

      

      
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    which
      is
      confusingly similar or a colorable imitation of such Trademark unless the
      Administrative Agent, for the ratable benefit of the Secured Parties, shall
      obtain a perfected security interest in such mark pursuant to this Agreement
      and
      (v) not (and not permit any licensee or sublicensee thereof to) knowingly do
      any
      act or omit to do any act whereby such Trademark may become invalidated or
      impaired in any way.

     

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

     

    (c)           Such
      Grantor (either itself or through licensees) (i) will employ each material
      Copyright, if such Grantor deems that such employment is appropriate under
      the
      circumstances, and (ii) will not (and will not permit any licensee or
      sublicensee thereof to) knowingly do any act or omit to do any act whereby
      any
      material portion of the Copyrights may, after giving immediate effect to such
      act or omission, become invalidated or otherwise impaired.  Such
      Grantor will not (either itself or through licensees) knowingly, do any act
      whereby any material portion of the Copyrights may fall into the public
      domain.

     

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

     

    (e)           Such
      Grantor or the Borrower will notify the Administrative Agent and the Lenders
      as
      soon as reasonably practicable after it knows, or a Responsible Officer has
      reason to know, that any application or registration relating to any material
      Intellectual Property may become forfeited, abandoned or dedicated to the
      public, or of any adverse determination or development (including, without
      limitation, the institution of, or any such determination or development in,
      any
      proceeding in the United States Patent and Trademark Office, the United States
      Copyright Office or any court or tribunal in any country) regarding such
      Grantor’s ownership of, or the validity of, any material Intellectual Property
      or such Grantor’s right to register the same or to own and maintain the
      same.

     

    (f)           Whenever
      such Grantor, either by itself or through any agent, employee, licensee or
      designee, shall file an application for the registration of any Intellectual
      Property with the United States Patent and Trademark Office, the United States
      Copyright Office or any similar office or agency in any other country or any
      political subdivision thereof, such Grantor shall report such filing to the
      Administrative Agent in the certificate it delivers pursuant to
      Section 8.01(c) of the Credit Agreement which covers the quarterly period
      in which such filing occurred.  Upon request of the Administrative
      Agent, such Grantor shall execute and deliver, and have recorded, any and all
      agreements, instruments, documents, and papers as the Administrative Agent
      may
      reasonably request to evidence the Administrative Agent’s and the Lenders’
security interest in any Copyright, Patent or Trademark and the goodwill and
      general intangibles of such Grantor relating thereto or represented
      thereby.

     

    (g)           Such
      Grantor will take all reasonable and necessary steps, including, without
      limitation, in any proceeding before the United States Patent and Trademark
      Office, the United States Copyright Office or any similar office or agency
      in
      any other country or any political subdivision thereof, to maintain and pursue
      each application (and to obtain the relevant

     


    
      
         

      

      
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    registration)
      and to maintain each registration of the material Intellectual Property,
      including, without limitation, filing of applications for renewal, affidavits
      of
      use and affidavits of incontestability.

     

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

     

    Section
      5.10                Commercial
      Tort Claims.  If such Grantor shall obtain an interest in any
      Commercial Tort Claim with an asserted value in excess of $1,000,000, such
      Grantor shall within 30 days of obtaining such interest sign and deliver
      documentation acceptable to the Administrative Agent that grants a security
      interest under the terms and provisions of this Agreement in and to such
      Commercial Tort Claim.

     

    


    ARTICLE
      VI

    Remedial
      Provisions

     

    Section
      6.01                Certain
      Matters Relating to Receivables.  At any time after the occurrence
      and the continuation of an Event of Default:

     

    (a)           The
      Administrative Agent shall have the right to make test verifications of the
      Receivables in any manner and through any medium that it reasonably considers
      advisable, and each Grantor shall furnish all such assistance and information
      as
      the Administrative Agent may require in connection with such test
      verifications.  At any time and from time to time, upon the
      Administrative Agent’s request and at the expense of the relevant Grantor, such
      Grantor shall cause independent public accountants or others satisfactory to
      the
      Administrative Agent to furnish to the Administrative Agent reports showing
      reconciliations, aging and test verifications of, and trial balances for, the
      Receivables.

     

    (b)           The
      Administrative Agent hereby authorizes each Grantor to collect such Grantor’s
      Receivables, subject to the Administrative Agent’s direction and control, and
      the Administrative Agent may curtail or terminate said authority at any time
      after the occurrence and during the continuance of an Event of
      Default.  If required by the Administrative Agent at any time after
      the occurrence and during the continuance of an Event of Default, any payments
      of Receivables, when collected by any Grantor, (i) shall be forthwith (and,
      in
      any event, within two Business Days) deposited by such Grantor in the exact
      form
      received, duly indorsed by such Grantor to the Administrative Agent if required,
      in a Collateral Account maintained under the sole dominion and control of the
      Administrative Agent, subject to withdrawal by the Administrative Agent for
      the
      account of the Lenders only as provided in Section 6.05, and (ii) until so
      turned over, shall be held by such Grantor in trust for the Administrative
      Agent
      and the Lenders, segregated from other funds of such Grantor.  Each
      such deposit of Proceeds of

     


    
      
         

      

      
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    Receivables
      shall be accompanied by a report identifying in reasonable detail the nature
      and
      source of the payments included in the deposit.

     

    (c)           At
      the Administrative Agent’s request, each Grantor shall deliver to the
      Administrative Agent all original and other documents evidencing, and relating
      to, the agreements and transactions which gave rise to the Receivables,
      including, without limitation, all original orders, invoices and shipping
      receipts.

     

    Section
      6.02                Communications
      with Obligors; Grantors Remain Liable.

     

    (a)           
      The Administrative Agent at any time after the occurrence and during the
      continuance of an Event of Default in its own name or in the name of others
      may
      at any time communicate with obligors under the Receivables to verify with
      them
      to the Administrative Agent’s satisfaction the existence, amount and terms of
      any Receivables.

     

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

     

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

     

    Section
      6.03                Pledged
      Securities.

     

    (a)           Unless
      an Event of Default shall have occurred and be continuing and the Administrative
      Agent shall have given notice to the relevant Grantor of the Administrative
      Agent’s intent to exercise its corresponding rights pursuant to Section 6.03(b),
      each Grantor shall be permitted to receive all cash dividends paid in respect
      of
      the Pledged Securities and all payments made in respect of the Pledged Notes,
      in
      each case paid in the normal course of business of the relevant Issuer and
      consistent with past practice, to the extent permitted in the Credit Agreement,
      and to exercise all voting and corporate or other organizational rights with
      respect to the Investment Property; provided, however, that no vote shall be
      cast or corporate or other organizational right exercised or other action taken
      which, in the Administrative Agent’s reasonable judgment, would impair the
      Collateral or which would be inconsistent with or result

     


    
      
         

      

      
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    in
      any
      violation of any provision of the Credit Agreement, this Agreement or any other
      Loan Document.

     

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

     

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

     

    Section
      6.04                Proceeds
      to be Turned Over to Administrative Agent.  In addition to the
      rights of the Administrative Agent and the Lenders specified in Section 6.01
      with respect to payments of Receivables, if an Event of Default shall occur
      and
      be continuing, all Proceeds received by any Grantor consisting of cash, checks
      and other near-cash items shall be held by such Grantor in trust for the
      Administrative Agent and the Lenders, segregated from other funds of such
      Grantor, and shall, forthwith upon receipt by such Grantor, be turned over
      to
      the Administrative Agent in the exact form received by such Grantor (duly
      indorsed by such Grantor to the Administrative Agent, if
      required).  All such Proceeds received by the Administrative Agent
      hereunder shall be held by the Administrative Agent in a Collateral Account
      maintained under its sole dominion and control.  All such Proceeds
      while held by the Administrative Agent in a Collateral Account (or by such
      Grantor in trust for the Administrative Agent and the

     


    
      
         

      

      
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    Lenders)
      shall continue to be held as collateral security for all the Obligations and
      shall not constitute payment thereof until applied as provided in Section
      6.05.

