Document:

exhibit103_03022009.htm

    Exhibit
10.3

     

    

    

    

    

    

    

    

    

    GUARANTY
AND COLLATERAL AGREEMENT

    

    dated
as of February 27, 2009

    

    made
by

    

    NORTHERN
OIL AND GAS, INC.

    

    and

    

    EACH
OF THE OTHER GRANTORS (AS DEFINED HEREIN)

    

    in
favor of

    

    CIT
CAPITAL USA INC.,

    as
Administrative Agent

    

    

     

    

     

    

     

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

     

    Page

     

     

    ARTICLE
I

     

     

    DEFINITIONS

     

    
      	
               
      

            	
              Section
      1.01Definitions.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      1.02Other Definitional Provisions[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      1.03Rules of Interpretation[INSERT
      PAGE NUMBER]

            

    

     

    ARTICLE
II

     

     

    GUARANTEE

     

    
      	
               
      

            	
              Section
      2.01Guarantee.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      2.02Right of Contribution[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      2.03No Subrogation[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      2.04Guaranty Amendments, Etc. with respect to the Borrower Obligations[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      2.05Waivers[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      2.06Guaranty Absolute and Unconditional.[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      2.07Reinstatement[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      2.08Payments[INSERT PAGE
      NUMBER]

            

    

     

    ARTICLE
III

     

     

    GRANT OF
SECURITY INTEREST

     

    
      	
               
      

            	
              Section
      3.01Grant of Security Interest[INSERT
      PAGE NUMBER]

            

    

    
      	
               
      

            	
              Section
      3.02Transfer of Pledged Securities[INSERT PAGE
  NUMBER]

            

    

     

    ARTICLE
IV

     

     

    REPRESENTATIONS
AND WARRANTIES

     

    
      	
               
      

            	
              Section
      4.01Representations in Credit Agreement[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.02Title; No Other Liens[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.03Perfected First Priority Liens[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.04Grantor Information[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.05Inventory and Equipment[INSERT
      PAGE NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.06Deposit Accounts[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.07Farm Products[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.08Investment Property.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.09Receivables.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.10Contracts.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.11Intellectual Property.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.12Commercial Tort Claims.[INSERT
      PAGE NUMBER]

            

    

    
      	
               
      

            	
              Section
      4.13Benefit to the Guarantors[INSERT
      PAGE NUMBER]

            

    

     

    ARTICLE
V

     

     

    COVENANTS

     

    
      	
               
      

            	
              Section
      5.01Covenants and Events of Default in Credit Agreement[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      5.02Delivery of Instruments, Certificated Securities and Chattel Paper[INSERT PAGE
  NUMBER]

            

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Section
      5.03Payment of Obligations[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      5.04Maintenance of Perfected Security Interest; Further Documentation.[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      5.05Changes in Locations, Name, Etc[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      5.06Notices[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      5.07Investment Property.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      5.08Intellectual Property.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      5.09Commercial Tort Claims[INSERT PAGE
      NUMBER]

            

    

     

    ARTICLE
VI

     

     

    REMEDIAL
PROVISIONS

     

    
      	
               
      

            	
              Section
      6.01Certain Matters Relating to Receivables.[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      6.02Communications with Obligors; Grantors Remain Liable.[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      6.03Pledged Securities.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      6.04Proceeds to be Turned Over to Administrative Agent[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      6.05Application of Proceeds[INSERT
      PAGE NUMBER]

            

    

    
      	
               
      

            	
              Section
      6.06Code and Other Remedies.[INSERT
      PAGE NUMBER]

            

    

    
      	
               
      

            	
              Section
      6.07Securities Laws.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      6.08Waiver; Deficiency[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      6.09Non-Judicial Enforcement[INSERT
      PAGE NUMBER]

            

    

     

    ARTICLE
VII

     

     

    THE
ADMINISTRATIVE AGENT

     

    
      	
               
      

            	
              Section
      7.01Administrative Agent’s Appointment as Attorney-in-Fact, Etc.[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      7.02Duty of Administrative Agent[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      7.03Execution of Financing Statements[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      7.04Authority of Administrative Agent[INSERT PAGE
  NUMBER]

            

    

     

    ARTICLE
VIII

     

     

    SUBORDINATION
OF INDEBTEDNESS

     

    
      	
               
      

            	
              Section
      8.01Subordination of All Grantor Claims[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      8.02Claims in Bankruptcy[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      8.03Payments Held in Trust[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      8.04Liens Subordinate[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      8.05Notation of Records[INSERT PAGE
      NUMBER]

            

    

     

    ARTICLE
IX

     

     

    MISCELLANEOUS

     

    
      	
               
      

            	
              Section
      9.01No Waiver by Course of Conduct; Cumulative Remedies[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.02Notices[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.03Enforcement Expenses; Indemnities.[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.04Amendments in Writing[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.05Successors and Assigns[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.06Survival; Revival; Reinstatement.[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.07Counterparts; Integration; Effectiveness.[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.08Severability[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.09Set-Off[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.10Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.[INSERT PAGE
  NUMBER]

            

    

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Section
      9.11Headings[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.12Acknowledgments[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.13Additional Grantors and Additional Pledged Securities[INSERT PAGE
  NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.14Releases.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              Section
      9.15Acceptance[INSERT PAGE
      NUMBER]

            

    

    

     

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    SCHEDULES:

     

    1           Notice
Addresses

    2           Investment
Property

    3           Perfection
Matters

    4           Location
of Jurisdiction of Organization and Chief Executive Office

    5           Inventory
and Equipment Locations

    6           Intellectual
Property

    7           Existing
Permitted Financing Statements

    8           Deposit
Accounts

    

    ANNEXES:

    I           Form
of Acknowledgment and Consent

    II           Form
of Assumption Agreement

    III           Form
of Supplement

    

    
      
         

      

      
        iv

        
          

        

      

      
         

      

    

    This
GUARANTY AND COLLATERAL
AGREEMENT, dated as of February 27, 2009, is made by Northern Oil and
Gas, Inc., a Nevada corporation (the “Borrower”), and each
of the other signatories hereto (the Borrower and each of the other signatories
hereto, together with any Subsidiary of the Borrower that becomes a party hereto
from time to time after the date hereof, the “Grantors”) in favor
of CIT Capital USA Inc., as administrative agent (in such capacity, together
with its successors in such capacity, the “Administrative
Agent”) for the banks and other financial institutions (the “Lenders”) from time
to time parties to the Credit Agreement, dated as of February 27, 2009 (as
amended, supplemented or otherwise modified from time to time, the “Credit Agreement”),
among the Borrower, the Administrative Agent and the Lenders.

     

    R
E C I T A L S

     

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

     

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

     

    ARTICLE
I

     

    Definitions

     

    Section
1.01                                Definitions.

     

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

     

    (b)           The
following terms are used herein as defined in the UCC on the date
hereof:  Accounts, Certificated Security, Chattel Paper, Commercial
Tort Claims, Contracts, Documents, Electronic Chattel Paper, Equipment, Farm
Products, Fixtures, General Intangibles,  Instruments, Inventory,
Letter-of-Credit Rights, Proceeds, Supporting Obligations, and Tangible Chattel
Paper.

     

    (c)           The
following terms have the following meanings:

     

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

     

    “Administrative Agent”
has the meaning assigned such term in the Preamble.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

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

     

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

     

    “Borrower” has the
meaning assigned such term in the Preamble.

     

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

     

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

     

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

     

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

     

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

     

    “Credit Agreement” has
the meaning assigned such term in the Preamble.

     

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

     

    
      
        
          

          - -

        

         

      

      
        2

        
          

        

      

      
         

      

    

    “Grantors” has the
meaning assigned such term in the Preamble.

     

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

     

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

     

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

     

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

     

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

     

    “Investment Property”
means the collective reference to (a) all “investment property” as such term is
defined in Section 9-102(a)(49) of the UCC and (b) whether or not constituting
“investment property” as so defined, all Pledged Notes and all Pledged
Securities.

     

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

     

    “Lenders” has the
meaning assigned such term in the Preamble.

     

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

     

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

     

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

     

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

     

    
      
        
          

          - -

        

         

      

      
        3

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

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

     

    “Pledged Securities”
means: (a) the Equity Interests described or referred to in Schedule 2 (as
the same may be supplemented from time to time pursuant to a Supplement),
together with any other Equity Interests of any Person that may be issued or
granted to, or held by, any Grantor while this Agreement is in effect;
including, but not limited to, all Pledged LLC Interests and Pledged Partnership
Interests related thereto; and (b) the certificates or instruments, if any,
representing such Equity Interests, (c) all dividends (cash, Equity Interests or
otherwise), cash, instruments, rights to subscribe, purchase or sell and all
other rights and Property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such securities, (d)
all replacements, additions to and substitutions for any of the Property
referred to in this definition, including, without limitation, claims against
third parties, (e) the proceeds, interest, profits and other income of or on any
of the Property referred to in this definition, (f) all security entitlements in
respect of any of the foregoing, if any, and (g) all books and records relating
to any of the Property referred to in this definition.

     

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

     

    
      
        
          

          - -

        

         

      

      
        4

        
          

        

      

      
         

      

    

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

     

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

     

    “Secured Parties”
means the collective reference to the Administrative Agent, the Lenders, and the
Approved Counterparties that are parties to Secured Swap
Agreements.

     

    “Secured Swap
Agreement” means any Swap Agreement between the Borrower or any of its
Subsidiaries and any Approved Counterparty in effect while such Person is an
Approved Counterparty regardless of when such Swap Agreement was entered
into.  For the avoidance of doubt, a Swap Agreement ceases to be a
Secured Swap Agreement if the Person that is the counterparty to the Borrower or
one of its Subsidiaries under a Swap Agreement ceases to be an Approved
Counterparty under the Credit Agreement.

    

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

     

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

     

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

     

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

     

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

     

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

     

    Section
1.03

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

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

     

    ARTICLE
II

     

    Guarantee

     

    Section
2.01                                Guarantee.

     

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

     

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

     

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

     

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

     

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

     

    (f)

     

    
      
         

      

      
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    shall be
outstanding (other than those Letters of Credit that cash collateral has been
posted for) and all of the Commitments are terminated.

     

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

     

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

     

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

     

    Section
2.05

     

    
      
         

      

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

     

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

     

    Section
2.07                                Guaranty Absolute and
Unconditional.

     

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

     

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

     

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

     

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

     

    (iv)

     

    
      
         

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (c)

     

    
      
         

      

      
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    express,
implied or available as a matter of law, of any Secured Party against any
Guarantor.  For the purposes hereof “demand” shall include the
commencement and continuance of any legal proceedings.

