Document:

exhibit103.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    GUARANTEE
AND COLLATERAL AGREEMENT

     

    DATED AS
OF JUNE 26, 2008

     

    BY

     

    EARTH
BIOFUELS, INC.

     

    AND

     

    DURANT BIOFUELS,
LLC

     

    

     

    AS
GRANTORS,

     

    IN FAVOR
OF

     

    FOURTH
THIRD LLC,

     

    AS
AGENT

     

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE
OF CONTENTS

          
 

           

        

      

    

    
      	
              Section
      1.

            	
              Definitions. 

            	
               

            

    

     

    
      	
               
      

            	
              1.01.

            	
              Definition
      of Terms Used Herein Generally. 

            	
               

            

    

     

    
      	
               
      

            	
              1.02.

            	
              Definition
      of Certain Terms Used Herein. 

            	
               

            

    

     

    
      	
               
      

            	
              1.03.

            	
              Rules
      of Interpretation 

            	
               

            

    

     

    
      	
              Section
      2.

            	
              Guarantee 

            	
               

            

    

     

    
      	
               
      

            	
              2.01.

            	
              Guarantee 

            	
               

            

    

     

    
      	
               
      

            	
              2.02.

            	
              Right
      of Contribution 

            	
               

            

    

     

    
      	
               
      

            	
              2.03.

            	
              Subrogation 

            	
               

            

    

     

    
      	
               
      

            	
              2.04.

            	
              Amendments,
      etc. with respect to the Borrower Obligations 

            	
               

            

    

     

    
      	
               
      

            	
              2.05.

            	
              Guarantee
      Absolute and Unconditional 

            	
               

            

    

     

    
      	
               
      

            	
              2.06.

            	
              Reinstatement 

            	
               

            

    

     

    
      	
               
      

            	
              2.07.

            	
              Payments 

            	
               

            

    

     

    
      	
               
      

            	
              2.08.

            	
              Waiver
      of Subrogation 

            	
               

            

    

     

    
      	
              Section
      3.

            	
              Grant
      of Security Interest 

            	
               

            

    

     

    
      	
              Section
      4.

            	
              Authorization
      to File Financing Statements 

            	
               

            

    

     

    
      	
              Section
      5.

            	
              Relation
      to Other Security Documents 

            	
               

            

    

     

    
      	
               
      

            	
              5.01.

            	
              Real
      Estate Documents 

            	
               

            

    

     

    
      	
               
      

            	
              5.02.

            	
              Patent
      and Trademark Security Agreement
  Supplements.

            

    

     

    
      	
              Section
      6.

            	
              Representations
      and Warranties 

            	
               

            

    

     

    
      	
               
      

            	
              6.01.

            	
              Grantors’
      Legal Status. 

            	
               

            

    

     

    
      	
               
      

            	
              6.02.

            	
              Grantors’
      Legal Names. 

            	
               

            

    

     

    
      	
               
      

            	
              6.03.

            	
              Grantors’
      Locations. 

            	
               

            

    

     

    
      	
               
      

            	
              6.04.

            	
              Representations
      in the Credit Agreements. 

            	
               

            

    

     

    
      	
               
      

            	
              6.05.

            	
              Title
      to Collateral. 

            	
               

            

    

     

    
      	
               
      

            	
              6.06.

            	
              Nature
      of Collateral. 

            	
               

            

    

     

    
      	
               
      

            	
              6.07.

            	
              Compliance
      with Laws. 

            	
               

            

    

     

    
      	
               
      

            	
              6.08.

            	
              Validity
      of Security Interest. 

            	
               

            

    

     

    
      	
               
      

            	
              6.09.

            	
              Perfection
      Certificate; Intellectual Property Filings. 

            	
               

            

    

     

    
      	
               
      

            	
              6.10.

            	
              Investment
      Property 

            	
               

            

    

     

    
      	
               
      

            	
              6.11.

            	
              Receivables 

            	
               

            

    

     

    
      	
               
      

            	
              6.12.

            	
              Accounts 

            	
               

            

    

     

    
      	
               
      

            	
              6.13.

            	
              Equipment
      and Inventory 

            	
               

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE
OF CONTENTS

          (continued)

           

        

      

    

    
      	
               
      

            	
              Section
      7.Covenants.

            

    

     

    
      	
               
      

            	
              7.01.

            	
              Grantors’
      Legal Status. 

            	
               

            

    

     

    
      	
               
      

            	
              7.02.

            	
              Grantors’
      Names. 

            	
               

            

    

     

    
      	
               
      

            	
              7.03.

            	
              Grantors’
      Organizational Numbers. 

            	
               

            

    

     

    
      	
               
      

            	
              7.04.

            	
              Locations. 

            	
               

            

    

     

    
      	
               
      

            	
              7.05.

            	
              Covenants
      in Credit Agreements 

            	
               

            

    

     

    
      	
               
      

            	
              7.06.

            	
              Promissory
      Notes and Tangible Chattel Paper. 

            	
               

            

    

     

    
      	
               
      

            	
              7.07.

            	
              Deposit
      Accounts. 

            	
               

            

    

     

    
      	
               
      

            	
              7.08.

            	
              Investment
      Property. 

            	
               

            

    

     

    
      	
               
      

            	
              7.09.

            	
              Collateral
      in the Possession of a Bailee. 

            	
               

            

    

     

    
      	
               
      

            	
              7.10.

            	
              Electronic
      Chattel Paper and Transferable Records. 

            	
               

            

    

     

    
      	
               
      

            	
              7.11.

            	
              Letter-of-Credit
      Rights. 

            	
               

            

    

     

    
      	
               
      

            	
              7.12.

            	
              Commercial
      Tort Claims 

            	
               

            

    

     

    
      	
               
      

            	
              7.13.

            	
              Intellectual
      Property. 

            	
               

            

    

     

    
      	
               
      

            	
              7.14.

            	
              Maintenance
      of Collateral; Compliance with Laws. 

            	
               

            

    

     

    
      	
               
      

            	
              7.15.

            	
              Dispositions
      of Collateral. 

            	
               

            

    

     

    
      	
               
      

            	
              7.16.

            	
              Maintenance
      of Insurance. 

            	
               

            

    

     

    
      	
               
      

            	
              7.17.

            	
              Periodic
      Certification. 

            	
               

            

    

     

    
      	
               
      

            	
              7.18.

            	
              Other
      Actions as to any and all Collateral. 

            	
               

            

    

     

    
      	
              Section
      8.

            	
              Inspection
      and Verification 

            	
               

            

    

     

    
      	
              Section
      9.

            	
              Collateral
      Protection Expenses; Preservation of Collateral. 

            	
               

            

    

     

    
      	
               
      

            	
              9.01.

            	
              Expenses
      Incurred by the Agent. 

            	
               

            

    

     

    
      	
               
      

            	
              9.02.

            	
              Agent’s
      Obligations and Duties. 

            	
               

            

    

     

    
      	
               
      

            	
              9.03.

            	
              Duties
      as to Pledged Securities. 

            	
               

            

    

     

    
      	
               
      

            	
              Section
      10.Securities
      and Deposits

            

    

     

    
      	
               
      

            	
              Section
      11.Notification
      to Account Debtors and Other Persons Obligated
      on

            

    

     

    
      	
               
      

            	
              Collateral.

            

    

     

    
      	
               
      

            	
              Section
      12.Power
      of Attorney.

            

    

     

    
      	
               
      

            	
              12.01.Appointment
      and Powers of Agent.

            

    

     

    
      	
               
      

            	
              12.02.Failure
      of Grantor to Perform.

            

    

     

    
      	
               
      

            	
              12.03.Expenses
      of Attorney-in-Fact.

            

    

     

    
      	
               
      

            	
              12.04.Ratification
      by Grantor.

            

    

     

    
      	
               
      

            	
              12.05.No
      Duty on Agent.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE
OF CONTENTS

          (continued)

           

        

      

    

    
      	
               
      

            	
              Section
      13.Remedies.

            

    

     

    
      	
               
      

            	
              13.01.Default

            

    

     

    
      	
               
      

            	
              13.02.Remedies
      Upon Default

            

    

     

    
      	
               
      

            	
              13.03.Grant
      of License to Use Intellectual
  Property

            

    

     

    
      	
               
      

            	
              13.04.Waivers
      by Grantors

            

    

     

    
      	
               
      

            	
              13.05.Application
      of Proceeds

            

    

     

    
      	
               
      

            	
              13.06.Surplus,
      Deficiency

            

    

     

    
      	
               
      

            	
              13.07.Information
      Related to the
Collateral

            

    

     

    
      	
               
      

            	
              13.08.Sale
      Exempt from Registration

            

    

     

    
      	
               
      

            	
              13.09.Rights
      and Remedies Cumulative

            

    

     

    
      	
               
      

            	
              13.10.No
      Direct Enforcement by Secured
  Creditors

            

    

     

    
      	
               
      

            	
              Section
      14.Standards
      for Exercising Remedies.

            

    

     

    
      	
               
      

            	
              14.01.Commercially
      Reasonable Manner.

            

    

     

    
      	
               
      

            	
              14.02.Standard
      of Care

            

    

     

    
      	
               
      

            	
              Section
      15.Waivers
      by Grantor; Obligations
Absolute.

            

    

     

    
      	
               
      

            	
              15.01.Specific
      Waivers.

            

    

     

    
      	
               
      

            	
              15.02.Obligations
      Absolute.

            

    

     

    
      	
               
      

            	
              Section
      16.Marshalling.

            

    

     

    
      	
               
      

            	
              Section
      17.Interest.

            

    

     

    
      	
               
      

            	
              Section
      18.Reinstatement.

            

    

     

    
      	
               
      

            	
              Section
      19.Miscellaneous.

            

    

     

    
      	
               
      

            	
              19.01.Notices

            

    

     

    
      	
               
      

            	
              19.02.GOVERNING
      LAW; CONSENT TO
JURISDICTION

            

    

     

    
      	
               
      

            	
              19.03.WAIVER
      OF JURY TRIAL, ETC.

            

    

     

    
      	
               
      

            	
              19.04.Counterparts.

            

    

     

    
      	
               
      

            	
              19.05.Headings.

            

    

     

    
      	
               
      

            	
              19.06.No
      Strict Construction.

            

    

     

    
      	
               
      

            	
              19.07.Severability.

            

    

     

    
      	
               
      

            	
              19.08.Survival
      of Agreement.

            

    

     

    
      	
               
      

            	
              19.09.Fees
      and Expenses;
Indemnification.

            

    

     

    
      	
               
      

            	
              19.10.Binding
      Effect; Several
Agreement.

            

    

     

    
      	
               
      

            	
              19.11.Waivers;
      Amendment

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE
OF CONTENTS

          (continued)

           

        

      

    

    
      	
               
      

            	
              19.12.Set-Off

            

    

     

    
      	
               
      

            	
              19.13.Integration

            

    

     

    
      	
               
      

            	
              19.14.Acknowledgments

            

    

     

    
      	
               
      

            	
              19.15.Additional
      Grantors and Guarantors

            

    

     

    
      	
               
      

            	
              19.16.Releases

            

    

     

    
      	
               
      

            	
              19.17.Intercompany
      Debt.

            

    

     

    

     

    SCHEDULES

     

    7.07(a)                      Deposit
Accounts

    

    

    

    EXHIBITS

     

    A         Perfection
Certificate

    B          Form
of Copyright Security Agreement Supplement

    C          Form
of Patent Security Agreement Supplement

    D          Form
of Trademark Security Agreement Supplement

    E           Form
of Control Agreement (Deposit Accounts)

    F          
Form of Control Agreement (Uncertificated Securities)

    G          Form
of Control Agreement (Securities Accounts)

    H          Form
of Control Agreement (Commodities Contracts)

    I           Form
of Control Agreement (Letter-of-Credit Rights)

    

    

    ANNEXES

     

    1           Form
of Assumption Agreement

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    GUARANTEE
AND COLLATERAL AGREEMENT, dated as of June 26, 2008, by each of the signatories
hereto identified on the signature pages hereto as a grantor (together with any
other entity that may become a party hereto as a grantor as provided herein,
each a “Grantor” and
collectively, jointly and severally, the “Grantors”) in favor
of Fourth Third LLC as Collateral Agent (in such capacity, the “Agent”) for itself in
its capacity as the Agent and a Lender under the Credit Agreement (as
hereinafter defined) (the “Lender”), together
with the banks and other financial institutions or entities (collectively, the
“Lenders”) from
time to time parties to the Amended and Restated Credit Agreement, dated as of
June __, 2008 (as amended, supplemented or otherwise modified from time to time,
the “Credit
Agreement”) among Durant Biofuels, LLC, (“Borrower”), Earth
Biofuels, Inc. (“Parent”), any other
Loan Parties named therein, the Lenders and the Agent, and the other Secured
Creditors (as hereinafter defined).

     

    W I T N E S S E T
H:

     

    WHEREAS,
pursuant to the Original Credit Agreement, the Lenders agreed to make extensions
of credit to Borrower upon the terms and conditions set forth therein;
and

     

    WHEREAS,
in connection therewith, Borrower, the Parent and certain other “Grantors” so
identified therein (such other “Grantors” herein called the “Released Grantors”),
and Agent made and entered into the Amended and Restated Guarantee and
Collateral Agreement; and

     

    WHEREAS,
effective this date, the Released Grantors have been released from their
obligations under the Amended and Restated Guarantee and Collateral Agreement;
and

     

    WHEREAS,
in connection therewith, Durant, Parent, Agent and Lenders have made and entered
into the Credit Agreement, amending and restating, in its entirety, the Original
Credit Agreement, pursuant to which the Lenders have agreed to consolidate and
restructure certain existing credit owing to Borrower; and

     

    WHEREAS,
it is a condition precedent to the obligations of the Lenders to continue to
make their respective additional extensions of credit to Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Agent; and

     

    WHEREAS,
in connection with the foregoing, the parties hereto have agreed to execute and
deliver this Agreement in substitution for the Amended and Restated Guarantee
and Collateral Agreement.

     

    NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

     

    Section
1.                      Definitions.

     

    1.01.           Definition of Terms Used
Herein Generally.  Except as otherwise provided herein, all
capitalized terms used herein (including in the preamble hereto) but not defined
herein shall have the meanings set forth in the Credit
Agreement.  Except as specifically provided herein, all terms used
herein and defined in the NYUCC shall have the same definitions herein as
specified therein as of the date hereof; provided, however, that if a
term is defined in Article 9 of the NYUCC differently than in another
Article of the NYUCC, the term has the meaning specified in Article 9 of
the NYUCC as of the date hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.02.           Definition of Certain Terms
Used Herein.  As used herein, the following terms shall have
the following meanings:

     

    “After-Acquired Intellectual
Property”:  as defined in Section
7.13.

     

    “Agent”: as defined in
the preamble.

     

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

     

    “Amended and Restated
Guarantee and Collateral Agreement”:  the Amended and Restated
Guarantee and Collateral Agreement, dated March 23, 2007, among the Grantors and
the Released Grantors, as amended, which amended and restated the Original
Guarantee and Collateral Agreement.

     

    “Borrower”:  as
defined in the preamble.  Any references herein to “each,” “either” or
“such” Borrower, or to the “applicable” Borrower, or to the “Borrowers” shall
mean and refer to the Borrower.

     

    “Borrower
Obligations”:  the Obligations (as defined in the Credit
Agreement).

     

    “Collateral”:  as
defined in Section
3.

     

    “Collateral Agent”
means Fourth Third LLC in its capacity as agent for the lenders under the Credit
Agreement and the other Secured Creditors.

     

    “Copyright
License”:  any written agreement, now or hereafter in effect,
granting any right to any third party under any Copyright now or hereafter owned
by any Grantor or that the Grantor otherwise has the right to license, or
granting any right to any Grantor under any Copyright now or hereafter owned by
any third party, and all rights of any Grantor under any such
agreement.

     

    “Copyright
Office”:  the United States Copyright Office.

     

    “Copyrights”:  (i)
all copyrights, whether or not the underlying works of authorship have been
published, and all works of authorship and other intellectual property rights
therein, all copyrights of works based on, incorporated in, derived from or
relating to works covered by such copyrights, all right, title and interest to
make and exploit all derivative works based on or adopted from works covered by
such copyrights, and all copyright registrations and copyright applications, and
any renewals or extensions thereof, including, without limitation, each
registration and application identified in Schedule 7(b) to
the Perfection Certificate, (ii) the rights to print, publish and distribute any
of the foregoing, (iii) the right to sue or otherwise recover for any and all
past, present and future infringements and misappropriations thereof, (iv) all
income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including, without limitation, payments under all
Copyright Licenses entered into in connection therewith, and damages and
payments for past, present or future infringements thereof), and (v) all
other rights of any kind whatsoever accruing thereunder or pertaining
thereto.

     

    “Copyright Security Agreement
Supplement”:  a supplement to this Agreement, executed by one
or more Grantors in favor of the Agent, substantially in the form of Exhibit B
hereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Credit
Agreement”:  as defined in the preamble.  Any
references herein to “each,” “either” or “such” Credit Agreement or to the
“applicable” Credit Agreement or to the “Credit Agreements” shall mean and refer
to this Agreement.

     

    “Disposition”:  with
respect to any Property, and except as otherwise provided in Sections 7.13(a)(x)
and 7.15, any
sale, lease, license, sale and leaseback, assignment, conveyance, transfer or
other disposition thereof, but not including the issuance of capital stock or
other equity interests by either Borrower; and the terms “Dispose” and “Disposed of” shall
have correlative meanings.

     

    “Durant”:  Durant Biofuels,
LLC, an Oklahoma limited liability company.

     

    “Durant Credit
Agreement”:  the Credit Agreement, dated on or about the
Closing Date, among EBOF, Durant, the other “Loan Parties” so identified
therein, the “Lenders” so identified therein, and Fourth Third LLC, as
“Agent.”

     

    “Durant Guarantee and Collateral
Agreement”:  the Guarantee and Collateral Agreement, dated on
or about the Closing Date, made among EBOF, Durant, the other “Grantors” so
identified therein, and Fourth Third LLC, as Agent.

     

    “Event”:  as
defined in Section 9.03
hereof.

     

    “Event of
Default”:  as defined in either Credit Agreement.

     

    “Excluded
Assets”:  collectively (a) any General Intangible to the extent
that (i) the terms of the agreement between the applicable Grantor and the
account debtor or other contract party with respect to such General Intangible
prohibits, restricts or requires the consent of the account debtor to, the
assignment or transfer of, or creation, attachment or perfection of a security
interest in, such General Intangible, or provides that the assignment or
transfer or creation, attachment or perfection of such security interest may
give rise to a default, breach, right of recoupment, claim, defense,
termination, right of termination or remedy and (ii) such terms are effective
under Sections 9-406, 9-407 or 9-408 of the NYUCC, (b) any property that is
subject to a Lien permitted under Section 7.2 of the
Credit Agreement pursuant to documents that prohibit the applicable Grantor from
granting other liens in such property, (c) all property or proceeds thereof now
owned or hereafter acquired by Parent, including, without limitation, all
capital stock in PNG acquired by Parent pursuant to the Share Exchange, other
than all membership or ownership interests in Borrower and all rights of Parent
in, to and under Borrower’s limited liability company operating agreement, now
owned or hereafter acquired by Parent, and all Proceeds and products of any
and all such property and all collateral security and guarantees given by any
Person with respect to any of such property.

     

    “Excluded Foreign Subsidiary
Voting Stock”:  the voting capital stock or other equity
interests of any Foreign Subsidiary owned by either Borrower or a Domestic
Subsidiary thereof.

     

    “Fully
Satisfied”:  with respect to the Secured Obligations, Guarantor
Obligations or Borrower Obligations, as the case may be, at any time that (a)
all principal constituting Secured Obligations, Guarantor Obligations or
Borrower Obligations, as the case may be, and all interest (including interest
that shall have accrued after the commencement of a bankruptcy proceeding with
respect to either Borrower or any Guarantor at the rate provided in the Loan
Documents) accrued to such time on such principal and on all other Secured
Obligations, Guarantor

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Obligations
or Borrower Obligations, as the case may be, shall have been paid in full in
cash, (b) all fees, expenses and other amounts (including contingent
obligations, including those in respect of indemnification provisions contained
in the Loan Documents, but excluding obligations in respect of such
indemnification provisions for which no claim has been made and for which no
notice of claim has been given) unpaid as of such time which constitute Secured
Obligations, Guarantor Obligations or Borrower Obligations, as the case may be,
shall have been paid in full in cash, and (c) the Commitments shall have expired
or been terminated.

     

    “General
Intangibles”:  all “general intangibles” as such term is
defined in Section 9-102(42) of the NYUCC as in effect on the date hereof and,
in any event, including, without limitation, with respect to any Grantor, all
contracts, agreements, instruments and indentures and all licenses and permits
issued by Governmental Authorities in any form, and portions thereof, to which
such Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is subject, as
the same may from time to time be amended, supplemented, replaced or otherwise
modified, including, without limitation, (i) all rights of such Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of such Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect thereto, (iii) all rights of such
Grantor to damages arising thereunder, (iv) all rights of such Grantor to
receive any tax refunds, and (v) all rights of such Grantor to terminate and to
perform, compel performance and to exercise all remedies
thereunder.

     

    “Grantor”: as defined
in the preamble.

     

    “Guarantor
Obligations”:  with respect to any Guarantor, all obligations
and liabilities of such Guarantor which may arise under or in connection with
this Agreement (including, without limitation, Section 2) or any
other Loan Document to which such Guarantor is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to any Secured Creditor that are required to be paid by
such Guarantor pursuant to the terms of this Agreement or any other Loan
Document).

     

    “Guarantor
Payment”:  as defined in Section
2.11(a).

     

    “Guarantors”:  the
collective reference to each Grantor, other than Borrower.

     

    “Intellectual
Property”:  all intellectual and similar property of any
Grantor of every kind and nature now owned or hereafter acquired by any Grantor,
including (i) all inventions, designs, Patents, Patent Licenses,
Trademarks, Trademark Licenses, Copyrights, Copyright Licenses, Trade Secrets,
designs, confidential or proprietary technical and business information, know
how, show how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations and
franchises, licenses for any of the foregoing and all license rights and all
additions, improvements and accessions to, and books and records describing or
used in connection therewith, (ii)  all computer software and software
systems (including, without limitation, data, databases and related
documentation), and (iii) all Internet web sites and domain
names.

     

    “Intellectual Property
Security Agreement”:  each of a Copyright Security Agreement
Supplement, a Patent Security Agreement Supplement and a Trademark Security
Agreement Supplement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Intercompany
Debt”:  as defined in Section
19.17.

     

    “Intercompany
Note”:  any promissory note evidencing loans made by any
Grantor to any of its Subsidiaries or any loan made by any Grantor to another
Grantor.

     

    “Investment
Property”:  the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(48) of the NYUCC on the date
hereof including, without limitation, all certificated securities and
uncertificated securities, all security entitlements, all securities accounts,
all commodity contracts and all commodity accounts (other than any Excluded
Foreign Subsidiary Voting Stock excluded from the definition of “Pledged
Stock”), (ii) security entitlements, in the case of any United States Treasury
book-entry securities, as defined in 31 C.F.R. section 357.2, or, in the
case of any United States federal agency book-entry securities, as defined in
the corresponding United States federal regulations governing such book-entry
securities, and (iii) whether or not constituting “investment property” as so
defined, all Pledged Notes, all Pledged Stock, all Pledged Security Entitlements
and all Pledged Commodity Contracts.

     

    “Issuers”:  the
collective reference to each issuer of a Pledged Security.

     

    “Lease”:  any
lease of personal property under which any Grantor is the lessee.

     

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

     

    “Original Durant Credit
Agreement”:  as defined in the Durant Credit
Agreement.

     

    “Original Guarantee and
Collateral Agreement”: the Guarantee and Collateral Agreement, dated
February 28, 2007, among the “Grantors” then party thereto, and Agent, as
amended, including pursuant to the Amended and Restated Guarantee and Collateral
Agreement.

     

    “Patent
License”:  any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Grantor or that any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.

     

    “Patents”:  all
of the following now owned or hereafter acquired by any
Grantor:  (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all pending
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the PTO or in any
similar office or agency of the United States, any State or Territory thereof,
or any other country, including those identified in Schedule 7(a) to
the Perfection Certificate, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof and the inventions
disclosed or claimed therein, including the right to make, use and/or sell
inventions disclosed or claimed therein.

     

    “Patent Security Agreement
Supplement”:  a supplement to this Agreement, executed by one
or more Grantors in favor of Collateral Agent, substantially in the form of
Exhibit C
hereto.

     

    “Perfection
Certificate”:  shall mean a certificate substantially in the
form of Exhibit A
hereto, completed and supplemented with the schedules and attachments
contemplated thereby,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    and duly
executed by the Grantors, either pursuant hereto or, if applicable, pursuant to
the Original Guarantee and Collateral Agreement or the Amended Guarantee and
Collateral Agreement.

     

    “Perfection
Supplement”:  shall have the meaning assigned to such term in
Section 7.17.

     

    “Person”:  any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other
entity.

     

    “Pledged Commodity
Contracts”:  all commodity contracts listed in Section 8 of the
Perfection Certificate, and all other commodity contracts to which any Grantor
is party from time to time.

     

    “Pledged Debt
Securities”:  the debt securities listed in Section 9 of the
Perfection Certificate, together with any other certificates, options, rights or
security entitlements of any nature whatsoever in respect of the debt securities
of any Person that may be issued or granted to, or held by, any Grantor while
this Agreement is in effect.

     

    “Pledged
Notes”:  all promissory notes listed in Section 9 of the
Perfection Certificate, 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 in an aggregate principal amount for all Grantors not to exceed
$250,000 at any time outstanding issued in connection with extensions of trade
credit by any Grantor in the ordinary course of business).

     

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

     

    “Pledged Security
Entitlements”:  all security entitlements with respect to the
financial assets listed on Section 8 of the
Perfection Certificate and all other security entitlements of any
Grantor.

     

    “Pledged
Stock”:  the shares of capital stock or other equity interests
owned at any time or from time to time by any Grantor in any other Grantor,
including, without limitation, (i) in the case of PNG, all shares of capital
stock of Earth LNG, including all than Shares acquired by if pursuant to the
Share Exchange Agreement, and (ii) in the case of Earth LNG, all shares of
capital stock, or membership interests, as applicable, in all Grantors that are
Subsidiaries of Earth LNG listed in Section 8 of the
Perfection Certificate, together with any other shares, stock certificates,
options, rights or security entitlements of any nature whatsoever in respect of
the capital stock or 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 65% of the total outstanding voting capital
stock of any Foreign Subsidiary be required to be pledged hereunder or any
capital stock of any Foreign Subsidiary owned by a Foreign Subsidiary be
required to be pledged hereunder; provided, further, that in no event shall
capital stock or other equity interests of any Subsidiary of Parent that is not
a Loan Party be required to be pledged hereunder.