     

    Section
      6.05               Application
      of Proceeds.  At such intervals as may be agreed upon by the
      Borrower and the Administrative Agent, or, if an Event of Default shall have
      occurred and be continuing, at any time at the Administrative Agent’s election,
      the Administrative Agent may apply all or any part of Proceeds constituting
      Collateral, whether or not held in any Collateral Account, and any proceeds
      of
      the guarantee set forth in Article II, in payment of the Obligations in
      accordance with Section 10.02(c) of the Credit Agreement.

     

    Section
      6.06                Code
      and Other Remedies.

     

    (a)           If
      an Event of Default shall occur and be continuing, the Administrative Agent,
      on
      behalf of the Secured Parties, may exercise, in addition to all other rights
      and
      remedies granted to them in this Agreement, the other Loan Documents and in
      any
      other instrument or agreement securing, evidencing or relating to the
      Obligations, all rights and remedies of a secured party under the UCC or any
      other applicable law or otherwise available at law or equity.  Without
      limiting the generality of the foregoing, the Administrative Agent, without
      demand of performance or other demand, presentment, protest, advertisement
      or
      notice of any kind (except any notice required by law referred to below) to
      or
      upon any Grantor or any other Person (all and each of which demands, defenses,
      advertisements and notices are hereby waived), may in such circumstances
      forthwith collect, receive, appropriate and realize upon the Collateral, or
      any
      part thereof, and/or may forthwith sell, lease, assign, give option or options
      to purchase, or otherwise dispose of and deliver the Collateral or any part
      thereof (or contract to do any of the foregoing), in one or more parcels at
      public or private sale or sales, at any exchange, broker’s board or office of
      any Secured Party or elsewhere upon such terms and conditions as it may deem
      advisable and at such prices as it may deem best, for cash or on credit or
      for
      future delivery without assumption of any credit risk.  Any Secured
      Party shall have the right upon any such public sale or sales, and, to the
      extent permitted by law, upon any such private sale or sales, to purchase the
      whole or any part of the Collateral so sold, free of any right or equity of
      redemption in any Grantor, which right or equity is hereby waived and
      released.  Each Grantor further agrees, at the Administrative Agent’s
      request, to assemble the Collateral and make it available to the Administrative
      Agent at places which the Administrative Agent shall reasonably select, whether
      at such Grantor’s premises or elsewhere.  Any such sale or transfer by
      the Administrative Agent either to itself or to any other Person shall be
      absolutely free from any claim of right by any Grantor, including any equity
      or
      right of redemption, stay or appraisal which any Grantor has or may have under
      any rule of law, regulation or statute now existing or hereafter adopted (and
      each Grantor hereby waives any rights it may have in respect
      thereof).  Upon any such sale or transfer, the Administrative Agent
      shall have the right to deliver, assign and transfer to the purchaser or
      transferee thereof the Collateral so sold or transferred.  The
      Administrative Agent shall apply the net proceeds of any action taken by it
      pursuant to this Section 6.06, after deducting all reasonable costs and expenses
      of every kind incurred in connection therewith or incidental to the care or
      safekeeping of any of the Collateral or in any way relating to the Collateral
      or
      the rights of the Administrative Agent and the Secured Parties hereunder,
      including, without limitation, reasonable attorneys’ fees and disbursements, to
      the payment in whole or in part of the Obligations, in accordance with
      Section 10.02(c) of the Credit Agreement, and only after such application
      and after the payment by the Administrative Agent of any other amount required
      by

     


    
      
         

      

      
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    any
      provision of law, including, without limitation, Section 9-615(a)(3) of the
      UCC,
      need the Administrative Agent account for the surplus, if any, to any
      Grantor.  To the extent permitted by applicable law, each Grantor
      waives all claims, damages and demands it may acquire against the Administrative
      Agent or any Secured Party arising out of the exercise by them of any rights
      hereunder except to the extent caused by the gross negligence or willful
      misconduct of the Administrative Agent or such Secured Party or their respective
      agents.  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.

     

    (b)           In
      the event that the Administrative Agent elects not to sell the Collateral,
      the
      Administrative Agent retains its rights to dispose of or utilize the Collateral
      or any part or parts thereof in any manner authorized or permitted by law or
      in
      equity, and to apply the proceeds of the same towards payment of the
      Obligations.  Each and every method of disposition of the Collateral
      described in this Agreement shall constitute disposition in a commercially
      reasonable manner.  Without limitation of the foregoing, any
      disposition involving three (3) or more bidders that are “accredited investors”
(within the meaning of the Securities Act) shall constitute disposition in
      a
      commercially reasonable manner.

     

    (c)           The
      Administrative Agent may appoint any Person as agent to perform any act or
      acts
      necessary or incident to any sale or transfer of the Collateral.

     

    Section
      6.07                Registration
      Rights.

     

    (a)           If
      the Administrative Agent shall determine to exercise its right to sell any
      or
      all of the Pledged Securities pursuant to Section 6.06, and if in the opinion
      of
      the Administrative Agent it is necessary or advisable to have the Pledged
      Securities, or that portion thereof to be sold, registered under the provisions
      of the Securities Act, the relevant Grantor will use commercially reasonable
      efforts to cause the Issuer thereof to (i) execute and deliver, and cause the
      directors and officers of such Issuer to execute and deliver, all such
      instruments and documents, and do or cause to be done all such other acts as
      may
      be, in the reasonable opinion of the Administrative Agent, necessary or
      advisable to register the Pledged Securities, or that portion thereof to be
      sold, under the provisions of the Securities Act, (ii) use its commercially
      reasonable efforts to cause the registration statement relating thereto to
      become effective and to remain effective for a period of one year from the
      date
      of the first public offering of the Pledged Securities, or that portion thereof
      to be sold and (iii) use its commercially reasonable efforts to cause the Issuer
      to make all amendments thereto and/or to the related prospectus which, in the
      opinion of the Administrative Agent, are necessary or advisable to enable it
      to
      realize upon such Collateral, all in conformity with the requirements of the
      Securities Act and the rules and regulations of the Securities and Exchange
      Commission applicable thereto.  Each Grantor agrees to use its
      commercially reasonable efforts to cause such Issuer to comply with the
      provisions of the securities or “Blue Sky” laws of any and all jurisdictions
      which the Administrative Agent shall designate and to make available to its
      security holders, as soon as practicable, an earnings statement (which need
      not
      be audited) which will satisfy the provisions of Section 11(a) of the Securities
      Act.

     


    
      
         

      

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

     

    (c)           Each
      Grantor agrees to use its commercially reasonable efforts to do or cause to
      be
      done all such other acts as may be necessary to make such sale or sales of
      all
      or any portion of the Pledged Securities pursuant to this Section 6.07 valid
      and
      binding and in compliance with any and all other applicable Governmental
      Requirements.  Each Grantor further agrees that a breach of any of the
      covenants contained in this Section 6.07 will cause irreparable injury to the
      Secured Parties, that the Secured Parties have no adequate remedy at law in
      respect of such breach and, as a consequence, that each and every covenant
      contained in this Section 6.07 shall be specifically enforceable against such
      Grantor, and, to the maximum extent permitted by applicable law, such Grantor
      hereby waives and agrees not to assert any defenses against an action for
      specific performance of such covenants except for a defense that no Event of
      Default has occurred under the Credit Agreement.

     

    Section
      6.08               Waiver;
      Deficiency.  To the maximum extent permitted by applicable law,
      each Grantor waives and agrees not to assert any rights or privileges which
      it
      may acquire under the UCC.  Each Grantor shall remain liable for any
      deficiency if the proceeds of any sale or other disposition of the Collateral
      are insufficient to pay its Obligations and the fees and disbursements of any
      attorneys employed by the Administrative Agent or any Secured Party to collect
      such deficiency.

     

    Section
      6.09               Non-Judicial
      Enforcement.  The Administrative Agent may enforce its rights
      hereunder without prior judicial process or judicial hearing, and to the extent
      permitted by law, each Grantor expressly waives any and all legal rights which
      might otherwise require the Administrative Agent to enforce its rights by
      judicial process.

     

    ARTICLE
      VII

    The
      Administrative Agent

     

    Section
      7.01                Administrative
      Agent’s Appointment as Attorney-in-Fact, Etc.