     

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

     

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

     

    ARTICLE
III

     

    Grant
of Security Interest

     

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

     

    (a)           all
Accounts;

     

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

     

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

     

    (d)           all
Contracts;

     

    (e)           all
Deposit Accounts other than payroll, withholding tax and other fiduciary Deposit
Accounts;

     

    (f)           all
Documents;

     

    (g)           all
Equipment;

     

    
      
         

      

      
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    (h)

     

    all
Fixtures;

     

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

     

    (j)           all
Instruments;

     

    (k)           all
Intellectual Property;

     

    (l)           all
Inventory;

     

    (m)           all
Investment Property (other than Auction-Rate Securities);

     

    (n)           all
Letter-of-Credit Rights (whether or not the letter of credit is evidenced by a
writing);

     

    (o)           all
other Property not otherwise described above (except for any Property
specifically excluded from any defined term used in any clause of this section
above);

     

    (p)           all
books and records pertaining to the Collateral; and

     

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

     

    Notwithstanding
the foregoing, this Section 3.01 does not grant a security interest in any
property to the extent that such grant is prohibited under any agreement
relating to such property and the violation of such prohibition would cause
Grantor to lose its interest in or rights with respect to such property, except
to the extent that Part 4 of Article 9 of the UCC would render such prohibition
ineffective.

     

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

     

    Section
3.03

     

    

    
      
         

      

      
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    Representations
and Warranties

     

    To induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective loans to and extensions of credit
to the Borrower thereunder and to induce the Lenders (and their Affiliates) to
enter into Swap Agreements with the Borrower and its Subsidiaries, each Grantor
hereby represents and warrants to the Administrative Agent and each Lender
that:

     

    Section
3.04                                Representations
in Credit Agreement.  In the case of each Guarantor, the
representations and warranties set forth in Article VII 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 by reference,
are true and correct, and the Administrative Agent and the Lenders shall be
entitled to rely on each of them, provided that each reference in each such
representation and warranty to the Borrower’s knowledge shall, for the purposes
of this Section 4.01, be deemed to be a
reference to such Guarantor’s knowledge.

     

    Section
3.05                                Title; No Other
Liens.  Except for the security interest granted to the
Administrative Agent for the ratable benefit of the Secured Parties pursuant to
this Agreement and the other Liens permitted to exist on the Collateral by the
Credit Agreement, such Grantor owns each item of the Collateral free and clear
of any and all Liens or claims of others.  No financing statement or
other public notice with respect to all or any part of the Collateral is on file
or of record in any public office, except such as have been filed in favor of
the Administrative Agent, for the ratable benefit of the Secured Parties,
pursuant to this Agreement or as are permitted by the Credit
Agreement.  Schedule 7 is a complete list of any existing permitted
financing statements or other public notice with respect to all or any part of
the Collateral.  For the avoidance of doubt, it is understood and
agreed that any Grantor may, as part of its business, grant licenses to third
parties to use Intellectual Property owned or developed by a
Grantor.  For purposes of this Agreement and the other Loan Documents,
such licensing activity shall not constitute a “Lien” on such Intellectual
Property.  Each of the Administrative Agent and each Lender
understands that any such licenses may be exclusive to the applicable licensees,
and such exclusivity provisions may limit the ability of the Administrative
Agent to utilize, sell, lease or transfer the related Intellectual Property or
otherwise realize value from such Intellectual Property pursuant
hereto.

     

    Section
3.06                                Perfected First Priority
Liens.  The security interests granted pursuant to this
Agreement b) upon completion of the filings and other actions specified on
Schedule 3 (which, in the case of all filings and other documents referred to on
said Schedule, have been delivered to the Administrative Agent in completed and
duly executed form) will constitute  valid perfected security
interests in all material Collateral in favor of the Administrative Agent, for
the ratable benefit of the Secured Parties, as collateral security for such
Grantor’s Obligations, enforceable in accordance with the terms hereof against
all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor and c) are prior to all other Liens on the
Collateral in existence on the date hereof except for those existing permitted
financing statements listed on Schedule 7 attached hereto.

     

    Section
3.07

     

    
      
         

      

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

     

    Section
3.08                                Inventory and
Equipment.  On the date hereof, the Inventory and the Equipment (other
than mobile goods) are kept at the locations listed on Schedule
5.

     

    Section
3.09                                Deposit
Accounts.  Schedule 8 correctly identifies all Deposit Accounts owned
by each Grantor and institutions holding such Deposit
Accounts.

     

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

     

    Section
3.11                                Investment
Property.

     

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

     

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

     

    (c)           Each
of the Pledged Notes constitutes the legal, valid and binding obligation of the
obligor with respect thereto, enforceable in accordance with its terms, subject
to

     

    
      
         

      

      
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    (d)

     

    the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing.

     

    Section
3.12                                Receivables.

     

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

     

    (b)           None
of the obligors on any Receivables is a Governmental Authority.

     

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

     

    Section
3.13                                Contracts.

     

    (a)           No
consent of any party (other than such Grantor) to any Contract is required, or
purports to be required, in connection with the execution, delivery and
performance of this Agreement, except as has been obtained.

     

    (b)           No
consent or authorization of, filing with or other act by or in respect of any
Governmental Authority is required in connection with the execution, delivery,
performance, validity or enforceability of any of the Contracts by any Grantor
party thereto other than those which have been duly obtained, made or performed,
are in full force and effect and do not subject the scope of any such Contract
to any material adverse limitation, either specific or general in
nature.

     

    (c)           Neither
such Grantor nor (to the best of such Grantor’s knowledge) any of the other
parties to the Contracts is in default in the performance or observance of any
of the terms thereof.

     

    (d)           The
right, title and interest of such Grantor in, to and under the Contracts are not
subject to any defenses, offsets, counterclaims or claims.

     

    (e)           Such
Grantor has delivered to the Administrative Agent a complete and correct copy of
each Contract, including all amendments, supplements and other modifications
thereto.

     

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

     

    Section
3.14                                Intellectual
Property.

     

    (a)           Schedule
6 lists all registered Intellectual Property owned by such Grantor in its own
name on the date hereof.

     

    (b)

     

    
      
         

      

      
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    On the
date hereof, all material Intellectual Property is valid, subsisting, unexpired
and enforceable, has not been abandoned and, to Grantor’s knowledge, does not
infringe the intellectual property rights of any other Person.

     

    (c)           Except
as set forth in Schedule 6, on the date hereof, none of the Intellectual
Property is the subject of any licensing or franchise agreement pursuant to
which such Grantor is the licensor or franchisor.

     

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

     

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

     

    Section
3.15                                Commercial Tort
Claims.

     

    (a)           On
the date hereof, except to the extent listed in Schedule 3, no Grantor has
rights in any Commercial Tort Claim with potential value in excess of
$100,000.

     

    (b)           Upon
the filing of a financing statement covering any Commercial Tort Claim referred
to in Section 5.09 against such Grantor
in the jurisdiction specified in Schedule 3, the security interest granted in
such Commercial Tort Claim will constitute a valid perfected security interest
in favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, as collateral security for such Grantor’s Obligations, enforceable in
accordance with the terms hereof against all creditors of such Grantor and any
Persons purporting to purchase such Collateral from such Grantor, which security
interest shall be prior to all other Liens on such Collateral except for
unrecorded liens permitted by the Credit Agreement which have priority over the
Liens on such Collateral by operation of law.

     

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

     

    ARTICLE
IV

     

    Covenants

     

    Each
Grantor covenants and agrees with the Administrative Agent and the Lenders that,
from and after the date of this Agreement until the Borrower Obligations shall
have been irrevocably and indefeasibly paid in full in cash, no Letter of Credit
shall be outstanding (other than those Letters of Credit that cash collateral
has been posted for) and all of the Commitments shall have
terminated:

     

    
      
        
          

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

     

    Section
4.01                                Delivery of Instruments,
Certificated Securities and Chattel Paper.  If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument, Certificated Security or Chattel Paper, such Instrument,
Certificated Security or Chattel Paper shall be immediately delivered to the
Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this
Agreement.

     

    Section
4.02                                Payment of
Obligations.  Such Grantor will pay and discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be, all
taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of income or profits therefrom, as well as all claims
of any kind (including, without limitation, claims for labor, materials and
supplies) against or with respect to the Collateral, except that no such charge
need be paid if the amount or validity thereof is currently being contested in
good faith by appropriate proceedings, reserves in conformity with GAAP with
respect thereto have been provided on the books of such Grantor and such
proceedings could not reasonably be expected to result in the sale, forfeiture
or loss of any material portion of the Collateral or any interest
therein.

     

    Section
4.03                                Maintenance of Perfected
Security Interest; Further Documentation.

     

    (a)           Such Grantor shall maintain
the security interest created by this Agreement as a perfected security interest
having at least the priority described in Section 4.03 and shall defend such
security interest against the claims and demands of all Persons whomsoever,
subject to the rights of such Grantor under the Loan Documents to dispose of the
Collateral.

     

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

     

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

     

    (d)

     

    
      
         

      

      
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    Changes in Locations, Name,
Etc.  Such Grantor recognizes that financing statements
pertaining to the Collateral have been or may be filed where such Grantor
maintains any Collateral or is organized.  Without limitation of
Section 8.01(k) of the Credit Agreement or any other covenant herein, such
Grantor will not cause or permit any change in its vii) corporate name or in any
trade name used to identify it in the conduct of its business or in the
ownership of its Properties, viii) the location of its chief executive office or
principal place of business, or ix) its identity or corporate structure or its
jurisdiction of organization or its organizational identification number in such
jurisdiction of organization, unless, in each case, such Grantor shall have
first (1) notified the Administrative Agent of such change at least fifteen (15)
days prior the effective date of such change and (2) taken all action reasonably
requested by the Administrative Agent for the purpose of maintaining the
perfection and priority of the Administrative Agent’s security interest under
this Agreement.  In any notice furnished pursuant to this Section 5.05, such Grantor will expressly
state in a conspicuous manner that the notice is required by this Agreement and
contains facts that may require additional filings of financing statements or
other notices for the purposes of continuing perfection of the Administrative
Agent’s security interest in the Collateral.  At the request of the
Administrative Agent, on or prior to the occurrence of such event, the Borrower
will provide to the Administrative Agent and the Lenders an opinion of counsel,
in form and substance reasonably satisfactory to the Administrative Agent, to
the effect that such event will not impair the validity of the security interest
hereunder, the perfection and priority thereof, the enforceability of the Loan
Documents, and such other matters as may be reasonably requested by the
Administrative Agent.

     

    Section
4.04                                Notices.  Such
Grantor will advise the Administrative Agent and the Lenders promptly, in
reasonable detail, of:

     

    (a)           any
Lien (other than security interests created hereby or Liens permitted under the
Credit Agreement) on any of the Collateral which would adversely affect the
ability of the Administrative Agent to exercise any of its remedies hereunder;
and

     

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

     

    Section
4.05                                Investment
Property.