     

    “PNG”:  PNG
Resources, Inc., a Nevada corporation.

     

    “Proceeds”:  all
“proceeds” as such term is defined in Section 9-102(64) of the NYUCC in effect
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.

     

    “Property”:  any
right or interest in or to property of any kind whatsoever, whether real,
personal or mixed and whether tangible or intangible, including capital stock or
other equity interests.

     

    “PTO”:  the
United States Patent and Trademark Office.

     

    “Receivable”:  any
right to payment on account of any obligation that could create any right to
receive money, whether or not such right is evidenced by an instrument or
chattel paper and whether or not it has been earned by performance (including,
without limitation, any account or payment intangible).

     

    “Released
Grantors”:  as defined in the preamble.

     

    “Secured
Creditor”:  collectively, the Collateral Agent, Fourth Third
LLC as administrative agent under the Credit Agreement and the Lenders under and
as defined in the Credit Agreement.

     

     “Secured
Obligations”:  the Borrower Obligations and the Guarantor
Obligations.

     

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

     

    “Security
Documents”:  this Agreement, the Intellectual Property Security
Agreements, all deposit account control agreements and similar agreements, all
landlord waivers, bailee letters and similar documents and all other pledge or
security agreements, “Mortgages” (as such term is defined in the Credit
Agreement), assignments or other similar agreements or instruments executed and
delivered by any Grantor pursuant to Section 6.8 or
Section
6.9 of the
Credit Agreement or otherwise in connection with the transactions contemplated
thereby, in each case as amended, modified, restated or supplemented from time
to time.

     

    “Security
Interest”:  the security interest granted pursuant to Section 3, as well as
all other security interests created or assigned as additional security for the
Secured Obligations pursuant to the provisions of this Agreement.

     

    “Subsidiary
Guarantor”: any Guarantor that is a Subsidiary of either
Borrower.

     

    “Trade Secret
License”:  any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trade Secret,
including, without limitation, any of the foregoing referred to on Schedule 7(a) to
the Perfection Certificate.

     

    “Trade
Secrets”:  (i) all trade secrets and all confidential and
proprietary information, including know-how, trade secrets, manufacturing and
production processes and techniques, inventions, research and development
information, technical data, financial, marketing and business data, pricing and
cost information, business and marketing plans, and customer and supplier lists
and information, including, without limitation, those identified in Schedule 7(a) to
the Perfection Certificate, (ii) the right to sue or otherwise recover for any
and all past, present and future infringements and misappropriations thereof,
(iii) all income, royalties, damages and other payments now and hereafter due
and/or payable with respect thereto (including, without

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    limitation,
payments under all licenses entered into in connection therewith, and damages
and payments for past, present or future infringements thereof), and (iv) all
other rights of any kind whatsoever of such Grantor accruing thereunder or
pertaining thereto.

     

    “Trademark
License”:  any written agreement, now or hereafter in effect,
granting to any third party any right to use any Trademark now or hereafter
owned by any Grantor or that any Grantor otherwise has the right to license, or
granting to any Grantor any right to use any Trademark now or hereafter owned by
any third party, and all rights of any Grantor under any such
agreement.

     

    “Trademark Security Agreement
Supplement”:  a supplement to this Agreement, executed by the
Grantor in favor ofAgent , substantially in the form of Exhibit D
hereto.

     

    “Trademarks”:  (i)
all trademarks, service marks, trade names, corporate names, company names,
business names, domain names, trade dress, trade styles, logos, or other indicia
of origin or source identification, trademark and service mark registrations,
and applications for trademark or service mark registrations and any renewals
thereof, including, without limitation, those identified in Schedule 7(a) to
the Perfection Certificate, (ii) the right to sue or otherwise recover for
any and all past, present and future infringements and misappropriations
thereof, (iii) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto (including, without
limitation, payments under all Trademark Licenses entered into in connection
therewith, and damages and payments for past, present or future infringements
thereof), and (iv) all other rights of any kind whatsoever accruing
thereunder or pertaining thereto, together in each case with the goodwill of the
business connected with the use of, and symbolized by, each of the
above.

     

    “UCC”:  the
Uniform Commercial Code as in effect in any jurisdiction (except as otherwise
contemplated in Section 7.18).  References
to particular sections of Article 9 of the UCC shall be, unless otherwise
indicated, references to Revised Article 9 of the UCC adopted and effective in
certain jurisdictions on or after July 1, 2001.

     

    1.03.           Rules of
Interpretation.  The rules of interpretation specified in Section 1.03 of
Credit Agreement shall be applicable to this Agreement.  References to
“Sections”, “Exhibits” and “Schedules” shall be to Sections, Exhibits and
Schedules, respectively, of this Agreement unless otherwise specifically
provided.  Any of the terms defined in this Section 1 may,
unless the context otherwise requires, be used in the singular or the plural
depending on the reference.  All references to statutes and related
regulations shall include (unless otherwise specifically provided herein) any
amendments of same and any successor statutes and regulations.

     

    Section
2.                      Guarantee

     

    2.01.           Guarantee.  i)                                Each
of the Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantees to the Agent, for the ratable benefit of the Secured
Creditors and their respective successors, indorsees, transferees and assigns,
the prompt and complete payment and performance by each Borrower when due
(whether at the stated maturity, by acceleration or otherwise) of the Borrower
Obligations.

     

    (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, state and other 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 Section 2 or
affecting the rights and remedies of any Secured Creditor
hereunder.

     

    (d)           The
guarantee contained in this Section 2 shall
remain in full force and effect until all the Borrower Obligations and Guarantor
Obligations shall have been Fully Satisfied notwithstanding that from time to
time during the term of the Credit Agreement Borrower may be free from any
Borrower Obligations.

     

    (e)           No
payment made by either Borrower, any of the Guarantors, any other guarantor or
any other Person or received or collected by any Secured Creditor from either
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
Secured Obligations or any payment received or collected from such Guarantor in
respect of the Secured Obligations), remain liable for the Borrower Obligations
up to the maximum liability of such Guarantor hereunder until the Borrower
Obligations are Fully Satisfied.

     

    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
at least 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
Creditors and each Guarantor shall remain liable to the Secured Creditors for
the full amount guaranteed by such Guarantor hereunder.

     

    2.03.           Subrogation.  Notwithstanding
any payment made by any Guarantor hereunder or any set-off or application of
funds of any Guarantor by any Secured Creditor, (i) no Guarantor shall be
entitled to be subrogated to any of the rights of any Secured Creditor against
either Borrower or any other Guarantor or Grantor or any collateral security or
guarantee or right of offset held by any Secured Creditor for the payment of the
Borrower Obligations, (ii) no Guarantor shall seek or be entitled to seek any
contribution or reimbursement from either Borrower or any other Guarantor or
Grantor in respect of payments made by such Guarantor hereunder, and (iii) each
Guarantor hereby expressly and irrevocably waives any and all rights at law or
in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety,
guarantor or accommodation co-obligor, in each case, until all Borrower
Obligations are Fully Satisfied.  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 Fully Satisfied, such amount shall be
held by such Guarantor in trust for the Secured Creditors, segregated from other
funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be
turned over to the Agent in the exact form received by such Guarantor (duly
endorsed by such Guarantor to the Agent, if required), to be applied against the
Borrower Obligations, whether matured or unmatured, in such order as the Agent
may determine.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Each
Guarantor acknowledges and agrees that this waiver is intended to benefit the
Secured Creditors and shall not limit or otherwise affect such Guarantor’s
liability hereunder or the enforceability of this Section 2.03, and
that the Secured Creditors and their respective successors and assigns are
intended third party beneficiaries of the waivers and agreements set forth in
this Section
2.03, and their rights under this Section 2.03, shall
survive payment in full of the Obligations.

     

    2.04.           Amendments, etc. with
respect to the Borrower Obligations.  Each Guarantor shall
remain obligated hereunder notwithstanding that, without any reservation of
rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Borrower Obligations made by any
Secured Creditor may be rescinded by such Secured Creditor and any of the
Borrower Obligations continued, and the Borrower Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by any Secured Creditor, and the
Credit Agreement and the other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Agent (or the Required Lenders under the
Credit Agreement or all Lenders, as the case may be) may deem advisable from
time to time, and any collateral security, guarantee or right of offset at any
time held by any Secured Creditor for the payment of the Borrower Obligations
may be sold, exchanged, waived, surrendered or released.  No Secured
Creditor 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 Section 2 or any
property subject thereto.

     

    2.05.           Guarantee Absolute and
Unconditional.  Each Guarantor 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 Creditor upon the guarantee
contained in this Section 2 or
acceptance of the guarantee contained in this Section 2; 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 Section 2; and all
dealings between either Borrower and any of the Guarantors, on the one hand, and
the Secured Creditors, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Section
2.  Each Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon either
Borrower or any of the Guarantors with respect to the Borrower Obligations,
except as required pursuant to the Credit Agreement.  Each Guarantor
understands and agrees that the guarantee contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment and
performance without regard to (a) the validity or enforceability of the Credit
Agreement or any other Loan Document (other than this Agreement), 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 Creditor, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance hereunder) which may at any time be available
to or be asserted by the Borrower or any other Person against any Secured
Creditor, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of either Borrower or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of either Borrower for
the Borrower Obligations, or of such Guarantor under the guarantee contained in
this Section 2,
in bankruptcy or in any other instance.  When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, any Secured Creditor may, but shall be under no obligation
to,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    make a
similar demand on or otherwise pursue such rights and remedies as it may have
against the 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 Creditor 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 Creditor against any Guarantor.  For the
purposes hereof, “demand” shall include
the commencement and continuance of any legal proceedings.

     

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

     

    2.07.           Payments.  Each
Guarantor hereby guarantees that payments hereunder will be paid to the Agent
without set-off or counterclaim in Dollars in immediately available funds to the
deposit account of Agent specified in Annex II to the applicable Credit
Agreement and that all such payments will be subject to the provisions of Section 2.8 of the
Credit Agreement.

     

    2.08.           Waiver of
Subrogation.  Notwithstanding anything to the contrary in this
Agreement or in any other Loan Document, and except as set forth in Section 2.11, each
Guarantor hereby expressly and irrevocably waives until all Secured Obligations
have been paid in full and the Commitments have been terminated pursuant to the
Credit Agreement any and all rights at law or in equity to subrogation,
reimbursement, exoneration, contribution, indemnification or set off and any and
all defenses available to a surety, guarantor or accommodation
co-obligor.  Each Guarantor acknowledges and agrees that this waiver
is intended to benefit the Secured Creditors and shall not limit or otherwise
affect such Guarantor’s liability hereunder or the enforceability of this Section 2.08, and
that the Secured Creditors and their respective successors and assigns are
intended third party beneficiaries of the waivers and agreements set forth in
this Section
2.08, and their rights under this Section 2.08, shall
survive payment in full of the Obligations.  The foregoing waiver
shall not be deemed to limit or prohibit the payment of indebtedness or other
obligations of any Guarantor to any other Guarantor or other Person which is
incurred in the ordinary course of business and which is otherwise permitted
under this Agreement or any other Loan Document.

     

    2.09.           Election of
Remedies.  If any Secured Creditor may, under applicable law,
proceed to realize its benefits under any of the Loan Documents giving such
Secured Creditor a Lien upon any Collateral, whether owned by any Guarantor or
by any other Person, either by judicial foreclosure or by non judicial sale or
enforcement, such Secured Creditor may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights and
remedies under this Section
2.  If, in the exercise of any of its rights and remedies, any
Secured Creditor shall forfeit any of its rights or remedies, including its
right to enter a deficiency judgment against any Guarantor or any other Person,
whether because of any

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    applicable
laws pertaining to “election of remedies” or the like, each Guarantor hereby
consents to such action by such Secured Creditor and waives, to the extent
permitted by applicable law, any claim based upon such action, even if such
action by such Secured Creditor shall result in a full or partial loss of any
rights of subrogation that each Guarantor might otherwise have had but for such
action by such Secured Creditor.  Any election of remedies that
results in the denial or impairment of the right of any Secured Creditor to seek
a deficiency judgment against any Guarantor shall not impair any other
Guarantor’s obligation to pay the full amount of the Obligations.  In
the event any Secured Creditor shall bid at any foreclosure or trustee’s sale or
at any private sale permitted by law or the Loan Documents, such Secured
Creditor may bid all or less than the amount of the Obligations and the amount
of such bid need not be paid by the such Secured Creditor but shall be credited
against the Obligations.  The amount of the successful bid at any such
public sale, whether such Secured Creditor or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance
of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 2,
notwithstanding that any present or future law or court decision or ruling may
have the effect of reducing the amount of any deficiency claim to which any
Secured Creditor might otherwise be entitled but for such bidding at any such
sale.

     

    2.10.           Limitation.  Notwithstanding
any provision herein contained to the contrary, each Guarantor’s liability under
this Section 2
(which liability is in any event in addition to amounts for which such Guarantor
is primarily liable under Section 2 of the
applicable Credit Agreement) shall be limited to an amount not to exceed as of
any date of determination the greater of:

     

    (a)           the
net amount of any portion of the Loan advanced to any other Grantor and then
re-loaned or otherwise transferred to, or for the benefit of, such Guarantor;
and

     

    (b)           the
amount that could be claimed by the Agent and the Lenders from such Guarantor
under this Section
2.10 without rendering such claim voidable or avoidable under Section 548
of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law after taking into account, among other things, such Guarantor’s right
of contribution and indemnification from each other Guarantor under Section
2.11.

     

    2.11.           Contribution with Respect to
Guaranty Obligations.

     

    (a)           To
the extent that any Guarantor shall make a payment under this Section 2.11 of all
or any of the Obligations which it has agreed to guarantee pursuant hereto (a
“Guarantor
Payment”) that, taking into account all other Guarantor Payments then
previously or concurrently made by any other Guarantor, exceeds the amount that
such Guarantor would otherwise have paid if each Guarantor had paid the
aggregate Obligations satisfied by such Guarantor Payment in the same proportion
that such Guarantor’s “Allocable Amount” (as
defined below) (as determined immediately prior to such Guarantor Payment) bore
to the aggregate Allocable Amounts of each of the Guarantors as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Guarantor shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Guarantor for
the amount of such excess, pro rata based upon their respective Allocable
Amounts in effect immediately prior to such Guarantor Payment.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)           As
of any date of determination, the “Allocable Amount” of
any Guarantor shall be equal to the maximum amount of the claim that could then
be recovered from such Guarantor under this Section 2 without
rendering such claim voidable or avoidable under Section 548 of Chapter 11 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
Act, Uniform Fraudulent Conveyance Act or similar statute or common
law.

     

    (c)           This
Section 2.11 is
intended only to define the relative rights of Guarantors and nothing set forth
in this Section
2.11 is intended to or shall impair the obligations of Guarantors,
jointly and severally, to pay any amounts as and when the same shall become due
and payable in accordance with the terms of this Agreement, including Section
2.1.  Nothing contained in this Section 2.11 shall
limit the liability of Borrower to pay the Loan and accrued interest, fees and
expenses with respect thereto for which Borrower shall be primarily
liable.

     

    (d)           The
parties hereto acknowledge that the rights of contribution and indemnification
hereunder shall constitute assets of the Guarantor to which such contribution
and indemnification is owing.

     

    (e)           The
rights of the indemnifying Guarantors against other Loan Parties under this
Section 2.11
shall be exercisable upon the full and indefeasible payment of the Obligations
and the termination of the Commitments.

     

    Section
3.                      Grant
of Security Interest.

     

    Each
Grantor hereby grants (and confirms the grant, if any, which shall continue
uninterrupted, made by such Grantor in the Amended and Restated Guarantee and
Collateral Agreement) to the Agent, for the ratable benefit of the Secured
Creditors, a security interest in and mortgage on, all of the following property
now owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the “Collateral”), as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the Secured
Obligations:

     

    a.           all
accounts, including health-care receivables;

     

    b.           all
chattel paper, whether tangible or electronic;

     

    c.           all
goods;

     

    d.           all
documents;

     

    e.           all
equipment;

     

    f.           all
fixtures;

     

    g.           all
general intangibles, including all payment intangibles;

     

    h.           all
instruments;

     

    i.           all
Intellectual Property;

     

    j.           all
inventory;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    k.           all
Investment Property;

     

    l.           all
Leases;

     

    m.           all
letter-of-credit rights;

     

    n.           all
money;

     

    o.           all
supporting obligations;

     

    p.           all
tort claims;

     

    q.           all
other property not otherwise described above;

     

    r.           all
deposit accounts, all claims now or hereafter arising therefrom, all funds now
or hereafter held therein, all amounts now or hereafter credited thereto and all
certificates and instruments, if any, from time to time representing or
evidencing such bank accounts;

     

    s.           all
books and records pertaining to the Collateral; and

     

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

     

    Notwithstanding
the foregoing, none of the Excluded Assets shall, to the extent and for so long
as they are Excluded Assets, constitute Collateral.  If at any time,
by reason of any change in law or the receipt of any required consent or
otherwise, any General Intangible that was an Excluded Asset ceases to meet the
conditions set forth in the definition of “Excluded Assets” found in Section 1 of this
Agreement, then such general intangible shall immediately and automatically
cease to be an Excluded Asset and the security interest herein granted shall
immediately and automatically attach thereto without necessity of any further
act or deed by any Grantor.

     

    Section
4.                      Authorization
to File Financing Statements.  Each Grantor hereby irrevocably
authorizes the Agent at any time and from time to time to file in any
jurisdiction in which the UCC has been adopted any initial financing statements
and amendments thereto that (a) indicate the Collateral (i) except as
to Parent, as “all assets” of such Grantor or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the NYUCC or such jurisdiction, or
(ii) as being of an equal or lesser scope or with greater detail, and
(b) contain any other information required by part 5 of Article 9
of the UCC for the sufficiency or filing office acceptance of any initial
financing statement or amendment, including (i) whether such Grantor is an
organization, the type of organization and any organization identification
number issued to such Grantor and, (ii) in the case of a financing
statement filed as a fixture filing or indicating Collateral as timber to be cut
or as-extracted collateral, a sufficient description of real property to which
such Collateral relates.  Each Grantor agrees to furnish any such
information to the Agent promptly upon request.  Each Grantor also
ratifies its authorization for the Agent to have filed in any UCC jurisdiction
any like initial financing statements or amendments thereto if filed prior to
the date hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
5.                      Relation
to Other Security Documents.

     

    5.01.           Real Estate
Documents.  The provisions of this Agreement supplement the
provisions of any real estate mortgage or deed of trust granted by any Grantor
to the Agent and securing the payment or performance of any of the Secured
Obligations.  Nothing contained in any such real estate mortgage or
deed of trust shall derogate from any of the rights or remedies of the Agent or
any Secured Creditor hereunder.

     

    5.02.           Patent and Trademark
Security Agreement Supplements.  Concurrently herewith certain
of the Grantors are executing and delivering to the Agent for recording in the
PTO or the Copyright Office, as applicable, the Patent Security Agreement
Supplement, the Trademark Security Agreement Supplement and the Copyright
Security Agreement Supplement.  The provisions of any current or any
future Patent Security Agreement Supplement, Trademark Security Agreement
Supplement or Copyright Security Agreement Supplement are supplemental to the
provisions of this Agreement.  Nothing contained in any current or
future Patent Security Agreement Supplement, Trademark Security Agreement
Supplement or Copyright Security Agreement Supplement shall derogate from any of
the rights or remedies of any Secured Creditor hereunder, nor shall anything
contained in any such current or future Patent Security Agreement Supplement,
Trademark Security Agreement Supplement or Copyright Security Agreement
Supplement be deemed to prevent or extend the time of attachment or perfection
of any Security Interest in such Collateral created hereby.

     

    Section
6.                      Representations and
Warranties.  To induce the Agent and the Lenders to enter into
the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower thereunder, each Grantor hereby represents
and warrants to the Secured Creditors that:

     

    6.01.           Grantors’ Legal
Status.  (a) Such Grantor is an organization as set forth
in the Perfection Certificate; (b) such organization is of the type, and is
organized in the jurisdiction, set forth in the Perfection Certificate; and
(c) the Perfection Certificate sets forth such Grantor’s correct
organizational identification number or states that such Grantor has
none.

     

    6.02.           Grantors’ Legal
Names.  Such Grantor’s exact legal name is that set forth on
the Perfection Certificate and on the signature page hereof.

     

    6.03.           Grantors’ Locations.
The Perfection Certificate sets forth such Grantor’s place of business or (if it
has more than one place of business) its chief executive office, as well as its
mailing address if different.  Such Grantor’s place of business or (if
it has more than one place of business) its chief executive office (if such
Grantor is an organization) is located in a jurisdiction that has adopted the
UCC or whose laws generally require that information concerning the existence of
nonpossessory security interests be made generally available in a filing,
recording or registration system as a condition or result of the security
interest obtaining priority over the rights of a lien creditor with respect to
the collateral.

     

    6.04.           Representations in the
Credit Agreement.  The representations and warranties set forth
in Section 5 of
the Credit Agreement as they relate to such Guarantor or to the Loan Documents
to which such Guarantor is a party, each of which is hereby incorporated herein
by reference, are true and correct in all material respects, and the Secured
Creditors shall be entitled to rely on each of them as if they were fully set
forth herein, provided that each reference

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    in each
such representation and warranty to the applicable Borrower’s knowledge shall,
for the purposes of this Section 6.04, be
deemed to be a reference to such Grantor’s knowledge.

     

    6.05.           Title to Collateral.
The Collateral of such Grantor is owned by such Grantor free and clear of any
Lien, except for Liens expressly permitted pursuant to the Credit
Agreements.  Such Grantor has not filed or consented to the filing of
(a) any financing statement or analogous document under the UCC or any other
applicable laws covering any of its Collateral, (b) any assignment in which such
Grantor assigns any Collateral or any security agreement or similar instrument
covering any Collateral with the PTO or the Copyright Office or (c) any
assignment in which such Grantor assigns any Collateral or any security
agreement or similar instrument covering any Collateral with any foreign
governmental, municipal or other office, which financing statement or analogous
document, assignment, security agreement or similar instrument is still in
effect, except, in each case, with respect to Liens expressly permitted pursuant
to the Credit Agreements.

     

    6.06.           Nature of
Collateral.  None of the Collateral of such Grantor
constitutes, or is the proceeds of, farm products and none of the Collateral has
been purchased or will be used by such Grantor primarily for personal, family or
household purposes, and as of the Closing Date, except as indicated in the
Perfection Certificate and as of any date of any Perfection Supplement, except
as indicated in such Perfection Supplement or in the Perfection
Certificate:

     

    (a)           none
of the account debtors or other persons obligated on any of the Collateral of
such Grantor is a governmental authority subject to the Federal Assignment of
Claims Act or like federal, state or local statute or rule in respect of such
Collateral;

     

    (b)           such
Grantor holds no commercial tort claims;

     

    (c)           such
Grantor has no deposit accounts or other bank accounts;

     

    (d)           such
Grantor owns no motor vehicles;

     

    (e)           such
Grantor has no securities accounts or securities entitlements or commodities
accounts or commodities contracts;

     

    (f)           such
Grantor holds no interest in, title to or power to transfer, any Patents, Patent
Licenses, Trademarks, Trademark Licenses, Trade Secrets, Trade Secret Licenses,
Copyrights or Copyright Licenses; and

     

    (g)           such
Grantor holds no interest in, title to or power to transfer any Intellectual
Property that is eligible for registration in the PTO or the Copyright
Office.

     

    6.07.           Compliance with
Laws.  Such Grantor has at all times operated its business in
compliance with all laws, except as could not reasonably be expected to have a
Material Adverse Effect.

     

    6.08.           Validity of Security
Interest. Except with respect to
assets which in the aggregate for all Grantors do not have a value exceeding
$250,000, (a) the Security Interest granted by such Grantor constitutes a
legal and valid security interest in all of the Collateral of such Grantor
securing the payment and performance of the Secured Obligations and
(b) upon the

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    giving of
value, the filing of financing statements describing the Collateral in the
offices listed on the Perfection Certificate, the recording in the PTO of the
Trademark Security Agreement Supplement and the Patent Security Agreement
Supplement and in the Copyright Office of the Copyright Security Agreement
Supplement, and the taking of all applicable actions in respect of perfection
contemplated by Sections 7.06, 7.07, 7.08,
7.09, 7.10, 7.11 and 7.12 in respect of
Collateral (in which a security interest cannot be perfected by the filing of a
financing statement or such recordings in the PTO or the Copyright Office), the
Security Interest will be valid, enforceable and perfected in all Collateral of
such Grantor.  The Security Interest is and shall be prior to any
other Lien on the Collateral, other than Liens expressly permitted to be prior
to the Security Interest under the Credit Agreements.

     

    6.09.           Perfection Certificate;
Intellectual Property Filings.

     

    (a)           All
information set forth on the Perfection Certificate is, and all information set
forth on each Perfection Supplement shall be, accurate and
complete.

     

    (b)           A
fully executed Patent Security Agreement Supplement, Trademark Security
Agreement Supplement and a Copyright Security Agreement Supplement containing a
description of all Collateral of such Grantor consisting of United States
Patents and United States registered Trademarks (and Trademarks for which United
States registration applications are pending) and United States registered
Copyrights have been delivered to the Agent for recording by the PTO and the
Copyright Office, as necessary, pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or
17 U.S.C. § 205 and the regulations thereunder, as applicable.

     

    6.10.           Investment
Property.

     

    (a)           The
shares of Pledged Stock pledged by such Grantor hereunder constitute all of the
issued and outstanding shares of all classes of the capital stock or other
equity interests of each Issuer owned by such Grantor or, in the case of any
Excluded Foreign Subsidiary Voting Stock, 65% of the outstanding Excluded
Foreign Subsidiary Voting Stock of each relevant Issuer.

     

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

     

    (c)           The
terms of any uncertificated limited liability company interests and partnership
interests included in the Pledged Stock expressly provide that they are
securities governed by Article 8 of the Uniform Commercial Code in effect from
time to time in the “issuer’s jurisdiction” of each Issuer thereof (as such term
is defined in the UCC in effect in such jurisdiction).