     

    (a)           Each
      Grantor hereby irrevocably constitutes and appoints the Administrative Agent
      and
      any officer or agent thereof, with full power of substitution, as its true
      and
      lawful attorney-in-fact with full irrevocable power and authority in the place
      and stead of

     


    
      
         

      

      
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    such
      Grantor and in the name of such Grantor or in its own name, for the purpose
      of
      carrying out the terms of this Agreement, to take any and all appropriate action
      and to execute any and all documents and instruments which may be necessary
      or
      desirable to accomplish the purposes of this Agreement, and, without limiting
      the generality of the foregoing, each Grantor hereby gives the Administrative
      Agent the power and right, on behalf of such Grantor, without notice to or
      assent by such Grantor, to do any or all of the following:

     

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

     

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

     

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

     

    (iv)         execute,
      in connection with any sale provided for in Section 6.06 or Section 6.07, any
      indorsements, assignments or other instruments of conveyance or transfer with
      respect to the Collateral; and

     

    (v)           (A)
      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) ask or
      demand for, collect, and receive payment of and receipt for, any and all moneys,
      claims and other amounts due or to become due at any time in respect of or
      arising out of any Collateral; (C) sign and indorse any invoices, freight or
      express bills, bills of lading, storage or warehouse receipts, drafts against
      debtors, assignments, verifications, notices and other documents in connection
      with any of the Collateral; (D) in the name of such Grantor, or in its own
      name,
      or otherwise, commence and prosecute any suits, actions or proceedings at law
      or
      in equity in any court of competent jurisdiction to collect the Collateral
      or
      any portion thereof and to enforce any other right in respect of any Collateral;
      (E) defend any suit, action or proceeding brought against such Grantor with
      respect to any Collateral; (F) settle, compromise or adjust any such suit,
      action or proceeding and, in connection therewith, give such discharges or
      releases as the Administrative Agent may deem appropriate; (G) assign any
      Copyright, Patent or Trademark (along with the goodwill of the business to
      which
      any such Copyright, Patent or Trademark pertains), throughout the world for
      such
      term on terms, on such conditions, and in such manner, as the Administrative
      Agent shall in its sole discretion determine; and (H) generally, sell, transfer,
      pledge and make any

     


    
      
         

      

      
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    agreement
      with respect to or otherwise deal with any of the Collateral as fully and
      completely as though the Administrative Agent were the absolute owner thereof
      for all purposes, and do, at the Administrative Agent’s option and such
      Grantor’s expense, at any time, or from time to time, all acts and things which
      the Administrative Agent deems necessary to protect, preserve or realize upon
      the Collateral and the Administrative Agent’s and the Secured Parties’ security
      interests therein and to effect the intent of this Agreement, all as fully
      and
      effectively as such Grantor might do.

     

    Anything
      in this Section 7.01(a) to the contrary notwithstanding, the Administrative
      Agent agrees that it will not exercise any rights under the power of attorney
      provided for in this Section 7.01(a) unless an Event of Default shall have
      occurred and be continuing.

     

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

     

    (c)           The
      expenses of the Administrative Agent incurred in connection with actions
      undertaken as provided in this Section 7.01, together with interest thereon
      at
      the post-default rate specified in Section 3.02(c) of the Credit Agreement,
      but
      in no event to exceed the Highest Lawful Rate, from the date of payment by
      the
      Administrative Agent to the date reimbursed by the relevant Grantor, shall
      be
      payable by such Grantor to the Administrative Agent on demand.

     

    (d)           Each
      Grantor hereby ratifies all that said attorneys shall lawfully do or cause
      to be
      done by virtue hereof.  All powers, authorizations and agencies
      contained in this Agreement are coupled with an interest and are irrevocable
      until this Agreement is terminated and the security interests created hereby
      are
      released.

     

    Section
      7.02               Duty
      of Administrative Agent.  The Administrative Agent’s sole duty
      with respect to the custody, safekeeping and physical preservation of the
      Collateral in its possession, under Section 9-207 of the UCC or otherwise,
      shall
      be to deal with it in the same manner as the Administrative Agent deals with
      similar Property for its own account, and the Administrative Agent shall be
      deemed to have exercised reasonable care in the custody and preservation of
      the
      Collateral in its possession if the Collateral is accorded treatment
      substantially equal to that which comparable secured parties accord comparable
      collateral.  Neither the Administrative Agent, any Secured Party nor
      any of their Related Parties shall be liable for failure to demand, collect
      or
      realize upon any of the Collateral or for any delay in doing so or shall be
      under any obligation to sell or otherwise dispose of any Collateral upon the
      request of any Grantor or any other Person or to take any other action
      whatsoever with regard to the Collateral or any part thereof.  The
      powers conferred on the Administrative Agent and the Secured Parties hereunder
      are solely to protect the Administrative Agent’s and the Secured Parties’
interests in the Collateral and shall not impose any duty upon the
      Administrative Agent or any Secured Party to exercise any such
      powers.  The Administrative Agent and the Secured Parties shall be
      accountable only for amounts that they actually receive as a result of the
      exercise of such powers, and neither they nor any of their Related Parties
      shall
      be responsible to any Grantor for any act or failure to act hereunder, except
      for their own gross negligence or willful misconduct.  To the fullest
      extent permitted by applicable law, the Administrative Agent shall be under
      no

     


    
      
         

      

      
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    duty
      whatsoever to make or give any presentment, notice of dishonor, protest, demand
      for performance, notice of non-performance, notice of intent to accelerate,
      notice of acceleration, or other notice or demand in connection with any
      Collateral or the Obligations, or to take any steps necessary to preserve any
      rights against any Grantor or other Person or ascertaining or taking action
      with
      respect to calls, conversions, exchanges, maturities, tenders or other matters
      relative to any Collateral, whether or not it has or is deemed to have knowledge
      of such matters.  Each Grantor, to the extent permitted by applicable
      law, waives any right of marshaling in respect of any and all Collateral, and
      waives any right to require the Administrative Agent or any Secured Party to
      proceed against any Grantor or other Person, exhaust any Collateral or enforce
      any other remedy which the Administrative Agent or any Secured Party now has
      or
      may hereafter have against any Grantor or other Person.

     

    Section
      7.03               Execution
      of Financing Statements.  Pursuant to the UCC and any other
      applicable law, each Grantor authorizes the Administrative Agent to file or
      record financing statements and other filing or recording documents or
      instruments with respect to the Collateral without the signature of such Grantor
      in such form and in such offices as the Administrative Agent determines
      appropriate to perfect the security interests of the Administrative Agent under
      this Agreement.  A photographic or other reproduction of this
      Agreement shall be sufficient as a financing statement or other filing or
      recording document or instrument for filing or recording in any
      jurisdiction.  Each Grantor authorizes the Administrative Agent to use
      the collateral description “all personal property” or “all assets” in any such
      financing statements.  Each Grantor hereby ratifies and authorizes the
      filing by the Administrative Agent of any financing statement with respect
      to
      the Collateral made prior to the date hereof.

     

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

     

    ARTICLE
      VIII

    Subordination
      of Indebtedness

     

    Section
      8.01               Subordination
      of All Grantor Claims.  As used herein, the term “Grantor
      Claims” shall mean all debts and obligations of the Borrower or any other
      Grantor to any other Grantor, whether such debts and obligations now exist
      or
      are hereafter incurred or arise, or whether the obligation of the debtor thereon
      be direct, contingent, primary, secondary, several, joint and several, or
      otherwise, and irrespective of whether such debts or obligations be evidenced
      by
      note, contract, open account, or otherwise, and irrespective of the Person
      or
      Persons in whose favor such debts or obligations may, at their inception, have
      been, or may hereafter be created, or the manner in which they have been or
      may
      hereafter be acquired by.

     


    
      
         

      

      
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    After
      and
      during the continuation of an Event of Default, no Grantor shall receive or
      collect, directly or indirectly, from any obligor in respect thereof any amount
      upon the Grantor Claims.