     

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

     

    (b)

     

    
      
         

      

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

     

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

     

    (d)           In
the case of each Grantor that is an Issuer, such Issuer agrees that xiv) it will
be bound by the terms of this Agreement relating to the Investment Property
issued by it and will comply with such terms insofar as such terms are
applicable to it, xv) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.07(a) with respect to the
Investment Property issued by it and xvi) the terms of Section 6.03(c) and Section 6.07 shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 6.03(c) or Section 6.07 with respect to the Investment
Property issued by it.  In the case of any Issuer that is not a
Grantor hereunder, such Grantor shall promptly cause such Issuer to execute and
deliver to the Administrative Agent an Acknowledgement and Consent.

     

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

     

    
      
         

      

      
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    (f)

     

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

     

    (g)           Such
Grantor shall not agree to any amendment of a Partnership Agreement or an LLC
Agreement that xvii) in any way adversely affects the perfection of the security
interest of the Administrative Agent in the Pledged Partnership Interests or
Pledged LLC Interests pledged by such Grantor hereunder or xviii) causes any
Partnership Agreement or LLC Agreement to include an election to treat the
membership interests or partnership interests of such Grantor as a security
under Section 8.103 of the UCC.

     

    (h)           Such
Grantor shall furnish to the Administrative Agent such stock or equity powers
and other instruments as may be required by the Administrative Agent to assure
the transferability of the Investment Property when and as often as may be
reasonably requested by the Administrative Agent.

     

    (i)           The
Pledged Securities set forth on Schedule 2 will at all times constitute not less
than 100% of the Equity Interests of any such Issuer thereof that are owned by
any such Grantor.  Such Grantor will not permit any Grantor that is an
Issuer of any of the Pledged Securities set forth on Schedule 2 to issue any new
shares of any class of Equity Interests of such Issuer without the prior written
consent of the Administrative Agent.

     

    Section
4.06                                Intellectual
Property.

     

    (a)           Such
Grantor (either itself or through licensees) will xix) continue to use each
material Trademark on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price lists in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, xx) maintain as in the past the quality of products and
services offered under such Trademark, xxi) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Governmental Requirements, xxii) not adopt or use any mark which is
confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Secured Parties, shall
obtain a perfected security interest in such mark pursuant to this Agreement and
xxiii) 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.

     

    (b)           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.

     

    (c)           Such
Grantor (either itself or through licensees) xxiv) will employ each material
Copyright and xxv) 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

     

    (d)

     

    
      
         

      

      
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    licensees)
do any act whereby any material portion of the Copyrights may fall into the
public domain.

     

    (e)           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.

     

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

     

    (g)           Whenever
such Grantor, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Intellectual
Property with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, such Grantor shall report such filing to the
Administrative Agent within five Business Days after the last day of the fiscal
quarter in which such filing occurs.  Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Administrative Agent’s and the Lenders’
security interest in any Copyright, Patent or Trademark and the goodwill and
General Intangibles of such Grantor relating thereto or represented
thereby.

     

    (h)           Such
Grantor will take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain and pursue
each application (and to obtain the relevant registration) and to maintain each
registration of the material Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability.

     

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

     

    Section
4.07                                Commercial
Tort Claims.  If such Grantor shall obtain an interest in any
Commercial Tort Claim with a potential value in excess of $100,000, such Grantor
shall, within 30 days of obtaining such interest, sign and deliver documentation
acceptable to the

     

    
      
         

      

      
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    Section
4.08

     

    Administrative
Agent granting a security interest under the terms and provisions of this
Agreement in and to such Commercial Tort Claim.

     

    ARTICLE
V

     

    Remedial
Provisions

     

    Section
5.01                                Certain
Matters Relating to Receivables.

     

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

     

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

     

    Section
5.02                                Communications
with Obligors; Grantors Remain Liable.

     

    (a)           The Administrative Agent in
its own name or in the name of others may at any time communicate with obligors
under the Receivables and parties to the Contracts to verify with them to the
Administrative Agent’s satisfaction the existence, amount and terms of any
Receivables.

     

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

     

    (c)           Anything herein to the
contrary notwithstanding, each Grantor shall remain liable under each of the
Receivables to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto.  Neither the Administrative Agent nor
any Lender shall have any obligation or liability under any Receivable (or any
agreement giving rise thereto) by reason of or arising out of this Agreement or
the receipt by the Administrative Agent or any Lender of any payment relating
thereto, nor shall the Administrative Agent or any Lender be obligated in any
manner to perform any of the obligations of any Grantor under or pursuant to any
Receivable

     

    
      
         

      

      
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    (d)           

     

    (or any agreement giving
rise thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.

     

    Section
5.03                                Pledged
Securities.

     

    (a)           Unless an Event of Default
shall have occurred and be continuing and the Administrative Agent shall have
given notice to the relevant Grantor of the Administrative Agent’s intent to
exercise its corresponding rights pursuant to Section
6.03(b),
each Grantor shall be permitted to receive all cash dividends paid in respect of
the Pledged Securities and all payments made in respect of the Pledged Notes, in
each case paid in the normal course of business of the relevant Issuer and
consistent with past practice, to the extent not prohibited in the Credit
Agreement, and to exercise all voting and corporate or other organizational
rights with respect to the Investment Property; provided, however, that no vote
shall be cast or corporate or other organizational right exercised or other
action taken which, in the Administrative Agent’s reasonable judgment, would
impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, this Agreement or any other
Loan Document.

     

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

     

    (c)           Each Grantor hereby
authorizes and instructs each Issuer of any Investment Property pledged by such
Grantor hereunder to xxxii) comply with any instruction
received by it from the Administrative Agent in writing that (a) states that an Event of
Default has occurred and is continuing and (b) is otherwise in accordance
with the terms of this

     

    
      
         

      

      
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    (d)           

     

    Agreement, without any other
or further instructions from such Grantor, and each Grantor agrees that each
Issuer shall be fully protected in so complying, and xxxiii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Investment Property directly to the Administrative Agent.

     

    Section
5.04                                Proceeds to be Turned Over
to Administrative Agent.  In addition to the rights of the
Administrative Agent and the Lenders specified in Section 6.01 with respect to payments of
Receivables, if an Event of Default shall occur and be continuing, all Proceeds
received by any Grantor consisting of cash, checks and other near-cash items
shall be held by such Grantor in trust for the Administrative Agent and the
Lenders, segregated from other funds of such Grantor, and shall, forthwith upon
receipt by such Grantor, be turned over to the Administrative Agent in the exact
form received by such Grantor (duly indorsed by such Grantor to the
Administrative Agent, if required).  All Proceeds received by the
Administrative Agent hereunder shall be held by the Administrative Agent in a
Collateral Account maintained under its sole dominion and
control.  All Proceeds while held by the Administrative Agent in a
Collateral Account (or by such Grantor in trust for the Administrative Agent and
the Lenders) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 6.05.

     

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

     

    Section
5.06                                Code
and Other Remedies.

     

    (a)           If an Event of Default shall
occur and be continuing, the Administrative Agent, on behalf of the Secured
Parties, may exercise, in addition to all other rights and remedies granted to
the Administrative Agent and the Secured Parties in this Agreement, the other
Loan Documents and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the UCC or any other applicable law or otherwise available at law or
equity.  Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of any Secured Party or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk.  Any Secured Party shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in any Grantor, which right or equity is
hereby waived

     

    
      
         

      

      
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    (b)           

     

    and
released.  Each Grantor further agrees, at the Administrative Agent’s
request, to assemble the Collateral and make it available to the Administrative
Agent at places which the Administrative Agent shall reasonably select, whether
at such Grantor’s premises or elsewhere.  Any such sale or
transfer by the Administrative Agent either to itself or to any other Person
shall be absolutely free from any claim of right by any Grantor, including any
equity or right of redemption, stay or appraisal which any Grantor has or may
have under any rule of law, regulation or statute now existing or hereafter
adopted (and each Grantor hereby waives any rights it may have in respect
thereof).  Upon any such sale or transfer, the Administrative Agent
shall have the right to deliver, assign and transfer to the purchaser or
transferee thereof the Collateral so sold or transferred.  The Administrative Agent
shall apply the net proceeds of any action taken by it pursuant to this
Section 6.06, after deducting all
reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative Agent and the
Secured Parties hereunder, including, without limitation, reasonable attorneys’
fees and disbursements, to the payment in whole or in part of the Obligations,
in accordance with Section 10.02(c) of the Credit Agreement, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-615(a)(3) of the UCC, need the Administrative Agent account for the surplus,
if any, to any Grantor.  To the extent permitted by applicable law,
each Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Secured Party arising out of the exercise by them of
any rights hereunder except to the extent caused by the gross negligence or
willful misconduct of the Administrative Agent or such Secured Party or their
respective agents.  If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition.

     

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

     

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

     

    Section
5.07                                Securities
Laws.

     

    (a)           Each Grantor recognizes that
the Administrative Agent may be unable to effect a public sale of any or all the
Pledged Securities, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise,
or  may determine that a public sale is impracticable or not
commercially reasonable, and, accordingly, may resort to one or more private
sales thereof to a restricted group of purchasers which will be obliged to
agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale
thereof.  Each Grantor acknowledges

     

    
      
         

      

      
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    (b)           

     

    and agrees that any such
private sale may result in prices and other terms less favorable than if such
sale were a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially reasonable
manner.  The Administrative Agent shall be under no obligation to
delay a sale of any of the Pledged Securities for the period of time necessary
to permit the Issuer thereof to register such securities for public sale under
the Securities Act, or under applicable state securities laws, even if such
Issuer would agree to do so.

     

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

     

    Section
5.08                                Waiver;
Deficiency.  Each Grantor shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay its Obligations and the fees and disbursements of any attorneys employed
by the Administrative Agent or any Secured Party to collect such
deficiency.