     

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

     

    6.11.           Receivables.  No
amount exceeding $50,000 and 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 Agent.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    6.12.                      Accounts.  (i) Each account of
such Grantor is genuine and in all material respects what they purport to be,
(ii) each account arises out of (A) a bona fide sale of goods sold and
delivered by such Grantor (or is in the process of being delivered) or
(B) services theretofore actually rendered or to be rendered by such
Grantor to the account debtor named therein, (iii) no material account of
such Grantor is evidenced by any instrument or chattel paper unless such
instrument or chattel paper has been theretofore endorsed over and delivered to,
or submitted to the control of, the Agent and (iv) no surety bond was
required or given in connection with any account of such Grantor or the
contracts or purchase orders out of which they arose and the right to receive
payment under each account is assignable.

     

    6.13.                      Equipment
and Inventory.  With respect to
any material equipment and/or material
inventory of such Grantor, each such Grantor has exclusive possession and
control of such equipment and inventory of such Grantor except for (i) equipment
leased by such Grantor as a lessor or (ii) equipment or inventory in transit
with common or other carriers. No material inventory is held by such Grantor
pursuant to consignment, sale or return, sale on approval or similar
arrangement.

     

    Section
7.                      Covenants.  Each
Grantor covenants and agrees with the Agent, in each case at such Grantor’s own
cost and expense, as follows.

     

    7.01.           Grantors’ Legal
Status.  Such Grantor shall not change its type of
organization, jurisdiction of organization or other legal structure except, upon
not less than twenty (20) days’ prior written notice to the Agent.

     

    7.02.           Grantors’
Names.  Such Grantor shall not change its name, except upon not
less than twenty (20) days’ prior written notice to the Agent.

     

    7.03.           Grantors’ Organizational
Numbers.  Without providing at least twenty (20) days’ prior
written notice to the Agent, such Grantor shall not change its organizational
identification number if it has one.  If such Grantor does not have an
organizational identification number and later obtains one, such Grantor shall
forthwith notify the Agent of such organizational identification number promptly
upon obtaining such identification number.

     

    7.04.           Locations.  Without
providing at least twenty (20) days’ prior written notice to the Agent, such
Grantor shall not (a) change its place of business or (if it has more than
one place of business) its chief executive office and shall promptly notify the
Agent of any new location of Collateral owned by either Borrower or a Domestic
Subsidiary thereof that is not set forth on a Perfection Certificate or
Perfection Supplement.

     

    7.05.           Covenants in Credit
Agreement.  Each Guarantor shall take, or shall refrain from
taking, as the case may be, each action that is necessary to be taken or not
taken, as the case may be, so that no Default or Event of Default is caused by
the failure to take such action or to refrain from taking such action by such
Guarantor or any of its Subsidiaries.

     

    7.06.           Promissory Notes and
Tangible Chattel Paper.  If such Grantor, together with the
other Grantors, shall at any time hold or acquire any promissory notes or
tangible chattel paper in an aggregate principal amount of more than $50,000,
such Grantor shall forthwith endorse, assign and deliver the same to the Agent,
accompanied by such instruments of transfer or assignment duly executed in blank
as the Agent may from time to time specify to be held by the Agent as Collateral
pursuant to this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.07.           Deposit
Accounts.  For each deposit account that such Grantor at any
time opens or maintains, such Grantor shall, at the Agent’s request and option,
either (a) cause the depository bank to enter into a written agreement or
other authenticated record with the Agent, in form and substance reasonably
satisfactory to the Agent, pursuant to which such depository bank shall agree,
among other things, to comply at any time with instructions from the Agent to
such depository bank directing the disposition of funds from time to time
credited to such deposit account, without further consent of the Grantor such
agreement to be substantially in the form of Exhibit E or
such other form as the Agent shall approve, or (b) arrange for the Agent to
become the customer of the depository bank with respect to the deposit account;
provided, however, that
notwithstanding the foregoing, the requirements of this Section 7.07 shall
not apply to (i) any zero balance payroll or similar disbursement account
maintained by any Grantor (and each Grantor agrees not to deposit in any payroll
account or similar disbursement account maintained by it any funds, except funds
needed at the time of deposit (or within three days thereafter) to meet payroll
needs of such Grantor), (ii) any deposit account maintained by any Grantor as of
the Closing Date and listed on Schedule 7.07(a)
until the date sixty (60) days following the Closing Date.

     

    7.08.           Investment
Property. 

     

    (a)           If
any of the Collateral shall be or become evidenced or represented by an
uncertificated security, such Grantor shall cause the Issuer thereof either (i)
to register the Agent as the registered owner of such uncertificated security,
upon original issue or registration of transfer or (ii) to agree in writing with
such Grantor and the Agent that such Issuer will comply with instructions with
respect to such uncertificated security originated by the Agent without further
consent of such Grantor, such agreement to be in substantially the form of Exhibit F or
such other form as the Agent shall approve.

     

    (b)           If
any of the Collateral shall be or become evidenced or represented by a security
entitlement, such Grantor shall cause the securities intermediary with respect
to such security entitlement either (i) to identify in its records the Agent as
having such security entitlement against such securities intermediary or (ii) to
agree in writing with such Grantor and the Agent that such securities
intermediary will comply with entitlement orders originated by the Agent without
further consent of such Grantor, such agreement to be in substantially the form
of Exhibit G or
such other form as the Agent shall approve.

     

    (c)           If
any of the Collateral shall be or become evidenced or represented by a commodity
contract, such Grantor shall cause the commodity intermediary with respect to
such commodity contract to agree in writing with such Grantor and the Agent that
such commodity intermediary will apply any value distributed on account of such
commodity contract as directed by the Agent without further consent of such
Grantor, such agreement to be in substantially the form of Exhibit H or
such other form as the Agent shall approve.

     

    (d)           If
any of the Collateral shall be or become evidenced or represented by or held in
a securities account or a commodity account, such Grantor shall, in the case of
a securities account, comply with subsection (b) of this Section 7.08 with
respect to all security entitlements carried in such securities account and, in
the case of a commodity account, comply with subsection (c) of this Section 7.08 with
respect to all commodity contracts carried in such commodity
account.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (e)           If
such Grantor shall receive any stock or other ownership certificate (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights in respect of the capital stock or other equity interests of any
Issuer, whether in addition to, in substitution of, as a conversion of, or in
exchange for, any shares of or other ownership interests in the Pledged Stock,
or otherwise in respect thereof, such Grantor shall accept the same as the agent
of the Secured Creditors, hold the same in trust for the Secured Creditors and
deliver the same forthwith to the Agent in the exact form received, duly
endorsed by such Grantor to the Agent, if required, together with an undated
stock power covering such certificate duly executed in blank by such Grantor and
with, if the Agent so requests, signature guaranteed, to be held by the Agent,
subject to the terms hereof, as additional collateral security for the Secured
Obligations.

     

    (f)           Subject
to Section
7.08(h) hereof, such Grantor shall be entitled:

     

    (i)           to
exercise, as it shall think fit, but in a manner not inconsistent with the terms
hereof and of the Credit Agreements, the voting power with respect to the
Pledged Stock of such Grantor, and for that purpose the Agent shall (if any
Pledged Stock shall be registered in the name of the Agent or its nominee)
execute or cause to be executed from time to time, at the expense of such
Grantor, such proxies or other instruments in favor of such Grantor or its
nominee, in such form and for such purposes as shall be reasonably required by
such Grantor and shall be specified in a written request therefor, to enable it
to exercise such voting power with respect to the Pledged Stock;
and

     

    (ii)           except
as otherwise provided in paragraphs (g) and (h) of this Section 7.08, to
receive and retain for its own account any and all payments made in respect of
the Pledged Securities to the extent such are permitted pursuant to the terms of
the Credit Agreements.

     

    (g)           Any
sums paid upon or in respect of the Pledged Securities upon the liquidation or
dissolution of any Issuer shall be paid over to the Agent to be held by it
hereunder as additional collateral security for the Secured Obligations, and in
case any distribution of capital shall be made on or in respect of the Pledged
Securities or any property shall be distributed upon or with respect to the
Pledged Securities 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 Agent, be delivered to the Agent to be held by it hereunder as
additional collateral security for the Secured Obligations.  If any
sums of money or property so paid or distributed in respect of the Pledged
Securities shall be received by such Grantor, such Grantor shall, until such
money or property is paid or delivered to the Agent, hold such money or property
in trust for the Secured Creditors, segregated from other funds of such Grantor,
as additional collateral security for the Secured Obligations.

     

    (h)           Upon
the occurrence and during the continuance of any Event of Default, all rights of
such Grantor to exercise or refrain from exercising the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to
Section 7.08(f)(i)
hereof and to receive the payments pursuant to Section 7.08(f)(ii)
hereof shall cease, and thereupon the Agent shall be entitled to exercise all
voting power with respect to the Pledged Securities and to receive and retain,
as additional collateral hereunder, any and all such payments any time declared
or paid upon any of the Pledged Securities during such an Event of Default and
otherwise to act with respect to the Pledged Securities as outright owner
thereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i)           At
any time and from time to time with respect to Pledged Securities other than
Pledged Stock either Borrower or a Subsidiary of either Borrower and at any time
and from time to time during the continuance of an Event of Default with respect
to Pledged Stock of a Subsidiary of either Borrower, the Agent may cause all or
any of the Pledged Securities to be transferred to or registered in its name or
the name of its nominee or nominees.

     

    (j)           Without
the prior written consent of the Agent, such Grantor will not (i) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, any of the Investment Property or Proceeds thereof or any interest therein
(except pursuant to a transaction permitted by the Credit Agreements), (ii)
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 and except for non-consensual Liens permitted by the Credit
Agreements, or (iii) enter into any agreement or undertaking expressly
restricting the foreclosure of the Agent’s Security Interest in any of the
Investment Property or Proceeds thereof or any interest therein.

     

    (k)           In
the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will
be bound by the terms of this Agreement relating to the Pledged Securities
issued by it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Agent promptly in writing of the
occurrence of any of the events described in Section 7.08(e) or
Section 7.08(g)
with respect to the Pledged Securities issued by it and (iii) the terms of Section 13.04(c)
shall apply to it, mutatis mutandis, with respect to all actions that may be
required of it with respect to the Pledged Securities issued by
it.  Each Grantor which is an Issuer consents to the grant of a
Security Interest in capital stock or other equity interests of such Issuer the
exercise of rights by the Agent in respect of such capital stock or other equity
interests, including (to the extent permitted hereunder) the foreclosure thereon
and the Agent, its nominee or transferee becoming a partner or member of any
such Issuer that is a partnership or limited liability company.

     

    7.09.           Collateral in the Possession
of a Bailee.  If any goods with a value in excess of $50,000
are at any time in the possession of a bailee, such Grantor shall promptly
notify the Agent thereof and, if requested by the Agent, shall promptly obtain
an acknowledgement from such bailee, in form and substance reasonably
satisfactory to the Agent, that such bailee holds such Collateral for the
benefit of the Secured Creditors, provided, that, notwithstanding the foregoing,
this Section
7.09 shall not apply to any goods constituting.

     

    7.10.           Electronic Chattel Paper and
Transferable Records. If such Grantor, together with the other Grantors,
shall at any time hold or acquire interests in any electronic chattel paper or
any “transferable record,” as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in Section 16
of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, in excess of $250,000 in the aggregate, such Grantor shall
promptly notify the Agent thereof and, at the request of the Agent, shall take
such action as the Agent may reasonably request to vest in the Agent control,
under Section 9-105 of the UCC, of such electronic chattel paper or control
under Section 201 of the federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable
record.  The Agent agrees with such Grantor that the Agent shall
arrange, pursuant to procedures reasonably satisfactory to the Agent and so long
as such procedures will not result in the Agent’s loss of control, for such
Grantor to make alterations to the electronic chattel paper or transferable
record permitted under Section 9-105 of the UCC or, as the case may be,
Section 201

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    of the
federal Electronic Signatures in Global and National Commerce Act or
Section 16 of the Uniform Electronic Transactions Act, unless an Event of
Default has occurred and is continuing or would occur after taking into account
any action by such Grantor with respect to such electronic chattel paper or
transferable record.

     

    7.11.           Letter-of-Credit
Rights. If such Grantor, together with the other Grantors, shall at any
time be beneficiaries under one or more letters of credit, now or hereafter
issued, having aggregate undrawn amounts of more than $250,000, such Grantor
shall promptly notify the Agent thereof and, at the request and option of the
Agent, such Grantor shall either (a) arrange, for the issuer and any
nominated person with respect to such letter of credit to consent, pursuant to
an agreement or other authenticated record with and in the form of Exhibit I or in
such other form and in substance satisfactory to the Agent, to an assignment to
the Agent of the proceeds of any drawing under the letter of credit or
(b) arrange for the Agent to become the transferee beneficiary of the
letter of credit.

     

    7.12.           Commercial Tort
Claims.  If such Grantor shall at any time hold or acquire a
commercial tort claim, such Grantor shall immediately notify the Agent in a
writing signed by such Grantor of the brief details thereof and grant to the
Agent for the benefit of the Secured Creditors in such writing a security
interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably satisfactory
to the Agent.

     

    7.13.           Intellectual
Property.

     

    (a)           Except
in any respect that would not materially impair the right, power, authority and
ability of any Grantor to use its intellectual property as necessary or
convenient for the profitable conduct of their businesses and would not
reasonably be expected to have a Material Adverse Effect:

     

    (i)           Such
Grantor (either itself or through licensees) will (A) continue to use each
material Trademark on each and every trademark class of goods in the ordinary
course of business in order to maintain such Trademark in full force free from
any claim of abandonment for non-use in any class of goods for which
registration was obtained, (B) maintain in the ordinary course of business
the quality of products and services offered under such Trademark and take all
necessary steps to ensure that all licensed users of such Trademark maintain as
in the past such quality, (C) use such Trademark with the appropriate
notice of registration and all other notices and legends required by applicable
Requirements of Law, (D) not adopt or use any mark which is confusingly
similar or a colorable imitation of such Trademark unless the Agent, for the
ratable benefit of the Secured Creditors, shall obtain a perfected security
interest in such mark pursuant to this Agreement and the Intellectual Property
Security Agreement, and (E) not (and not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby such Trademark
may become invalidated or impaired in any way.

     

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

     

    (iii)           Such
Grantor (either itself or through licensees) (A) will employ each material
Copyright and (B) will not (and will not permit any licensee or
sublicensee

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    thereof
to) do any act or knowingly omit to do any act whereby any material portion of
the Copyrights may become invalidated or otherwise impaired.  Such
Grantor will not (either itself or through licensees) do any act whereby any
material portion of the Copyrights may fall into the public domain.

     

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

     

    (v)           Such
Grantor (either itself or through licensees) will use proper statutory notice in
connection with the use of each material Patent, Trademark and Copyright
included in the Intellectual Property.

     

    (vi)           Such
Grantor will take all reasonable and necessary steps, including, without
limitation, in any proceeding before the PTO, the Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of material Intellectual
Property, including, without limitation, the payment of required fees and taxes,
the filing of responses to office actions issued by the PTO and the Copyright
Office, the filing of applications for renewal or extension, the filing of
affidavits of use and affidavits of incontestability, the filing of divisional,
continuation, continuation-in-part, reissue, and renewal applications or
extensions, the payment of maintenance fees, and the participation in
interference, reexamination, opposition, cancellation, infringement and
misappropriation proceedings.

     

    (vii)           Such
Grantor (either itself or through licensees) will not, without the prior written
consent of the Agent, discontinue use of or otherwise abandon any Intellectual
Property or abandon any right to file an application for letters patent,
trademark, or copyright, unless such Grantor shall have previously determined
that such use or the pursuit or maintenance of such Intellectual Property is no
longer desirable in the conduct of such Grantor’s business and that the loss
thereof could not reasonably be expected to have a Material Adverse Effect and,
in which case, such Grantor shall give prompt notice of any such abandonment to
the Agent in accordance herewith.

     

    (viii)           In
the event that any material Intellectual Property is infringed, misappropriated
or diluted by a third party, such Grantor shall (A) take such actions as such
Grantor shall reasonably deem appropriate under the circumstances to protect
such Intellectual Property and (B) if such Intellectual Property is of material
economic value, promptly notify the 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.

     

    (ix)           Such
Grantor will do all things that are necessary and proper within such Grantor’s
power and control to keep each license of Intellectual Property held by such
Grantor as licensee or licensor in full force and effect except to the extent
that (A) such Grantor has reasonably determined that the failure to keep any
such license in full force and effect could not be reasonably expected to have a
Material Adverse Effect or (B) any such license would expire by its terms or is
terminable at will by a Person other than Grantor.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (x)           In
the event that such Grantor shall create any nonexclusive license in any
Trademark, Copyright, Patent or other Intellectual Property or General
Intangible, in each case owned by or licensed to such Grantor (whether pursuant
to a local marketing agreement, time broadcasting agreement or otherwise) and
such license is (x) for a duration of more than eighteen (18) months, (y) not
terminable at the option of such Grantor and (z) not by its terms expressly
subject and subordinate to the Security Interest, then, and in any such event,
such license shall constitute a Disposition of the licensed property. In the
event such Grantor creates any license in Trademark, Copyright, Patent, other
Intellectual Property or General Intangible owned by or licensed to such Grantor
that does not meet the requirements of the immediately preceding sentence, such
license shall not constitute a Disposition of such Trademark, Copyright, Patent,
other Intellectual Property or General Intangible.

     

    (xi)           Such
Grantor shall maintain all of its rights to its domain names in full force and
effect, other than any, the loss of which could not reasonably be expected to
result in a Material Adverse Effect.

     

    (b)           Such
Grantor will notify the Agent immediately if it knows, or has reason to know,
that any registration relating to any material Intellectual Property has been or
could reasonably be expected to be 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 PTO, the 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.

     

    (c)           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 PTO, the 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 Agent within five Business Days after the last day of
the fiscal quarter in which such filing occurs.  Upon request of the
Agent, such Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Agent may request to
evidence the Secured Creditors’ Security Interest in any Copyright, Patent,
Trademark or other Intellectual Property and the goodwill and general
intangibles of such Grantor relating thereto or represented
thereby.

     

    (d)           Such
Grantor agrees that, should it obtain an ownership interest in any item of
Intellectual Property which is not now a part of the Intellectual Property
Collateral (the “After-Acquired Intellectual
Property”), (i) the provisions of Section 3 shall
automatically apply thereto, (ii) any such After-Acquired Intellectual Property,
and in the case of trademarks, the goodwill of the business connected therewith
or symbolized thereby, shall automatically become part of the Collateral, (iii)
it shall give prompt (and, in any event within twenty (20) days after the date
of such acquisition) written notice thereof to the Agent in accordance herewith,
and (iv) it shall provide the Agent promptly (and, in any event within twenty
(20) days after the date of such acquisition) with an amended Perfection
Certificate and amended schedules to the applicable Intellectual Property
Security Agreement reflecting the acquisition of such After-Acquired
Intellectual Property.  Such Grantor authorizes the Agent to modify
this Agreement by amending the Perfection Certificate and to modify the
schedules to the applicable Intellectual Property Security Agreement if such
Grantor fails to provide the Agent with satisfactory amended schedules hereto or
thereto within the time period required hereunder (and will cooperate with the
Agent in effecting any such amendment) to include any After-Acquired
Intellectual Property

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    which
becomes part of the Intellectual Property Collateral under this Section, and to
record any such modified agreement with the PTO, the Copyright Office, or any
other applicable Governmental Authority.

     

    (e)           Such
Grantor assumes all responsibility and liability arising from the use of the
Intellectual Property and hereby indemnifies and holds the Secured Creditors
harmless from and against any claim, suit, loss, damage or expense (including
reasonable attorneys’ fees arising out of any alleged defect in any product
manufactured, promoted or sold by such Grantor (or any affiliate or subsidiary
thereof) in connection with such Intellectual Property or out of the
manufacture, promotion, labeling, sale or advertisement of any such product by
such Grantor (or any affiliate or subsidiary thereof), except for any claim,
suit, loss, damage or expense arising solely from the gross negligence or
willful misconduct of a Secured Creditor as finally determined by a court of
competent jurisdiction.

     

    (f)           Such
Grantor agrees to execute one or more applicable Intellectual Property Security
Agreements with respect to its Intellectual Property in order to record the
Security Interest granted herein to the Agent for the ratable benefit of the
Secured Creditors with the PTO, the Copyright Office, and any other applicable
Governmental Authority.

     

    7.14.           Maintenance of Collateral;
Compliance with Laws.  (a) Such Grantor shall keep the
Collateral provided by it in good order and repair and shall not use the same in
violation of any law to the extent that such violation could reasonably be
expected to have a Material Adverse Effect.

     

    7.15.           Dispositions of
Collateral.  Such Grantor shall not sell or otherwise dispose,
or offer to sell or otherwise dispose, of the Collateral provided by it or any
interest therein except for dispositions permitted by the Credit
Agreements.  In the event that such Grantor shall create any lease of
any personal property owned by or leased to such Grantor and such lease is (x)
for a duration of more than eighteen (18) months, (y) not terminable at the
option of such Grantor and (z) not by its terms expressly subject and
subordinate to the Security Interest, then, and in any such event, such lease
shall constitute a Disposition of the leased property.  In the event
such Grantor creates any lease in any personal property owned by or leased to
such Grantor that does not meet the requirements of the immediately preceding
sentence, such lease shall not constitute a Disposition of such personal
property.

     

    7.16.           Maintenance of
Insurance.  Such Grantor, at its sole cost and expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Collateral provided by it in accordance with the Credit
Agreements.

     

    7.17.           Periodic
Certification.  From time to
time on demand (which demand, absent an Event of Default, shall be no more
frequent that once every four months) from the Agent, but in no event less
frequently than annually, such Grantor shall deliver to the Agent a supplemental
perfection certificate (each, a “Perfection Supplement”) executed
by such Grantor setting forth the information required pursuant to the
Perfection Certificate or confirming that there has been no change in such
information since the date of such certificate or the date of the most recent
certificate delivered pursuant to this   Section 7.17.

     

    7.18.           Other Actions as to any and
all Collateral.  Such Grantor further agrees to take any other
action reasonably requested by the Agent to insure the attachment, perfection
and, first priority of, and the ability of the Agent to enforce, the Security
Interest in any and all of

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    the
Collateral provided by such Grantor including, without limitation,
(a) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the UCC, to the extent, if any,
that such Grantor’s signature thereon is required therefor; (b) causing the
Agent’s name to be noted as secured party on any certificate of title for a
titled good if such notation is a condition to attachment, perfection or
priority of, or ability of the Agent to enforce, the Security Interest in such
Collateral; (c) complying with any provision of any statute, regulation or
treaty of the United States of America as to any Collateral if compliance with
such provision is a condition to the attachment, perfection or priority of, or
the ability of the Agent to enforce, the Security Interest in such Collateral;
(d) obtaining governmental and other third party consents and approvals,
including without limitation any consent of any licensor, lessor or other person
obligated on such Collateral; (e) obtaining waivers from mortgagees,
bailees, landlords and any other person who has possession of or any interest in
any Collateral or any real property on which any such Collateral may be located,
in form and substance satisfactory to the Agent; (f) providing to the Agent
“control” over such Collateral, to the extent that perfection can only be
achieved under the UCC by control or where obtaining perfection by control
provides more protection to the Secured Creditors that perfection by filing a
financing statement; and (g) taking all actions required by the UCC or by
other law, as applicable in any relevant UCC jurisdiction, or by other law as
applicable in any foreign jurisdiction; provided, however, that nothing
contained in paragraphs (d) or (e) shall require such Grantor to pay any
consideration (other than any governmental application, processing, filing or
recording fees) in order to obtain any consent or waiver referred to in such
paragraphs.

     

    7.19.           Treatment of Accounts.
No Grantor shall grant or extend the time for payment of any material
account, or compromise or settle any account for less than the full amount
thereof, or release any person or property, in whole or in part, from payment
thereof, or allow any credit or discount thereon, other than as normal and
customary in the ordinary course of a Grantor’s business.

     

    Section
8.                      Inspection
and Verification.  The Agent and such Persons as the Agent may
designate shall have the right, at each Grantor’s own cost and expense, to
inspect the Collateral of such Grantor, all records related thereto (and to make
extracts and copies from such records) and the premises upon which any of the
Collateral of such Grantor is located, to discuss such Grantor’s affairs with
the officers of such Grantor (i) in the absence of an Event of Default, upon
reasonable prior notice and during regular operating hours for such Grantor and
(ii) otherwise, at any time as the Agent shall decide in its sole
discretion.

     

    Section
9.                      Collateral
Protection Expenses; Preservation of Collateral.

     

    9.01.           Expenses Incurred by the
Agent.  In its discretion, the Agent may, if the relevant
Grantor fails to do so, discharge taxes and other encumbrances at any time
levied or placed on any material portion of the Collateral, make repairs thereto
and pay any necessary filing fees or insurance premiums.  Each Grantor
agrees to reimburse the Agent on demand for any and all expenditures so made,
and all sums disbursed by the Agent in connection with this Section 9.01,
including reasonable attorneys’ fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by such Grantor to the Agent
shall bear interest at the per annum rate specified in Section 17 and
shall constitute additional Secured Obligations.  The Agent shall have
no obligation to any Grantor to make any such expenditures, nor shall the making
thereof relieve any Grantor of any default.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    9.02.           Agent’s Obligations and
Duties.

     

    (a)           Anything
herein to the contrary notwithstanding, each Grantor shall remain liable under
each contract or agreement comprised in the Collateral provided by it to be
observed or performed by such Grantor thereunder.  Neither the Agent
nor any other Secured Creditor shall have any obligation or liability under any
such contract or agreement by reason of or arising out of this Agreement or the
receipt by the Agent or any other Secured Creditor of any payment relating to
any of the Collateral, nor shall the Agent or any other Secured Creditor be
obligated in any manner to perform any of the obligations of any Grantor under
or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Agent or any other Secured
Creditor in respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, 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 the Agent or any other
Secured Creditor or to which the Agent or any other Secured Creditor may be
entitled at any time or times.

     

    (b)           The
Agent’s sole duty with respect to the custody, safe keeping and physical
preservation of the Collateral in its possession, under Section 9-207 of
the NYUCC or otherwise, shall be to deal with such Collateral in the same manner
as the Agent deals with similar property for its own account.