     

    Section
      8.02               Claims
      in Bankruptcy.  In the event of receivership, bankruptcy,
      reorganization, arrangement, debtor’s relief, or other insolvency proceedings
      involving any Grantor, the Administrative Agent on behalf of the Administrative
      Agent and the Secured Parties shall have the right to prove their claim in
      any
      such proceeding, so as to establish their rights hereunder and receive directly
      from the receiver, trustee or other court custodian, dividends and payments
      which would otherwise be payable upon Grantor Claims.  Each Grantor
      hereby assigns such dividends and payments to the Administrative Agent for
      the
      benefit of the Administrative Agent and the Secured Parties for application
      against the Borrower Obligations as provided under Section 10.02(c) of the
      Credit Agreement.  Should any Agent or Secured Party receive, for
      application upon the Obligations, any such dividend or payment which is
      otherwise payable to any Grantor, and which, as between such Grantors, shall
      constitute a credit upon the Grantor Claims, then upon payment in full in cash
      of the Borrower Obligations, the expiration of all Letters of Credit outstanding
      under the Credit Agreement and the termination of all of the Commitments, the
      intended recipient shall become subrogated to the rights of the Administrative
      Agent and the Secured Parties to the extent that such payments to the
      Administrative Agent and the Secured Parties on the Grantor Claims have
      contributed toward the liquidation of the Obligations, and such subrogation
      shall be with respect to that proportion of the Obligations which would have
      been unpaid if the Administrative Agent and the Secured Parties had not received
      dividends or payments upon the Grantor Claims.

     

    Section
      8.03                Payments
      Held in Trust.  In the event that, notwithstanding Section 8.01
      and Section 8.02, any Grantor should receive any funds, payments, claims or
      distributions which is prohibited by such Sections, then it agrees: (a) to
      hold
      in trust for the Administrative Agent and the Secured Parties an amount equal
      to
      the amount of all funds, payments, claims or distributions so received and
      (b)
      that it shall have absolutely no dominion over the amount of such funds,
      payments, claims or distributions except to pay them promptly to the
      Administrative Agent, for the benefit of the Secured Parties; and each Grantor
      covenants promptly to pay the same to the Administrative Agent.

     

    Section
      8.04               Liens
      Subordinate.  Each Grantor agrees that, until the Borrower
      Obligations are paid in full in cash, no Letter of Credit shall be outstanding
      and the termination of all of the Commitments, any Liens securing payment of
      the
      Grantor Claims shall be and remain inferior and subordinate to any Liens
      securing payment of the Obligations, regardless of whether such encumbrances
      in
      favor of such Grantor, the Administrative Agent or any Secured Party presently
      exist or are hereafter created or attach.  Without the prior written
      consent of the Administrative Agent, no Grantor, during the period in which
      any
      of the Borrower Obligations are outstanding or the Commitments are in effect,
      shall (a) exercise or enforce any creditor’s right it may have against any
      debtor in respect of the Grantor Claims or (b) foreclose, repossess, sequester
      or otherwise take steps or institute any action or proceeding (judicial or
      otherwise, including without limitation the commencement of or joinder in any
      liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency
      proceeding) to enforce any Lien held by it.

     


    
      
         

      

      
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    Section
      8.05                Notation
      of Records.  Upon the request of the Administrative Agent, all
      promissory notes and all accounts receivable ledgers or other evidence of the
      Grantor Claims accepted by or held by any Grantor shall contain a specific
      written notice thereon that the indebtedness evidenced thereby is subordinated
      under the terms of this Agreement.

     

    ARTICLE
      IX

    Miscellaneous

     

    Section
      9.01                No
      Waiver by Course of Conduct; Cumulative Remedies.  Neither the
      Administrative Agent nor any Secured Party shall by any act (except by a written
      instrument pursuant to Section 9.04), delay, indulgence, omission or otherwise
      be deemed to have waived any right or remedy hereunder or to have acquiesced
      in
      any Default or Event of Default.  No failure to exercise, nor any
      delay in exercising, on the part of the Administrative Agent or any Secured
      Party, and no course of dealing with respect to, any right, power or privilege
      hereunder, or any abandonment or discontinuance of steps to enforce such right,
      power or privilege, 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 or any Secured Party
      of any right or remedy hereunder on any one occasion shall not be construed
      as a
      bar to any right or remedy which the Administrative Agent or such Secured Party
      would otherwise have on any future occasion.  The rights and remedies
      herein provided are cumulative, may be exercised singly or concurrently and
      are
      not exclusive of any other rights or remedies provided by law or
      equity.

     

    Section
      9.02               Notices.  All
      notices and other communications provided for herein shall be given in the
      manner and subject to the terms of Section 12.01 of the Credit Agreement;
      provided that any such notice, request or demand to or upon any Guarantor shall
      be addressed to such Guarantor at its notice address set forth on Schedule
      1.

     

    Section
      9.03                Enforcement
      Expenses; Indemnities.

     

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

     

    (b)           Each
      Guarantor agrees to pay, and to save the Administrative Agent and the Secured
      Parties harmless from, any and all liabilities with respect to, or resulting
      from any delay in paying, any and all Other Taxes which may be payable or
      determined to be payable with respect to any of the Collateral or in connection
      with any of the transactions contemplated by this Agreement.

     

    (c)           Each
      Guarantor agrees to pay, and to save the Administrative Agent and the Secured
      Parties harmless from, any and all liabilities, obligations, losses, damages,
      penalties, actions, judgments, suits, costs, expenses or disbursements of any
      kind or nature whatsoever with respect to the execution, delivery, enforcement,
      performance and administration of this

     


    
      
         

      

      
        -31-

        
          

        

      

      
         

      

    


    Agreement
      to the extent the Borrower would be required to do so pursuant to Section 12.03
      of the Credit Agreement.

     

    (d)           The
      agreements in this Section 9.03 shall survive repayment of the Obligations
      and
      all other amounts payable under the Credit Agreement and the other Loan
      Documents.

     

    Section
      9.04                Amendments
      in Writing.  None of the terms or provisions of this Agreement may
      be waived, amended, supplemented or otherwise modified except in accordance
      with
      Section 12.02 of the Credit Agreement.

     

    Section
      9.05                Successors
      and Assigns.  The provisions of this Agreement shall be binding
      upon the Grantors and their successors and assigns and shall inure to the
      benefit of the Administrative Agent and the Secured Parties and their respective
      successors and permitted assigns; provided that no Grantor may assign, transfer
      or delegate any of its rights or obligations under this Agreement without the
      prior written consent of the Administrative Agent and the Majority Lenders,
      and
      any such purported assignment, transfer or delegation shall be null and
      void.

     

    Section
      9.06                Survival;
      Revival; Reinstatement.

     

    (a)           All
      covenants, agreements, representations and warranties made by any Grantor herein
      and in the certificates or other instruments delivered in connection with or
      pursuant to this Agreement or any other Loan Document to which it is a party
      shall be considered to have been relied upon by the Administrative Agent, the
      other Agents, the Issuing Bank and the Lenders and shall survive the execution
      and delivery of this Agreement and the making of any Loans and issuance of
      any
      Letters of Credit, regardless of any investigation made by any such other party
      or on its behalf and notwithstanding that the Administrative Agent, the other
      Agents, the Issuing Bank or any Lender may have had notice or knowledge of
      any
      Default or incorrect representation or warranty at the time any credit is
      extended hereunder, and shall continue in full force and effect as long as
      the
      principal of or any accrued interest on any Loan or any fee or any other amount
      payable under the Credit Agreement is outstanding and unpaid or any Letter
      of
      Credit is outstanding and so long as the Commitments have not expired or
      terminated.  The provisions of Section 9.03 shall survive and remain
      in full force and effect regardless of the consummation of the transactions
      contemplated hereby, the repayment of the Loans, the expiration or termination
      of the Letters of Credit and the Commitments or the termination of this
      Agreement, any other Loan Document or any provision hereof or
      thereof.

     

    (b)           To
      the extent that any payments on the Obligations or proceeds of any Collateral
      are subsequently invalidated, declared to be fraudulent or preferential, set
      aside or required to be repaid to a trustee, debtor in possession, receiver
      or
      other Person under any bankruptcy law, common law or equitable cause, then
      to
      such extent, the Obligations so satisfied shall be revived and continue as
      if
      such payment or proceeds had not been received and the Administrative Agent’s
      and the Secured Parties’ Liens, security interests, rights, powers and remedies
      under this Agreement and each other Loan Document shall continue in full force
      and effect.  In such event, each Loan Document shall be automatically
      reinstated and the Borrower

     


    
      
         

      

      
        -32-

        
          

        

      

      
         

      

    


    shall
      take such action as may be reasonably requested by the Administrative Agent
      and
      the Secured Parties to effect such reinstatement.