     

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

     

    ARTICLE
VI

     

    The
Administrative Agent

     

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

     

    (a)           Upon
and during the continuance of an Event of Default, each Grantor hereby
irrevocably constitutes and appoints the Administrative Agent and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, to do any or all of the following during
the continuance of an Event of Default:

     

    (i)           in
the name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other
instruments

     

    
      
         

      

      
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    (ii)

     

    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 Administrative
Agent for the purpose of collecting any and all such moneys due under any
Receivable or with respect to any other Collateral whenever
payable;

     

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

     

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

     

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

     

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

     

    
      
        
          

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

     

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

     

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

     

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

     

    Section
6.02                                Duty of Administrative
Agent.  The Administrative Agent’s sole duty with respect to
the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the UCC or otherwise, shall be to deal with
it in the same manner as the Administrative Agent deals with similar Property
for its own account, and the Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which comparable secured parties accord comparable
collateral.  Neither the Administrative Agent, any Secured Party nor
any of their Related Parties shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.  The
powers conferred on the Administrative Agent and the Secured Parties hereunder
are solely to protect the Administrative Agent’s and the Secured Parties’
interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any Secured Party to exercise any such
powers.  The Administrative Agent and the Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their Related Parties shall
be responsible to any Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.  To the fullest
extent permitted by applicable law, the Administrative Agent shall be under no
duty whatsoever to make or give any presentment, notice of dishonor, protest,
demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection with
any Collateral or the Obligations, or to take any steps necessary to preserve
any rights against any Grantor or other Person or ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not it has or is deemed to have
knowledge of such matters.  Each Grantor, to the extent permitted by
applicable law, waives any right of marshaling in respect of any and all
Collateral, and waives any right to require the Administrative Agent or any
Secured

     

    
      
         

      

      
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    Section
6.03

     

    Party to
proceed against any Grantor or other Person, exhaust any Collateral or enforce
any other remedy which the Administrative Agent or any Secured Party now has or
may hereafter have against any Grantor or other Person.

     

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

     

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

     

    ARTICLE
VII

     

    Subordination
of Indebtedness

     

    Section
7.01                                Subordination
of All Grantor Claims.  As used herein, the term “Grantor Claims” shall
mean all debts and obligations of the Borrower or any other Grantor to any other
Grantor, whether such debts and obligations now exist or are hereafter incurred
or arise, or whether the obligation of the debtor thereon be direct, contingent,
primary, secondary, several, joint and several, or otherwise, and irrespective
of whether such debts or obligations be evidenced by note, contract, open
account, or otherwise, and irrespective of the Person or Persons in whose favor
such debts or obligations may, at their inception, have been, or may hereafter
be created, or the manner in which they have been or may hereafter be acquired
by.  During the continuation of an Event of Default, no Grantor shall
receive or collect, directly or indirectly, from any obligor in respect thereof
any amount upon the Grantor Claims.

     

    Section
7.02                                Claims
in Bankruptcy.  In the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings
involving any Grantor, the Administrative Agent on behalf of the Administrative
Agent and the Secured Parties shall have the right to prove their claim in any
proceeding, so as to establish their rights hereunder and receive directly from
the receiver, trustee or other court custodian, dividends and

     

    
      
         

      

      
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    Section
7.03

     

    payments
which would otherwise be payable upon Grantor Claims.  Each Grantor
hereby assigns such dividends and payments to the Administrative Agent for the
benefit of the Administrative Agent and the Secured Parties for application
against the Borrower Obligations as provided under Section 10.02(c) of the
Credit Agreement.  Should the Administrative Agent or any Secured
Party receive, for application upon the Obligations, any such dividend or
payment which is otherwise payable to any Grantor, and which, as between such
Grantors, shall constitute a credit upon the Grantor Claims, then upon
irrevocable and indefeasible payment in full in cash of the Borrower
Obligations, the expiration of all Letters of Credit outstanding under the
Credit Agreement and the termination of all of the Commitments, the intended
recipient shall become subrogated to the rights of the Administrative Agent and
the Secured Parties to the extent that such payments to the Administrative Agent
and the Secured Parties on the Grantor Claims have contributed toward the
liquidation of the Obligations, and such subrogation shall be with respect to
that proportion of the Obligations which would have been unpaid if the
Administrative Agent and the Secured Parties had not received dividends or
payments upon the Grantor Claims.

     

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

     

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

     

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

     

    Section
7.07

     

    
      
         

      

      
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    Miscellaneous

     

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

     

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

     

    Section
7.10                                Enforcement
Expenses; Indemnities.

     

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

     

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

     

    (c)           Each
Guarantor agrees to pay, and to save the Administrative Agent and the Secured
Parties harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 12.03 of the Credit
Agreement.

     

    (d)

     

    
      
         

      

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

     

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

     

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

     

    Section
7.13                                Survival;
Revival; Reinstatement.

     

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

     

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

     

    (c)

     

    
      
         

      

      
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    Counterparts;
Integration; Effectiveness.

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
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    Section
7.16

     

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

     

    (a)           THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

     

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

     

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

     

    (d)           EACH
PARTY HEREBY (1) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (2)
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (3) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (IV) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS

     

    
      
         

      

      
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    (e)

     

    AGREEMENT,
THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS
SECTION 9.10.

     

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

     

    Section
7.18                                Acknowledgments.  Each
Grantor hereby acknowledges that:

     

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

     

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

     

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

     

    (d)           Each
of the parties hereto specifically agrees that it has a duty to read this
Agreement, the Security Instruments and the other Loan Documents and agrees that
it is charged with notice and knowledge of the terms of this Agreement, the
Security Instruments and the other Loan Documents; that it has in fact read this
Agreement, the Security Instruments and the other Loan Documents and is fully
informed and has full notice and knowledge of the terms, conditions and effects
thereof; that it has been represented by independent legal counsel of its choice
throughout the negotiations preceding its execution of this Agreement and the
Security Instruments; and has received the advice of its attorney in entering
into this Agreement and the Security Instruments; and that it recognizes that
certain of the terms of this Agreement and the Security Instruments result in
one party assuming the liability inherent in some aspects of the transaction and
relieving the other party of its responsibility for such
liability.  EACH
PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR
ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE SECURITY
INSTRUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH
PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

     

    Section
7.19                                Additional
Grantors and Additional Pledged Securities.  Each Subsidiary of the
Borrower that is required to become a party to this Agreement pursuant to
Section 8.13 of the Credit Agreement shall become a party hereto as a
Grantor for all purposes of this Agreement upon execution and delivery by such
Subsidiary of an Assumption Agreement and shall thereafter have the same rights,
benefits and obligations as a Grantor party hereto on the date

     

    Section
7.20

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    hereof.  Each
Grantor that is required to pledge additional Equity Interests pursuant to the
Credit Agreement shall execute and deliver a Supplement.

     

    Section
7.21                                Releases.

     

    (a)           Release Upon Payment in
Full.  The grant of a security interest hereunder and all of
rights, powers and remedies in connection herewith shall remain in full force
and effect until the Administrative Agent has (4) retransferred and delivered
all Collateral in its possession to the Grantors and (5) executed a written
release or termination statement and reassigned to the Grantors without recourse
or warranty any remaining Collateral and all rights conveyed
hereby.  Upon the date that the Borrower Obligations shall have been
paid in full in cash, no Letter of Credit shall be outstanding (other than those
Letters of Credit that cash collateral has been posted for), no Secured Swap
Agreements shall be outstanding, all of the Commitments shall have terminated
and the Grantors shall have fully complied with all covenants and agreements
hereof, the Administrative Agent, at the written request and expense of the
Borrower, will promptly release, reassign and transfer the Collateral to the
Grantors and declare this Agreement to be of no further force or
effect.

     

    (b)           Partial
Releases.  If any of the Collateral shall be sold, transferred
or otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall promptly execute and deliver to such Grantor all releases or
other documents reasonably necessary or desirable for the release of the Liens
created hereby on such Collateral.  At the request and sole expense of
the Borrower, a Guarantor shall be released from its obligations hereunder in
the event that all the Equity Interests of such Guarantor shall be sold,
transferred or otherwise disposed of in a transaction permitted by the Credit
Agreement; provided that the Borrower shall have delivered to the Administrative
Agent, at least fifteen Business Days prior to the date of the proposed release
(or by such later date to which the Administrative Agent may agree), a written
request of a Responsible Officer for release identifying the relevant Guarantor
and the terms of the sale or other disposition in reasonable detail, including
the price thereof and any expenses in connection therewith, together with a
certification by the Borrower stating that such transaction is in compliance
with the Credit Agreement and the other Loan Documents.

     

    (c)           Retention in
Satisfaction.  Except as may be expressly applicable pursuant
to Section 9-620 of the UCC, no action taken or omission to act by the
Administrative Agent or the Secured Parties hereunder, including, without
limitation, any exercise of voting or consensual rights or any other action
taken or inaction, shall be deemed to constitute a retention of the Collateral
in satisfaction of the Obligations or otherwise to be in full satisfaction of
the Obligations, and the Obligations shall remain in full force and effect,
until the Administrative Agent and the Secured Parties shall have applied
payments (including, without limitation, collections from Collateral) towards
the Obligations in the full amount then outstanding or until such subsequent
time as is provided in Section
9.14(a).

     

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

     

    
      
         

      

      
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    Section
7.23

     

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

     

    
      
        
          

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

     

    

     

    BORROWER:                                                                NORTHERN OIL AND GAS,
INC.

    

    By:           /s/ Michael L.
Reger________________

    Michael L. Reger

    Chief Executive Officer

    

    

    

    

    

    

    
      
        
          Signature Page 1  –
Guaranty and Collateral Agreement

        

         

      

      
         

        
          

        

      

      
         

      

    

    Acknowledged
and Agreed to as

    of the
date hereof by:

    

    ADMINISTRATIVE
AGENT:                                                                CIT CAPITAL USA
INC.,

    as Administrative Agent

    

    

    By:           /s/ Brian
Kerrigan

    Brian
Kerrigan

    Vice
President

    

     

    
      
        
                                            
Signature Page 2 – Guaranty and Collateral Agreementexhibit104_03022009.htm

    Exhibit
10.4

     

    THIS
WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY
NOT BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE ASSIGNED IN VIOLATION OF SUCH ACT
AND LAWS OR THE PROVISIONS OF THIS WARRANT.

     

    

     

    WARRANT

     

    To
Purchase Shares of

     

    Northern
Oil and Gas, Inc.

     

    THIS
CERTIFIES THAT, for value received, CIT Group/Equity Investments, Inc., a New
Jersey corporation, or its registered and permitted assigns, (“CIT”) is
entitled, at any time and from time to time prior to the Expiration Date (as
hereinafter defined), to purchase from Northern Oil and Gas, Inc., a Nevada
corporation (the “Company”),
an aggregate of 300,000 shares (“Warrant
Grant”) of common stock, par value $0.001 per share, of the Company (the
“Shares”)(subject
to adjustment as provided herein), in whole or in part, at a purchase price of
five dollars ($5.00) per Share (the “Exercise
Price”), all on the terms and conditions and pursuant to the provisions
hereinafter set forth.

     

    1.           DEFINITIONS.  As
used in this Warrant, the following terms have the respective meanings set forth
below:

     

    “Additional
Shares” means all Shares issued by the Company after the Closing Date,
other than Permitted Shares.

     

    “Board”
means the Board of Directors of the Company.