     

    (c)           Neither
the Agent, nor any other Secured Party nor any of their respective officers,
directors, partners, employees, agents, attorneys and other advisors,
attorneys-in-fact or affiliates 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 Secured Creditors hereunder are solely to protect the
Secured Creditors’ interests in the Collateral and shall not impose any duty
upon any Secured Creditor to exercise any such powers.  The Secured
Creditors shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers, and neither they nor any of their
officers, directors, partners, employees, agents, attorneys and other advisors,
attorneys-in-fact or affiliates shall be responsible to any Grantor for any act
or failure to act hereunder, except to the extent that any such act or failure
to act is found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from their respective gross negligence or willful
misconduct.

     

    (d)           Each
Grantor acknowledges that the rights and responsibilities of the Agent under
this Agreement with respect to any action taken by the Agent or the exercise or
non-exercise by the 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 Agent and the other Secured Creditors, be
governed by the Credit Agreements and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the Agent and
the Grantors, the Agent shall be conclusively presumed to be acting as agent for
the Secured Creditors 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.

     

    9.03.           Duties as to Pledged
Securities.

     

    (a)           With
respect to any calls, conversions, exchanges, redemptions, offers, tenders or
similar matters relating to any such Pledged Securities (herein called “Events”),

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    any duty
in connection therewith imposed on the Agent by applicable law shall be fully
satisfied if:

     

    (i)           the
Agent exercises reasonable care to ascertain the occurrence and to give
reasonable notice to the applicable Grantor of any Events applicable to any
Pledged Securities that are registered and held in the name of Agent or its
nominee;

     

    (ii)           the
Agent gives the applicable Grantor reasonable notice of the occurrence of any
Events of which the Agent has received actual knowledge, which Events are
applicable to any securities that are in bearer form or are not registered and
held in the name of the Agent or its nominee (each Grantor agreeing to give the
Agent reasonable notice of the occurrence of any Events of which such Grantor
has knowledge, which Events are applicable to any securities in the possession
of the Agent); and

     

    (iii)           the
Agent endeavors to take such action with respect to any of the Events as the
applicable Grantor may reasonably and specifically request in writing in
sufficient time for such action to be evaluated and taken or, if the Agent
reasonably believes that the action requested would adversely affect the value
of the Pledged Securities as collateral or the collection of the Secured
Obligations, or would otherwise prejudice the interests of any Secured Creditor,
the Agent gives reasonable notice to such Grantor that any such requested action
will not be taken and, if the Agent makes such determination or if such Grantor
fails to make such timely request, the Agent takes such other action as it
reasonably deems advisable in the circumstances.

     

    (b)           Except
as hereinabove specifically set forth, neither the Agent nor any other Secured
Creditor shall have any further obligation to ascertain the occurrence of, or to
notify any Grantor with respect to, any Events and shall not be deemed to assume
any such further obligation as a result of the establishment by the Agent or any
other Secured Creditor of any internal procedures with respect to any securities
in its possession, nor shall the Agent or any other Secured Creditor be deemed
to assume any other responsibility for, or obligation or duty with respect to,
any Pledged Securities or its use of any nature or kind, or any matter or
proceedings arising out of or relating thereto, including, without limitation,
any obligation or duty to take any action to collect, preserve or protect its or
any Grantor’s rights in the Pledged Securities or against any prior parties
thereto, but the same shall be at such Grantor’s sole risk and responsibility at
all times.

     

    (c)           Nothing
contained in this Section 9.03
shall be deemed to create any obligation in respect of Events on the Agent, the
purpose of this Section 9.03
being solely to provide standards, in the event that applicable law imposes any
obligations on the Agent as to Events.

     

    Section
10.                                Securities
and Deposits.  Without limitation of Section 7.08, but
subject to Section
7.08(i), the Agent may at any time at its option, transfer to itself or
any nominee any securities constituting Collateral, and, subject to Section 7.08(f)(ii),
receive any income thereon and hold such income as additional Collateral or
apply it to the Secured Obligations.  The Agent may after the
occurrence and during the continuance of an Event of Default demand, sue for,
collect, or make any settlement or compromise which it deems desirable with
respect to the Collateral.  Regardless of the adequacy of Collateral
or any other security for the Secured Obligations, any deposits or other sums at
any time credited by or due from the

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Agent or
any other Secured Creditor to any Grantor may at any time be applied to or set
off against any of the Secured Obligations whether or not due and
owing.

     

    Section
11.                                Notification
to Account Debtors and Other Persons Obligated on Collateral.  If an
Event of Default shall have occurred and be continuing, each Grantor shall, at
the request of the Agent, notify account debtors and other persons obligated on
any of the Collateral of such Grantor of the Security Interest in any account,
chattel paper, general intangible, instrument or other claims constituting
Collateral that payment thereof is to be made directly to the Agent or to any
financial institution designated by the Agent as the Agent’s agent therefor, and
the Agent may itself, if an Event of Default shall have occurred and be
continuing, without notice to or demand upon any Grantor, so notify account
debtors and other persons obligated on Collateral.  After the making
of such a request or the giving of any such notification, each Grantor shall
hold any proceeds of collection of accounts, chattel paper, general intangibles,
instruments and other claims constituting Collateral received by the Grantor as
trustee for the Secured Creditors without commingling the same with other funds
of the Grantor and shall turn the same over to the Agent in the identical form
received, together with any necessary endorsements or
assignments.  The Agent shall have no liability or responsibility to
any Grantor for acceptance of a check, draft or other order for payment of money
bearing the legend “payment in full” or words of similar import or any other
restrictive legend or endorsement or be responsible for determining the
correctness of any remittance.  Without limitation of the foregoing,
during the continuation of an Event of Default (1) the Agent shall have the
right, but not the obligation, to make test verifications of the accounts in any
manner and through any medium that it reasonably considers advisable, and the
Grantors shall furnish all such assistance and information as the Agent may
require in connection with such test verifications, and (2) the Agent in its own
name or in the name of others may communicate with account debtors on the
accounts to verify with them to the Agent’s satisfaction the existence, amount
and terms of any accounts.  The Agent may apply the proceeds of
collection of accounts, chattel paper, general intangibles, instruments and
other claims constituting Collateral received by the Agent or any other Secured
Creditor to the Secured Obligations or hold such proceeds as additional
Collateral, at the option of the Agent.  The provisions of Section
9-209 of the NYUCC shall not apply to any account, chattel paper or payment
intangible as to which notification of assignment has been sent to the account
debtor or other person obligation on the Collateral, whether under this Section 11,
Section 12
or Section 13.

     

    Section
12.                                Power
of Attorney.

     

    12.01.                      Appointment and Powers of
Agent. Each Grantor hereby irrevocably constitutes and appoints the Agent
and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of such Grantor and in the name of such Grantor or in its own
name, for the purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, each Grantor
hereby gives the 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:

     

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

     

    (b)           in
the case of any Intellectual Property, execute and deliver, and have recorded,
any and all agreements, instruments, documents and papers as the Agent may
request to evidence the Security Interest in such Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby;

     

    (c)           pay
or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or provide any insurance and pay all or any part
of the premiums therefor and the costs thereof;

     

    (d)           execute,
in connection with any sale provided for in Section 13, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral;

     

    (e)           exercise
all rights of such Grantor as owner of the Pledged Securities or as party to any
partnership, limited liability company or similar agreement, including, without
limitation, the right to sign any and all amendments, instruments, certificates,
proxies, and other writings and exercise all voting and consent rights with
respect to the Pledged Securities;

     

    (f)           (1)
direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly to the
Agent or as the Agent shall direct; (2) ask or demand for, collect, and receive
payment of and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any Collateral; (3)
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of any Collateral;
(5) defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (6) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or
releases as the Agent may deem appropriate; (7) assign any Copyright, Patent or
Trademark (along with the goodwill of the business to which any such Copyright,
Patent or Trademark pertains) throughout the world for such term or terms, on
such conditions, and in such manner, as the Agent shall in its sole discretion
determine; and (8) generally, sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though the Agent were the absolute owner thereof for all purposes, and do, at
the Agent’s option and such Grantor’s expense, at any time, or from time to
time, all acts and things which the Agent deems necessary to protect, preserve
or realize upon the Collateral and the Security Interest therein and to effect
the intent of this Agreement, all as fully and effectively as such Grantor might
do; and

     

    (g)           to
the extent that such Grantor’s authorization given in Section 4 is not
sufficient, to file such financing statements or similar documents under the
laws of any jurisdiction with respect hereto, with or without such Grantor’s
signature, or a photocopy of this Agreement in substitution for a financing
statement or such other document, as the Agent may deem appropriate and to
execute in such Grantor’s name such financing statements, other
such

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    documents
and amendments thereto and continuation statements which may require such
Grantor’s signature.

     

    Anything
in this Section
12.01 to the contrary notwithstanding, the Agent agrees that it will not
exercise any rights under the power of attorney provided for in this Section 12.01
(other than under paragraph (g) of this Section 12.01)
unless an Event of Default shall have occurred and be continuing.

     

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

     

    12.03.                      Expenses of
Attorney-in-Fact. The expenses of the Agent incurred in connection with
actions undertaken as provided in this Section 12, together
with interest thereon at a rate per annum equal to the Default Rate, from the
date of payment by the Agent to the date reimbursed by the relevant Grantor,
shall be payable by such Grantor to the Agent on demand.

     

    12.04.                      Ratification by
Grantor.  To the extent permitted by law, each Grantor hereby
ratifies all that said attorneys shall lawfully do or cause to be done by virtue
of this Section
12.  This power of attorney is a power coupled with an interest
and is irrevocable.

     

    12.05.                      No Duty on
Agent.  The powers conferred on the Agent, its directors,
officers and agents pursuant to this Section 12 are solely
to protect the Secured Creditors’ interests in the Collateral and shall not
impose any duty upon any of them to exercise any such powers.  Each
Secured Creditor shall be accountable only for the amounts that it actually
receives as a result of the exercise of such powers, and neither it nor any of
its officers, directors, employees or agents shall be responsible to any Grantor
for any act or failure to act, except for such Secured Creditor’s own gross
negligence or willful misconduct.

     

    Section
13.                                Remedies.

     

    13.01.                      Default.  Grantors
shall be in default under this Agreement (a) whenever any Event of Default has
occurred and is continuing (and each of the Grantors shall thereupon be in
default hereunder without regard to whether or to what degree any Grantor
individually may have caused, participated in, or had any knowledge of the
occurrence of such Event of Default) and (b) at all times after any Loan has
become due and payable and remains unpaid beyond any applicable grace period,
whether at maturity, upon acceleration pursuant to the Credit Agreement or
otherwise.

     

    13.02.                      Remedies Upon
Default.  At any time when any Grantor is in default under this
Agreement as set forth in Section 13.01, the
Agent may exercise and enforce, in any order, (i) each and all of the rights and
remedies available to a secured party upon default under the NYUCC or any other
applicable UCC or other applicable law, (ii) each and all of the rights and
remedies available to it under the Credit Agreements or any other Loan Document
and (iii) each and all of the following rights and remedies:

     

    (a)           Collection
Rights.  Without notice to any Grantor or any other Loan Party,
the Agent may notify any or all account debtors and obligors on any accounts,
instruments, general intangibles or other claims constituting Collateral of the
Secured Creditors’ Security

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Interests
therein and may direct, demand and enforce payment thereof directly to the
Agent.  The provisions of Section 9-209 of the NYUCC shall not apply
to any account, chattel paper or payment intangible as to which notification of
assignment has been sent to the account debtor.

     

    (b)           Taking
Possession.  The Agent may (i) enter upon any and all premises
owned or leased by any Grantor where Collateral is located (or believed by the
Agent to be located), with or (to the fullest extent permitted by law) without
judicial process and without any obligation to pay rent, (ii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent the Agent deems appropriate, (iii) take possession of any Grantor’s
premises or place custodians in exclusive control thereof, remain on such
premises and use the same and any Grantor’s equipment for the purpose of
completing any work in process or otherwise preparing the Collateral for sale or
selling or otherwise transferring the Collateral, (iv) take possession of all
items of Collateral that are not then in its possession, either upon such
premises or by removal from such premises, and (v) require any Grantor or the
Person in possession thereof to deliver such Collateral to the Agent at one or
more locations designated by the Agent and reasonably convenient to it and each
Grantor owning an interest therein.

     

    (c)           Foreclosure.  The
Agent may sell, lease, license or otherwise dispose of or transfer any or all of
the Collateral or any part thereof in one or more parcels at public sale or in
private sale or transaction, on any exchange or market or at the Agent’s offices
or on any Grantor’s premises or at any other location, for cash, on credit or
for future delivery, and may enter into all contracts necessary or appropriate
in connection therewith, without any notice whatsoever unless required by
law.  Where permitted by law, one or more of the Secured Creditors may
be the purchasers at any such sale and in such event, if such bid is made by all
of the Lenders or otherwise whenever a credit bid is expressly permitted under
each Credit Agreement or approved in writing by the Agent and the Required
Lenders, the Secured Creditors bidding at such sale may bid part or all of the
Obligations owing to them without necessity of any cash payment on account of
the purchase price, even though any other purchaser at such sale is required to
bid a purchase price payable in cash.  Each Grantor agrees that at
least ten (10) calendar days’ written notice to such Grantor of the time and
place of any public sale of Collateral owned by it (or, to the extent such
Grantor is entitled by law to notice thereof, the public sale of any other
Collateral), or the time after which any private sale of Collateral owned by it
(or, to the extent such Grantor is entitled by law to notice thereof, the
private sale of any other Collateral) is to be made, shall be commercially
reasonable.  For purposes of such notice, to the fullest extent
permitted by law (i) each Grantor waives notice of any sale of Collateral owned
by any other Grantor and (ii) each Grantor agrees that notice given to either
Borrower shall constitute notice given to such Grantor.  The giving of
notice of any such sale or other disposition shall not obligate the Agent to
proceed with the sale or disposition, and any such sale or disposition may be
postponed or adjourned from time to time, without further notice.

     

    (d)                                              Voting
Rights.  The Agent may exercise any and all rights of any
Grantor as the owner of any Pledged Securities, including, without limitation,
voting rights, rights to give or withhold consent under any agreement under
which any Pledged Security is issued and all other rights referred to in Section
12.01(e).

     

    (e)           Use of Intellectual
Property.  The Agent may, on a royalty-free basis, use and
license use of any Trademark, Trade Secret, trade name, trade style, Copyright,
Patent, technical knowledge or process or other Intellectual Property owned,
held or used by any Grantor

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    in
respect of any Collateral as to which any right or remedy of the Agent is
exercised or enforced.  In addition, the Agent may exercise and
enforce such rights and remedies for collection as may be available to it by law
or agreement.  Each Grantor grants a license pursuant to Section 13.03 in
connection therewith.

     

    (f)           Use of
Collateral.  With respect to any Collateral in the possession
of the Agent or any other Secured Creditor, or a bailee or other third party
holding on its behalf, the Agent or such other Secured Creditor may use or
operate such Collateral in any manner and to the extent determined by the Agent
or such Secured Creditor.

     

    13.03.                      Grant of License to Use
Intellectual Property.  For the purpose
of enabling the Agent to exercise rights and remedies under this Section 13 at such
time as the Agent shall be lawfully and otherwise entitled to exercise such
rights and remedies, each Grantor hereby grants to the Agent an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, license or sub-license any of the
Collateral consisting of Intellectual Property now owned or hereafter acquired
by the Grantor to the extent that such Grantor is not legally or contractually
prohibited from doing so (Grantor agreeing to use commercially reasonable
efforts not to enter into, after the Closing Date, any such contractual
prohibition), and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof.  The use of such license by the Agent
shall be exercised, at the Agent’s option, only upon the occurrence and during
the continuation of an Event of Default; provided that any license, sub-license
or other transaction entered into by the Agent in accordance herewith shall be
binding upon each Grantor notwithstanding any subsequent cure, waiver or other
termination of an Event of Default.

     

    13.04.                      Waivers by
Grantors.  Each Grantor hereby irrevocably waives (a) all
rights of redemption from any foreclosure sale, (b) the benefit of all
valuation, appraisal, exemption and moratorium laws, (c) to the fullest extent
permitted by law, all rights to notice or a hearing prior to the exercise by the
Agent of its right to take possession of any Collateral, whether by self-help or
by legal process and any right to object to the Agent taking possession of any
Collateral by self-help, and (d) if the Agent seeks to obtain possession of any
Collateral by replevin, claim and delivery, attachment, levy or other legal
process, (i) any notice or demand for possession prior to the commencement of
legal proceedings, (ii) the posting of any bond or security in any such
proceedings, and (iii) any requirement that the Agent retain possession and not
dispose of any Collateral until after a trial or final judgment in such
proceedings.

     

    13.05.                      Application of
Proceeds.  Except as expressly provided elsewhere in this
Agreement, all proceeds received by the Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Agent, be held by the Agent as Collateral for, or
then, or at any other time thereafter, applied in full or in part by the Agent
against, the Secured Obligations in the following order of
priority:

     

    FIRST:  to
the payment of all reasonable costs and expenses of such sale, collection or
other realization, including reasonable compensation to the Agent and its agents
and counsel, and all other reasonable expenses, liabilities and advances made or
incurred by the Agent in connection therewith, and all amounts for which the
Agent is entitled to indemnification hereunder and all reasonable advances made
by the Agent hereunder for the account of any Grantor, and to the payment of all
reasonable costs and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    expenses
paid or incurred by the Agent in connection with the exercise of any right or
remedy hereunder, all in accordance with Section
19.09;

     

    SECOND:  to
the payment of all other Secured Obligations (for the ratable benefit of the
holders thereof) then due and payable in the manner and order provided in the
Credit  Agreement;

     

    THIRD:  to
any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the NYUCC;
and

     

    FOURTH,
to the payment to or upon the order of the Grantor entitled thereto, or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.

     

    13.06.                      Surplus,
Deficiency.  Any surplus proceeds of any sale or other
disposition by the Agent of any Collateral remaining after discharge of the
Credit Agreements and after all Secured Obligations are paid in full and in cash
and any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the NYUCC
are paid in full shall be paid over to the Grantor entitled thereto, or to
whomever may be lawfully entitled to receive such surplus or as a court of
competent jurisdiction may direct, but prior to termination and discharge of the
Credit Agreements, such surplus proceeds may be retained by the Agent and held
as Collateral until termination and discharge of the Credit
Agreements.  Each Borrower and each Guarantor shall be and remain
liable for any deficiency.

     

    13.07.                      Information Related to the
Collateral.  If, during the continuance of an Event of Default,
the Agent determines to sell or otherwise transfer any Collateral, each Grantor
shall, and shall cause any Person controlled by it to, furnish to the Agent all
information the Agent may request that pertains or could pertain to the value or
condition of the Collateral or that would or might facilitate such sale or
transfer.  The Agent shall have the right, notwithstanding any
confidentiality obligation or agreement otherwise binding upon it, freely (but
not in violation of any law, including federal securities laws) to disclose such
information, and any and all other information (including confidential
information) pertaining in any manner to the Collateral or the assets,
liabilities, results of operations, business or prospects of any Secured
Creditors, freely to any Person that the Agent in good faith believes to be a
potential or prospective purchaser in such sale or transfer, without liability
for any disclosure, dissemination or use that may be made as to such information
by any such Person.

     

    13.08.                      Sale Exempt from
Registration.  The Agent shall be entitled at any such sale or
other transfer, if it deems it advisable to do so, to restrict the prospective
bidders or purchasers to Persons who will provide assurances satisfactory to the
Agent that the Collateral may be offered and sold to them without registration
under the Securities Act, and without registration or qualification under any
other applicable state or federal law.  Upon the consummation of any
such sale, the Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold.  The Agent may
solicit offers to buy the Collateral, or any part of it, from a limited number
of investors deemed by the Agent, in its good faith judgment or in good faith
reliance upon advice of its counsel, to meet the requirements to purchase
securities under Regulation D promulgated under the Securities Act (or any other
regulation of similar import).  If the Agent solicits such offers from
such investors, then the acceptance by the Agent of the highest offer obtained
from any of them shall be deemed to be a commercially reasonable method of
disposition of the Collateral.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    13.09.                      Rights and Remedies
Cumulative.  The rights provided for in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any other rights,
powers or privileges or remedies provided by law or in equity, or under any
other instrument, document or agreement.  The Agent may exercise and
enforce each right and remedy available to it either before or concurrently with
or after, and independently of, any exercise or enforcement of any other right
or remedy of the Agent or any other Secured Creditor against any Person or
property.  All such rights and remedies shall be cumulative, and no
one of them shall exclude or preclude any other.

     

    13.10.                      No Direct Enforcement by
Secured Creditors.  The Agent may freely exercise and enforce
any and all of its rights and remedies hereunder, for the benefit of the Secured
Creditors.  No Secured Creditor, other than the Agent, shall have any
independent right to collect, take possession of, foreclose against or otherwise
enforce the Security Interests granted hereby.

     

    Section
14.                                Standards
for Exercising Remedies.

     

    14.01.                      Commercially Reasonable
Manner.  To the extent that applicable law imposes duties on
the Agent to exercise remedies in a commercially reasonable manner, each Grantor
acknowledges and agrees that it is not commercially unreasonable for the Agent
(a) to fail to incur expenses reasonably deemed significant by the Agent to
prepare Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition or to
postpone any such disposition pending any such preparation or processing;
(b) to fail to obtain third party consents for access to Collateral to be
disposed of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of; (c) to fail to exercise
collection remedies against account debtors or other persons obligated on
Collateral or to remove any Lien on or any adverse claims against Collateral;
(d) to exercise collection remedies against account debtors and other
persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists; (e) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature; (f) to contact other persons,
whether or not in the same business as such Grantor, for expressions of interest
in acquiring all or any portion of the Collateral; (g) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the collateral is of a specialized nature; (h) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets; (i) to dispose of assets in
wholesale rather than retail markets; (j) to disclaim disposition
warranties; (k) to purchase insurance or credit enhancements to insure the
Agent against risks of loss, collection or disposition of Collateral or to
provide to the Agent a guaranteed return from the collection or disposition of
Collateral; or (l) to the extent deemed appropriate by the Agent, to obtain
the services of other brokers, investment bankers, consultants and other
professionals to assist the Agent in the collection or disposition of any of the
Collateral.  Each Grantor acknowledges that the purpose of this Section 14 is to
provide non-exhaustive indications of what actions or omissions by the Agent
would not be commercially unreasonable in the Agent’s exercise of remedies
against the Collateral and that other actions or omissions by the Agent shall
not be deemed commercially unreasonable solely on account of not being indicated
in this Section
14.  Without limiting the foregoing, nothing contained in this
Section 14
shall be construed to grant any rights to any Grantor or to impose any duties on
the Agent that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section
14.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    14.02.                      Standard of
Care.  The powers conferred on the Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers.  Except for the exercise of reasonable
care in the custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or to protect, preserve, vote or exercise any rights pertaining to
any Collateral.  The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of Collateral in its possession
if such Collateral is accorded treatment substantially equal to that which the
Agent accords its own property or if it selects, with reasonable care, a
custodian to hold such Collateral on its behalf.

     

    Section
15.                                Waivers
by Grantor; Obligations Absolute.

     

    15.01.                      Specific
Waivers.  Each Grantor waives demand, notice, protest, notice
of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description other than those required
pursuant to the Credit Agreements or any other Loan Documents to which such
Grantor is a party.

     

    15.02.                      Obligations
Absolute.  All rights of the Agent hereunder, the Security
Interest and all obligations of the Grantors hereunder shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Credit Agreement, any other Loan Document, any agreement with respect to any of
the Secured Obligations or any other agreement or instrument relating to any of
the foregoing, (b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other amendment
or waiver of or any consent to any departure from the Credit Agreement, any
other Loan Document, or any other agreement or instrument, (c) any exchange,
release or non-perfection of any Lien on other collateral, or any release or
amendment or waiver of or consent under or departure from or any acceptance of
partial payment thereon and or settlement, compromise or adjustment of any
Secured Obligation or of any guarantee, securing or guaranteeing all or any of
the Secured Obligations, or (d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Grantor in respect of
the Secured Obligations or this Agreement other than the prompt and complete
performance and payment in full of the Secured Obligations.

     

    Section
16.                                Marshalling.  The
Agent shall not be required to marshal any present or future collateral security
(including but not limited to this Agreement and the Collateral) for, or other
assurances of payment of, the Secured Obligations or any of them or to resort to
such collateral security or other assurances of payment in any particular order,
and all of its rights hereunder and in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising.  To the extent that it lawfully
may, each Grantor hereby agrees that it shall not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent’s rights under this Agreement or under any other instrument
creating or evidencing any of the Secured Obligations or under which any of the
Secured Obligations is outstanding or by which any of the Secured Obligations is
secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, each Grantor hereby irrevocably waives the benefits of all such
laws.

     

    Section
17.                                Interest.  Until
paid, all amounts due and payable by each Grantor hereunder shall be a debt
secured by the Collateral and shall bear, whether before or after

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    judgment,
interest at a rate per annum equal to the Default Rate, from the date of payment
by the Agent to the date reimbursed by such Grantor, and such interest shall be
payable by such Grantor to the Agent on demand.

     

    Section
18.                                Reinstatement.
The obligations of each Grantor pursuant to this Agreement shall continue to be
effective or automatically be reinstated, as the case may be, if at any time
payment of any of the Secured Obligations is rescinded or otherwise must be
restored or returned by the Agent or any other Secured Creditor upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of such
Grantor or any other obligor or otherwise, all as though such payment had not
been made.

     

    Section
19.                                Miscellaneous.

     

    19.01.                      Notices.  All
notices, requests and demands to or upon the Agent or any Grantor hereunder
shall be effected in the manner provided for in Section 10.2 of the
Credit Agreements.

     

    19.02.                      GOVERNING LAW; CONSENT TO
JURISDICTION. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW). ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH PARTY HERETO HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH
ABOVE.  EACH PARTY HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF NEW YORK.  EACH PARTY HERETO HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

     

    19.03.                      WAIVER OF JURY TRIAL,
ETC. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT,
ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN
CONNECTION WITH ANY OF THE FOREGOING, AND

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.

     

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

     

    19.05.                      Headings.  The
headings of each section of this Agreement are for convenience only and shall
not define or limit the provisions thereof.

     

    19.06.                      No Strict
Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement.  In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.

     

    19.07.                      Severability.  The
illegality or unenforceability of any provision of this Agreement or any
instrument or agreement required hereunder shall not in any way affect or impair
the legality or enforceability of the remaining provisions of this Agreement or
any instrument or agreement required hereunder.