     

    Section
      9.07                Counterparts;
      Integration; Effectiveness.

     

    (a)           This
      Agreement may be executed in counterparts (and by different parties hereto
      on
      different counterparts), each of which shall constitute an original, but all
      of
      which when taken together shall constitute a single contract.

     

    (b)           This
      Agreement, the other Loan Documents and any separate letter agreements with
      respect to fees payable to the Administrative Agent constitute the entire
      contract among the parties relating to the subject matter hereof and thereof
      and
      supersede any and all previous agreements and understandings, oral or written,
      relating to the subject matter hereof and thereof.  THIS
      AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THE LETTERS OF CREDIT AND
      THE
      LETTER OF CREDIT AGREEMENTS) REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
      HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
      CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE
      ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     

    (c)           This
      Agreement shall become effective when it shall have been executed by the
      Administrative Agent and when the Administrative Agent shall have received
      counterparts hereof which, when taken together, bear the signatures of each
      of
      the other parties hereto, and thereafter shall be binding upon and inure to
      the
      benefit of the parties hereto, the Lenders and their respective successors
      and
      assigns.  Delivery of an executed counterpart of a signature page of
      this Agreement by telecopy or other electronic transmission shall be effective
      as delivery of a manually executed counterpart of this Agreement.

     

    Section
      9.08                Severability.  Any
      provision of this Agreement or any other Loan Document held to be invalid,
      illegal or unenforceable in any jurisdiction shall, as to such jurisdiction,
      be
      ineffective to the extent of such invalidity, illegality or unenforceability
      without affecting the validity, legality and enforceability of the remaining
      provisions hereof or thereof; and the invalidity of a particular provision
      in a
      particular jurisdiction shall not invalidate such provision in any other
      jurisdiction.

     

    Section
      9.09                Set-Off.  If
      an Event of Default shall have occurred and be continuing, each Lender and
      each
      of its Affiliates is hereby authorized at any time and from time to time,
      without notice to such Person or any other Grantor, any such notice being
      expressly waived by each Grantor, to the fullest extent permitted by law, to
      set
      off and appropriate and apply any and all deposits (general or special, time
      or
      demand, provisional or final), in any currency, and any other credits,
      indebtedness, claims or obligations (of whatsoever kind, including, without
      limitations obligations under Swap Agreements), in any currency, whether direct
      or indirect, absolute or contingent, matured or unmatured, at any time held
      or
      owing by such Lender or Affiliate to or for the credit or the account of any
      Grantor against any of and all the obligations and liabilities of the Grantor
      owed to such Lender now or hereafter existing under this Agreement or any other
      Loan Document, irrespective of whether or not such Lender shall have made any
      demand under this Agreement or any other Loan Document and although
      such

     


    
      
         

      

      
        -33-

        
          

        

      

      
         

      

    


    obligations
      may be unmatured.  The rights of each Lender under this Section 9.09
      are in addition to other rights and remedies (including other rights of setoff)
      which such Lender or its Affiliates may have.

     

    Section
      9.10                Governing
      Law; Submission to Jurisdiction; Waiver of Jury Trial.

     

    (a)           THIS
      AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
      OF
      THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW PERMITS
      ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR TAKE INTEREST AT THE
      RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS
      LOCATED.  CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES
      CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL
      NOT APPLY TO THIS AGREEMENT.

     

    (b)           ANY
      LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
      DOCUMENT MAY BE BROUGHT IN THE COURTS OF HARRIS COUNTY IN THE STATE OF TEXAS
      OR
      OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY
      EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF
      AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY
      AND
      UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH PARTY
      HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
      OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
      CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
      ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.  THIS
      SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM
      OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING
      JURISDICTION.

     

    (c)           EACH
      PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
      AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
      THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS
      SPECIFIED IN SECTION 12.01 OF THE CREDIT AGREEMENT OR SUCH OTHER ADDRESS AS
      IS
      SPECIFIED PURSUANT TO SECTION 12.01 OF THE CREDIT AGREEMENT (OR ITS ASSIGNMENT
      AND ASSUMPTION) OR SCHEDULE 1 HERETO, AS APPLICABLE, SUCH SERVICE TO BECOME
      EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL
      AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
      OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
      PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.

     

    (d)           EACH
      PARTY HEREBY (1) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
      PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
      TO
      THIS

     


    
      
         

      

      
        -34-

        
          

        

      

      
         

      

    


    AGREEMENT
      OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (2) IRREVOCABLY
      WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE
      TO
      CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
      CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES;
      (3) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE, OR AGENT OF COUNSEL
      FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
      SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
      WAIVERS, AND (4) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
      AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
      THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
      IN THIS SECTION 9.10.

     

    Section
      9.11                Headings.  Article
      and Section headings and the Table of Contents used herein are for convenience
      of reference only, are not part of this Agreement and shall not affect the
      construction of, or be taken into consideration in interpreting, this
      Agreement.

     

    Section
      9.12                Acknowledgments.  Each
      Grantor hereby acknowledges that:

     

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

     

    (b)           neither
      the Administrative Agent nor any Secured Party has any fiduciary relationship
      with or duty to any Grantor arising out of or in connection with this Agreement
      or any of the other Loan Documents, and the relationship between the Grantors,
      on the one hand, and the Administrative Agent and Secured Parties, on the other
      hand, in connection herewith or therewith is solely that of debtor and creditor;
      and

     

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

     

    (d)           Each
      of the parties hereto specifically agrees that it has a duty to read this
      Agreement, the Security Instruments and the other Loan Documents and agrees
      that
      it is charged with notice and knowledge of the terms of this Agreement, the
      Security Instruments and the other Loan Documents; that it has in fact read
      this
      Agreement, the Security Instruments and the other Loan Documents and is fully
      informed and has full notice and knowledge of the terms, conditions and effects
      thereof; that it has been represented by independent legal counsel of its choice
      throughout the negotiations preceding its execution of this Agreement and the
      Security Instruments; and has received the advice of its attorney in entering
      into this Agreement and the Security Instruments; and that it recognizes that
      certain of the terms of this Agreement and the Security Instruments result
      in
      one party assuming the liability inherent in some aspects of the transaction
      and
      relieving the other party of its responsibility for such
      liability.  EACH PARTY
      HERETO
      AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY
      OF
      ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS ON
      THE
      BASIS THAT THE

     


    
      
         

      

      
        -35-

        
          

        

      

      
         

      

    


    PARTY
      HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
“CONSPICUOUS.”

     

    Section
      9.13                Additional
      Grantors and Additional Pledged Securities.  Each
      Subsidiary of the Borrower that is required to become a party to this Agreement
      pursuant to Section 8.14 of the Credit Agreement shall become a party
      hereto as a
      Grantor for all purposes of this Agreement upon execution and delivery by
      such Subsidiary of an Assumption Agreement and shall thereafter have the same
      rights, benefits and obligations as a Grantor party hereto on the date
      hereof.  Each Grantor that is required to pledge additional Equity
      Interests pursuant to the Credit Agreement shall execute and deliver a
      Supplement.

     

    Section
      9.14                Releases.

     

    (a)           Release
      Upon Payment in Full.  The grant of the security interest
      hereunder, all other grants of interests, set off and other Liens hereunder,
      and
      all guarantees provided for herein, the security interest granted hereunder,
      all
      other interest, set offs and other Liens granted hereunder, and all guarantees
      provided for herein, and all Lien rights, powers and interests and guarantee
      benefits with respect thereto shall automatically terminate and be null and
      void
      immediately upon the date that the Borrower Obligations (other than Borrower
      Obligations in respect of Secured Swap Agreements and Indebtedness consisting
      of
      payment obligations that are provided under each Loan Document as surviving
      the
      termination of any Loan Document or other transactions contemplated thereby,
      or
      words of similar import) shall have been indefeasibly paid in full in cash,
      no
      Letter of Credit shall be outstanding, and all of the Commitments shall have
      terminated, and the Administrative Agent, at the written request and expense
      of
      the Borrower, will promptly take all steps and actions requested by the Borrower
      to evidence and more fully effect the foregoing termination, including the
      release, reassignment and transfer, without recourse or warranty, of the
      property theretofore constituting the Collateral to the Grantors and the
      declaration of all such guarantees and this Agreement to be of no further force
      or effect.