     

    “Business
Day” means any day that is not a Saturday, Sunday or other day when
commercial banks are required or permitted by law to be closed in New York City
or Houston, Texas.

     

    “CIT” has
the meaning ascribed to such term in the introductory paragraph to this
Warrant.

     

    “Closing
Date” means February 27, 2009.

     

    “Common
Stock” means the common stock of the Company, par value $0.001 per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed into.

     

    “Commission”
means the U.S. Securities and Exchange Commission.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Company”
has the meaning set forth in the opening paragraph of this Warrant.

     

    “Conversion
Right” has the meaning set forth in Section 2.3 of this Warrant.

     

    “Conversion
Shares” has the meaning set forth in Section 2.3 of this Warrant.

     

    “Convertible
Securities” means any security convertible into Shares.

     

    “Current Market
Price” means, in respect of any Shares on any date herein specified the
average of the daily market prices for the ten (10) consecutive Business Days
commencing ten (10) Business Days before such date or, at the time of an initial
public offering of the Company’s Shares, the initial public offering
price.  The daily market price for each such Business Day shall be
(i) the last sale price on such date on the principal securities exchange
on which the Shares are then listed or admitted to trading, (ii) if no sale
takes place on such day on any such exchange, the average of the last reported
closing bid and asked prices on such day as officially quoted on any such
exchange, (iii) if the Shares are not then listed or admitted to trading on
any stock exchange, the average of the last reported closing bid and asked
prices on such day in the over-the-counter market, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., (iv) if neither such entity at the time is engaged
in the business of reporting such prices, as furnished by any similar firm then
engaged in such business, or (v) if there is no such firm, as furnished by
any member of the NASD selected mutually by the Majority Holders and the Company
or, if they cannot agree upon such selection, as selected by two such members of
the NASD, one of which shall be selected by the Majority Holders and one of
which shall be selected by the Company.

     

    “Direct
Competitor” means any person engaged in the oil and gas exploration and
production business and operating in the geographical regions or areas where the
Company operates.

     

    “Exercise
Price” has the meaning set forth in the opening paragraph of this Warrant
and as adjusted as provided herein.

     

    “Expiration
Date” means the third (3rd)
anniversary of the Closing Date.

     

    “Fiscal
Quarter” means a fiscal quarter of any Fiscal Year.

     

    “Fiscal
Year” means the fiscal year of Company and its Subsidiaries ending on
December 31st of each
calendar year.

     

    “Fully Diluted
Outstanding” means, when used with reference to Shares, at any date when
the number of Shares is to be determined, the total number of all Shares
outstanding at such date plus any unexercised Warrant Shares outstanding on such
date, plus the number of Shares convertible from any other options or warrants
to purchase, or securities convertible into, Shares outstanding on such
date.

     

    “Holder”
means the Person in whose name the Warrant set forth herein is registered on the
books of the Company maintained for such purpose and its successors and
assigns.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Independent
Financial Expert” means an investment banking firm of nationally
recognized standing mutually chosen by the Board and the Majority Holders; provided, however, that if
the Board and such Holders cannot agree on a mutually acceptable Independent
Financial Expert, then such Holders and the Company shall each choose one (1)
Independent Financial Expert, and the respective chosen Independent Financial
Experts shall agree on another Independent Financial Expert that shall make the
determination.  The Company shall retain, at its sole cost, all such
Independent Financial Experts as may be necessary pursuant to the terms of this
Warrant.

     

    “Loan
Agreement” means that certain Credit Agreement dated as of even date
herewith between the Company, CIT and the Lenders party thereto.

     

    “Majority
Holders” means holders of Warrants exercisable for in excess of 50% of
the aggregate number of Shares then purchasable upon exercise of all Warrants,
whether or not then exercisable.

     

    “NASD”
means the National Association of Securities Dealers, Inc., or any successor
corporation thereto.

     

    “Option”
means rights, options or warrants to subscribe for, purchase or otherwise
acquire Shares, Convertible Securities or other equity interests in the
Company.

     

    “Other
Property” has the meaning set forth in Section 4.8.

     

    “Permitted
Shares” means (i) Warrant Shares (ii) Shares issued or issuable
on conversion or exercise of Convertible Securities or options or warrants
issued or outstanding on the Closing Date, (iii) up to 3,000,000 (as adjusted
for stock dividends, splits and similar actions) Shares or Options (and any
Shares underlying such Options) that may be issued to officers, directors,
employees, consultants and advisors of the Company pursuant to such plans or
agreements that the Board of Directors of the Company shall determine, (iv)
Shares, Options, or Convertible Securities (and any Shares underlying such
Options or Convertible Securities) issued for non-cash consideration pursuant to
acquisitions, mergers, financings, drilling activities and other transactions
approved by the Board and (v) up to 180,000 Shares to be issued to Cynergy
Advisors, LLC.

     

    “Person”
shall mean any individual, corporation, general partnership, limited
partnership, limited liability partnership, joint venture, association,
joint-stock company, trust, limited liability company, unincorporated
organization or government or any agency or political subdivision
thereof.

     

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

     

    “Shares”
has the meaning set forth in the recitals.

     

    “Subsidiary”
means any corporation, association, trust, limited liability company,
partnership, joint venture or other business association or entity (i) at least
50% of the Outstanding voting securities of which are at the time owned or
controlled, directly or indirectly, by the Company; or (ii) with respect to
which the Company possesses, directly or indirectly, the power to direct or
cause the direction of the affairs or management of such Person.

     

    
      
         

      

      
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    “Trading
Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American
Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange or the OTC Bulletin
Board.

     

    “Transfer”
means any disposition of any Warrant or Warrant Shares or of any interest in
either thereof, which would constitute a sale thereof within the meaning of the
Securities Act.

     

    “Warrant
Price” means an amount equal to (i) the number of Shares being
purchased upon any exercise of this Warrant pursuant to Section 2, multiplied by
(ii) the Exercise Price as adjusted pursuant to the terms of this Warrant
as of the date of such exercise.

     

    “Warrant
Shares” means the Shares purchased by Holders of the Warrants upon the
exercise thereof.

     

    “Warrants”
means this Warrant and all warrants issued upon transfer, division or
combination of, or in substitution for, any thereof; provided that all Warrants
shall at all times be identical as to terms and conditions and date, except as
to the number of Shares for which they may be exercised.

     

    2.           EXERCISE OF
WARRANT

     

    2.1           General.  From
time to time after the Closing Date and until 5:00 p.m., New York time, on the
Expiration Date, Holder may exercise this Warrant, on any Business Day, for all
or any part of the number of Shares purchasable hereunder, at the stated
Exercise Price, as adjusted pursuant to Section 4, if applicable.

     

    2.2           Cash
Exercise.  Holder may exercise this Warrant, in whole or in
part, by delivering to the Company at the Company’s principal offices at 315
Manitoba Avenue, Suite 200, Wayzata, MN 55391 or at such other office or agency
designated by the Company pursuant to Section 12
the following: (i) a written notice of Holder’s election to exercise this
Warrant specifying the number of Shares to be purchased, (ii) payment of
the Warrant Price and (iii) this Warrant.  Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as Exhibit A, duly executed by Holder.  Upon receipt
thereof, the Company shall, as promptly as practicable, and in any event within
five (5) Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
reflecting Holder’s ownership of the aggregate number of Shares issuable upon
such exercise, together with cash in lieu of any fraction of a Share, as
hereinafter provided in Section 2.3.  The Share certificate or
certificates so delivered shall be in such denomination or denominations as
Holder shall request in the notice and shall be registered in the name of Holder
or, subject to any restrictions on transfer, such other name as shall be
designated in the notice.  This Warrant shall be deemed to have been
exercised and such Warrant Shares shall be deemed to have been issued, and
Holder or any other Person so designated to be named therein shall be deemed to
have become a holder of record of such Shares for all purposes, as of the date
of delivery of the Warrant Shares by the Company.  If this Warrant has
been exercised in part, the Company shall, at the time of delivery of the
certificate or certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased Shares
called for by this Warrant, which new Warrant shall in all other respects
be

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    identical
with this Warrant, or, at the request of Holder, appropriate notation may be
made on this Warrant and the same returned to Holder.  Payment of the
Warrant Price and all taxes required to be paid by Holder, if any, pursuant to
Section 2.4, shall be paid by Holder prior to delivery of the Warrant Shares by
the Company and shall be made at the option of Holder by certified bank check or
by wire transfer of immediately available funds.

     

    2.3           Cashless
Exercise.

     

    (a)           In
lieu of the payment of the Warrant Price, Holder shall have the right (but not
the obligation), to require the Company to convert this Warrant, in whole or in
part, into Shares as provided for in this Section 2.3 (the “Conversion
Right”).  Upon exercise of the Conversion Right, the Company
shall deliver to Holder (without payment by the Holder of any of the Warrant
Price) that number of Warrant Shares (the “Conversion
Shares”) equal to the quotient obtained by dividing (x) the value of this
Warrant (or portion thereof as to which the Conversion Right is being exercised
if the Conversion Right is being exercised in part) at the time the Conversion
Right is exercised (determined by subtracting the aggregate Warrant Price of the
Warrant Shares as to which the Conversion Right is being exercised in effect
immediately prior to the exercise of the Conversion Right from the aggregate
Current Market Price of the Warrant Shares as to which the Conversion Right is
being exercised immediately prior to the exercise of the Conversion Right) by
(y) the Current Market Price of one (1) Share immediately prior to the exercise
of the Conversion Right.

     

    (b)           The
Conversion Rights provided under this Section 2.3
may be exercised in whole or in part and at any time and from time to time while
this Warrant remains outstanding, subject to Section 2.3(c) below.  In
order to exercise the Conversion Right, the Holder shall surrender to the
Company, at its offices, this Warrant, and the Notice of Conversion in the form
attached hereto as Exhibit C duly executed.  The presentation and
surrender shall be deemed a waiver of Holder’s obligation to pay all or any
portion of the aggregate purchase price payable for the Warrant Shares as to
which such Conversion Right is being exercised.  This Warrant (or so
much thereof as shall have been surrendered for conversion) shall be deemed to
have been converted immediately prior to the close of business on the day of
surrender of such Warrant for conversion in accordance with the foregoing
provisions.

     

    (c)           Notwithstanding
anything to the contrary in this Section 2.3, the Holder may only make a
cashless exercise pursuant to this Section 2.3 if at the time of exercise all of
the Warrant Shares are not then registered for resale with the Commission or are
not otherwise freely tradable pursuant to Rule 144 under the Securities
Act.

     

    2.04           Payment of
Taxes.  When the Warrant Price is paid to the Company, all such
Warrant Shares shall be validly issued, fully paid and nonassessable and without
any preemptive rights.  The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery thereof, unless such tax or
charge is imposed by law upon Holder, in which case, Holder shall pay such taxes
or charges.  The Company shall not be required to pay any tax or other
charge imposed in connection with any transfer involved in the issue or delivery
of any certificate for Shares issuable upon exercise of this Warrant in any name
other than that of Holder, and in such case, the Company shall not be required
to register such Shares in any name other than Holder until

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    such tax
or other charge has been paid or it has been established to the reasonable
satisfaction of the Company that no such tax or other charge is
due.

     

    2.5           Fractional
Shares.  The Company shall not be required to issue a
fractional Share upon the exercise of this Warrant.  As to any
fraction of a Share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect of such
final fraction (calculated on an aggregate basis for all Warrants exercised) in
an amount equal to the same fraction of the Current Market Price per Share of a
Warrant Share on the date of exercise.

     

    3.           TRANSFER, DIVISION AND
COMBINATION

     

    3.1             Transfer.  Subject
to the terms and conditions hereof, and compliance with all applicable
securities laws, Transfer of this Warrant and all rights hereunder, in whole or
in part, shall be registered on the books of the Company to be maintained for
such purpose, upon surrender of this Warrant at the principal office of the
Company referred to in Section 2.2 or the office or
agency designated by the Company pursuant to Section  12, together with (i) a written assignment of this
Warrant substantially in the form of Exhibit B hereto duly executed by Holder
and (ii) evidence reasonably satisfactory to the Company (including, without
limitation, an opinion of counsel other than in the case of a Transfer to an
Affiliate for which no opinion is required) that the transfer of the Warrant to
such person does not violate any securities laws or other transfer restrictions
applicable to the Warrant.  Upon such surrender, the Company shall
execute and deliver a new Warrant or Warrants in the name of the transferee or
transferees and in the denomination specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be
cancelled.  Such Warrant, if properly assigned in compliance with any
restrictions on transfer and properly registered on the books of the Company,
may be exercised by a new Holder for the purchase of Shares without having a new
Warrant issued.  Subject to compliance with all applicable securities
laws, nothing herein shall prohibit Holder from transferring this Warrant and
its rights hereunder to any Person; provided that Holder shall
not assign all or any part of the Warrant to a Direct Competitor of the Company
except upon the prior written consent of the Company.

     

    3.2           Division and
Combination.  This Warrant may be divided or combined with
other Warrants upon presentation hereof at the aforesaid office or agency of the
Company, together with a written notice specifying the names and denominations
in which new Warrants are to be issued, signed by Holder.  Subject to
compliance with Section 3.1, as to any Transfer
that may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to
be divided or combined in accordance with such notice.

     

    3.3           Expenses.  The
Company shall prepare, issue and deliver at its own cost and expense (other than
transfer taxes) the new Warrant or Warrants under this Section 3.

     

    3.4           Maintenance of
Books.  The Company agrees to maintain, at its aforesaid office
or agency, a ledger recording the Holder(s) of this Warrant and any subsequent
Transfer of this Warrant in compliance with Section 3.1 and/or Section 3.2.

     

    
      
         

      

      
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    4.           ADJUSTMENTS.  The
number of Shares for which this Warrant is exercisable, or the price at which
such Shares may be purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 4.  The Company shall give each Holder
notice of any event described below, which requires an adjustment pursuant to
this Section 4 at the time of such
event.

     

    4.1           Distributions, Subdivisions
and Combinations.  If, at any time, the Company:

     

    (a)           takes
a record of holders of its Shares for the purpose of entitling them to receive a
distribution payable in, or other distribution of, Additional
Shares,

     

    (b)           subdivides
its outstanding Shares into a larger number of Shares, or

     

    (c)           combines
its outstanding Shares into a smaller number of Shares,

     

    (d)           then
(i) the number of Shares for which this Warrant is exercisable immediately after
the occurrence of any such event shall be adjusted to equal the number of Shares
that a record holder of the same number of Shares for which this Warrant is
exercisable immediately prior to the occurrence of such event would own or be
entitled to receive after the happening of such event, and (ii) the Exercise
Price shall be adjusted to equal (A) the then existing Exercise Price multiplied
by the number of Shares for which this Warrant is exercisable immediately prior
to the adjustment divided by (B) the number of Shares for which this Warrant is
exercisable immediately after such adjustment; provided that if any such
adjustment would reduce the Exercise Price below the par value of the Shares,
the Company will first reduce the par value to below such adjusted Exercise
Price.

     

    4.2           Certain Other
Distributions.  If at any time the Company takes a record of
holders of its Shares for the purpose of entitling them to receive any
distribution of:

     

    (a)           any
evidences of its indebtedness, any other securities of any nature whatsoever
(other than Additional Shares) or any other property, dividends or other cash
distributions, or

     

    (b)           any
Options to subscribe for or purchase any evidences of its indebtedness, or for
any other securities of any nature whatsoever (other than Additional Shares) or
for any other property,

     

    (c)           then
(i) the number of Shares for which this Warrant is exercisable shall be adjusted
to equal the product of the number of Shares for which this Warrant is
exercisable immediately prior to such adjustment multiplied by a fraction (A)
the numerator of which shall be the Current Market Price per Share at the date
of taking such record and (B) the denominator of which shall be such Current
Market Price per Share at the date of taking such record, plus the amount of
consideration, if any, paid by the holder of one (1) Share for such evidence of
indebtedness, other securities or property, or options so distributable and
minus the amount allocable to one Share of the fair value (as determined in good
faith by the Board and supported by an opinion from an Independent Financial
Expert) of any and all such evidences of indebtedness, Shares, other securities
or property or warrants or other subscription or purchase rights so
distributable, and (ii) the Exercise Price shall be adjusted to equal
(A) the Exercise Price multiplied by the number of Shares for which this
Warrant is exercisable immediately prior to the adjustment divided by (B) the
number of Shares for which this Warrant is exercisable

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    immediately
after such adjustment; provided, that if any such adjustments would reduce the
Exercise Price to below the par value per Share, the Company will first reduce
the par value to below such adjusted Exercise Price.  A
reclassification of the Shares into shares of any other class of equity shall be
deemed a distribution by the Company to Holders of its Shares of such shares or
shares of such other class of equity within the meaning of this Section 4.2 and, if the outstanding Shares shall be changed
into a larger or smaller number of Shares as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be, of
the outstanding Shares within the meaning of Section 4.1.

     

    4.3           Issuance of Additional
Shares.  If at any time the Company (except as hereinafter
provided) issues or sells any Additional Shares, in exchange for consideration
in an amount per Additional Share less than the Exercise Price at the time the
Additional Shares are issued, then

     

    (a)           the
Exercise Price for which this Warrant is exercisable shall be reduced to a price
equal to the price obtained by multiplying (i) the Exercise Price in effect
immediately prior to the issuance of such Additional Shares by (ii) a fraction
of which (x) the numerator equals the sum of (i) the number of Fully Diluted
Outstanding Shares immediately prior to such issue or sale and (ii) the number
of Additional Shares that the aggregate consideration received by the Company
upon such issue or sale would purchase at the Exercise Price in effect
immediately prior to such issuance and (y) the denominator equals the total
number of Shares outstanding immediately after such issue or sale;
and

     

    (b)           the
number of Shares for which this Warrant is exercisable shall be adjusted to
equal the product obtained by multiplying the Exercise Price in effect
immediately prior to such issue or sale by the number of Shares for which this
Warrant is exercisable immediately prior to such issue or sale and dividing the
product thereof by the Exercise Price resulting from the adjustment made
pursuant to clause (a) above.

     

    4.4           Issuance of Warrants or
Other Rights.  If at any time the Company shall issue or sell,
any warrants or other rights to subscribe for or purchase any Additional Shares
or any Convertible Securities other than Permitted Shares, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per Share for which Shares are issuable upon the exercise of such warrants
or other rights or upon conversion or exchange of such Convertible Securities
shall be less than the Exercise Price in effect immediately prior to the time of
such issue or sale, then the number of Shares for which this Warrant is
exercisable and the Exercise Price shall be adjusted as provided in Section 4.3 on the basis that the maximum number of Additional
Shares issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall have received
all of the consideration payable therefor, if any, as of the date of the actual
issuance of such warrants or other rights; provided that if any adjustment would
reduce the Exercise Price to below the par value of the Shares, the Company will
first reduce the par value to below such adjusted Exercise Price.  No
further adjustments of the number of Shares for which this Warrant is
exercisable and the Exercise Price shall be made upon the actual issue of such
Shares or of such Convertible Securities upon exercise of such warrants or other
rights or upon the actual issue of such Shares upon such conversion or exchange
of such Convertible Securities.

     

    
      
         

      

      
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    4.5           Issuance
of Convertible Securities.  If at any time the Company shall issue or
sell, any Convertible Securities other than Permitted Shares, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per Share for which Shares are issuable upon such conversion or exchange
shall be less than the Exercise Price in effect immediately prior to the time of
such issue or sale, then the number of Shares for which this Warrant is
exercisable and the Exercise Price shall be adjusted as provided in Section 4.3 on the basis that the maximum number of Additional
Shares necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and the Company
shall have received all of the consideration payable therefor, if any, as of the
date of actual issuance of such Convertible Securities; provided that if any
adjustment would reduce the Exercise Price to below the par value of the Shares,
the Company will first reduce the par value to below such adjusted Exercise
Price. No adjustment of the number of Shares for which this Warrant is
exercisable and the Exercise Price shall be made under this Section 4.5 upon the issuance of any Convertible Securities
that are issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights pursuant to Section 4.4.  No further adjustments of the number
of Shares for which this Warrant is exercisable and the Exercise Price shall be
made upon the actual issue of such Shares upon conversion or exchange of such
Convertible Securities and, if any issue or sale of such Convertible Securities
is made upon exercise of any warrant or other right to subscribe for or to
purchase any such Convertible Securities for which adjustments of the number of
Shares for which this Warrant is exercisable and the Exercise Price have been or
are to be made pursuant to other provisions of this Section 4, no further adjustments of the number of Shares for
which this Warrant is exercisable and the Exercise Price shall be made by reason
of such issue or sale.

     

    4.6           Superseding
Adjustment.  If, at any time after any adjustment of the number
of Shares for which this Warrant is exercisable and the Exercise Price has been
made pursuant to Section 4.4 or Section 4.5 as the result of any issuance of warrants, rights
or Convertible Securities:

     

    (a)           such
warrants or rights, or the right of conversion or exchange in such other
Convertible Securities, shall expire, and all or a portion of such warrants or
rights, or the right of conversion or exchange with respect to all or a portion
of such other Convertible Securities, as the case may be, shall not have been
exercised, or

     

    (b)           the
consideration per Share for which Shares are issuable pursuant to such warrants
or rights, or the terms of such other Convertible Securities, shall be increased
solely by virtue of provisions therein contained for an automatic increase in
such consideration per Share upon the occurrence of a specified date or
event,

     

    (c)           then
for each outstanding Warrant such previous adjustments shall be rescinded and
annulled and the Additional Shares that were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation.  Thereupon, a recomputation shall be made of the effect
of such rights or options or other Convertible Securities on the basis
of:

     

    (i)           treating
the number of Additional Shares or other property, if any, theretofore actually
issued or issuable pursuant to the previous exercise of any such warrants
or

     

    
      
         

      

      
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    rights or
any such right of conversion or exchange, as having been issued on the date or
dates of any such exercise and for the consideration actually received and
receivable therefor, and

     

    (ii)            treating
any such warrants or rights or any such other Convertible Securities that then
remain outstanding as having been granted or issued immediately after the time
of such increase of the consideration per Share for which Shares or other
property are issuable under such warrants or rights or other Convertible
Securities, whereupon a new adjustment of the number of Shares for which this
Warrant is exercisable and the Exercise Price shall be made, which new
adjustment shall supersede the previous adjustment so rescinded and
annulled.

     

    4.7           Other Provisions Applicable
to Adjustments under This Section.  The following provisions
shall be applicable to making adjustments to the number of Shares for which this
Warrant is exercisable and the Exercise Price provided for in this Section
4:

     

    (a)           Computation of
Consideration.  To the extent that any Additional Shares or any
Convertible Securities or any warrants or other rights to subscribe for or
purchase any Additional Shares or any Convertible Securities are issued for cash
consideration, the consideration received by the Company therefor shall be the
amount of the cash received by the Company therefor, or, if such Additional
Shares or Convertible Securities are offered by the Company for subscription,
the subscription price, or, if such Additional Shares or Convertible Securities
are sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued distributions and
without taking into account any compensation, discounts or expenses paid or
incurred by the Company for and in the underwriting of, or otherwise in
connection with, the issuance thereof).  To the extent that such
issuance is for a consideration other than cash, then, except as herein
otherwise expressly provided, the amount of such consideration shall be deemed
to be the fair market value of such consideration at the time of such issuance
as determined in good faith by the Board, upon the request of Holder, and
supported by an opinion from an Independent Financial Expert.  The
consideration for any Additional Shares issuable pursuant to any warrants or
other rights to subscribe for or purchase the same shall be the consideration
received by the Company for issuing such warrants or other rights plus the
additional consideration payable to the Company upon exercise of such warrants
or other rights.  The consideration for any Additional Shares issuable
pursuant to the terms of any Convertible Securities shall be the consideration
received by the Company for issuing warrants or other rights to subscribe for or
purchase such Convertible Securities, plus the consideration paid or payable to
the Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the Company
upon the exercise of the right of conversion or exchange in such Convertible
Securities.  If any Additional Shares or Convertible Securities are
issued at any time in payment or satisfaction of any distributions upon any
class of shares other than Shares, the Company shall be deemed to have received
for such Additional Shares or Convertible Securities a consideration equal to
the amount of such distribution so paid or satisfied

     

    (b)           When Adjustments Shall Be
Made.  The adjustments required by this Section  4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that any adjustment
of the number of Shares for which this Warrant is exercisable that

     

    
      
         

      

      
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    would
otherwise be required may be postponed (except in the case of a subdivision or
combination of the Shares, as provided for in Section 4.1) up to, but not beyond the date of exercise if
such adjustment either by itself or with other adjustments not previously made
adds or subtracts less than one percent (1%) of the Shares for which this
Warrant is exercisable immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount (except as
aforesaid) that is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum
adjustment on the date of exercise. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business on the
date of its occurrence.

     

    (c)           Timing of Issuance of Additional
Shares Upon Adjustments.  In any case in which the provisions
of this Section 4 shall require that an adjustment shall become effective
immediately after a record date for an event, the Company, after such record
date and before the occurrence of such event, may defer until the occurrence of
such event issuing to Holder the Additional Shares or other property issuable or
deliverable upon exercise by reason of the adjustment required by such event
over and above the Shares issuable or deliverable upon such exercise before
giving effect to such adjustment; provided, however, that the Company shall,
upon request of Holder, deliver to Holder a due bill or other appropriate
instrument evidencing  Holder’s right to receive such Additional
Shares or other property upon the occurrence of the event requiring such
adjustment.

     

    (d)           Fractional
Interests.  In computing adjustments under this Section  4, fractional interests in Shares shall be taken into
account to the nearest 1/10th of a Share.

     

    (e)           When Adjustment Not
Required.  If the Company takes a record of holders of its
Shares for the purpose of entitling them to receive a distribution or
subscription or purchase rights and, thereafter and before the distribution to
holders thereof, legally abandons its plan to pay or deliver such distribution,
subscription or purchase rights, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.

     

    (f)           Challenge to Good Faith
Determination.  Whenever the Board is required to make a
determination in good faith of the fair market value of any item under this
Section  4, the Majority Holders may challenge
such determination in good faith, and an Independent Financial Expert chosen by
both parties shall resolve any such dispute.  If the parties cannot
agree on an Independent Financial Expert, then the Majority Holders and the
Company shall each choose one Independent Financial Expert, and the respective
chosen Independent Financial Experts shall agree on another Independent
Financial Expert that shall make the determination.  The costs of all
such Independent Financial Experts shall be paid by the Company.

     

    4.8           Reorganization,
Reclassification, Merger, Consolidation or Disposition of
Assets.  If the Company reorganizes its capital, reclassifies
its capital securities, consolidates or merges with or into another Person
(where the Company is not the surviving Person), or sells, transfers or
otherwise disposes of all or substantially all its property, assets or business
to another Person and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, units or
shares of stock of the successor or acquiring Person or of the Company, or any
cash, units or shares of stock or other securities or property of any
nature

     

    
      
         

      

      
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    whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of the units or shares of stock of the successor or acquiring Person
(“Other
Property”), are to be received by or distributed to Holders of the Shares
of the Company, then each Holder shall have the right thereafter to receive,
upon exercise of a Warrant, the number of Shares, units or shares of stock of
the successor or acquiring Person or of the Company, if it is the surviving
Person, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a holder of the number of Shares for which this Warrant is exercisable
immediately prior to such event.  If any such reorganization,
reclassification, merger, consolidation or disposition of assets occurs, the
successor or acquiring Person (if other than Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined by the Board and supported by an opinion from
an Independent Financial Expert) in order to provide for adjustments of the
Shares for which this Warrant is exercisable, which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 4. For purposes of this Section 4.8, “units or shares of stock of the successor or
acquiring Person” includes units or shares of stock of such Person of any class
that is not preferred as to distributions or assets over any other class of
units or shares of stock of such corporation and that is not subject to
redemption and shall also include any evidences of indebtedness, units or shares
of stock or other securities that are convertible into or exchangeable for any
such units or shares of stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such Shares or stock.  The
foregoing provisions of this Section 4.8 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations, or disposition of assets.

     

    5.           NOTICES TO WARRANT
HOLDERS

     

    5.1           Notice of
Adjustments.  Whenever the number of Shares for which this
Warrant is exercisable, or whenever the price at which such Shares may be
purchased upon exercise of the Warrants, is adjusted pursuant to Section 4, the Company shall prepare a certificate to be
executed by its chief financial officer, if any, or its principal financial
officer(s) in case there is no chief financial officer, setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated (including a description of the basis on which
the Board determined the fair market value of any evidences of indebtedness,
shares of stock, other securities or property or warrants or other subscription
or purchase rights referred to in Section 4.2),
specifying the number of Shares for which this Warrant is exercisable and
describing the number and kind of any other Shares or Other Property for which
this Warrant is exercisable, and any change in the purchase price or prices
thereof, after giving effect to such adjustment or change.  The
Company shall promptly cause a signed copy of such certificate to be delivered
to each Holder in accordance with Section 14.1.  The Company shall keep at its office
or agency designated pursuant to Section 12 copies
of all such certificates and cause the same to be available for inspection at
said office during normal business hours by any Holder or any prospective
purchaser of a Warrant designated by a Holder thereof.

     

    
      
         

      

      
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    5.2           Notice
of Company Action.  If at any time:

     

    (a)           the
Company takes a record of holders of its Shares for the purpose of entitling
them to receive a distribution of any type including cash (other than regular
cash dividends), property, or any right to subscribe for or purchase any
evidences of its indebtedness, any Shares of any class or series or any other
securities or property, or to receive any other right, or

     

    (b)           there
is any capital reorganization of the Company, any reclassification or
recapitalization of the Company or any consolidation or merger of the Company
with, or any sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another business entity not
affiliated with the Company, or

     

    (c)           there
is a voluntary or involuntary dissolution, liquidation or winding up of the
Company;

     

    then, in
any one or more of such cases, the Company shall, if possible, give to Holder:
(i) at least twenty (20) days’ prior written notice of the date on which a
record date shall be selected for such distribution or right or for determining
rights to vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) if any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up occurs, at least twenty (20) days’ prior written notice of the date when the
same shall take place.  Such notice also shall specify: (i) the
date on which any such record is to be taken for the purpose of such
distribution or right, the date on which Holders of Shares shall be entitled to
any such distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
Holders of Shares shall be entitled to exchange their Shares for securities or
other property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up.  Each such written notice shall be deemed sufficiently given if
addressed to Holder at the last address of Holder appearing on the books of the
Company.

     

    6.           NO
IMPAIRMENT.  Except and to the extent as waived or consented to
be the Holder, the Company shall not by any action, including, without
limitation, through any amendment to its articles of incorporation, through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in carrying out all such actions as may be reasonably
necessary or appropriate to protect the rights of Holder against
impairment.  Without limiting the generality of the foregoing, the
Company will (a) take all such action as may be reasonably necessary or
appropriate in order that the Company may validly and legally issue fully-paid
and nonassessable Shares upon the exercise of this Warrant, and (b) use its
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this
Warrant.

     

    7.           RESERVATION AND
AUTHORIZATION OF SHARES.  From and after the Closing Date, the
Company shall at all times reserve and keep available for issue upon the
exercise of

     

    
      
         

      

      
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    Warrants
such number of its authorized but unissued Shares as will be sufficient to
permit the exercise in full of all outstanding Warrants.  All Shares,
when issued upon exercise of this Warrant and payment therefor in accordance
with the terms of this Warrant, shall be duly and validly issued and fully paid
and nonassessable, and not subject to preemptive rights.

     

    Before
taking any action that would result in an adjustment in the number of Shares for
which this Warrant is exercisable or in the Exercise Price, the Company shall
obtain all such authorizations or exemptions thereof, or consents thereto, as
may be necessary from any public regulatory body or bodies having jurisdiction
thereof.

     

    If any
Shares required to be reserved for issuance upon exercise of Warrants require
registration or qualification with any governmental authority or other
governmental approval or filing under any federal or state law before such
Shares may be so issued, the Company will in good faith and as expeditiously as
possible and at its expense endeavor to cause such Shares to be duly registered
or qualified.

     

    8.           TAKING OF RECORD; SHARES AND
WARRANT TRANSFER BOOKS.  In the case of all distributions by
the Company to holders of its Shares with respect to which any provision of
Section 4 refers to the taking of a record of such
holders, the Company will in each such case take such a record as of the close
of business on a Business Day.  The Company will not at any time,
except upon dissolution, liquidation or winding up of the Company, close its
transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.

     

    9.           RESTRICTIVE
LEGEND.  This Warrant and any Warrant issued upon transfer or
partial exercise of this Warrant shall be imprinted with the following legend,
in addition to any legend required under applicable state securities
laws:

     

    “THIS WARRANT AND THE SECURITIES
ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
OTHERWISE ASSIGNED IN VIOLATION OF SUCH ACT AND LAWS OR THE PROVISIONS OF THIS
WARRANT.”

     

    Each
Share certificate representing Warrant Shares shall bear the following
legend:

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE ASSIGNED IN VIOLATION OF SUCH ACT AND LAWS OR THE
PROVISIONS OF THIS WARRANT.”

     

    Upon
request of the holder of a Share certificate, the Company shall issue to that
holder a new certificate free of the foregoing legend, if, with such request,
such holder provides the Company with an opinion of counsel (including in-house
counsel) reasonably acceptable to the Company

     

    
      
         

      

      
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    to the
effect that the securities evidenced by such certificate may be sold without
restriction under Rule 144 (or any other rule permitting resales of securities
without restriction) promulgated under the Securities Act.

     

    10.           SUPPLYING
INFORMATION.  The Company shall cooperate with each Holder of a
Warrant and each holder of Warrant Shares in supplying such information as may
be reasonably necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale or
transfer of any Warrant or Warrant Shares.

     

    11.           LOSS OR
MUTILATION.  Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Warrant (which evidence shall be, in the case of an
institutional investor, notice from such institutional investor of such
ownership and such loss, theft, destruction or mutilation), and

     

    (a)           in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
it (provided that if the Holder of such Warrant has a minimum net worth of at
least $100,000,000, such Holder’s own unsecured agreement of indemnity shall be
deemed to be satisfactory), or

     

    (b)           in
the case of mutilation, upon surrender and cancellation thereof, the Company at
its own expense shall execute and deliver, in lieu thereof, a new Warrant, dated
the date of the original Warrant.

     

    12.           OFFICE OF THE
COMPANY.  As long as this Warrant remains outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where this Warrant may be presented for exercise,
registration of transfer, division or combination as provided in this
Warrant.

     

    13.           REPRESENTATIONS, WARRANTIES
AND COVENANTS.

     

    13.1           Representations, Warranties
and Covenants of Holder.  The Holder hereby represents and
warrants to the Company as of the Closing Date and as of the date of any
exercise hereof that:

     

    (a)           it
is acquiring this Warrant and, upon exercise of this Warrant, the Warrant
Shares, for its own account, without a view to the distribution thereof, without
prejudice, however, to Holder’s right to Transfer the Warrant Shares in
compliance with applicable securities laws.

     

    (b)           it
is an “accredited investor” within the meaning of Regulation D, under the
Securities Act.

     

    (c)           it
acknowledges that (i) this Warrant and the Warrant Shares have not been
registered under the Securities Act or any state securities laws, in reliance on
the non-public offering exemption contained in Section 4(2) of the Securities
Act and Regulation D thereunder and, as such, the Warrant and the Warrant Shares
are “restricted securities” under the Securities Act; (ii) because the Warrant
and the Warrant Shares are not so registered, it must bear the economic risk of
holding this Warrant and the Warrant Shares for an indefinite period of time
unless this Warrant and/or the Warrant Shares are subsequently, registered under
the Securities

     

    
      
         

      

      
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    Act or an
exemption from such registration is available with respect thereto; (iii) it is
familiar with Rule 144 under the Securities Act and the restrictions on resale
thereunder; and (iv) there is no trading market for this Warrant or the Warrant
Shares and there is no expectation that such market will exist in the
future.

     

    (d)           it
will not assign or transfer this Warrant or the Warrant Shares except in
accordance and in compliance with the requirements of the Securities Act, as
then in effect.

     

    13.2           Representations, Warranties
and Covenants of the Company.  The Company represents and
warrants to, and agrees with, Holder as of the Closing Date and as of the date
of any exercise that:

     

    (a)           The
Company is duly organized, validly existing and in good standing under the laws
of its jurisdiction of formation or organization and has the requisite corporate
or similar power and authority to own and operate its properties and assets and
to carry on its business as presently conducted.

     

    (b)           The
Company has the requisite corporate power and authority and has taken the
requisite corporate action, necessary in order to execute, deliver and perform
its obligations under this Warrant.  The Warrant has been duly
executed and delivered by the Company the Warrant (assuming due and valid
authorization, execution and delivery hereof by the counterparties hereto)
constitutes the valid and binding obligation of the Company and is enforceable
against the Company, 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 and to general
equity principles.

     

    (c)           Except
as set forth in Schedule 13.2(d), neither the execution, delivery or
performance of any the Warrant by the Company, nor the consummation by it of the
obligations and transactions contemplated hereby (including, without limitation,
the issuance, the reservation for issuance and the delivery of the Warrant
Stock) requires any consent of, authorization by, exemption from, filing with or
notice to any governmental authority or any other Person, excluding the Company
or any Holder, but including, without limitation, any stock exchange or
quotation system on which the Common Stock is listed or traded.

     

    (d)           The
execution, delivery and performance of the Warrant and the consummation of the
transactions contemplated hereby (including, without limitation, the issuance
and reservation for issuance, as applicable, of the Warrant Stock) will not (i)
result in a violation of the certificate of incorporation or bylaws of the
Company, in each case as amended, (ii) conflict with or result in the breach of
the terms, conditions or provisions of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give rise to any right of termination, acceleration or cancellation under, any
material contract to which the Company or any Subsidiary is a party, (iii)
assuming the accuracy of the representations and warranties set forth in
Section 13 of the Warrant, result in a violation of any law, rule,
regulation, order, judgment or decree (including, without limitation, U.S.
federal and state securities laws and regulations) applicable to the Company or
any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iv) result in the creation of any material
Lien (as defined in the Loan Agreement) upon any of their assets.

     

    
      
         

      

      
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    (e)           Assuming
the truth and accuracy of Holder’s representations and warranties contained in
Section 13.1, the issuance of this Warrant and the issuance of Warrant Shares
pursuant to this Warrant are exempt from the registration and prospectus
delivery requirements of the Securities Act.

     

    (f)           The
Company agrees that neither it nor any Person acting on its behalf has offered
or will offer this Warrant or the Warrant Shares or any part thereof or any
similar securities for issue or sale to, or has solicited or will solicit any
offer to acquire any of the same from, any Person so as to bring the issuance
and sale of this Warrant or the Warrant Shares hereunder within the provisions
of the registration and prospectus delivery requirements of the Securities
Act.

     

    14.           MISCELLANEOUS

     

    14.1           Notice
Generally.  Any notice, demand, request, consent, approval,
declaration, delivery or other communication to be made pursuant to the
provisions of this Warrant shall be deemed sufficiently given or made if in
writing and either delivered in person with receipt acknowledged or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
telecopy and confirmed by telecopy answerback, addressed as
follows:

     

    (a)           If
to any Holder or holder of Warrant Shares, at its last known address appearing
on the books of the Company maintained for such purpose.

     

    (b)           If
to the Company at:

     

    315 Manitoba Avenue, Suite
200

    Wayzata, MN 55391

    Attention:  General
Counsel

    Telecopy
No.: (952) 476-9801

    

    or at
such address as may be substituted by notice given as herein
provided.  The party entitled to receive any notice required hereunder
may waive such notice in writing.  Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three (3) Business Days after the same shall have been
deposited in the United States mail. Notice by electronic mail shall not
constitute effective notice hereunder.

     

    14.2           Successors and
Assigns.  Subject to the provisions of Sections 3.1, this
Warrant and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and assigns of
Holder (provided that this Warrant would otherwise be eligible for Transfer to
such successor or assign). This Warrant and all
rights evidenced by this Warrant may be transferred by Holder to any Person in
accordance with the terms of this Warrant, federal and state securities law,
including without limitation, the Securities Act.

     

    14.3           Remedies.  Each
holder of a Warrant or Warrant Shares, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled
to

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    specific
performance of its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by the Company of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.

     

    14.4           Amendment.  This
Warrant and all other Warrants may be modified or amended or the provisions
hereof waived with the written consent of the Company and Holder.

     

    14.5           Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Warrant.

     

    14.6           Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

     

    14.7           Governing
Law.  This Warrant shall be governed by the laws of the State
of New York, without regard to the provisions thereof relating to conflict of
laws (except NY General Obligations Law Section 5-1401).

     

    14.8           Facsimile
Signature.  The signature on this Warrant may be delivered by
telecopy,  facsimile or other electronic transmission, with original
signature page to be subsequently substituted therefor.

     

    14.9           Non-Survival.  The
parties hereby agree that all the provisions of this Warrant shall terminate and
be of no further force or effect on the earlier of the exercise in full of this
Warrant and the Expiration Date.

     

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

     

    15.           LIMITATION OF
LIABILITY.  No provision hereof, in the absence of affirmative
action by Holder to purchase Shares, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Shares or as a holder of Shares of Company, whether
such liability is asserted by the Company or by creditors of the
Company.

     

    

     

    [Signature page follows.]

     

    

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, each party hereto has caused this Warrant to be duly executed
by its authorized officer and dated effective as of the Closing
Date.

     

    Dated:  Effective
as of February 27, 2009

     

    
      	
              Northern
      Oil and Gas, Inc.

               

            
	
              By:  /s/ Michael
      Reger                                                                           

              Name:  Michael
      Reger

              Title:    Chief
      Executive OFficer

            
	 
      

    

    

    
      
        
          

          signature page to
warrant

        

         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              The CIT Group/Equity Investments,
      Inc.

               

            
	
              By:           /s/ Michael C. Magee

              Name:  Michael C.
      Magee

                         Title:
      EVP & Tax Director

            
	
                         Address:   The
      CIT Group/Equity Investments, Inc.

                  1
      CIT Drive

                  Livingston,
      NJ 07039

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