     

    19.08.                      Survival of
Agreement. All representations, warranties and agreements made by or on
behalf of any Grantor or any other Loan Party in this Agreement and in the other
Loan Documents shall survive the execution and delivery hereof or thereof and
the making and repayment of the Loan.  In addition, notwithstanding
anything herein or under applicable law to the contrary, the provisions of this
Agreement and the other Loan Documents relating to indemnification or payment of
costs and expenses, including, without limitation, the provisions of Sections 3.1, 3.2,
3.3 and 10.5 of the Credit
Agreements, shall survive the payment in full of the Loan, the termination of
the Commitments and any termination of this Agreement or any of the other Loan
Documents.

     

    19.09.                      Fees and Expenses;
Indemnification.

     

    (a)           The
Grantors, jointly and severally, agree to pay upon demand the amount of any and
all reasonable expenses, including the fees, disbursements and other charges of
counsel and of any experts or agents, which (i) any Secured Creditor may incur
in connection with (x) collecting against any Grantor under the guarantee
contained in Section
2 or otherwise enforcing or preserving any rights under this Agreement
and the other Loan Documents, (y) the exercise, enforcement or protection of any
of the rights of such Secured Creditor hereunder or (z) the failure of any
Grantor to perform or observe any of the provisions hereof, and (ii) the Agent
may incur in connection with (x) the administration of this Agreement (including
the customary fees and charges of such Secured Creditor for any audits conducted
by it or on its behalf with respect to the accounts receivable or inventory) or
(y) the custody or preservation of, or the sale of, collection from or other
realization upon any of the Collateral.

     

    (b)           Each
Grantor agrees to pay, and to save the Secured Creditors harmless from, any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement to the extent any Borrower would be required to do so pursuant
to Section 10.5
of the Credit Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    (d)           Each
Grantor agrees that the provisions of Section 3.1 of the
Credit Agreements are hereby incorporated herein by reference, mutatis mutandis,
and each Secured Creditor shall be entitled to rely on each of them as if they
were fully set forth herein.

     

    19.10.                      Binding Effect; Several
Agreement. This Agreement is
binding upon each Grantor and the Secured Creditors and their respective
successors and permitted (in accordance with Section 10.8.1 of the
Credit Agreements) assigns, and shall inure to the benefit of the Grantors, the
Secured Creditors and their respective successors and permitted (in accordance
with Section
10.8.1 of the Credit Agreements) assigns, except that no Grantor shall
have any right to assign or transfer its rights or obligations hereunder or any
interest herein, except as specifically permitted by the Credit Agreements,
without the prior written consent of the Agent (and any such assignment or
transfer shall be void).

     

    19.11.                      Waivers;
Amendment.

     

    (a)           No
failure or delay of the Agent in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.  The rights and remedies of the
Secured Creditors hereunder and of the Secured Creditors under the Credit
Agreements and other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have.  No waiver of any
provisions of this Agreement or consent to any departure by any Grantor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given.  No notice
to or demand on any Grantor in any case shall entitle such or any other Grantor
to any other or further notice or demand in similar or other
circumstances.

     

    (b)           Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Agent and each affected Grantor; provided, that any
provision of this Agreement imposing obligations on any Grantor may be waived by
the Agent in a written instrument executed by the Agent in accordance with Section 10.1 of the
Credit Agreements.

     

    19.12.                      Set-Off.  Each
Grantor hereby irrevocably authorizes each Secured Creditor at any time and from
time to time while an Event of Default shall have occurred and be continuing,
without notice to such Grantor or any other Grantor, any such notice being
expressly waived by each Grantor, to set-off and appropriate and apply any and
all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Secured Creditor to or for the
credit or the account of such Grantor, or any part thereof in such amounts as
such Secured Creditor may elect, against and on account of the obligations and
liabilities of such Grantor to such Secured Creditor hereunder and claims of
every nature and description of such Secured Creditor against such Grantor, in
any currency, whether arising hereunder, under the Credit Agreements, any other
Loan Document or otherwise, as such Secured Creditor may elect,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    whether
or not any Secured Creditor has made any demand for payment and although such
obligations, liabilities and claims may be contingent or
unmatured.  Each Secured Creditor shall notify such Grantor promptly
of any such set-off and the application made by such Secured Creditor of the
proceeds thereof, provided that the failure to give such notice shall not affect
the validity of such set-off and application.  The rights of each
Secured Creditor under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such Secured
Creditor may have.

     

    19.13.                      Integration.  This
Agreement and the other Loan Documents constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof (except for the Fee Letter).  Without limitation of the
foregoing, this Agreement supersedes and replaces the Amended and Restated
Guarantee and Collateral Agreement without any break in the continuity of the
liabilities of the Grantors incurred thereunder or in the Liens granted pursuant
thereto, subject to any modifications of such liabilities or Liens pursuant
hereto.

     

    19.14.                      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)           no
Secured Creditor 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
Secured Creditors, 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
Creditors or among the Grantors and the Secured Creditors.

     

    19.15.                      Additional Grantors and
Guarantors.  Each Subsidiary of each Borrower that is required
to become a party to this Agreement pursuant to Section 6.8 of either
Credit Agreement shall become a Grantor and Guarantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex 1 hereto.

     

    19.16.                      Releases.

     

    (a)           Notwithstanding
anything to the contrary contained in either Credit Agreement, herein or in any
other Loan Document, upon request of Borrower in connection with any Disposition
of Property permitted by the Loan Documents, the Agent shall (without notice to
or vote or consent of any other Secured Creditor) take such actions as shall be
required to release the Security Interest in any Collateral being Disposed of in
such Disposition, to the extent necessary to permit consummation of such
Disposition in accordance with the Loan Documents, provided that the Borrower
shall have delivered to the Agent, at least five (5) Business Days prior to the
date of the proposed release, a written request for release identifying the
relevant Collateral being Disposed of in such Disposition and the terms of such
Disposition in reasonable detail, including the date thereof, the price thereof
and any estimated expenses in connection therewith, together with a
certification by Borrower stating that such transaction is in compliance with
the

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Credit
Agreement and the other Loan Documents and that the proceeds of such Disposition
will be applied in accordance with the applicable Credit Agreement and the other
Loan Documents.

     

    (b)           At
the request and sole expense of Borrower, a Subsidiary Guarantor shall be
released from its obligations hereunder in the event that all the capital stock
or other equity interests of such Subsidiary Guarantor shall be Disposed of in a
transaction permitted by the applicable Credit Agreement; provided that such
Borrower shall have delivered to the Agent, at least five (5) Business Days
prior to the date of the proposed release, a written request for release
identifying the relevant Subsidiary Guarantor and the terms of the Disposition
in reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by such Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents and that the Proceeds of such Disposition will be applied in
accordance therewith.

     

    19.17.                      Intercompany
Debt.

     

    (a)           Each
Grantor hereby agrees that any intercompany Debt or other intercompany payables
or receivables directly or indirectly made by or owed to such Grantor by any
other Grantor (collectively, “Intercompany Debt”),
of whatever nature at any time outstanding shall be subordinate and subject in
right of payment to the prior payment in full in cash of the Borrower
Obligations.  Each Grantor hereby agrees that following a single
written notice to either Borrower, such Grantor will not, while any Event of
Default is continuing, accept any payment, including by offset, on any
Intercompany Debt until all Secured Obligations have been paid in full and the
Commitments have been terminated, in each case, except with the prior written
consent of the Agent.

     

    (b)           In
the event that any payment on any Intercompany Debt shall be received by a
Grantor other than as permitted by this Section 19.17 before
all Secured Obligations have been paid in full, the Commitments have been
terminated pursuant to each Credit Agreement, such Grantor shall receive such
payments and hold the same in trust for, segregate the same from its own assets
and shall immediately pay over to, the Agent for the benefit of the Agent and
Lenders all such sums to the extent necessary so that the Agent and the Lenders
shall have been paid in full, in cash, all Borrower Obligations owed or which
may become owing.

     

    (c)           Upon
any payment or distribution of any assets of any Grantor of any kind or
character, whether in cash, property or securities by set-off, recoupment or
otherwise, to creditors in any liquidation or other winding-up of such Grantor
or in the event of any case, proceeding or other action described in Section 8.1.3 of
either Credit Agreement, the Agent and Lenders shall first be entitled to
receive payment in full in cash, in accordance with the terms of the Borrower
Obligations and of this Agreement, of all amounts payable under or in respect of
such Borrower Obligations, before any payment or distribution is made on, or in
respect of, any Intercompany Debt, in any such case, proceeding or other action,
any distribution or payment, to which the Agent or any Lender would be entitled
except for the provisions hereof shall be paid by such Grantor, or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution directly to the Agent (for the benefit of
the Agent and the Lenders) to the extent necessary to pay all such Borrower
Obligations in full in cash, after giving effect to any concurrent payment or
distribution to the Agent and Lenders (or to the Agent for the benefit of the
Agent and Lenders).

     

    [Remainder
of Page Intentionally Left Blank; Signature Pages Follow]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    GRANTORS:

    

    

    EARTH
BIOFUELS, INC.

    

    

    By: /s/ Dennis G. McLaughlin, III    

    Name:  Dennis
G. McLaughlin, III

    Title: Chief
Executive Officer

    

    

    DURANT BIOFUELS,
LLC

    

    

    By: /s/ Dennis G. McLaughlin, III    

    Name:  Dennis
G. McLaughlin, III

    Title: Chief
Executive Officer

    

    

    

    

     

    
      
        
          Guarantee
and Collateral Agreement Signature Pages

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Accepted:                      as
to Sections 9.02 and 9.03

     

    FOURTH
THIRD LLC,

    as
Agent

     

    
      	
               
      

            	
              By:  /s/ Seth R. Taube         
      

            

    

    
      	
               
      

            	
              Name:
      Seth R. Taube

            

    

    
      	
               
      

            	
              Title:  Authorized
      Signatory

            

    

     

    

    
      
        
          Guarantee
and Collateral Agreement Signature Pages

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
7.07(a)

    Principal
Deposit Accounts

    

    
      	
              Grantor

            	
              Account Bank

            	
              Account
Number

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
A to Guarantee and Collateral Agreement

     

    PERFECTION
CERTIFICATE

     

    

    [REDACTED]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
B to Guarantee and Collateral Agreement

    

    SUPPLEMENT
TO GUARANTEE AND COLLATERAL AGREEMENT

    (COPYRIGHTS)

    

    WHEREAS,
[                        ],
a
[               ]
corporation (herein referred to as “Grantor”), having an
address at
[                          ],
has adopted, used and is using the copyrights listed on the annexed
Schedule 1-A, which copyrights are registered in the United States
Copyright Office (the “Copyrights”);

     

    WHEREAS, the Grantor has
entered into a Guarantee and Collateral Agreement (said Guarantee and Collateral
Agreement, as it may hereafter be amended or otherwise modified from time to
time being the “Security Agreement”,
the terms defined therein and not otherwise defined herein being used herein as
therein defined) in favor of the Secured Party; and

     

    WHEREAS, pursuant to the Security
Agreement, the Grantor has granted to Secured Party a security interest in all
right, title and interest of the Grantor in and to the Copyrights, and the
registrations and recordings thereof in the United States Copyright Office or
any other country or any political subdivision thereof, all whether now or
hereafter owned or licensable by the Grantor and all extensions or renewals
thereof and all Copyright Licenses, and all proceeds of all of the foregoing,
including, without limitation, any claims by the Grantor against third parties
for infringement thereof (the “Collateral”), to
secure the payment and performance of the Secured Obligations.

     

    NOW, THEREFORE, for good and
valuable consideration, receipt of which is hereby acknowledged, the Grantor
does hereby further confirm, and put on the public record, its grant to Secured
Party of a security interest in and mortgage on the Collateral to secure the
prompt payment and performance of the Secured Obligations.

     

    The
Grantor does hereby further acknowledge and affirm that the rights and remedies
of Secured Party with respect to the assignment of and grant of a security
interest in the Collateral made hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are hereby incorporated herein by
reference as if fully set forth herein.

     

    Secured
Party’s address is [___________________],
Attention:  ______________.

     

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the Grantor has duly
executed or caused this Agreement to be duly executed as of
[          ].

     

    [                             ]

     

    By:           ............................................

    Name:

    Title:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    STATE
OF                                           )

    )
ss.:

    COUNTY
OF                                           )

     

    On this
____ day of __________, ____, before me personally appeared __________________,
to me known, who, being by me duly sworn, did depose and say that he/she resides
at _________________________________________ and that he/she is _______________
of the Grantor; that he/she knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was affixed pursuant
to authority of the Board of Directors of said corporation and that he/she
signed his/her name thereto in his/her capacity as an authorized officer of said
corporation pursuant to such authority.

     

    ____________________________

    Notary
Public

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
1-A to the SUPPLEMENT TO GUARANTEE

    AND
COLLATERAL AGREEMENT

    (COPYRIGHTS)

    

    

    
      	
              Copyright

            	 
      	
              Registration
      Date

            	 
      	
              Registration
      No.

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
C to Guarantee and Collateral Agreement

     

    SUPPLEMENT
TO GUARANTEE AND COLLATERAL AGREEMENT

     

    (PATENTS)

     

    WHEREAS,
[                        ],
a
[               ]
corporation (herein referred to as “Grantor”), having an
address at
[                          ],
owns the letters patent and/or applications for letters patent of the United
States of America more particularly described on Schedule 1-A annexed hereto as
part hereof (the “Patents”);

     

    WHEREAS, the Grantor has
entered into a Guarantee and Collateral Agreement (said Guarantee and Collateral
Agreement, as it may hereafter be amended or otherwise modified from time to
time being the “Security Agreement”,
the terms defined therein and not otherwise defined herein being used herein as
therein defined) in favor of the Secured Party; and

     

    WHEREAS, pursuant to the
Security Agreement, the Grantor has granted to Secured Party a security interest
in all right, title and interest of Grantor in and to the Patents, together with
all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings 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, all
whether now or hereafter owned or licensable by Grantor, and all reissues,
divisions, continuations, continuations-in-part, term restorations or extensions
thereof, all Patent Licenses and all proceeds of all of the foregoing,
including, without limitation, any claims by Grantor against third parties for
infringement thereof for the full term of the Patents (the “Collateral”), to
secure the prompt payment and performance of the Secured
Obligations.

     

    NOW, THEREFORE, for good and
valuable consideration, receipt of which is hereby acknowledged, the Grantor
does hereby further confirm, and put on the public record, its grant to Secured
Party of a security interest in and mortgage on the Collateral to secure the
prompt payment and performance of the Secured Obligations.

     

    The
Grantor does hereby further acknowledge and affirm that the rights and remedies
of Secured Party with respect to the assignment of and grant of a security
interest in the Collateral made hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are hereby incorporated herein by
reference as if fully set forth herein.

     

    Secured
Party’s address is[________________________],
Attention:  ______________.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the Grantor has duly
executed or caused this Agreement to be duly executed as of
[          ].

     

    [                            ]

     

    By:           ............................................

    Name:

    Title:

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    STATE
OF                                           )

    )
ss.:

    COUNTY
OF                                           )

     

    On this
____ day of ____________, before me personally appeared ________________, to me
known, who, being by me duly sworn, did depose and say that he/she resides at
_________________________________________ and that he/she is _______________ of
the Grantor; that he/she knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was affixed pursuant
to authority of the Board of Directors of said corporation and that he/she
signed his/her name thereto in his/her capacity as an authorized officer of said
corporation pursuant to such authority.

     

    ____________________________

    Notary
Public

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
1-A to the SUPPLEMENT TO GUARANTEE

    AND
COLLATERAL AGREEMENT

    (PATENTS)

    

    

    
      	
              Title

            	 
      	
              Date
      Filed

              or
      Granted

            	 
      	
              Serial
      No. or

              Patent
      No.

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
D to Guarantee and Collateral Agreement

     

    SUPPLEMENT
TO GUARANTEE AND COLLATERAL AGREEMENT

     

    (TRADEMARKS)

     

    WHEREAS,
[                        ],
a
[               ]
corporation (herein referred to as “Grantor”), having an
address at
[                          ],
(1) has adopted, used and is using, or (2) has intended to use and
filed an application indicating that intention, but has not yet filed an
allegation of use under Section l(c) or l(d) of the Trademark Act, or (3)
has filed an application based on an intention to use and has since used and has
filed an allegation of use under Section l(c) or l(d) of the Trademark Act,
the trademarks, trade names, trade styles and service marks listed on the
annexed Schedule 1-A, which trademarks, trade names, trade styles and service
marks are registered, or for which applications for registration have been filed
in the United States Patent and Trademark Office (the “Trademarks”);
and

     

    WHEREAS, the Grantor has
entered into a Guarantee and Collateral Agreement (said Guarantee and Collateral
Agreement, as it may hereafter be amended or otherwise modified from time to
time being the “Security Agreement”,
the terms defined therein and not otherwise defined herein being used herein as
therein defined) in favor of the Secured Party; and

     

    WHEREAS, pursuant to the
Security Agreement, the Grantor has granted to Secured Party a security interest
in all right, title and interest of the Grantor in and to the Trademarks,
together with all prints and labels on which said Trademarks have appeared or
appear, designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, and the goodwill of the business symbolized by
the Trademarks and the applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or agency of the
United States of America, any State thereof, or any other country or any
political subdivision thereof, all whether now or hereafter owned or licensable
by Grantor, and all reissues, extensions or renewals thereof, all Trademark
Licenses and all proceeds of all of the foregoing, including, without
limitation, any claims by Grantor against third parties for infringement thereof
(the “Collateral”), to
secure the payment and performance of the Secured Obligations.

     

    NOW, THEREFORE, for good and
valuable consideration, receipt of which is hereby acknowledged, the Grantor
does hereby further confirm, and put on the public record, its grant to Secured
Party of a security interest in and mortgage on the Collateral to secure the
prompt payment and performance of the Secured Obligations.

     

    The
Grantor does hereby further acknowledge and affirm that the rights and remedies
of Secured Party with respect to the grant of, security interest in and mortgage
on the Collateral made hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are hereby incorporated herein by
reference as if fully set forth herein.

     

    Secured
Party’s address is [___________________________],
Attention:  ______________.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the Grantor has duly
executed or caused this Agreement to be duly executed as of
[          ].

    

    [                              ]

     

    By:           ............................................

    Name:

    Title:

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    STATE
OF                                           )

    )
ss.:

    COUNTY
OF                                           )

     

    On this
____ day of _________, ____, before me personally appeared ___________________,
to me known, who, being by me duly sworn, did depose and say that he/she resides
at _________________________________________ and that he/she is _______________
of the Grantor; that he/she knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was affixed pursuant
to authority of the Board of Directors of said corporation and that he/she
signed his/her name thereto in his/her capacity as an authorized officer of said
corporation pursuant to such authority.

     

    ____________________________

    Notary
Public

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
1-A to the SUPPLEMENT TO GUARANTEE

    AND
COLLATERAL AGREEMENT

    (TRADEMARKS)

    

    

    
      	
              Trademark

            	 
      	
              Application
      or Registration Date

            	 
      	
              Application
      Serial No. or Registration No.

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
E to Guarantee and Collateral Agreement

     

    FORM
OF CONTROL AGREEMENT

     

    This
CONTROL AGREEMENT (as amended, supplemented or otherwise modified from time to
time, this “Control
Agreement”) dated as of _______________, 200__, is made by and among
_______________, a __________ corporation (the “Grantor”), Fourth
Third LLC, as Agent (in such capacity, the “Agent”) for the
Secured Creditors (as defined in the Guarantee and Collateral Agreement referred
to below), and ____________, a ____________ (the “Depository
Bank”).

     

    WHEREAS,
the Depository Bank maintains for the Grantor a deposit account, Account No.
_________________ (the “Pledged Account”), in
the name of the Grantor.

     

    WHEREAS,
the Grantor has granted to the Agent for the benefit of the Secured Creditors a
security interest in the Pledged Account, all claims arising therefrom, all
funds now or hereafter therein, all amounts now or hereafter credited thereto
and all Proceeds thereof (collectively, the “Collateral”) pursuant
to a Guarantee and Collateral Agreement, dated as of June __, 2008, (as amended,
supplemented, replaced or otherwise modified from time to time, the “Guarantee and Collateral
Agreement”), by the Grantor and the other persons party thereto as
grantors in favor of the Agent.

     

    WHEREAS,
the following terms which are defined in Article 9 of the Uniform Commercial
Code in effect in the State of New York on the date hereof (the “UCC”) are used herein
as so defined (whether or not such terms are capitalized in the
UCC):  Bank, Bank’s Jurisdiction, Control, Deposit Account and
Proceeds.

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

     

    SECTION
1.  Notice
of Security Interest.  The Grantor, the Agent and the
Depository Bank are entering into this Control Agreement to perfect, and to
confirm the priority of, the Agent’s security interest in the
Collateral.  The Depository Bank acknowledges that this Control
Agreement constitutes written notification to the Depository Bank of the Agent’s
security interest in the Collateral.  The Depository Bank agrees to
promptly make all necessary entries or notations in its books and records to
reflect the Agent’s security interest in the Collateral.  The
Depository Bank acknowledges that the Agent has control over the Pledged
Account, all claims arising therefrom, all funds now or hereafter therein all
amounts now or hereafter credited thereto and all Proceeds thereof.

     

    SECTION
2.  Collateral; Pledged
Account.  (a) The Grantor agrees with the Agent and the
Depository Bank that the Grantor will direct that, all funds transferred by the
Grantor to the Depository Bank, deposited by the Grantor with the Depository
Bank, or otherwise held by the Depository Bank for the Grantor, be credited to
the Pledged Account, another deposit account with the Depository Bank subject to
a Control Agreement or, in accordance with Section 7.07 of the
Guarantee and Collateral Agreement, a zero balance payroll or similar
disbursement account.

     

    (b)           The
Depository Bank hereby represents and warrants to, and agrees with the Grantor
and the Agent, that (i) the Depository Bank is a Bank, (ii) the Pledged Account
is and shall remain a Deposit Account, (iii) the Bank’s Jurisdiction is, and
during the term of this

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Control
Agreement shall remain, the State of New York and (iv) Schedule 1 contains a
true and complete statement of the Pledged Account and credit balance therein as
of the date hereof.  The Depository Bank will not, so long as this
Control Agreement is in effect, enter into any agreement with any other person
that provides Control over the Pledged Account to such person.  The
Depository Bank will not advance credit to the Grantor secured by the Collateral
(other than the fees and charges referred to in Section 7).

     

    (c)           The
Agent hereby instructs the Depository Bank, and the Depository Bank hereby
confirms and agrees that, unless the Agent shall otherwise direct the Depository
Bank in writing, all funds transferred by the Grantor to the Depository Bank,
deposited by the Grantor with the Depository Bank, or otherwise held by the
Depository Bank for the Grantor shall be credited to the Pledged Account,
another deposit account with the Depository Bank subject to a Control Agreement
or a zero balance payroll or similar disbursement account with the Depository
Bank.

     

    SECTION
3.  Control.  The
Depository Bank hereby agrees, upon written direction from the Agent and without
further consent from the Grantor, (a) to comply with all instructions originated
by the Agent directing disposition of the funds in the Pledged Account and all
other instructions regarding the Pledged Account originated by the Agent and to
the extent directed by the Agent and to pay over to the Agent all proceeds
without any setoff or deduction, and (b) except as otherwise directed by the
Agent, not to comply with the instructions or directions of any kind originated
by the Grantor or any other person regarding the Pledged Account or disposition
of the funds therein; provided, however, that
notwithstanding the foregoing provisions of this paragraph (b), the Depository
Bank may comply with instructions regarding disposition of funds in the Pledged
Account originated by the Grantor except during any period beginning at the time
that the Depository Bank has received from the Agent a notice, substantially in
the form of Exhibit
1 hereto (a “Notice of Default”)
and ending at the time that the Depository Bank has received from the Agent a
written notice withdrawing such Notice of Default.

     

    SECTION
4.  Other
Agreements; Termination.  The Depository Bank shall
simultaneously send to the Agent copies of all notices given and statements
rendered pursuant to the Pledged Account.  The Depository Bank shall
notify promptly the Agent and the Grantor if any other person asserts any lien,
encumbrance, claim (including any adverse claim) or security interest in or
against any of the Collateral.  As long as the Guarantee and
Collateral Agreement remains in effect, neither the Grantor nor the Depository
Bank shall terminate the Pledged Account without thirty (30) days’ prior written
notice to the other party and the Agent.  In the event of any conflict
between the provisions of this Control Agreement and any other agreement
governing the Pledged Account or the Collateral, the provisions of this Control
Agreement shall control.

     

    SECTION
5.  Protection of Depository
Bank.  The Depository Bank may rely and shall be protected in
acting upon any notice, instruction or other communication that it reasonably
believes to be genuine and authorized.

     

    SECTION
6.  Termination.  This
Control Agreement shall terminate automatically upon receipt by the Depository
Bank of written notice executed by the Agent terminating this
Agreement.

     

    SECTION
7.  Waiver;
Priority of Agent’s Interests.  Other than with respect to its
fees and customary charges with respect to the Pledged Account, the Depository
Bank hereby waives

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    its right
to set off any obligations of the Grantor to the Depository Bank against any or
all of the Collateral and hereby agrees that any and all liens, encumbrances,
claims or security interests which the Depository Bank may have against the
Collateral, either now or in the future in connection with the Pledged Account
(other than in respect of such fees and customary charges) are and shall be
subordinate and junior to the prior payment in full in immediately available
funds of all obligations of the Grantor now or hereafter existing under the
Credit Agreements, the Guarantee and Collateral Agreement, and all other
documents related thereto, whether for principal, interest (including, without
limitation, interest as provided in the Credit Agreements, whether or not such
interest accrues after the filing of such petition for purposes of the federal
Bankruptcy Code or is an allowed claim in such proceeding), indemnities, fees,
premiums, expenses or otherwise.  Except for the foregoing and claims
and interests of the Agent and the Grantor in the Collateral and the rights of
the Depository Bank therein, the Depository Bank does not know of any claim to
or security interest or other interest in the Collateral.

     

    SECTION
8.  Exculpation and
Indemnity.  The Depository Bank shall not be liable, except for
its own gross negligence or willful misconduct or its breach of the express
terms of this Control Agreement and, except with respect to claims based upon
such gross negligence or willful misconduct or any such breach that are
successfully asserted against the Depository Bank, the Grantor shall indemnify
and hold harmless the Depository Bank (and any successor Depository Bank) from
and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys’ fees and disbursements arising out of
and in connection with this Control Agreement.