     

    (b)           Partial
      Releases.  If any of the Collateral shall be sold, transferred or
      otherwise disposed of by any Grantor in a transaction permitted by the Credit
      Agreement, then immediately upon the occurrence of any such disposition, all
      Liens and other rights with respect thereto, shall automatically terminate
      and
      be null and void, and the Administrative Agent, at the request and sole expense
      of such Grantor, shall promptly execute and deliver to such Grantor all releases
      or other documents deemed reasonably necessary or desirable by the Borrower
      to
      evidence the release of the Liens created hereby on such
      Collateral.  If all the Equity Interests of a Guarantor shall be sold,
      transferred or otherwise disposed of in a transaction permitted by the Credit
      Agreement, then immediately upon the occurrence of such disposition, such
      Guarantor automatically shall be released from its obligations hereunder, and
      the Liens and other rights created hereunder in all property of such Guarantor
      shall automatically terminate and be null and void; and at the request and
      sole
      expense of the Borrower, the Administrative Agent shall promptly execute and
      deliver to or at the request of the Borrower all releases and other documents
      reasonable necessary or desirable to release such obligations, Liens and other
      rights; provided that the Borrower shall have delivered to the Administrative
      Agent, at least fifteen Business Days prior to the date of the requested
      releases and documents, a written request of a Responsible Officer for release
      identifying the relevant Guarantor and the terms of the sale or

     


    
      
         

      

      
        -36-

        
          

        

      

      
         

      

    


    other
      disposition in reasonable detail, including the price thereof and any expenses
      in connection therewith, together with a certification by the Borrower stating
      that such transaction is in compliance with the Credit Agreement and the other
      Loan Documents.

     

    (c)           Retention
      in Satisfaction.  Except as may be expressly applicable pursuant
      to Section 9.620 of the UCC, no action taken or omission to act by the
      Administrative Agent or the Secured Parties hereunder, including, without
      limitation, any exercise of voting or consensual rights or any other action
      taken or inaction, shall be deemed to constitute a retention of the Collateral
      in satisfaction of the Obligations or otherwise to be in full satisfaction
      of
      the Obligations, and the Obligations shall remain in full force and effect,
      until the Administrative Agent and the Secured Parties shall have applied
      payments (including, without limitation, collections from Collateral) towards
      the Obligations in the full amount then outstanding or until such subsequent
      time as is provided in Section 9.14(a).

     

    Section
      9.15                Acceptance.  Each
      Grantor hereby expressly waives notice of acceptance of this Agreement,
      acceptance on the part of the Administrative Agent and the Secured Parties
      being
      conclusively presumed by their request for this Agreement and delivery of the
      same to the Administrative Agent.

     

    [Remainder
      of page intentionally left blank; signature page follows]

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


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

     

    


     

    
      	BORROWER:	REX
              ENERGY CORPORATION 	 
	 	 	 
	 	
              By:

            	
              /s/
                Benjamin W. Hulburt

            	 
	 	 	
              Benjamin
                W. Hulburt, Chief Executive Officer

            	 


    

    


               

    
      	GRANTORS:	REX
              ENERGY I, LLC	 
	 	REX
              ENERGY OPERATING CORP.	 
	 	PENN
              TEX ENERGY, INC.	 
	 	PENNTEX
              RESOURCES ILLINOIS, INC.	 
	 	REX
              ENERGY IV, LLC 	 
	 	 	 
	 	
              By:

            	
              /s/
                Benjamin W. Hulburt

            	 
	 	 	
              Benjamin
                W. Hulburt, Chief Executive Officer

            	 


    

     

     

    
      	 	PENNTEX
              RESOURCES, L.P.	 
	 	 	 
	 	By: 
              Penn Tex Energy, Inc., its general partner 	 
	 	 	 
	 	
              By:

            	
              /s/
                Benjamin W. Hulburt

            	 
	 	 	
              Benjamin
                W. Hulburt, Chief Executive Officer

            	 




    

 

     

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Acknowledged
      and Agreed to as

    of
      the
      date hereof by:

    


    
      	ADMINISTRATIVE
              AGENT:	KEYBANK
              NATIONAL ASSOCIATION,	 
	 	as
              Administrative Agent	 
	 	 	 
	 	
              By:

            	
              /s/
                Thomas Rajan

            	 
	 	 	
              Thomas
                Rajan

            	 
	 	 	Director	 


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    SCHEDULE
      1

    NOTICE
      ADDRESSES OF GRANTORS

    


     

    
      	
              Grantor

            	
              Notice
                Address

            
	 	 
	
              Rex
                Energy I, LLC

            	
              Rex
                Energy I, LLC

              c/o
                Rex Energy Corporation

              1975
                Waddle Road

              State
                College, PA 16803

              Attn:
                Thomas Stabley, Chief Financial Officer

              Fax
                No. 814.278.7286

               

            
	
              Rex
                Energy Operating Corp.

            	
              Rex
                Energy Operating Corp.

              c/o
                Rex Energy Corporation

              1975
                Waddle Road

              State
                College, PA 16803

              Attn:
                Thomas Stabley, Chief Financial Officer

              Fax
                No. 814.278.7286

               

            
	
              Rex
                Energy IV, LLC

            	
              Rex
                Energy IV, LLC

              c/o
                Rex Energy Corporation

              1975
                Waddle Road

              State
                College, PA 16803

              Attn:
                Thomas Stabley, Chief Financial Officer

              Fax
                No. 814.278.7286

               

            
	
              PennTex
                Resources Illinois, Inc.

            	
              PennTex
                Resources Illinois, Inc.

              c/o
                Rex Energy Corporation

              1975
                Waddle Road

              State
                College, PA 16803

              Attn:
                Thomas Stabley, Chief Financial Officer

              Fax
                No. 814.278.7286

               

            
	
              Penn
                Tex Energy, Inc.

            	
              Penn
                Tex Energy, Inc.

              c/o
                Rex Energy Corporation

              1975
                Waddle Road

              State
                College, PA 16803

              Attn:
                Thomas Stabley, Chief Financial Officer

              Fax
                No. 814.278.7286

               

            
	
              PennTex
                Resources, L.P.

            	
              PennTex
                Resources, L.P.

              c/o
                Rex Energy Corporation

              1975
                Waddle Road

              State
                College, PA 16803

              Attn:
                Thomas Stabley, Chief Financial Officer

              Fax
                No. 814.278.7286

               

            


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    SCHEDULE
      2

    INVESTMENT
      PROPERTY

    


     

    Description
      of Pledged Securities

    


    
      	
               

              Owner/Grantor

            	
               

              Issuer

            	
              Percentage

              Owned

            	
              Percentage

              Pledged

            	
              Class
                of

              Stock
                or other Equity Interest

            	
              No.
                of

              Shares

            	
              Certificate

              No.

            
	 	 	 	 	 	 	 
	
              Rex
                Energy Corporation

            	
              Rex
                Energy I, LLC

            	
              100%

            	
              100%

            	
              Membership
                Interest

            	
              Not
                Applicable

            	
              Not
                Applicable

            
	 	 	 	 	 	 	 
	
              Rex
                Energy Corporation

            	
              Rex
                Energy Operating Corp.

            	
              100%

            	
              100%

            	
              Common
                Stock

            	
              100

            	
              3

            
	 	 	 	 	 	 	 
	
              Rex
                Energy Corporation

            	
              Penn
                Tex Energy, Inc.

            	
              100%

            	
              100%

            	
              Common
                Stock

            	
              100

            	
              2

            
	 	 	 	 	 	 	 
	
              Rex
                Energy Corporation

            	
              PennTex
                Resources, L.P.

            	
              99%

            	
              100%

            	
              Limited
                Partnership Interest

            	
              Not
                Applicable

            	
              Not
                Applicable

            
	 	 	 	 	 	 	 
	
              Rex
                Energy Corporation

            	
              PennTex
                Resources Illinois, Inc.

            	
              100%

            	
              100%

            	
              Common
                Stock

            	
              1,000

            	
              7

            
	 	 	 	 	 	 	 
	
              Rex
                Energy Corporation

            	
              Rex
                Energy IV, LLC

            	
              100%

            	
              100%

            	
              Membership
                Interest

            	
              Not
                Applicable

            	
              Not
                Applicable

            
	 	 	 	 	 	 	 
	
              Rex
                Energy I, LLC

            	
              Rex
                Energy Marketing, LLC

            	
              100%

            	
              100%

            	
              Membership
                Interest

            	
              Not
                Applicable

            	
              Not
                Applicable

            
	 	 	 	 	 	 	 
	
              Penn
                Tex Energy, Inc.

            	
              PennTex
                Resources, L.P.

            	
              1%

            	
              100%

            	
              General
                Partner Interest

            	
              Not
                Applicable

            	
              Not
                Applicable

            


    

    


    Description
      of Pledged Notes

     

    None.

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    SCHEDULE
      3

    FILINGS
      AND OTHER ACTIONS

    REQUIRED
      TO PERFECT SECURITY INTERESTS

    


     

    Uniform
      Commercial Code Filings

     

    
      	
              1.

            	
              Filing
                of UCC-1 Financing Statements with respect to the Collateral with
                the
                Secretary of State of the State of
                Delaware.

            


    

     

    2.           Filing
      of UCC-1 Financing Statements with respect to the Collateral with the Secretary
      ofState of the State of Texas.

     

    Patent
      and Trademark Filings

     

    
      	
              1.

            	
              Filing
                of UCC-1 Financing Statements with respect to the trademarks of Rex
                Energy
                Operating Corp. with the Secretary of State of the State of
                Delaware.

            


    

     

    Actions
      with respect to Pledged Securities

     

    
      	
              1.

            	
              Delivery
                to the Administrative Agent of all Pledged Securities consisting
                of
                certificated securities, in each case properly endorsed for transfer
                or in
                blank.

            


    

     

    Description
      of Commercial Tort Claims With An Asserted Value in Excess of
      $1,000,000

     

    None.

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    SCHEDULE
      4

     

    JURISDICTION
      OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE

     

    Borrower:

     

    
      	
              Legal
                Name/Address

            	
              Trade
                Names Used in Past 5 Years

            	
              Current
                Jurisdiction of Organization

            	
              Jurisdiction
                of Organizations in Past 5 Years

            	
              Organizational
                No.

            	
              Taxpayer
                Identification No.

            	
              Chief
                Executive Office or Sole Place of Business over the last 5
                years

            
	
              Rex
                Energy Corporation

              1975
                Waddle Road

              State
                College, PA 16803

               

               

            	
              None

            	
              Delaware

            	
              Not
                Applicable

            	
              4313846

            	
              20-8814402

            	
              1975
                Waddle Road

              State
                College, PA 16803

            


    

    


    Grantors:

    


    
      	
              Legal
                Name/Address

            	
              Trade
                Names Used in Past 5 Years

            	
              Current
                Jurisdiction of Organization

            	
              Jurisdiction
                of Organizations in Past 5 Years

            	
              Organizational
                No.

            	
              Taxpayer
                Identification No.

            	
              Chief
                Executive Office or Sole Place of Business over the last 5
                years

            
	
              Rex
                Energy I, LLC

              1975
                Waddle Road

              State
                College, PA 16803

               

               

            	
              None

            	
              Delaware

            	
              Not
                Applicable

            	
              4335969

            	
              20-8909799

            	
              1975
                Waddle Road

              State
                College, PA 16803

            
	
              Rex
                Energy Operating Corp.

              1975
                Waddle Road

              State
                College, PA 16803

               

            	
              None

            	
              Delaware

            	
              Not
                Applicable

            	
              3865470

            	
              20-2120390

            	
              1975
                Waddle Road

              State
                College, PA 16803

               

              1965
                Waddle Road

              State
                College, PA

              16803

               

            
	
              Rex
                Energy IV, LLC

              1975
                Waddle Road

              State
                College, PA 16803

               

               

            	
              None

            	
              Delaware

            	
              Not
                Applicable

            	
              4219136

            	
              20-5549688

            	
              1975
                Waddle Road

              State
                College, PA 16803

               

              Route
                1, Box 197, Bridgeport, Illinois 62417

               

              Highway
                250, P.O. Box 318, Bridgeport, Illinois 62417

               

            
	
              PennTex
                Resources Illinois, Inc.

              1975
                Waddle Road

              State
                College, PA 16803

               

            	
              ERG
                Illinois, Inc.

            	
              Delaware

            	
              Not
                Applicable

            	
              3757111

            	
              20-0660609

            	
              1975
                Waddle Road

              State
                College, PA 16803

               

              1965
                Waddle Road

              State
                College, PA

              16803

               

              1100
                Louisiana, Suite 2650, Houston, Texas

              77002

               

            
	
              Penn
                Tex Energy, Inc.

              1975
                Waddle Road

              State
                College, PA 16803

               

               

               

            	
              None

            	
              Delaware

            	
              Not
                Applicable

            	
              2822522

            	
              23-2933817

            	
              1975
                Waddle Road

              State
                College, PA 16803

               

              1965
                Waddle Road

              State
                College, PA

              16803

               

            
	
              PennTex
                Resources, L.P.

              1975
                Waddle Road

              State
                College, PA 16803

               

            	
              None

            	
              Texas

            	
              Not
                Applicable

            	
              10295910

            	
              23-2933816

            	
              1975
                Waddle Road

              State
                College, PA 16803

               

              1965
                Waddle Road

              State
                College, PA

              16803

               

            


    

    


    


    


     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    SCHEDULE
      5

    LOCATIONS
      OF INVENTORY AND EQUIPMENT

    


    


    
      	
              Grantor

            	
              Locations

            
	
              Rex
                Energy I, LLC

            	
              1.  1975
                Waddle Road, State College, Pennsylvania 16803

               

              2.  400
                Southpointe Blvd, Suite 410, Canonsburg, Pennsylvania 15317

               

              3.  500
                West Texas Avenue, Suite 940, Midland, Texas 79701

               

              4.  Route
                1, Box 197, Bridgeport, Illinois 62417

               

              5.  6555
                Griffin Road, New Harmony, Indiana 47631

               

            
	 	 
	
              Rex
                Energy Operating Corp.

            	
              1.  1975
                Waddle Road, State College, Pennsylvania 16803

               

              2.  400
                Southpointe Blvd, Suite 410, Canonsburg, Pennsylvania 15317

               

              3.  500
                West Texas Avenue, Suite 940, Midland, Texas 79701

               

              4.  Route
                1, Box 197, Bridgeport, Illinois 62417

               

              5.  6555
                Griffin Road, New Harmony, Indiana 47631

               

            
	 	 
	
              Rex
                Energy IV, LLC

            	
              1.  1975
                Waddle Road, State College, Pennsylvania 16803

               

              2.  Route
                1, Box 197, Bridgeport, Illinois 62417

               

               

            
	 	 
	
              PennTex
                Resources Illinois, Inc.

            	
              1.  1975
                Waddle Road, State College, Pennsylvania 16803

               

              2.  Route
                1, Box 197, Bridgeport, Illinois 62417

               

               

            
	 	 
	
              Penn
                Tex Energy, Inc.

            	
              1.  1975
                Waddle Road, State College, Pennsylvania 16803

               

            
	 	 
	
              PennTex
                Resources, L.P.

            	
              1.  1975
                Waddle Road, State College, Pennsylvania 16803

               

              2.  Route
                1, Box 197, Bridgeport, Illinois 62417

               

               

            


    

    


    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Schedule
      6

    INTELLECTUAL
      PROPERTY

    


     

    Copyrights
      and Copyright Licenses

     

    None.

     

    Patents
      and Patent Licenses

     

    None.

     

    Trademarks
      and Trademark Licenses

     

    
      	
              Grantor

            	
              Trademark
                Name

            	
              Reg.
                No.

            	
              Date
                Registered

            
	 	 	 	 
	
              Rex
                Energy Operating Corp.

            	
              Rex
                Energy Trademark

            	
              3,132,973

            	
              August
                22, 2006

            
	 	 	 	 
	
              Rex
                Energy Operating Corp.