     

    SECTION
9.  Notices.  All
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered, or three days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when received, to the Grantor’s and the Agent’s
addresses as set forth in the Guarantee and Collateral Agreement, and to the
Depository Bank’s address as set forth below, or to such other address as any
party may give to the others in writing for such purpose:

     

    [Name of
Depository Bank]

     

    [Address
of Depository Bank]

     

    Attention:___________________

     

    Telephone:  (  )
_____________________

     

    Telecopy:  (  )
_____________________

     

    SECTION
10.  Amendments in
Writing.  None of the terms or provisions of this Control
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the parties hereto.

     

    SECTION
11.  Entire
Agreement.  This Control Agreement and the Guarantee and
Collateral Agreement constitute the entire agreement and supersede all other
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.

     

    SECTION
12.  Execution in
Counterparts.  This Control Agreement may be executed in any
number of counterparts (including by telecopy), each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SECTION
13.  Successors and
Assigns.  This Control Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Grantor may not assign, transfer or delegate any of its
rights or obligations under this Control Agreement without the prior written
consent of the Agent.

     

    SECTION
14.  Governing Law and
Jurisdiction.  This Control Agreement has been delivered to and
accepted by the Agent and will be deemed to be made in the State of New
York.  THIS CONTROL AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.  Each of the parties hereto submits for itself and its property
in any legal action or proceeding relating to this Control Agreement, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof.

     

    SECTION
15.  WAIVER
OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS CONTROL AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.

     

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

     

    
      	
               
      

            	
              [NAME
      OF GRANTOR]

            

    

     

    By:___________________________

    Name:

    Title:

     

    
      	
               
      

            	
              FOURTH
      THIRD LLC, as

            

    

    
      	
               
      

            	
              Agent

            

    

     

    By:___________________________

    Name:

    Title:

     

    
      	
               
      

            	
               [NAME
      OF DEPOSITORY BANK]

            

    

     

    By:___________________________

    Name:

    Title:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Exhibit
      1 to Control Agreement

            

    

    

    
      	
               
      

            	
              [Date]

            

    

    

    

    To:  [Name
of Depository Bank

    Address of Depository
Bank]

    

    Attention:

    Telecopy:

    

    Dear_______;

    

    We refer
to the Control Agreement, dated _______ (as heretofore amended, modified or
supplemented, the “Control Agreement”)
by and among [Name of Depository Bank,] [name of Grantor] and
us.  Except as otherwise provided herein, terms defined in the Control
Agreement, when used herein, shall have the respective meanings therein
provided.

    

    This
constitutes a Notice of Default under and as such term is defined in the Control
Agreement.  Until the Depository Bank receives a written notice from
us withdrawing this Notice of Default, the Depository Bank shall not comply with
any instructions regarding disposition of funds in the Pledged
Account.

    

    Very
truly yours,

    

    FOURTH
THIRD LLC,

    as
Agent

    

    

    By:_______________________

        Name:

        Title:

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
F to Guarantee and Collateral Agreement

     

    FORM
OF CONTROL AGREEMENT

     

    This
CONTROL AGREEMENT (as amended, supplemented or otherwise modified from time to
time, this “Control
Agreement”) dated as of ______________, 200__ is made by and among
_______________, a __________ corporation (the “Grantor”), Fourth
Third LLC, as Agent (in such capacity, the “Agent”) for the
Secured Creditors (as defined in the Guarantee and Collateral Agreement referred
to below), and ____________, a ____________ corporation (the “Issuer”).

     

    WHEREAS,
the Grantor has granted to the Agent for the benefit of the Secured Creditors a
security interest in the uncertificated securities of the Issuer owned by the
Grantor from time to time (collectively, the “Pledged Securities”),
and all additions thereto and substitutions and Proceeds thereof (collectively,
with the Pledged Securities, the “Collateral”) pursuant
to a Guarantee and Collateral Agreement, dated as of June __, 2008 (as amended,
supplemented, replaced or otherwise modified from time to time, the “Guarantee and
Collateral Agreement”), by the
Grantor and the other persons party thereto as grantors in favor of the
Agent.

     

    WHEREAS,
the following terms which are defined in Articles 8 and 9 of the Uniform
Commercial Code in effect in the State of New York on the date hereof (the
“UCC”) are used
herein as so defined (whether or not such terms are capitalized in the
UCC):  Adverse Claim, Control, Instruction, Issuer’s Jurisdiction,
Proceeds and Uncertificated Security.

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

     

    SECTION
1.  Notice
of Security Interest.  The Grantor, the Agent and the Issuer
are entering into this Control Agreement to perfect, and to confirm the priority
of, the Agent’s security interest in the Collateral.  The Issuer
acknowledges that this Control Agreement constitutes written notification to the
Issuer of the Agent’s security interest in the Collateral.  The Issuer
agrees to promptly make all necessary entries or notations in its books and
records to reflect the Agent’s security interest in the Collateral and, upon
request by the Agent, to register the Agent as the registered owner of any or
all of the Pledged Securities.  The Issuer acknowledges that the Agent
has control over the Collateral.

     

    SECTION
2.  Collateral.  The
Issuer hereby represents and warrants to, and agrees with the Grantor and the
Agent that (i) the terms of any limited liability company interests or
partnership interests included in the Collateral from time to time shall
expressly provide that they are securities governed by Article 8 of the Uniform
Commercial Code in effect from time to time in the State of [__________], (ii)
the Pledged Securities are Uncertificated Securities, (iii) the Issuer’s
Jurisdiction is, and during the term of this Control Agreement shall remain, the
State of [____________], (iv) Schedule 1 contains a
true and complete description of the Pledged Securities as of the date hereof
and (v) except for the claims and interests of the Agent and the Grantor in the
Collateral, the Issuer does not know of any claim to or security interest or
other interest in the Collateral.

     

    SECTION
3.  Control.  The
Issuer hereby agrees, upon written direction from the Agent and without further
consent from the Grantor, (a) to comply with all Instructions and directions of
every kind originated by the Agent concerning the Collateral, to liquidate or
otherwise dispose of

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    the
Collateral as and to the extent directed by the Agent and to pay over to the
Agent all Proceeds of the Collateral without any setoff or deduction, and (b)
except as otherwise directed by the Agent, not to comply with the Instructions
or directions of any kind originated by the Grantor or any other person with
respect to the Collateral.

     

    SECTION
4.  Other
Agreements.  The Issuer shall notify promptly the Agent and the
Grantor if any other person asserts any lien, encumbrance, claim (including any
adverse claim) or security interest in or against any of the
Collateral.  In the event of any conflict between the provisions of
this Control Agreement and any other agreement governing the Pledged Securities
or the Collateral, the provisions of this Control Agreement shall
control.

     

    SECTION
5.  Protection of
Issuer.  The Issuer may rely and shall be protected in acting
upon any notice, instruction or other communication that it reasonably believes
to be genuine and authorized.

     

    SECTION
6.  Termination.  This
Control Agreement shall terminate automatically upon receipt by the Issuer of
written notice executed by the Agent terminating this Agreement.

     

    SECTION
7.  Notices.  All
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered, or three days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when received, to the Grantor’s and the Agent’s
addresses as set forth in the Guarantee and Collateral Agreement, and to the
Issuer’s address as set forth below, or to such other address as any party may
give to the others in writing for such purpose:

     

    [Name of
Issuer]

     

    [Address
of Issuer]

     

    Attention:
______________________

     

    Telephone:  (  )
__________________

     

    Telecopy:  (  )
___________________

     

    SECTION
8.  Amendments in
Writing.  None of the terms or provisions of this Control
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the parties hereto.

     

    SECTION
9.  Entire
Agreement.  This Control Agreement and the Guarantee and
Collateral Agreement constitute the entire agreement and supersede all other
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.

     

    SECTION
10.  Execution in
Counterparts.  This Control Agreement may be executed in any
number of counterparts (including by telecopy), each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

     

    SECTION
11.  Successors and
Assigns.  This Control Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Grantor may not assign, transfer or delegate any of its
rights or obligations under this Control Agreement without the prior written
consent of the Agent.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SECTION
12.  Governing Law and
Jurisdiction.  This Control Agreement has been delivered to and
accepted by the Agent and will be deemed to be made in the State of New
York.  THIS CONTROL AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.  Each of the parties hereto submits for itself and its property
in any legal action or proceeding relating to this Control Agreement, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof.

     

    SECTION
13.  WAIVER
OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS CONTROL AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.

     

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

     

    
      	
               
      

            	
              [NAME
      OF GRANTOR]

            

    

     

    By:___________________________

    Name:

    Title:

     

    
      	
               
      

            	
              FOURTH
      THIRD LLC, as

            

    

    
      	
               
      

            	
              Agent

            

    

     

    By:___________________________

    Name:

    Title:

    

     

    
      	
               
      

            	
              [NAME
      OF ISSUER]

            

    

     

    By:___________________________

    Name:

    Title:

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
G to Guarantee and Collateral Agreement

     

    FORM
OF CONTROL AGREEMENT

     

    This
CONTROL AGREEMENT (as amended, supplemented or otherwise modified from time to
time, this “Control
Agreement”) dated as of ______________, 200__, is made by and among
_______________, a __________ corporation (the “Grantor”), Fourth
Third LLC, as Agent (in such capacity, the “Agent”) for the
Secured Creditors (as defined in the Guarantee and Collateral Agreement referred
to below), and ____________, a ____________ corporation (the “Broker”).

     

    WHEREAS,
the Broker maintains for the Grantor a securities account,
Account No. _________________ (the “Pledged Account”), in
the name of the Grantor.

     

    WHEREAS,
the Grantor has granted to the Agent for the benefit of the Secured Creditors a
security interest in the Pledged Account, the financial assets and any free
credit balance carried therein, all security entitlements with respect thereto,
and all additions thereto and substitutions and Proceeds thereof (collectively,
the “Collateral”) pursuant
to a Guarantee and Collateral Agreement, dated as June __, 2008 (as amended,
supplemented, replaced or otherwise modified from time to time, the “Guarantee and Collateral
Agreement”), by the Grantor and the other persons party thereto as
grantors in favor of the Agent.

     

    WHEREAS,
the following terms which are defined in Articles 8 and 9 of the Uniform
Commercial Code in effect in the State of New York on the date hereof (the
“UCC”) are used
herein as so defined (whether or not such terms are capitalized in the
UCC):  Adverse Claim, Commodity Account, Commodity Contract, Control,
Entitlement Order, Financial Asset, Investment Property, Proceeds, Securities
Account, Securities Intermediary, Securities Intermediary’s Jurisdiction and
Security Entitlement.

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

     

    SECTION
1.  Notice
of Security Interest.  The Grantor, the Agent and the Broker
are entering into this Control Agreement to perfect, and to confirm the priority
of, the Agent’s security interest in the Collateral.  The Broker
acknowledges that this Control Agreement constitutes written notification to the
Broker of the Agent’s security interest in the Collateral.  The Broker
agrees to promptly make all necessary entries or notations in its books and
records to reflect the Agent’s security interest in the
Collateral.  The Broker acknowledges that the Agent has control over
the Pledged Account, all Financial Assets contained therein from time to time,
and all Security Entitlements with respect thereto.

     

    SECTION
2.  Collateral; Pledged
Account.  (a) The Grantor hereby agrees with the Agent and the
Broker that that Grantor shall direct that all Investment Property (other than
any Commodity Contract or Commodity Account) held by the Broker for the Grantor
be credited to the Pledged Account or another securities account subject to a
Control Agreement maintained with the Broker.

     

    (b)           The
Broker hereby represents and warrants to, and agrees with the Grantor and the
Agent that (i) the Broker is a Securities Intermediary with respect to the
Grantor and the Pledged Account is a Securities Account, (ii) all assets,
property and items from time to time

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    carried
in the Pledged Account, including, without limitation, any Investment Property,
are, and will continue to be, Financial Assets, (iii) the Securities
Intermediary’s Jurisdiction is, and during the term of this Control Agreement
shall remain, the State of New York, (iv) Schedule 1 contains a
true and complete statement of the Pledged Account and the Financial Assets
carried therein and any free credit balance therein as of the date hereof,
(v) no Financial Asset included in the Collateral is registered in the name
of, payable to the order of, or specially indorsed to, the Grantor, which has
not been indorsed to the Broker or in blank, and (vi) the Pledged Account
is and shall remain a cash account, and the Broker will not extend, directly or
indirectly, any “purpose credit” (within the meaning of such term under
Regulation T of the Board of Governors of the Federal Reserve System of the
United States) to the Grantor in respect of the Pledged Account.  The
Brokers will not, so long as this Control Agreement is in effect, enter into any
agreement with any other Person that provides Control over the Pledged Account
to such other Person.

     

    (c)           The
Agent hereby instructs the Broker, and the Broker hereby confirms and agrees
that, unless the Agent shall otherwise direct the Broker in writing, the
Investment Property (other than any Commodity Contract or Commodity Account)
from time to time held by the Broker for the Grantor shall be credited only to,
and carried only in, the Pledged Account or another securities account subject
to a Control Agreement maintained with the Broker.

     

    SECTION
3.  Control.  The
Broker hereby agrees, upon written direction from the Agent and without further
consent from the Grantor, (a) to comply with all instructions, Entitlement
Orders and directions of every kind originated by the Agent concerning the
Collateral, to liquidate or otherwise dispose of the Collateral as and to the
extent directed by the Agent and to pay over to the Agent all proceeds without
any setoff or deduction, and (b) except as otherwise directed by the Agent, not
to comply with the instructions, Entitlement Orders or directions of any kind
originated by the Grantor or any other person.

     

    SECTION
4.  Other
Agreements; Termination; Successor Brokers.  The Broker shall
simultaneously send to the Agent copies of all notices given and statements
rendered pursuant to the Pledged Account.  The Broker shall notify
promptly the Agent and the Grantor if any other person asserts any lien,
encumbrance, claim (including any adverse claim) or security interest in or
against any of the Collateral.  As long as the Guarantee and
Collateral Agreement remains in effect, neither the Grantor nor the Broker shall
terminate the Pledged Account without thirty (30) days’ prior written notice to
the other party and the Agent.  In the event of any conflict between
the provisions of this Control Agreement and any other agreement governing the
Pledged Account or the Collateral, the provisions of this Control Agreement
shall control.  In the event the Broker no longer serves as Broker for
the Collateral, the Pledged Account and the Financial Assets carried therein
shall be transferred to a successor broker or custodian satisfactory to the
Agent, provided, that prior to such transfer, such successor broker or custodian
shall execute an agreement that is substantially in the form of this Control
Agreement or is otherwise in form and substance satisfactory to the
Agent.

     

    SECTION
5.  Protection of Broker
Indemnification.  The Broker may rely and shall be protected in
acting upon any notice, instruction or other communication that it reasonably
believes to be genuine and authorized.  The Broker shall not be
liable, except for its own gross negligence or willful misconduct or its breach
of the express terms of this Control Agreement and, except with respect to
claims based upon such gross negligence or willful misconduct or any such breach
that are successfully asserted against the Broker, the Grantor shall indemnify
and hold harmless the Broker (and any successor Broker) from and against any and
all losses,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    liabilities,
claims, actions, damages and expenses, including reasonable attorneys’ fees and
disbursements arising out of and in connection with this Control
Agreement.

     

    SECTION
6.  Termination.  This
Control Agreement shall terminate automatically upon receipt by the Broker of
written notice executed by the Agent terminating this Agreement.

     

    SECTION
7.  Waiver;
Priority of Agent’s Interests.  Other than with respect to its
fees and customary commissions with respect to the Pledged Account, the Broker
hereby waives its right to set off any obligations of the Grantor to the Broker
against any or all of the Collateral and hereby agrees that any and all liens,
encumbrances, claims or security interests which the Broker may have against the
Collateral, either now or in the future in connection with the Pledged Account,
are and shall be subordinate and junior to the prior payment in full in
immediately available funds of all obligations of the Grantor now or hereafter
existing under the Credit Agreements, the Guarantee and Collateral Agreement,
and all other documents related thereto, whether for principal, interest
(including, without limitation, interest as provided in the Credit Agreements,
whether or not such interest accrues after the filing of such petition for
purposes of the federal Bankruptcy Code or is an allowed claim in such
proceeding), indemnities, fees, premiums, expenses or
otherwise.  Except for the foregoing and claims and interests of the
Agent and the Grantor in the Collateral and the rights of the Broker therein,
the Broker does not know of any claim to or security interest or other interest
in the Collateral.

     

    SECTION
8.  Notices.  All
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy) and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered, or three days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when received, to the Grantor’s and the Agent’s
addresses as set forth in the Guarantee and Collateral Agreement, and to the
Broker’s address as set forth below, or to such other address as any party may
give to the others in writing for such purpose:

     

    [Name of
Broker]

    [Address
of Broker]

    Attention:________________

    Telephone:  (  )
___________________

    Telecopy:  (  )
____________________

     

    SECTION
9.  Amendments in
Writing.  None of the terms or provisions of this Control
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the parties hereto.

     

    SECTION
10.  Entire
Agreement.  This Control Agreement and the Guarantee and
Collateral Agreement constitute the entire agreement and supersede all other
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.

     

    SECTION
11.  Execution in
Counterparts.  This Control Agreement may be executed in any
number of counterparts (including by telecopy), each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SECTION
12.  Successors and
Assigns.  This Control Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Grantor may not assign, transfer or delegate any of its
rights or obligations under this Control Agreement without the prior written
consent of the Agent.

     

    SECTION
13.  Governing Law and
Jurisdiction.  This Control Agreement has been delivered to and
accepted by the Agent and will be deemed to be made in the State of New
York.  THIS CONTROL AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.  Each of the parties hereto submits for itself and its property
in any legal action or proceeding relating to this Control Agreement, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof.

     

    SECTION
14.  WAIVER
OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS CONTROL AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.

     

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

     

    [NAME OF
GRANTOR]

     

    By:___________________________

    Name:

    Title:

     

    FOURTH
THIRD LLC, as

     

    Agent

     

    By:___________________________

    Name:

    Title:

     

     [NAME
OF BROKER]

     

    By:___________________________

    Name:

    Title:

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
H to Guarantee and Collateral Agreement

     

    FORM
OF CONTROL AGREEMENT

     

    This
CONTROL AGREEMENT (as amended, supplemented or otherwise modified from time to
time, this “Control
Agreement”) dated as of ______________, 200__, is made by and among
_______________, a __________ corporation (the “Grantor”), Fourth
Third LLC, as Agent (in such capacity, the “Agent”) for the
Secured Creditors (as defined in the Guarantee and Collateral Agreement referred
to below), and ____________, a ____________ corporation (the “Broker”).

     

    WHEREAS,
the Broker maintains for the Grantor a commodity account, Account No.
_________________ (the “Pledged Account”), in
the name of the Grantor.

     

    WHEREAS,
the Grantor has granted to the Agent for the benefit of the Secured Creditors a
security interest in the Pledged Account, the commodity contracts and any free
credit balance carried therein, and all additions thereto and substitutions and
Proceeds thereof (collectively, the “Collateral”) pursuant
to a Guarantee and Collateral Agreement, dated as of June __, 2008 (as amended,
supplemented, replaced or otherwise modified from time to time, the “Guarantee and Collateral
Agreement”), by the Grantor and the other persons party thereto as
grantors in favor of the Agent.

     

    WHEREAS,
the following terms which are defined in Articles 8 and 9 of the Uniform
Commercial Code in effect in the State of New York on the date hereof (the
“UCC”) are used
herein as so defined (whether or not such terms are capitalized in the
UCC):  Commodity Account, Commodity Contract, Commodity Intermediary’s
Jurisdiction, Control and Proceeds.

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

     

    SECTION
1.  Notice
of Security Interest.  The Grantor, the Agent and the Broker
are entering into this Control Agreement to perfect, and to confirm the priority
of, the Agent’s security interest in the Collateral.  The Broker
acknowledges that this Control Agreement constitutes written notification to the
Broker of the Agent’s security interest in the Collateral.  The Broker
agrees to promptly make all necessary entries or notations in its books and
records to reflect the Agent’s security interest in the
Collateral.  The Broker acknowledges that the Agent has control over
the Pledged Account and all Commodity Contracts and any free credit balance
carried therein from time to time.

     

    SECTION
2.  Collateral; Pledged
Account.  (a) The Grantor hereby agrees with the Agent and the
Broker that the Grantor shall direct that  all Commodity Contracts
carried by the Broker on its books for the Grantor be credited to the Pledged
Account or another commodity account subject to a Control Agreement maintained
with the Broker.

     

    (b)           The
Broker hereby represents and warrants to, and agrees with the Grantor and the
Agent that (i) the Broker is a Commodity Intermediary with respect to the
Grantor and the Pledged Account is a Commodity Account, (ii) the Commodity
Intermediary’s Jurisdiction is, and during the term of this Control Agreement
shall remain, the State of New York, (iii) Schedule 1 contains a
true and complete statement of the Pledged Account and the Commodity Contracts
and any free credit balance carried therein as of the date hereof, and
(iv) the Pledged Account is and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    shall
remain a cash account, and the Broker will not extend, directly or indirectly,
any “purpose credit” (within the meaning of such term under Regulation T of the
Board of Governors of the Federal Reserve System of the United States) to the
Grantor in respect of the Pledged Account.  The Broker will not, so
long as this Control Agreement is in effect, enter into any agreement with any
other person that provides Control over the Pledged Account to such other
person.

     

    (c)           The
Agent hereby instructs the Broker, and the Broker hereby confirms and agrees
that, unless the Agent shall otherwise direct the Broker in writing, all
Commodity Contracts carried by the Broker on its books for the Grantor shall be
credited only to, and carried only in, the Pledged Account or another commodity
account subject to a Control Agreement maintained with the Broker.

     

    SECTION
3.  Control.  The
Broker hereby agrees, upon written direction from the Agent and without further
consent from the Grantor, (a) to apply any value distributed on account of the
Commodity Contracts carried in the Pledged Account as directed by the Agent, to
liquidate or otherwise dispose of the Collateral as and to the extent directed
by the Agent and to pay over to the Agent all proceeds and other value therefrom
or otherwise distributed with respect thereto without any setoff or deduction,
and (b) except as otherwise directed by the Agent, not to apply any value
distributed on account of any Commodity Contract carried in the Pledged Account
as directed by the Grantor or any other person.

     

    SECTION
4.  Other
Agreements; Termination; Successor Brokers.  The Broker shall
simultaneously send to the Agent copies of all notices given and statements
rendered pursuant to the Pledged Account.  The Broker shall notify
promptly the Agent and the Grantor if any other person asserts any lien,
encumbrance, claim or security interest in or against any of the
Collateral.  As long as the Guarantee and Collateral Agreement remains
in effect, neither the Grantor nor the Broker shall terminate the Pledged
Account without thirty (30) days’ prior written notice to the other party and
the Agent.  In the event of any conflict between the provisions of
this Control Agreement and any other agreement governing the Pledged Account or
the Collateral, the provisions of this Control Agreement shall
control.  In the event the Broker no longer serves as Broker for the
Collateral, the Pledged Account, the Commodity Contracts and any free credit
balance carried therein shall be transferred to a successor broker, custodian or
futures commission merchant satisfactory to the Agent, provided, that prior to
such transfer, such successor broker, custodian or futures commission merchant
shall execute an agreement that is substantially in the form of this Control
Agreement or is otherwise in form and substance satisfactory to the
Agent.

     

    SECTION
5.  Protection of Broker
Indemnification.  The Broker may rely and shall be protected in
acting upon any notice, instruction or other communication that it reasonably
believes to be genuine and authorized.  The Broker shall not be
liable, except for its own gross negligence or willful misconduct or its breach
of the express terms of this Control Agreement and, except with respect to
claims based upon such gross negligence or willful misconduct or any such breach
that are successfully asserted against the Broker, the Grantor shall indemnify
and hold harmless the Broker (and any successor Broker) from and against any and
all losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys’ fees and disbursements arising out of and in connection
with this Control Agreement.

     

    SECTION
6.  Termination.  This
Control Agreement shall terminate automatically upon receipt by the Broker of
written notice executed by the Agent terminating this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SECTION
7.  Waiver;
Priority of Agent’s Interests.  Other than with respect to its
fees and customary commissions with respect to the Pledged Account, the Broker
hereby waives its right to set off any obligations of the Grantor to the Broker
against any or all of the Collateral and hereby agrees that any and all liens,
encumbrances, claims or security interests which the Broker may have against the
Collateral, either now or in the future in connection with the Pledged Account,
are and shall be subordinate and junior to the prior payment in full in
immediately available funds of all obligations of the Grantor now or hereafter
existing under the Credit Agreements, the Guarantee and Collateral Agreement,
and all other documents related thereto, whether for principal, interest
(including, without limitation, interest as provided in the Credit Agreements,
whether or not such interest accrues after the filing of such petition for
purposes of the federal Bankruptcy Code or is an allowed claim in such
proceeding), indemnities, fees, premiums, expenses or
otherwise.  Except for the foregoing and claims and interests of the
Agent and the Grantor in the Collateral and the rights of the Broker therein,
the Broker does not know of any claim to or security interest or other interest
in the Collateral.

     

    SECTION
8.  Notices.  All
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy) and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered, or three days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when received, to the Grantor’s and the Agent’s
addresses as set forth in the Guarantee and Collateral Agreement, and to the
Broker’s address as set forth below, or to such other address as any party may
give to the others in writing for such purpose:

     

    [Name of
Broker]

    [Address
of Broker]

    Attention:_________________

    Telephone:  (  )
__________________

    Telecopy:  (  )
___________________

     

    SECTION
9.  Amendments in
Writing.  None of the terms or provisions of this Control
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the parties hereto.

     

    SECTION
10.  Entire
Agreement.  This Control Agreement and the Guarantee and
Collateral Agreement constitute the entire agreement and supersede all other
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.

     

    SECTION
11.  Execution in
Counterparts.  This Control Agreement may be executed in any
number of counterparts (including by telecopy), each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

     

    SECTION
12.  Successors and
Assigns.  This Control Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Grantor may not assign, transfer or delegate any of its
rights or obligations under this Control Agreement without the prior written
consent of the Agent.

     

    SECTION
13.  Governing Law and
Jurisdiction.  This Control Agreement has been delivered to and
accepted by the Agent and will be deemed to be made in the State of New
York.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    THIS
CONTROL AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.  Each of the
parties hereto submits for itself and its property in any legal action or
proceeding relating to this Control Agreement, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof.

     

    SECTION
14.  WAIVER
OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS CONTROL AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.

     

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

     

    [NAME OF
GRANTOR]

     

    By:___________________________

    Name:

    Title:

     

    FOURTH
THIRD LLC, as

     

    Agent

     

    By:___________________________

    Name:

    Title:

    Title:

     

    [NAME OF
BROKER]

     

    By:___________________________

    Name:

    Title:

    

    1.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
I to Guarantee and Collateral Agreement

     

    FORM
OF CONTROL AGREEMENT

     

    This
CONTROL AGREEMENT (as amended, supplemented or otherwise modified from time to
time, this “Control
Agreement”) dated as of _________, 200_, is made by and among
_______________, a __________ corporation (the “Beneficiary”), FOURTH
THIRD LLC, as Agent (in such capacity, the “Agent”) for the
Secured Creditors (as defined in the Guarantee and Collateral Agreement referred
to below), and ____________, a ____________ (the “Issuer”).

     

    WHEREAS,
the Issuer has issued Letter of Credit No. _________ (together with all accepted
amendment or other modifications thereto, the “Credit”) in favor of
the Beneficiary.

     

    WHEREAS,
the Beneficiary has granted to the Agent for the benefit of the Secured
Creditors a security interest in and assignment of all proceeds of and all of
the Beneficiary’s other Letter-of-Credit Rights with respect to the Credit (the
“Collateral”)
pursuant to a Guarantee and Collateral Agreement, dated as of June __, 2008 (as
amended, supplemented, replaced or otherwise modified from time to time, the
“Guarantee and
Collateral Agreement”), by the Beneficiary and the other persons named as
“Grantors” therein in favor of the Agent.

     

    WHEREAS,
the following terms which are defined in Article 9 of the Uniform Commercial
Code in effect in the State of New York on the date hereof (the “UCC”) are used herein
as so defined (whether or not such terms are capitalized in the
UCC):  Letter-of-Credit Rights and Proceeds.

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

     

    SECTION
1.  Notice
of Security Interest.  The Beneficiary, the Agent and the
Issuer are entering into this Control Agreement to perfect, and to confirm the
priority of, the Agent’s security interest in the Collateral.  The
Issuer acknowledges that this Control Agreement constitutes written notification
to the Issuer of the Agent’s security interest in the Collateral.  The
Issuer agrees, upon its receipt of the original Credit (which the Beneficiary
agrees to transmit forthwith to the Issuer), to promptly make a notation to
reflect the Agent’s security interest in the Collateral upon the original Credit
and thereafter return the original Credit to the Beneficiary.  The
Issuer also agrees to promptly make such other necessary entries or notations in
its books and records to reflect the Agent’s security interest in the
Collateral.  The Issuer acknowledges that the Agent has control over
the Collateral.

     

    SECTION
2.  Control.  For
the purposes of Sections 5-114(c) and 9-107 of the UCC, the Issuer hereby
consents to the grant to the Agent of a security interest in the
Letter-of-Credit Rights under the Credit and to the assignment to the Agent of
the Proceeds of the Credit.  The Issuer will pay all Proceeds of the
Credit to the Agent in accordance with the Agent’s written
instructions.  The Beneficiary agrees to immediately return to the
Issuer any Proceeds of the Credit inadvertently paid to the
Beneficiary.  The Issuer will not consent to any other assignment of
Proceeds of the Credit or to any other security interest in the
Collateral.

     

    SECTION
3.  Extent
of Agreement.  This Control Agreement (a) is not a transfer or
assignment of the Credit, (b) does not give the Agent any interest in the Credit
or any documents presented thereunder or any right to draw on the Credit or to
consent or to refuse to consent to

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    amendments
to the Credit or to the cancellation thereof, (c) does not affect whether the
Beneficiary can transfer its right to draw on the Credit and (d) does not affect
the Beneficiary’s right to draw on the Credit or the Beneficiary’s or the
Issuer’s right to consent or to refuse to consent to amendments to the Credit or
to the cancellation thereof.

     

    SECTION
4.  Representations and
Warranties.  The Beneficiary represents and warrants
that:

     

    (a)           other
than as set forth herein, the Beneficiary has not and will not, by transfer or
assignment of the Credit, by negotiation of drafts, by drawing drafts to a third
party or otherwise, assign the right to receive the whole or any portion of the
Collateral or give any other control rights, authorization or direction in
respect of the Collateral to any other party;

     

    (b)           the
Beneficiary has not and will not, without the prior written consent of the
Issuer, present to anyone but the Issuer any documents under the
Credit;

     

    (c)           the
Beneficiary’s execution, delivery and performance of this Control Agreement (i)
are within its powers, (ii) have been duly authorized, (iii) do not contravene
any charter provision, by-law, resolution, contract or other undertaking binding
on or affecting the Beneficiary or any of its properties, (iv) do not violate
any applicable domestic or foreign law, rule or regulation and (v) do not
require any notice, filing or other action to, with or by any governmental
authority;

     

    (d)           this
Control Agreement has been duly executed and delivered by the Beneficiary and is
the Beneficiary’s legal, valid and binding obligation; and

     

    (e)           the
transactions underlying the Credit (and any shipment of goods or provision of
services and any related financial arrangements) and this Control Agreement do
not violate any applicable United States or other law, rule or
regulation.

     

    SECTION
5.  Other
Agreements; Termination; Successor Issuers.  The Issuer shall
simultaneously send to the Agent copies of all notices given and statements
rendered pursuant to the Credit.  The Issuer shall notify promptly the
Agent and the Beneficiary if any other person asserts any lien, encumbrance,
claim (including any adverse claim) or security interest in or against any of
the Collateral.  Until the Agent has notified the Issuer and
Beneficiary that this Agreement has been terminated in accordance with Section 7,
neither the Beneficiary nor the Issuer shall terminate the Credit before its
stated maturity without thirty (30) days’ prior written notice to the other
party and the Agent.  In the event of any conflict between the
provisions of this Control Agreement and any other agreement governing the
Credit or the Collateral, the provisions of this Control Agreement shall
control.  In the event the Issuer no longer serves as Issuer for the
Credit, the Credit shall be transferred to a successor Issuer satisfactory to
the Agent, provided, that prior to such transfer, such successor Issuer shall
execute an agreement that is substantially in the form of this Control Agreement
or is otherwise in form and substance satisfactory to the Agent.

     

    SECTION
6.  Protection of Issuer;
Indemnification.  The Issuer may rely and shall be protected in
acting upon any notice, instruction or other communication that it reasonably
believes to be genuine and authorized.  The Issuer shall not be
liable, except for its own gross negligence or willful misconduct or its breach
of the express terms of this Control Agreement and, except with respect to
claims based upon such gross negligence or willful misconduct or
any

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    such
breach that are successfully asserted against the Issuer, the Beneficiary shall
indemnify and hold harmless the Issuer (and any successor Issuer) from and
against any and all losses, liabilities, claims, actions, damages and expenses,
including reasonable attorneys’ fees and disbursements arising out of and in
connection with this Control Agreement.

     

    SECTION
7.  Termination.  This
Control Agreement shall terminate automatically upon receipt by the Issuer of
written notice executed by the Agent terminating this Agreement.

     

    SECTION
8.  Waiver.  The
Issuer hereby waives its right to set off any obligations of the Beneficiary to
the Issuer against any or all of the Collateral.

     

    SECTION
9.  Notices.  All
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered, or three days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when received, to the Beneficiary’s and the
Agent’s addresses as set forth in the Guarantee and Collateral Agreement, and to
the Issuer’s address as set forth below, or to such other address as any party
may give to the others in writing for such purpose:

     

    [Name of
Issuer]

    [Address
of Issuer]

    Attention:_____________________

    Telephone:  (  )
________________

    Telecopy:  (  )
_________________

     

    SECTION
10.  Amendments in
Writing.  None of the terms or provisions of this Control
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the parties hereto.

     

    SECTION
11.  Entire
Agreement.  This Control Agreement and the Guarantee and
Collateral Agreement constitute the entire agreement and supersede all other
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.

     

    SECTION
12.  Execution in
Counterparts.  This Control Agreement may be executed in any
number of counterparts (including by telecopy), each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

     

    SECTION
13.  Successors and
Assigns.  This Control Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Beneficiary may not assign, transfer or delegate any of
its rights or obligations under this Control Agreement without the prior written
consent of the Agent.

     

    SECTION
14.  Governing Law and
Jurisdiction.  This Control Agreement has been delivered to and
accepted by the Agent and will be deemed to be made in the State of New
York.  This Control Agreement is made subject to the practice rules
(e.g., UCP 500 or ISP
98) to which the Credit is subject.  THIS CONTROL AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.  Each of the parties hereto submits for itself and
its property in any legal action

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    or
proceeding relating to this Control Agreement, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof.

     

    SECTION
15.  WAIVER
OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS CONTROL AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.

     

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

     

    [NAME OF
BENEFICIARY],

    as
Beneficiary

    

     

    By:___________________________

    Name:

    Title:

    

    FOURTH
THIRD LLC,

    as
Agent

    

     

    By:___________________________

    Name:

    Title:

    

    [NAME OF
ISSUER],

    as
Issuer

    

     

    By:___________________________

    Name:

    Title:

    

    

    1.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Annex
1 to Guarantee and Collateral Agreement

     

    ASSUMPTION
AGREEMENT, dated as of ____________, 200__, made by ______________________, a
_______________ corporation (the “Additional Grantor”),
in favor of Fourth Third LLC, as Agent (in such capacity, the “Agent”) for (i) the
lenders (the “Lenders”) party to
the Credit Agreement referred to below and (ii) the other Secured Creditors (as
defined in the Guarantee and Collateral Agreement (as hereinafter
defined)).  All capitalized terms not defined herein shall have the
meaning ascribed to them in such Credit Agreement.

     

    W I T N E
S S E T H:

     

    WHEREAS
[_________________], (“Borrower”),
[___________________], the Lenders and the Agent have entered into an Amended
and Restated Credit Agreement, dated as of June __, 2008 (as amended,
supplemented, replaced or otherwise modified from time to time, the “Credit
Agreement”);

     

    WHEREAS,
in connection with the Credit Agreement, the Borrowers and certain of its
Affiliates (other than the Additional Grantor) have entered into a Guarantee and
Collateral Agreement, dated as of June __, 2008 (as amended, supplemented or
otherwise modified from time to time, the “Guarantee and Collateral
Agreement”) in favor of the Agent for the benefit of the Secured
Creditors;

     

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

     

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

     

    NOW,
THEREFORE, IT IS AGREED:

     

    1.           Guarantee and Collateral
Agreement.  By executing and delivering this Assumption
Agreement, the Additional Grantor, as provided in Section 19.15 of the
Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and
Collateral Agreement as a Grantor and Guarantor thereunder with the same force
and effect as if originally named therein as a Grantor and Guarantor and,
without limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor and Guarantor
thereunder.  The information set forth in Annex 1-A hereto is hereby
added to the information set forth in the Perfection Certificate or Perfection
Supplement most recently delivered pursuant to the terms of the Guarantee and
Collateral Agreement.  The Additional Grantor hereby represents and
warrants that each of the representations and warranties as to the Additional
Grantor contained in Section 6 of the
Guarantee and Collateral Agreement is true and correct on and as the date hereof
(after giving effect to this Assumption Agreement) as if made on and as of such
date.

     

    2.           GOVERNING
LAW.  THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    [ADDITIONAL
GRANTOR]

     

    By:_________________________

    Name:

    Title:exhibit101.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SECURITIES
PURCHASE AGREEMENT

    

               THIS SUBSCRIPTION AGREEMENT
(this “Agreement”), is
made as of May 2, 2008, by and among Apollo Drilling, Inc., a Delaware
corporation (the “Company”), and Noctua Fund, LP
or its designees (“Subscriber”).

    

               WHEREAS, the Company and the
Subscriber are executing and delivering this Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2) and/or Regulation D (“Regulation D”) as promulgated
under the Securities Act of 1933, as amended (the “1933 Act”); and

    

               WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Subscriber, and the Subscribers shall purchase, (a)
150,000 shares of Series A Preferred Stock, par value $.001 per share of the
Company, (the “Preferred
Stock”), at a purchase price of $1.00 per share, pursuant to a
Certificate of Designation to be approved by the Company and filed with the
Secretary of State of Delaware designating the rights and privileges of the
Preferred Stock, substantially in the form as annexed hereto as Exhibit
A (the “Certificate”), (b) Series A-1
Warrants to purchase common stock, par value $0.001 (the “Common Stock”) of the Company
(the “Warrant Shares”),
at an exercise price of $.01 per share, subject to adjustment (the “Exercise Price”), in
substantially the form as annexed hereto as Exhibit
B (the “Investor
Warrants”), and (c) 8,750,000 restricted shares (the “Restricted Shares”) of Common
Stock (all such transactions, collectively, the “Offering”).  The
Preferred Stock, the Investor Warrants, the Restricted Shares and the Warrant
Shares are collectively referred to herein as the “Securities”; and

    

    WHEREAS, simultaneously with
the Closing, three of the Company’s shareholders are delivering an Irrevocable
Voting Proxy and Trust Agreement in the form as annexed as Exhibit
C  with respect to an aggregate of approximately 120,000,000
shares of the company (the “Proxy Agreement”), and the
Escrow Agreement substantially in the form annexed hereto as Exhibit
D (the “Escrow
Agreement”);

    

    NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Subscribers hereby agree as follows:

    

               1.           Purchase and Sale of
Preferred Stock.

     

    1.1.           Sale and Issuance of
Preferred Stock.

     

    (a) The
Company shall adopt and file with the Secretary of State of the State of
Delaware on or before the Initial Closing (as defined below) the Certificate in
the form of Exhibit
A attached to this Agreement.

     

    (b) Subject
to the terms and conditions of this Agreement, Subscriber agrees to purchase at
the Closing and the Company agrees to sell and issue to each Subscriber at the
Closing units consisting of 150,000 shares of Preferred Stock, the Restricted
Shares and Investor Warrants, at a purchase price of $1.00 per share of
Preferred Stock (or an aggregate of $150,000).  At Closing, the
Company shall deliver to each Subscriber, among other closing documents
mentioned herein, a certificate representing the Preferred Stock being purchased
by such Subscriber at such Closing against payment of the purchase price
therefore by check payable to the Company, by wire transfer to a bank account
designated by the Company.

     

    1.2.           Use of Proceeds. In
accordance with the directions of the Company’s Board of Directors, the Company
shall use the proceeds from the sale of the Preferred Shares in accordance with
Schedule
1.2 annexed hereto, other general corporate purposes.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

               2.           Closing.  The
consummation of the transactions contemplated herein (the “Closing”) shall take place at
the offices of Hodgson Russ LLP, 1540 Broadway, 24th Floor,
New York, NY 10036, upon the satisfaction of all conditions to Closing set forth
in this Agreement, at a date and time acceptable to the parties (the date on
which the actual Closing takes place shall be referred to as the “Closing Date”).

     

     

    2.1           Closing Deliveries by
Company.  At  Closing or immediately thereafter, if
any requests are initiated, the Company shall have approved and filed the
Certificate with the State of Delaware and delivered those closing documents and
instruments required by Section 10
below.  

     

    2.2           Closing Deliveries by
Executive.  At each Closing, Proxy Agreements executed and
delivered with respect to no less than 120,000,000 shares shall be delivered,
all, duly authorized, approved, executed and delivered as set forth in Section
10 below.

     

    2.3           Closing Deliveries by
Subscriber.   At each Closing, Subscriber shall deliver to
the Company its respective portion of the Purchase Price in immediately
available funds and this Agreement.

    

               3.           Subscriber’s Representations and
Warranties.  Subscribers hereby represents and warrants to and
agrees with the Company, severally and not jointly, only as to such Subscriber
that:

    

                          (a)           Organization and Standing of
the Subscribers.  If the Subscriber is an entity, such
Subscriber is a corporation, partnership or other entity duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.

    

                          (b)           Authorization and
Power.  Such Subscriber has the requisite power and authority
to enter into and perform this Agreement and to purchase the Securities being
sold to it hereunder.  The execution, delivery and performance of this
Agreement by such Subscriber and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate or partnership action on the part of the Subscribers, and no further
consent or authorization of such Subscriber or its board of directors,
stockholders, partners, members or managers, as the case may be, is
required.

    

                          (c)           No
Conflicts.  The execution, delivery and performance of this
Agreement and the consummation by such Subscriber of the transactions
contemplated hereby, do not conflict with such Subscriber’s charter documents or
bylaws or other organizational documents.  Subscriber is not required
to obtain any consent, authorization or order of, or make any filing, notice
filing or registration with, any court or governmental agency or creditor in
order for it to execute, deliver or perform any of its obligations under this
Agreement.

    

                          (d)           Information on
Company. Such Subscriber has reviewed and relied upon the accuracy of the
“SEC Documents” (as
defined in Section 5(h) hereof) and has been afforded (i) the opportunity to ask
such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the “Subsidiaries” (as defined in
Section 5(u) hereof) and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate the investment in the Securities; and (iii) the opportunity to
obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed
investment decision with respect to the investment.  Neither such
inquiries nor any other investigation conducted by or on behalf of such
Subscriber or its representatives or counsel shall modify, amend or affect such
Subscriber’s right to rely on the truth, accuracy and completeness of the
SEC

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Documents
(subject to a re-audit of the Company’s financial statements currently being
conducted) and the Company’s representations and warranties contained in this
Agreement.

    

                          (e)           Information on
Subscriber.  The Subscriber is an “accredited investor”, as such
term is defined in Regulation D promulgated under the 1933 Act, is experienced
in investments and business matters, and, with its representatives, has such
knowledge and experience in financial, tax and other business matters as to
enable the Subscriber to utilize the information made available by the Company
to evaluate the merits and risks of and to make an informed investment decision
with respect to the proposed purchase of the Securities.  The
information set forth on the signature page hereto regarding the Subscriber is
accurate.  Such Subscriber is not a registered broker-dealer under
Section 15 of the Securities Exchange Act of 1934, as amended (the “1934
Act”).  

    

    (f)           Investment Intent.
Such Subscriber is acquiring the Securities as principal for its own account for
investment purposes only and not with a view to or for distributing or reselling
such Securities or any part thereof, without prejudice, however, to such
Subscriber’s right at all times to sell or otherwise dispose of all or any part
of such Securities in compliance with applicable federal and state securities
laws.  Subject to the immediately preceding sentence, nothing
contained herein shall be deemed a representation or warranty by such Subscriber
to hold the Securities for any period of time.

    

               (g)           Legends.  Each
Subscriber understands that the certificates or other instruments representing
the Securities shall bear a restrictive  legend in substantially the
following form:

    

    THE
SECURITIES REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES HAVE BEEN ACQUIRED SOLELY
FOR  INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL, IN A GENERALLY ACCEPTABLE FORM TO THE COMPANY, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

     

    The legend set forth above shall be removed and the Company
shall, within five (5) business days, issue a certificate without such legend to
the holder of the Securities upon which it is stamped, if, unless otherwise
required by state securities laws, (i) in connection with a sale transaction,
provided the Securities are registered under the 1933 Act or (ii) in connection
with a sale transaction, after such holder provides the Company with an opinion
of counsel, which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public
sale, assignment or transfer of the Securities may be made without registration
under the 1933 Act.

    

                          (h)           Communication of
Offer. The offer to sell the Securities was directly communicated to such
Subscriber by the Company and/or its agents.  At no time was such
Subscriber presented with or solicited by any leaflet, newspaper or magazine
article, spam or “mass” email, radio or television advertisement, or any other
form of general advertising or solicited or invited to attend a promotional
meeting otherwise than in connection and concurrently with such communicated
offer.  Notwithstanding anything to the contrary contained in this
Agreement, the Company acknowledges and agrees that such Subscriber may transfer
the Securities to its Affiliates (as defined below) provided
that

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    each such
Affiliate is an “accredited
investor” under Regulation D and such Affiliate agrees to be bound by the
terms and conditions of this Agreement and Security Agreements.  For
the purposes of this Agreement, an “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity. For purposes of this definition, “control” means the power to
direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.

    

                          (i)           Enforceability.  This
Agreement has been duly authorized and executed by such Subscriber and, when
delivered by the Subscriber, will become Subscriber’s valid and binding
agreement enforceable against Subscriber in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity.

    

                          (j)           Group.  Subscriber,
together with any other shareholders or affiliates of Subscriber, is not part of
a “Group” (as defined in Schedule 13 and Section 13 of the 1934 Act) and is not
acting in concert with any person or persons as part of a Group with respect to
the acquisition or holding of the Securities or any other securities of the
Company, and does not have any agreement or understanding with any other person
relating to the sale or voting of securities held by Subscriber or such other
persons.  In each case, a Group for the foregoing purposes shall only
be deemed to exist if said Group beneficially owns or controls 5% or more (as
defined in Rule 13(d) of the 1934 Act) of the voting securities of the
Company.

    

    (k)           Funds.  The
Subscriber has taken such measures as are required by law to assure that the
funds used to pay to the Company the purchase price as set forth on the
signature pages hereto are derived: (i) from transactions that do not violate
United States law nor, to the extent such funds originate outside the United
States, do not violate the laws of the jurisdiction in which they originated;
and (ii) from permissible sources under United States law and to the extent such
funds originate outside the United States, under the laws of the jurisdiction in
which they originated.

    

    (l)           Patriot Act and No
Prohibited Investment.  The Subscriber is in compliance with any and
all applicable provisions of the Patriot Act including, without limitation,
amendments to the Bank Secrecy Act. If the Subscriber is a Financial
Institution, it has established and is in compliance with all procedures
required by the Subscriber and the Bank Secrecy Act.  Subscriber
hereby represents and warrants that the proposed investment in the Company is
being made on its own behalf and does not directly or indirectly contravene
United States federal, state, local or international laws or regulations
applicable to Subscriber, including anti-money laundering laws (a "Prohibited Investment"). 
Federal regulations and Executive Orders administered by the U.S. Treasury
Department's Office of Foreign Assets Control ("OFAC") prohibit, among other
things, the engagement in transactions with, and the provision of services to,
certain foreign countries, territories, entities and individuals. The lists of
OFAC prohibited countries, territories, persons and entities can be found on the
OFAC website at <www.treas.gov/ofac>.  Subscriber hereby
represents and warrants that it is not a country, territory, person or entity
named on an OFAC list, nor is Subscriber a natural person or entity with whom
dealings are prohibited under any OFAC regulations.

     

    4.           Company Representations and
Warranties.  Except as set forth in the Schedule of Exceptions
attached hereto as Schedule 4 (the
“Schedule of
Exceptions”), the Company represents and warrants to and agrees with each
Subscriber that:

    

                          (a)           Due Incorporation.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the requisite
corporate power to own its properties and to carry on its business as disclosed
in the Latest SEC Documents (as defined in Section 4(h)).  The Company
is duly qualified as a foreign corporation to do business and is in good
standing in each

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have or be reasonably likely to have a Material Adverse
Effect.  For purpose of this Agreement, a “Material Adverse Effect” shall
mean any of (i) a material and adverse effect on the legality, validity or
enforceability of any of this Agreement (ii) a material and adverse effect on
the results of operations, assets, prospects, business or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) an
adverse impairment to the Company’s ability to perform on a timely basis its
obligations under this Agreement.

    

    (b)           Capitalization.  The
authorized capital stock of the Company, other than the Conversion Shares (as
defined in Section
10 below), consists of 500,000,000 shares of Common Stock, par value
$.001 per share, of which 228,840,000 shares are issued and outstanding as of
the date hereof, and 15,000,000 shares of “blank check” preferred stock of which
150,000 shares have been designated as “Series A Preferred Stock” and reserved
for issuance to Subscriber hereby in one or more series.   In
addition, at Closing or immediately after but no later than (the following
business day), the Certificate will have been duly authorized and
filed.   Except as disclosed in the Latest SEC Documents (as
defined in Section 4(h)), no shares of Common Stock or Preferred Stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company or, the existence of any such
rights will be waived prior to Closing.  Except as disclosed in the
SEC Documents, as of the date of this Agreement, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act and (iv) except as set forth on Schedule
4(b), there are no outstanding registration statements and there are no
outstanding comment letters from the Securities and Exchange Commission (the
“Commission”) or any
other regulatory agency. There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
any of the Securities as described in this Agreement (except, to the extent, if
any, that such rights are understood prior to Closing).  The Company
has reserved for issuance all of the Conversion Shares upon conversion of the
Preferred Stock.

    

                          (c)           Authorization, Enforcement,
Compliance with Other Instruments.  (i) The Company has the
requisite corporate power and authority to enter into and perform this Agreement
and to issue the Preferred Stock and Investor Warrants, and, upon conversion or
exercise thereof, the Conversion Shares and Warrant Shares, respectively, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement  by the Company (or any subsidiary) to which it is a
party and the consummation by it or them of the transactions contemplated hereby
and thereby, including, without limitation, the issuance of the Preferred Stock,
the Conversion Shares, the Investor Warrants and the Warrant Shares and the
reservation for issuance and the issuance of the Conversion Shares and Warrant
Shares issuable upon conversion or exercise thereof (whether in the event of a
mandatory redemption of Preferred Stock or otherwise), have been duly authorized
by the Company’s Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders, (iii) on or
before the Closing Date, this Agreement  will have been duly executed
and delivered by the Company, (iv) this Agreement will, when executed and
delivered constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                          (d)           Consents.  No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, or any of its
Affiliates, or FINRA, the SEC, or the OTC Bulletin Board market system or the
Company’s stockholders, is required for the execution by the Company of this
Agreement to which it is a party and compliance and performance by the Company
of its covenants and obligations under this Agreement, including, without
limitation, the issuance and sale of the Securities.

    

                          (e)           No Violation or
Conflict. Assuming the representations and warranties of the Subscriber
in Section
3 are
true and correct (except with respect to Section 3(c)),
neither the issuance and sale of the Securities nor the performance of the
Company’s obligations under this Agreement will: (i) violate, conflict with,
result in a breach of, or constitute a default (or an event which with the
giving of notice or the lapse of time or both would be reasonably likely to
constitute a default) under (A) the Articles of Incorporation of the Company as
in effect on the date hereof, including the Certificate (the “Certificate of
Incorporation”), the Bylaws of the Company as in effect on the date
hereof (the “Bylaws”) or
other organizational documents of the Company, (B) any decree, judgment, order,
law, treaty, rule, regulation or determination applicable to the Company of any
court, governmental agency or body, or arbitrator having jurisdiction over the
Company or over the properties or assets of the Company or any of its
Affiliates, (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to which the Company or any
of its Affiliates is a party, by which the Company or any of its Affiliates is
bound, or to which any of the properties of the Company or any of its Affiliates
is subject, or (D) the terms of any “lock-up” or similar provision
of any underwriting or similar agreement to which the Company, or any of its
Affiliates is a party except the violation, conflict, breach, or default of
which would not have or be reasonably likely to have a Material Adverse Effect;
or (ii) result in the creation or imposition of any lien, charge or encumbrance
upon the Securities or any of the assets of the Company or any of its
Affiliates; or (iii) result in the activation of any anti-dilution rights or a
reset or repricing of any debt or security instrument of any other creditor or
equity holder of the Company, nor result in the acceleration of the due date of
any obligation of the Company; or (iv) result in the activation of any
piggy-back registration rights of any person or entity holding securities of the
Company or having the right to receive securities of the Company.

    

                          (f)           Issuance of the
Securities. The Securities upon issuance: (i) are free and clear of any
security interests, liens, claims or other encumbrances, subject to restrictions
upon transfer under the 1933 Act and any applicable state securities laws; (ii)
have been duly and validly authorized and on the date exercise of the Investor
Warrants, the Warrant Shares will be duly and validly issued, fully paid and
non-assessable or if registered pursuant to the 1933 Act, and if resold pursuant
to an effective registration statement, will be freely tradable without any
restriction whatsoever; (iii) will not have been issued or sold in violation of
any pre-emptive or other similar rights of the holders of any securities of the
Company; and  (iv) will not subject the holders thereof to personal
liability by reason of being such holders.

    

                          (g)           Litigation. There is
no pending or, to the best knowledge of the Company, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates that
would affect the execution by the Company or the performance by the Company of
its obligations under the Transaction Documents to which it is a party. Except
as disclosed Schedule 4(g) to the Schedule of Exceptions or as disclosed in the
Latest SEC Documents (as defined in Section 4(h)), there is no pending or, to
the best knowledge of the Company, basis for or threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates which
litigation if adversely determined would have or be reasonably likely to have a
Material Adverse Effect.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

                          (h)           SEC
Documents:  Financial Statements.  Since December 31,
2005, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Commission under the 1934 Act (all
of the foregoing filed prior to the date hereof or amended after the date hereof
and all exhibits included therein and financial statements and schedules thereto
and documents incorporated by reference therein, being hereinafter referred to
as the “SEC Documents”
and any of the foregoing filed prior to the date hereof for periods ending on or
after December 31, 2006 or amended after the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to as the “Latest SEC
Documents”).   As of their respective dates, the financial
statements of the Company disclosed in the SEC Documents (the “Financial Statements”) are the
subject of a re-audit by the Company’s current principal
auditors.  The Company has not, in the past two years, received any
notice from FINRA, the NASD, the  Pink Sheets quotation system or the
SEC, advising the Company that it is in danger of having its securities
de-listed, or that any late filings of SEC reports by it in the future would
endanger the eligibility of its common stock to remain quoted on the Pink Sheets
or any other quotations service.

    

                          (i)           No Market
Manipulation. The Company has not taken, and will not take, directly or
indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Securities or affect the price at
which the Securities may be issued or resold.

    

                          (j)           Information Concerning
Company. The Subscriber has not been provided with any material
non-public information concerning the Company, except (i) as the terms and
conditions of the transactions contemplated hereby may constitute such
information, or (ii) pursuant to non-disclosure agreements or documents of
similar purpose.  The Company understands and confirms that the
Subscriber will rely on the representations and covenants herein effecting
transactions in securities of the Company. All disclosure provided to the
Subscriber regarding the Company, its business and the transactions contemplated
hereby, furnished by or on behalf of the Company (including the Company’s
representations and warranties set forth in this Agreement) are true and correct
in all material respects as of the date thereof and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The SEC Documents contain all material
information relating to the Company and its operations and financial condition
as of their respective dates which information is required to be disclosed
therein, (subject to a re-audit as disclosed in certain SEC Documents) and
disclosed in the Latest SEC Documents which are subject to audit.

    

                          (k)           Stop Transfer. The
Securities, when issued, will be restricted securities. The Company will not
issue any stop transfer order or other order impeding the sale, resale or
delivery of any of the Securities, except as may be required by any applicable
federal or state securities laws and unless contemporaneous notice of such
instruction is given to the Subscriber.

    

                          (l)           Defaults. The Company
is not in violation of its Certificate of Incorporation or
Bylaws.  The Company is (i) not in default under or in violation of
any agreement or instrument to which it is a party or by which it or any of its
properties are bound or affected, which default or violation would have or be
reasonably likely to have a Material Adverse Effect or which default has not
been waived for purposes of allowing the issuance of the Preferred Stock and
entry into this Agreement, (ii) not in default with respect to any order of any
court, arbitrator or governmental body or subject to or party to any order of
any court or governmental authority arising out of any action, suit or
proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) not in
violation of any statute, rule or regulation of any governmental authority which
violation would have or be reasonably likely to have a Material Adverse
Effect.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

                          (m)           No Integrated
Offering. Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or
sales of any security or solicited any offers to buy any security under
circumstances that would cause the offer of the Securities pursuant to this
Agreement to be integrated with prior offerings by the Company for purposes of
the 1933 Act or any applicable stockholder approval
provisions.  Neither the Company nor any of its Affiliates will take
any action or steps that would cause the offer or issuance of the Securities to
be integrated with other offerings.

    

                          (n)           No General Solicitation;
Private Placement.  Neither the Company, nor any of its
Affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 1933 Act) in connection with the offer or sale
of the Securities. Assuming the accuracy of the Subscribers’ representations and
warranties set forth in Sections 3(d)-(f), no registration under the 1933 Act is
required for the offer and sale of the Securities by the Company to the
Subscribers under this Agreement.

    

                          (o)           Listing.  The
Company has not received any oral or written notice that its Common Stock is not
eligible or will become ineligible for quotation on the Pink Sheets or OTC
Bulletin Board, and there have been no FINRA or similar hearings relating to the
listing or quotation of the Company’s securities on such market or any other
market in the past two years,  or that its Common Stock does not meet
all requirements for the continuation of such quotation, and the Company
satisfies all the requirements for the continued listing of its Common Stock on
the Pink Sheets or OTC Bulletin Board.

    

                          (p)           No Undisclosed
Liabilities.  The Company has no liabilities or obligations
which are material, individually or in the aggregate, which are not disclosed as
of the respective dates as of which the information is given in the SEC
Documents, other than those incurred in the ordinary course of the Company’s
businesses since December 31, 2007 and which, individually or in the aggregate,
would not reasonably be expected to have or be reasonably likely to have a
Material Adverse Effect.

    

                          (q)           No Undisclosed Events or
Circumstances.  Since December 31, 2007, no event or
circumstance has occurred or exists with respect to the Company or its
businesses, properties, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed in the SEC Documents.

    

                          (r)           Acknowledgment Regarding
Subscribers’ Purchase of the Securities.  The Company
acknowledges and agrees that the Subscribers are acting solely in the capacity
of an arm’s length purchaser with respect to this Agreement and the transactions
contemplated hereby.  The Company further acknowledges that the
Subscribers are not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Subscribers or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to such Subscribers’
purchase of the Securities.  The Company further represents to the
Subscribers that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation by the Company and its
representatives.

    

    (s)           No Disagreements with
Accountants and Lawyers.  There are no disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants (other than those specified designates
with the independent auditors or the Company’s financial statements which have
already been disclosed in the SEC Reports), and lawyers formerly or presently
employed by the Company, including but not limited to disputes or conflicts over
payment owed to such accountants and lawyers. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

                          (t)           Omitted.

    

    (u)           Title to
Assets.  The Company and its subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to their respective businesses and good and marketable title in all
personal property owned by them that is material to their respective businesses,
in each case free and clear of all liens, except for liens as do not materially
affect the actual value of such property and do not materially interfere with
the use made and proposed to be made of such property by the Company and its
Subsidiaries. Any real property and facilities held under lease by the Company
and its Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and its Subsidiaries are in compliance, except as
could not, individually or in the aggregate, have or be reasonably likely to
have a Material Adverse Effect.

    

                          (v)           Patents and
Trademarks. The Company and its subsidiaries have, or have rights to use,
in accordance with applicable U.S. or foreign laws where it transacts business,
all patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and other similar rights that are
necessary or material for use in connection with their respective businesses as
described in the Latest SEC Documents and which the failure to so have could,
individually or in the aggregate, have or be reasonably likely to have a
Material Adverse Effect (collectively, the “Intellectual Property
Rights”).  Neither the Company nor any Subsidiary has received
a written notice that the Intellectual Property Rights used by the Company or
any Subsidiary violates or infringes upon the rights of any
person.  To the knowledge of the Company, there  is no
existing infringement by another person of any of the Intellectual Property
Rights.

    

                          (w)           Solvency.  Based
on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company’s fair saleable value of
its assets exceeds the amount that will be required to be paid on or in respect
of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company will not incur debts beyond its ability to
pay such debts as they mature (taking into account the timing and amounts of
cash to be payable on or in respect of its debt).

    

                          (x)           Compliance with
Law.  The Company and its subsidiaries are conducting business
in all material respects in compliance with all applicable laws and
orders.  The Company and the Subsidiaries hold all permits of all
governmental authorities that by the nature of the operations of the business
conducted by it or the ownership of the assets owned by it are permits required
to conduct the operation and ownership thereof in the manner currently conducted
or to use such assets in the manner currently utilized in the business, except
for such permits, if any, as to which the failure to hold are not reasonably
likely to have a Material Adverse Effect.  

    

                          (y)           Environmental
Laws.  The Company and its subsidiaries are (i) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental
Laws”), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any such
permit, license or approval.  The Company and its

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Subsidiaries
have not been notified by any governmental authority that any such environmental
permits will be modified, suspended or revoked or cannot be renewed in the
ordinary course of business consistent with past practice.  There are
no present or past environmental conditions at any property owned, leased or
used by the Company or any Subsidiary.  There is no pending or, to the
best knowledge of the Company, threatened environmental claim against the
Company or any Subsidiary relating to their business or the properties owned,
leased or used thereby, or against any entity relating to the business of the
Company or such properties, for which the Company or any Subsidiary may have any
liability.  There are no hazardous materials or other conditions at,
under or emanating from, and there has been no release at, on or adjoining, any
real property currently or formerly owned, operated or leased by the Company or
any Subsidiary or their respective predecessors in interest that would
reasonably be expected to give rise to an environmental claim against or
liability of any of the foregoing under any Environmental
Law.  Neither the Company nor any Subsidiary has assumed,
contractually or by operation of applicable law, any liabilities of any third
party under any Environmental Law.

    

                          (z)           Tax
Status.  Except as set forth in the SEC Documents, the Company
and each of its Subsidiaries has made and filed through December 31, 2007 (and
has valid extensions for all applicable periods thereafter) all federal and
state income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) has paid
all taxes and other  governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply,
in each case, except where the failure to make such filing or payment or set
aside such amount would not, individually or in the aggregate, have or be
reasonably likely to have a Material Adverse Effect.

    

                          (aa)                      Certain
Transactions.  Except as set forth in the Latest SEC Documents,
and except for arm’s length transactions pursuant to which the Company makes
payments in the ordinary course of business upon terms no less favorable than
the Company could obtain from third parties and other than the grant of stock
options disclosed in the Latest SEC Documents, none of the officers, directors,
or employees of the Company or any Subsidiary is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director trustee or partner.

    

    5.           Exempt Offering. The offer and
issuance of the Securities to the Subscribers is being made pursuant to the
exemption from the registration provisions of the 1933 Act afforded by Section
4(2)  of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder. The Company will
provide, at the Company’s expense, such legal opinions in the future as are
reasonably necessary for the issuance and resale of the Warrant Shares issuable
upon the due exercise of the Investor Warrants.

    

    6.           Broker/Legal
Fees.  The Company on the one hand, and each Subscriber (for
itself only) on the other hand, agree to indemnify the other against and hold
the other harmless from any and all liabilities to any persons claiming
brokerage commissions or finder’s fees on account of services purported to have
been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby and arising out of such
party’s actions.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.           Covenants of the Company. The
Company covenants and agrees with the Subscriber as follows:

    

               (a)           Listing.  The
Company will maintain the listing of its Common Stock on the OTC Bulletin board
or any other national exchange or listing system, whichever of the foregoing
is at the time the principal trading exchange or market for the Common Stock
(the “Principal
Market”), and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Principal Market,
as applicable.

    

               (b)           Market Regulations.
The Company shall notify the Commission of the transactions contemplated by this
Agreement, and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Securities to the Subscribers and promptly provide copies
thereof to Subscriber.

    

               (c)           Reservation.  The
Company undertakes to reserve from its authorized but unissued shares of Common
Stock (i) 100% of the number of Warrant Shares as are issuable upon exercise of
the Investor Warrants and (ii) 10% of the maximum number of Conversion Shares as
may be issued upon conversion in the event of a mandatory conversion. Failure to
have sufficient shares reserved pursuant to this Section 9(d) for three (3)
consecutive business days or ten (10) days in the aggregate shall be a material
default of the Company’s obligations under this Agreement and the Preferred
Stock.

    

               (d)           Books and
Records.  From the date of this Agreement and until the later
of (i) two (2) years after the Closing Date, or (ii) until all the Preferred
Stock have been converted and Conversion Shares resold or transferred by all
Subscriber or are eligible for resale pursuant Rule 144, without regard to
volume limitations, the Company will keep true records and books of account in
which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent
basis.

    

               (e)           Reasonable Best
Efforts.  Each party shall use its reasonable best efforts
timely to satisfy each of the conditions to be satisfied by it as provided in
Sections 11 and 12 of this Agreement.

    

    (f)           Restricted Shares Guaranteed
Return.   The Company has guaranteed the Subscriber shall
receive a net sales price, minus sales commissions and fees, of $52,500 from the
eventual sale of the Restricted Shares.

    

    8.           Covenants of the Company Regarding
Indemnification.

    

               (a)           The
Company agrees to indemnify, hold harmless, reimburse and defend the subscriber,
the subscriber’s officers, directors, agents, Affiliates, control persons, and
principal stockholders or, equity holders, against any actual: claim, cost,
expense, liability, obligation, loss or damage (including reasonable legal fees)
of any nature, incurred by or imposed upon the Subscriber or any such person
which results, arises out of or is based upon (i) any material misrepresentation
by Company or breach of any warranty made by the Company in this Agreement or in
any Exhibits or Schedules attached hereto or (ii) after any applicable notice
and/or cure periods, any breach or default in performance by the Company of any
covenant or undertaking to be performed by the Company hereunder.

    

               9.           Conditions to the Company’s
Obligation to Sell.  The obligation of the Company hereunder to
issue and sell the Preferred Stock, if any are requested to be purchased,
Investor Warrants and Restricted Shares to the Subscriber at any Closing, is
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Company’s
benefit and may be waived by the Company at any time in its sole
discretion:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

               (a)           The
Subscriber(s) shall have executed this Agreement and any of the other
transaction documents to which it is a party, and delivered it to the
Company.

               (b)           The
Subscriber shall have delivered to the Company the Purchase Price and by wire
transfer of immediately available U.S. funds pursuant to the wire instructions
provided by the Company.

    

               (c)           The
representations and warranties of the Subscriber(s) shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date), and the Subscriber shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Subscriber on or before the Closing Date.

    

     

                          10.           Conditions to the Subscribers’
Obligation to Purchase.  The obligation of the Subscriber
hereunder to subscribe for the Preferred Stock to be sold at the Initial Closing
or any subsequent closing, Restricted Shares and Investor Warrants to be sold at
Initial Closing or any subsequent closing is subject to the satisfaction, on or
before the Closing Date, of each of the following conditions, any which may be
waived at Subscriber’s sole and absolute discretion:

     

    (a)           The
Certificate shall have been duly authorized and approved and filed with the
State of Delaware, and in full force and effect;

     

    (b)           Certificates
representing the Preferred Stock shall be executed and delivered to each
Subscriber,

     

    (c)           The
Company shall have approved, authorized executed and delivered:

     

    (i)  the Escrow Agreement to
the agent for the Subscriber set forth therein (the “Agent”) along with the
268,410,000 shares of Common Stock for issuance upon conversion of the Preferred
Stock, based on the adjusted Conversion Price (as defined in the
Certificate)  and shall have reserved such shares plus any other
shares that may be issuable upon conversion of the Preferred Stock for issuance
thereon (the “Conversion
Shares”),

     

    (ii)           Investor
Warrants to purchase such number of Warrant Shares as equals  the
number of Conversion Shares into which the Preferred Stock issued is convertible
into,

    

    all duly authorized, approved, executed
and delivered by the Company, and a as well as a legal opinion from counsel to
the Company, as reasonably approved by the Subscriber’s, which shall contain
customary opinions relating to enforceability, validity, due authority, no
conflicts of laws of all agreements and securities issued as well as the valid
and fully paid issuance of Preferred Stock and all other securities contemplated
hereby (the “Opinion”).

    

               (d)           The
Common Stock shall be authorized for quotation on the Pink Sheets and trading in
the Common Stock shall not have been suspended for any reason.

    

               (e)           The
representations and warranties of the Company shall be true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality, in which case, such
representations and warranties shall be true and correct without further
qualification) as of the date when made and as of the Closing Date as though
made at that time (except for  representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company on or prior to the Closing Date.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    If
requested by the Subscribers, the Subscribers shall have received a certificate,
executed by the President and the Treasurer of the Company, dated as of the
Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by the Subscribers.

    

               (f)           The
shareholders holding shares of grater than 120,000,000 shares of common stock
shall have duly executed and delivered the Proxy Agreement.

    

               (g)           The
Company shall have reserved out of its authorized and unissued Common Stock,
solely for the purpose of effecting exercise of the Investor Warrants, that
number of shares of Common Stock as shall be equal to 100% of the number of shares
of Common Stock required to effect the exercise of all the Investor Warrants to
be outstanding immediately following the Closing Date.

    

    (h)           The
Subscriber shall have received the Opinion.

    

               (i)           The
Subscriber shall have completed a due diligence review of the Company to their
sole satisfaction.

    

    The
Company covenants that as of the foregoing which haven’t been delivered (or
actions taken) at closing shall be delivered for the requisite action taken
within two (2) business days of the closing date unless otherwise indicated
herein.

    

    11.           Miscellaneous.

    

               (a)           Notices. All notices,
demands, requests, consents, approvals, and other communications required or
permitted hereunder shall be in writing and, unless otherwise specified herein,
shall be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by
reputable air courier service with charges prepaid, or (iv) transmitted by hand
delivery, telegram, confirmed email (with a hard copy by mail or fax) or
facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (i) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (ii) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be: if to the
Company, to: Apollo Drilling, Inc.,
_____________________________________________ _____________,
Attn:______________, telephone: (____)___-_______ telecopier number:
(___)___-_______, with a copy by telecopier only to: Hodgson Russ, LLP, 1540
Broadway, 24th Floor,
New York, NY 10036, telecopier number: (212) 751-0928, and (ii) if to the
Subscribers, to the one or more addresses and telecopier numbers indicated on
the signature pages hereto.

    

               (b)           Entire Agreement;
Assignment. This Agreement and other documents delivered in connection
herewith represent the entire agreement between the parties hereto with respect
to the subject matter hereof. No right or obligation of the Company shall be
assigned without prior notice to and the written consent of the
Subscriber.

    

               (c)           Amendments; Waivers; No
Additional Consideration. No provision of this Agreement may be waived or
amended except in a written instrument signed by the Company and the Subscribers
(or transferees of Securities) holding a majority in interest of the Preferred
Stock, or upon

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    execution
hereof by Existing Investors desiring to exercise their Participation Rights. No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.

    

               (d)           Counterparts/Execution.
This Agreement may be executed in any number of counterparts and by the
different signatories hereto on separate counterparts, each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument. This Agreement may be executed by
facsimile signature and delivered by facsimile transmission.

    

               (e)           Law Governing this
Agreement. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
laws principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state of
New York. The parties and the individuals executing this Agreement and other
agreements referred to herein or delivered in connection herewith on behalf of
the Company agree to submit to the jurisdiction of such courts and waive trial
by jury. The prevailing party shall be entitled to recover from the other party
its reasonable attorney’s fees and costs. In the event that any provision of
this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of any
agreement.

    

               (f)           Specific Enforcement,
Consent to Jurisdiction. The Company and Subscriber acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to one or more preliminary and final injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any of them may be entitled by law or equity. Subject to Section 13(e) hereof,
each of the Company, Subscriber and any signatory hereto in his personal
capacity hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction in
New York of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Nothing in this Section shall affect or limit any right to serve
process in any other manner permitted by law.

    

               (g)           Independent Nature of
Subscribers. The Company acknowledges that the obligations of each
Subscriber under this Agreement are several and not joint with the obligations
of any other Subscriber, and no Subscriber shall be responsible in any way for
the performance of the obligations of any other Subscriber under this Agreement.
The Company acknowledges that each Subscriber has represented that the decision
of each Subscriber to purchase Securities has been made by such Subscriber
independently of any other Subscriber or other person of entity and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company which
may have been made or given by any other Subscriber or by any agent or employee
of any other Subscriber, and no Subscriber or any of its agents or employees
shall have any liability to any other Subscriber (or any other person) relating
to or arising from any such information, materials, statements or opinions. The
Company acknowledges

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    that
nothing contained in this Agreement, and no action taken by any Subscriber
pursuant hereto or thereto shall be deemed to constitute the Subscribers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Subscribers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this Agreement. The Company acknowledges that each Subscriber shall be entitled
to independently protect and enforce its rights, including without limitation,
the rights arising out of this Agreement, and it shall not be necessary for any
other Subscriber to be joined as an additional party in any proceeding for such
purpose.  The Company and each Subscriber acknowledges that it has
elected to provide all Subscribers with the same terms and this Agreement for
the convenience of the Company and not because Company was required or requested
to do so by the Subscribers. The Company acknowledges that such procedure with
respect to this Agreement in no way creates a presumption that the Subscribers
are in any way acting in concert or as a group with respect to this Agreement
uments or the transactions contemplated hereby.

    

               (h)           Business/Calendar
Days. Unless otherwise indicated, references to days in this Agreement
will refer to calendar days.

    

               (i)
Termination.                                In
the event that the Closing shall not have occurred with respect to the on or
before ten (10) business days from the date hereof due to the Company’s or the
Subscribers’ failure to satisfy the conditions set forth in Sections 11 and 12
above (and the non-breaching party’s failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party.

    

    

    [THE
REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    LIST
OF EXHIBITS & SCHEDULES

    Exhibits

    Exhibit
A                                Certificate
of Designation

    Exhibit
B                      Form
of Investor Warrant

    Exhibit
C                      Form
of Irrevocable Voting Proxy and Trust Agreement

    Exhibit
D                      Escrow
Agreement

    

    Schedule
1.2                                Use
of Proceeds

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    COMPANY
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

    

               Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

    

                                                                    APOLLO DRILLING,
INC.,

    a Delaware corporation

                                                                    

    

    By:  /s/ Jeff F. Raley         

    Name:
Jeff F. Raley

    Its:
Chief Executive Officer

    

    By: /s/ Dennis G. McLaughlin, III    

    Name:
Dennis G. McLaughlin

    Its:
Director

    

    

    

    

    

    

    SUBSCRIBER:

    

    (By Counterpart Signature
Pages)

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     SUBSCRIBER
COUNTER-SIGNATURE PAGE

    (For
Individual Subscribers Pursuant to Subscription Agreement of Apollo Drilling,
Inc.

    Series
A Preferred Stock and Warrants, May 2008)

    

    This Subscription Agreement is hereby
executed and entered into by the below Subscriber.

    

    
      	
              Purchase
      Price and Principal Amount of Note Subscribed For:

               

               

              $_____________________________

            	
               

               

              Signature
      (Individual)

               

              Name
      (Print)

               

              Street
      address

               

              City,
      State and Zip Code

            
	 
      	 
      

    

    

    
      	 
      	
               

              Tax
      Identification or Social Security Number

               

              (            )                                                                

              Telephone
      Number

               

              (            )                                                                

              Facsimile
      Number

            

    

    

    
      	 
      	
              Address
      to Which Correspondence Should Be Directed (if different from
      above)

               

              ____________________________________

              c/o
      Name

              ____________________________________

              Street
      Address

               

            
	 
      	
              ____________________________________

              City,
      State and Zip Code

               

              (______)____________________________

              Telephone
      Number

               

              (______)____________________________

              Facsimile
      Number

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SUBSCRIBER COUNTER-SIGNATURE
PAGE

    (for
Corporation, Partnership, Pursuant to Subscription Agreement of Apollo Drilling,
Inc.,

    Series
A Preferred Stock and Warrants May 2008)

    

    This Subscription Agreement (including
the Questionnaire) is hereby executed and entered into by the below
Subscriber:

    

    
      	
              Purchase
      Price and Principal Amount of Note Subscribed For:

               

               

              $_____________________________

               

            	
              ____________________________________

              Name
      of Entity

               

               

              Type
      of Entity (i.e., corporation, partnership, etc.)

               

              Tax
      Identification or Social Security Number

               

              State
      of Formation of Entity

               

              Name
      of Signatory Typed or Printed

               

              Its:                                                                

              Title

               

            

    

    

    
      	 
      	
              Address
      to Which Correspondence Should Be Directed (if different from
      above)

               

              ____________________________________

              c/o
      Name

              ____________________________________

              Street
      Address

               

            	 
      
	 
      	
              ____________________________________

              City,
      State and Zip Code

               

              (______)____________________________

              Telephone
      Number

               

              (______)____________________________

              Facsimile
      Number

               

               

            	 
      

    

    *If
Preferred Stock and Warrants are being subscribed for by an entity, the
Certificate of Signatory that follows must also be completed.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    CERTIFICATE
OF SIGNATORY

    

    To be
completed if Preferred Stock and Investor  Warrants are being
subscribed for by an entity.

    

    

    I,__________________________________,
am the ___________________________ of

                                             (the “Entity”).

    

               I
certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement relating to the sale of
Preferred Stock and Investor Warrants of Apollo Drilling, Inc.  and to
purchase and hold the said Securities.  The Subscription Agreement has
been duly and validly executed on behalf of the Entity and constitutes a legal
and binding obligation of the Entity.

    

               IN
WITNESS WHEREOF, I have hereto set my hand this ______ day of May ,
2008.

    

    

    
      	 
      	
               

              Signature

            

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
1.2

    

    Use of
Proceeds

    

    

     

    [REDACTED]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]