            	
              Rex
                Energy and Lion Design Trademark

            	
              3,132,974

            	
              August
                22, 2006

            


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Schedule
      7

    RECEIVABLES
      WITH GOVERNMENTAL AUTHORITY AS OBLIGOR

    


    None.

    


     

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Annex
      I

     

    ACKNOWLEDGMENT
      AND CONSENT

     

    The
      undersigned hereby acknowledges
      receipt of a copy of the Guaranty and Collateral Agreement dated as of September
      28, 2007 (the “Guaranty and Collateral Agreement”), made by the Grantors
      parties thereto for the benefit of KeyBank National Association, as
      Administrative Agent.  The undersigned agrees for the benefit of the
      Administrative Agent and the Secured Parties as follows:

     

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

     

    2.           The
      undersigned will notify the Administrative Agent promptly in writing of the
      occurrence of any of the events described in Section 5.07(a) of the Guaranty
      and
      Collateral Agreement.

     

    3.           The
      terms of Section 6.03(c) and Section 6.07 of the Guaranty and Collateral
      Agreement shall apply to it, mutatismutandis, with respect to all
      actions that may be required of it pursuant to Section 6.03(c) and Section
      6.07
      of the Guaranty and Collateral Agreement.

     

    [NAME
      OF
      ISSUER]

    


    By:
      ______________________________________

    Title:

    


    Address
      for Notices:

    


    


    


    Fax:                      

    


    


    


    


    


    


    


    


     

    
      


       

      


    

    
      	
              *

            	
              This
                consent is necessary only with respect to any Issuer which is not
                also a
                Grantor.  This consent may be modified or eliminated with
                respect to any Issuer that is not controlled by a
                Grantor.

            


    

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Annex
      II

     

    Assumption
      Agreement

     

    


     

    ASSUMPTION
      AGREEMENT, dated as of
      [                 ],
      200[   ], made by
      [                 ],
      a
      [                 ]
      (the “Additional Grantor”), in favor of KeyBank National Association, as
      administrative agent (in such capacity, the “Administrative Agent”) for
      the Lenders party to the Credit Agreement referred to below.  All
      capitalized terms not defined herein shall have the meaning ascribed to them
      in
      the Guaranty and Collateral Agreement referred to below.

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
Rex
      Energy
      Corporation, a corporation
      duly formed and
      existing under the laws of the State of [Delaware] (the
“Borrower”), the Administrative Agent, and certain financial institutions
      (the “Lenders”) have entered into that certain Credit Agreement, dated as
      of September 28, 2007 (as amended, restated, supplemented or otherwise modified
      from time to time, the “Credit Agreement”);

     

    WHEREAS,
      in connection with the Credit
      Agreement, the Borrower and certain of its affiliates (other than the Additional
      Grantor) have entered into that certain Guaranty and Collateral Agreement,
      dated
      as of September 28, 2007 (as amended, restated, supplemented or otherwise
      modified from time to time, the “Guaranty and Collateral Agreement”) in
      favor of the Administrative Agent for the ratable benefit of the Secured
      Parties;

     

    WHEREAS,
      the Credit Agreement requires
      the Additional Grantor to become a party to the Guaranty and Collateral
      Agreement; and

     

    WHEREAS,
      the Additional Grantor has
      agreed to execute and deliver this Assumption Agreement in order to become
      a
      party to the Guaranty and Collateral Agreement;

     

    NOW,
      THEREFORE, IT IS
      AGREED:

     

    1.           Guaranty
      and Collateral Agreement.  By executing and delivering this
      Assumption Agreement, the Additional Grantor, as provided in Section 9.13 of
      the
      Guaranty and Collateral Agreement, hereby becomes a party to the Guaranty and
      Collateral Agreement as a Grantor thereunder with the same force and effect
      as
      if originally named therein as a Grantor and, without limiting the generality
      of
      the foregoing, hereby expressly assumes all obligations and liabilities of
      a
      Grantor and a Guarantor thereunder. The information set forth in Annex 1-A
      hereto is hereby added to the information set forth in the Schedules to the
      Guaranty and Collateral Agreement.  The Additional Grantor hereby
      represents and warrants that, with respect to itself and as applicable, each
      of
      the representations and warranties contained in Article IV of the Guaranty
      and Collateral Agreement is true and correct on and as the date hereof (after
      giving effect to this Assumption Agreement) as if made on and as of such
      date.

     

    2.           Governing
      Law.  This Assumption Agreement shall be governed by, and
      construed in accordance with, the laws of the State of Texas.

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


          
      3.           Miscellaneous.  This
      Assumption Agreement may be executed in counterparts (and by different parties
      hereto on different counterparts), each of which shall constitute an original,
      but all of which when taken together shall constitute a single
      contract.  Any provision of this Assumption Agreement held to be
      invalid, illegal or unenforceable in any jurisdiction shall, as to such
      jurisdiction, be ineffective to the extent of such invalidity, illegality or
      unenforceability without affecting the validity, legality and enforceability
      of
      the remaining provisions hereof; and the invalidity of a particular provision
      in
      a particular jurisdiction shall not invalidate such provision in any other
      jurisdiction.

     

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

     

    [ADDITIONAL
      GRANTOR]

     

    


    


    By:
      _____________________________________

    Name:

    Title:

    


     

    


     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Annex
      III

     

    Supplement

     

    


     

    SUPPLEMENT,
      dated as of
      [                 ],
      200[   ], made by
      [                 ],
      a
      [                 ]
      (the “Grantor”), in favor of KeyBank National Association, as
      administrative agent (in such capacity, the “Administrative Agent”) for
      the Lenders party to the Credit Agreement referred to below.  All
      capitalized terms not defined herein shall have the meaning ascribed to them
      in
      the Guaranty and Collateral Agreement referred to below.

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
Rex
      Energy
      Corporation, a corporation
      duly formed and
      existing under the laws of the State of [Delaware] (the
“Borrower”), the Administrative Agent, and certain financial institutions
      (the “Lenders”) have entered into that certain Credit Agreement, dated as
      of September 28, 2007 (as amended, restated, supplemented or otherwise modified
      from time to time, the “Credit Agreement”);

     

    WHEREAS,
      in connection with the Credit
      Agreement, the Borrower and certain of its Affiliates (including the Grantor)
      have entered into that certain Guaranty and Collateral Agreement, dated as
      of
      September 28, 2007 (as amended, restated, supplemented or otherwise modified
      from time to time, the “Guaranty and Collateral Agreement”)
      in favor of the Administrative Agent for the ratable benefit of the Secured
      Parties;

     

    WHEREAS,
      the Credit Agreement requires
      the Grantor to pledge the Equity Interests described in Schedule 2-S hereto;
      and

     

    WHEREAS,
      the Grantor has agreed to
      execute and deliver this Supplement in order to pledge such Equity
      Interests;

     

    NOW,
      THEREFORE, IT IS
      AGREED:

     

    1.           Guaranty
      and Collateral Agreement.  By executing and
      delivering this Supplement, the information set forth in Schedule 2-S hereto
      is
      hereby added to the information set forth in Schedule 2 to the Guaranty and
      Collateral Agreement.  The Grantor hereby represents and warrants
      that, with respect to itself and as applicable, each of the representations
      and
      warranties contained in Article IV of the Guaranty and Collateral Agreement
      is true and correct on and as the date hereof (after giving effect to this
      Supplement) as if made on and as of such date.

     

    2.           Governing
      Law.  This Supplement shall be governed by, and construed in
      accordance with, the laws of the State of Texas.

     

    3.           Miscellaneous.  This
      Supplement may be executed in counterparts (and by different parties hereto
      on
      different counterparts), each of which shall constitute an original, but all
      of
      which when taken together shall constitute a single contract.  Any
      provision of this

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Supplement
      held to be invalid, illegal or unenforceable in any jurisdiction shall, as
      to
      such jurisdiction, be ineffective to the extent of such invalidity, illegality
      or unenforceability without affecting the validity, legality and enforceability
      of the remaining provisions hereof; and the invalidity of a particular provision
      in a particular jurisdiction shall not invalidate such provision in any other
      jurisdiction.

     

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

     

    [GRANTOR]

     

    


    


    By:
      _____________________________________

    Name:

    Title: