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Unassociated Document

    

      EXECUTION
        VERSION

    

     

     

     

     

     

     

     

    
      

      

    

     

    GUARANTEE
      AND COLLATERAL AGREEMENT

     

    made
      by

     

    GRITEL
      HOLDING CO., INC.

     

    TELEPHONICS
      CORPORATION

     

    and
      certain of its Subsidiaries

     

    in
      favor
      of

     

    JPMORGAN
      CHASE BANK, N.A.,

     

    as
      Administrative Agent

     

    Dated
      as
      of March 31, 2008 

     

    

    
      

      

    

     

     

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

     

    TABLE
      OF
      CONTENTS

     

    Page

     

    

      
        	
                Section
                  1.

              	
                DEFINED
                  TERMS

              	
                1

              
	
                1.1

              	
                Definitions

              	
                1

              
	
                1.2

              	
                Other
                  Definitional Provisions

              	
                5

              
	 	 	 
	
                Section
                  2.

              	
                GURANTEE

              	
                5

              
	
                2.1

              	
                Guarantee

              	
                5

              
	
                2.2

              	
                Right
                  of Contribution

              	
                6

              
	
                2.3

              	
                No
                  Subrogation

              	
                6

              
	
                2.4

              	
                Amendments,
                  etc. with respect to the Borrower Obligations

              	
                7

              
	
                2.5

              	
                Guarantee
                  Absolute and Unconditional

              	
                7

              
	
                2.6

              	
                Reinstatement

              	
                8

              
	
                2.7

              	
                Payments

              	
                8

              
	 	 	 
	
                Section
                  3.

              	
                GRANT
                  OF SECURITY INTEREST

              	
                8

              
	 	 	 
	
                Section
                  4.

              	
                REPRESENTATIONS
                  AND WARRANTIES

              	
                10

              
	
                4.1

              	
                Title;
                  No Other Liens

              	
                10

              
	
                4.2

              	
                Perfected
                  First Priority Liens

              	
                10

              
	
                4.3

              	
                Jurisdiction
                  of Organization; Chief Executive Office

              	
                11

              
	
                4.4

              	
                Inventory
                  and Equipment

              	
                11

              
	
                4.5

              	
                Farm
                  Products

              	
                11

              
	
                4.6

              	
                Investment
                  Property

              	
                11

              
	
                4.7

              	
                Receivables

              	
                11

              
	
                4.8

              	
                Intellectual
                  Property

              	 
	 	 	 
	
                Section
                  5.

              	
                COVENANTS

              	
                12

              
	
                5.1

              	
                Delivery
                  of Instruments, Certificated Securities and Chattel Paper

              	
                12

              
	
                5.2

              	
                Maintenance
                  of Insurance

              	
                12

              
	
                5.3

              	
                Maintenance
                  of Perfected Security Interest; Further Documentation

              	
                13

              
	
                5.4

              	
                Changes
                  in Name, etc

              	
                13

              
	
                5.5

              	
                Notices

              	
                13

              
	
                5.6

              	
                Investment
                  Property

              	
                13

              
	
                5.7

              	
                Intellectual
                  Property

              	
                15

              
	
                5.8

              	
                Receivables

              	
                16

              
	 	 	 
	
                Section
                  6.

              	
                REMEDIAL
                  PROVISIONS

              	
                16

              
	
                6.1

              	
                Certain
                  Matters Relating to Receivables

              	
                16

              
	
                6.2

              	
                Communications
                  with Obligors; Grantors Remain Liable

              	
                17

              
	
                6.3

              	
                Pledged
                  Stock

              	
                17

              
	
                6.4

              	
                Proceeds
                  to be Turned Over To Administrative Agent

              	
                18

              
	
                6.5

              	
                Application
                  of Proceeds

              	
                18

              
	
                6.6

              	
                Code
                  and Other Remedies

              	
                19

              
	
                6.7

              	
                Registration
                  Rights

              	
                20

              
	
                6.8

              	
                Subordination

              	
                21

              
	
                6.9

              	
                Deficiency

              	
                21

              

      

    

     

    
      
        i

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	
                Section
                  7.

              	
                THE
                  ADMINISTRATIVE AGENT

              	
                21

              
	
                7.1

              	
                Administrative
                  Agent’s Appointment as Attorney-in-Fact, etc

              	
                21

              
	
                7.2

              	
                Duty
                  of Administrative Agent

              	
                23

              
	
                7.3

              	
                Execution
                  of Financing Statements

              	
                23

              
	
                7.4

              	
                Authority
                  of Administrative Agent

              	
                23

              
	 	 	
                 

              
	
                Section
                  8.

              	
                MISCELLANEOUS

              	
                24

              
	
                8.1

              	
                Amendments
                  in Writing

              	
                24

              
	
                8.2

              	
                Notices

              	
                24

              
	
                8.3

              	
                No
                  Waiver by Course of Conduct; Cumulative Remedies

              	
                24

              
	
                8.4

              	
                Enforcement
                  Expenses; Indemnification

              	
                24

              
	
                8.5

              	
                Successors
                  and Assigns

              	
                25

              
	
                8.6

              	
                Set-Off

              	
                25

              
	
                8.7

              	
                Counterparts

              	
                25

              
	
                8.8

              	
                Severability

              	
                25

              
	
                8.9

              	
                Section
                  Headings

              	
                25

              
	
                8.10

              	
                Integration

              	
                25

              
	
                8.11

              	
                GOVERNING
                  LAW

              	
                25

              
	
                8.12

              	
                Submission
                  To Jurisdiction; Waivers

              	
                26

              
	
                8.13

              	
                Acknowledgements

              	
                26

              
	
                8.14

              	
                Additional
                  Grantors

              	
                26

              
	
                8.15

              	
                Releases

              	
                26

              
	
                8.16

              	
                WAIVER
                  OF JURY TRIAL

              	
                27

              

      

       

    

    

      SCHEDULES

       

      
        	Schedule
                1	
                Notice
                  Addresses

              

      

      
        	Schedule
                2	
                Investment
                  Property

              

      

      
        	Schedule
                3	
                Perfection
                  Matters

              

      

      
        	Schedule
                4	
                Jurisdictions
                  of Organization and Chief Executive
                  Offices

              

      

      
        	Schedule
                5	
                Inventory
                  and Equipment Locations

              

      

      
        	Schedule
                6	
                Intellectual
                  Property

              

      

       

      
        
          ii

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

     

    GUARANTEE
      AND COLLATERAL AGREEMENT

     

    GUARANTEE
      AND COLLATERAL AGREEMENT, dated as of March 31, 2008, made by each of the
      signatories hereto (together with any other entity that may become a party
      hereto as provided herein, the “Grantors”),
      in
      favor of JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity,
      the “Administrative
      Agent”)
      for
      the banks and other financial institutions or entities (the “Lenders”)
      from
      time to time parties to the Credit Agreement, dated as of March 31, 2008 (as
      amended, supplemented or otherwise modified from time to time, the “Credit
      Agreement”),
      among
      Gritel Holding Co., Inc. (“Holdings”),
      Telephonics Corporation (the “Borrower”),
      the
      Lenders and the Administrative Agent.

     

    WITNESSETH:

     

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

     

    WHEREAS,
      the Borrower is a member of an affiliated group of companies that includes
      each
      other Grantor;

     

    WHEREAS,
      the proceeds of the extensions of credit under the Credit Agreement will be
      used
      in part to enable the Borrower to make valuable transfers to one or more of
      the
      other Grantors in connection with the operation of their respective
      businesses;

     

    WHEREAS,
      the Borrower and the other Grantors are engaged in related businesses, and
      each
      Grantor will derive substantial direct and indirect benefit from the making
      of
      the extensions of credit under the Credit Agreement; and

     

    WHEREAS,
      it is a condition precedent to the obligation of the Lenders to make their
      respective extensions of credit to 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 Secured
      Parties;

     

    NOW,
      THEREFORE, in consideration of the premises and to induce the Administrative
      Agent and the Lenders to enter into the Credit Agreement and to induce the
      Lenders to make their respective extensions of credit to the Borrower
      thereunder, each Grantor hereby agrees with the Administrative Agent, for the
      ratable benefit of the Secured Parties, as follows:

     

     

    SECTION
      1. DEFINED
      TERMS

     

    1.1     Definitions.
      (a) Unless
      otherwise defined herein, terms defined in the Credit Agreement and used herein
      shall have the meanings given to them in the Credit Agreement, and the following
      terms are used herein as defined in the New York UCC: Accounts, Certificated
      Security, Chattel Paper, Documents, Equipment, Farm Products, General
      Intangibles, Instruments, Inventory, Letter-of-Credit Rights and Supporting
      Obligations.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        2

      

       

    

    (b) The
      following terms shall have the following meanings:

     

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

     

    “Borrower
      Obligations”:
      the
      collective reference to the unpaid principal of and interest on the Loans and
      reimbursement obligations and all other obligations and liabilities of the
      Borrower (including, without limitation, interest accruing at the then
      applicable rate provided in the Credit Agreement after the maturity of the
      Loans
      and reimbursement obligations 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 Administrative
      Agent or any Lender (or, in the case of any Specified Cash Management Agreement
      or any Specified Swap Agreement, any Affiliate of any Lender), 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
      Credit Agreement, this Agreement, the other Loan Documents, any Letter of
      Credit, any Specified Swap Agreement, any Specified Cash Management Agreement,
      or any other document made, delivered or given in connection with any of the
      foregoing, in each case whether on account of principal, interest, reimbursement
      obligations, fees, indemnities, costs, expenses or otherwise (including, without
      limitation, all fees and disbursements of counsel to the Administrative Agent
      or
      to the Lenders that are required to be paid by the Borrower pursuant to the
      terms of any of the foregoing agreements).

     

    “Collateral”:
      as
      defined in Section 3.

     

    “Collateral
      Account”:
      any
      collateral account established by the Administrative Agent as provided in
      Section 6.1 or 6.4.

     

    “Copyrights”:
      (i)
      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, without limitation, those listed
      in
      Schedule 6), all registrations and recordings thereof, and all applications
      in
      connection therewith, including, without limitation, all registrations,
      recordings and applications in the United States Copyright Office, and (ii)
      the
      right to obtain all renewals thereof.

     

    “Copyright
      Licenses”:
      any
      written agreement naming any Grantor as licensor or licensee (including, without
      limitation, those listed in Schedule 6), granting any right under any Copyright,
      including, without limitation, the grant of rights to manufacture, distribute,
      exploit and sell materials derived from any Copyright.

     

    “Deposit
      Account”:
      as
      defined in the Uniform Commercial Code of any applicable jurisdiction and,
      in
      any event, including, without limitation, any demand, time, savings, passbook
      or
      like account maintained with a depositary institution.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        3

      

       

    

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

     

    “Foreign
      Subsidiary Voting Stock”:
      the
      voting Capital Stock of any Foreign Subsidiary.

     

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

     

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

     

    “Intellectual
      Property”:
      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, without limitation, 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”:
      any
      promissory note evidencing loans made by any Grantor to Holdings or any of
      its
      Subsidiaries.

     

    “Investment
      Property”:
      the
      collective reference to (i) all “investment property” as such term is defined in
      Section 9-102(a)(49) of the New York UCC (other than any Foreign Subsidiary
      Voting Stock excluded from the definition of “Pledged Stock”) and (ii) whether
      or not constituting “investment property” as so defined, all Pledged Notes and
      all Pledged Stock.

     

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

     

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

     

    “Obligations”:
      (i) in
      the case of the Borrower, the Borrower Obligations, and (ii) in the case of
      each
      Guarantor, its Guarantor Obligations.

     

    “Patents”:
      (i)
      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, without limitation, any of the foregoing
      referred to in Schedule
      6,
      (ii)
      all applications for letters patent of the United States or any other country
      and all divisions, continuations and continuations-in-part thereof, including,
      without limitation, any of the foregoing referred to in Schedule
      6,
      and
      (iii) all rights to obtain any reissues or extensions of the foregoing.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        4

      

       

    

    “Patent
      License”:
      all
      written agreements, 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 of the foregoing referred to in Schedule
      6.

     

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

     

    “Pledged
      Stock”:
      the
      shares of Capital Stock listed on Schedule
      2,
      together with any other shares, stock certificates, options, interests or rights
      of any nature whatsoever in respect of the Capital Stock of any Person that
      may
      be issued or granted to, or held by, any Grantor while this Agreement is in
      effect; provided
      that in
      the case of Capital Stock of any Foreign Subsidiary, Pledged Stock shall be
      limited to no more than 66% of the total outstanding Foreign Subsidiary Voting
      Stock of such Foreign Subsidiary.

     

    “Proceeds”:
      all
“proceeds” as such term is defined in Section 9-102(a)(64) of the New York UCC
      and, in any event, shall include, without limitation, all dividends or other
      income from the Investment Property, collections thereon or distributions or
      payments with respect thereto.

     

    “Receivable”:
      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, without limitation, any
      Account).

     

    “Secured
      Parties”:
      the
      collective reference to the Administrative Agent, the Lenders and any affiliate
      of any Lender or other Person to which Borrower Obligations or Guarantor
      Obligations, as applicable, are owed.

     

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

     

    “Specified
      Cash Management Agreement”:
      any
      agreement providing for treasury, depositary or cash management services,
      including in connection with any automated clearing house transfers of funds
      or
      any similar transactions between any Loan Party and any Lender or Affiliate
      thereof, which has been designated by such Lender and the Borrower, by notice
      to
      the Administrative Agent not later than 90 days after the execution and delivery
      by such Loan Party of such Specified Cash Management Agreement, as a “Specified
      Cash Management Agreement”.

     

    “Specified
      Swap Agreement”:
      any
      Swap Agreement in respect of interest rates or currency exchange rates entered
      into by any Loan Party and any Person that is a Lender or an Affiliate of a
      Lender at the time such Swap Agreement is entered into, which has been
      designated by such Lender and the Borrower, by notice to the Administrative
      Agent not later than 90 days after the execution and delivery by such Loan
      Party
      of such Specified Swap Agreement, as a “Specified Swap Agreement”.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        5

      

       

    

    “Subsidiary
      Guarantors”:
      the
      collective reference to all Guarantors other than Holdings. 

     

    “Trademarks”:
      (i)
      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, without
      limitation, any of the foregoing referred to in Schedule
      6,
      and
      (ii) the right to obtain all renewals thereof.

     

    “Trademark
      License”:
      any
      written agreements providing for the grant by or to any Grantor of any right
      to
      use any Trademark, including, without limitation, any of the foregoing referred
      to in Schedule
      6.

     

    1.2 Other
      Definitional Provisions.
      (a)
      The
      words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import
      when used in this Agreement shall refer to this Agreement as a whole and not
      to
      any particular provision of this Agreement, and Section and Schedule references
      are to this Agreement unless otherwise specified.

     

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

     

    (c)     Where
      the
      context requires, terms relating to the Collateral or any part thereof, when
      used in relation to a Grantor, shall refer to such Grantor’s Collateral or the
      relevant part thereof.

     

     

    SECTION
      2. GUARANTEE

     

    2.1     Guarantee.
      (a)
      Each of
      the Subsidiary Guarantors hereby, jointly and severally, unconditionally and
      irrevocably, guarantees to the Administrative Agent, for the ratable benefit
      of
      the Secured Parties and their respective successors, indorsees, transferees
      and
      assigns, the prompt and complete payment and performance by the Borrower when
      due (whether at the stated maturity, by acceleration or otherwise) of the
      Borrower Obligations. Each Subsidiary Guarantor hereby further agrees that
      its
      guarantee under this Section constitutes a guarantee of payment when due and
      not
      of collection, and waives any right to require that any resort be taken by
      the
      Administrative Agent or any Secured Party to any of the security held for
      payment of the Borrower Obligations or to any balance of any deposit account
      or
      credit on the books of the Administrative Agent or any Secured Party in favor
      of
      the Borrower or any other person.

     

    (b)     Anything
      herein or in any other Loan Document to the contrary notwithstanding, the
      maximum liability of each Subsidiary 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 2.2).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        6

      

       

    

    (c)     Each
      Subsidiary Guarantor agrees that the Borrower Obligations may at any time and
      from time to time exceed the amount of the liability of such Guarantor hereunder
      without impairing the guarantee contained in this Section 2 or affecting the
      rights and remedies of the Administrative Agent or any Lender hereunder.

     

    (d)     The
      guarantee contained in this Section 2 shall remain in full force and effect
      until all the Borrower Obligations and the obligations of each Subsidiary
      Guarantor under the guarantee contained in this Section 2 shall have been
      satisfied by payment in full (other than contingent indemnification obligations
      not then due or asserted), no Letter of Credit shall be outstanding and the
      Commitments shall be terminated, notwithstanding that from time to time during
      the term of the Credit Agreement the Borrower may be free from any Borrower
      Obligations.

     

    (e)     No
      payment made by the Borrower, any of the Guarantors, any other guarantor or
      any
      other Person or received or collected by the Administrative Agent or any Lender
      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 Subsidiary Guarantor hereunder which shall,
      notwithstanding any such payment (other than any payment made by such Subsidiary
      Guarantor in respect of the Borrower Obligations or any payment received or
      collected from such Subsidiary Guarantor in respect of the Borrower
      Obligations), remain liable for the Borrower Obligations up to the maximum
      liability of such Subsidiary Guarantor hereunder until the Borrower Obligations
      are paid in full (other than contingent indemnification obligations not then
      due
      or asserted), no Letter of Credit shall be outstanding and
      the
      Commitments are terminated.

     

    2.2     Right
      of Contribution.
      Each
      Subsidiary Guarantor hereby agrees that to the extent that a Subsidiary
      Guarantor shall have paid more than its proportionate share of any payment
      made
      hereunder, such Subsidiary Guarantor shall be entitled to seek and receive
      contribution from and against any other Subsidiary Guarantor hereunder which
      has
      not paid its proportionate share of such payment. Each Subsidiary Guarantor’s
      right of contribution shall be subject to the terms and conditions of Section
      2.3. The provisions of this Section 2.2 shall in no respect limit the
      obligations and liabilities of any Subsidiary Guarantor to the Administrative
      Agent and the Lenders, and each Subsidiary Guarantor shall remain liable to
      the
      Administrative Agent and the Lenders for the full amount guaranteed by such
      Subsidiary Guarantor hereunder.

     

    2.3     No
      Subrogation.
      Notwithstanding any payment made by any Subsidiary Guarantor hereunder or any
      set-off or application of funds of any Subsidiary Guarantor by the
      Administrative Agent or any Lender, no Subsidiary Guarantor shall be entitled
      to
      be subrogated to any of the rights of the Administrative Agent or any Lender
      against the Borrower or any other Guarantor or any collateral security or
      guarantee or right of offset held by the Administrative Agent or any Lender
      for
      the payment of the Borrower Obligations, nor shall any Subsidiary Guarantor
      seek
      or be entitled to seek any contribution or reimbursement from the Borrower
      or
      any other Guarantor in respect of payments made by such Subsidiary Guarantor
      hereunder, until all amounts owing to the Administrative Agent and the Lenders
      by the Borrower on account of the Borrower Obligations are paid in full (other
      than contingent indemnification obligations not then due or asserted), no Letter
      of Credit shall be outstanding and the Commitments are terminated. If any amount
      shall be paid to any Subsidiary Guarantor on account of such subrogation rights
      at any time when all of the Borrower Obligations shall not have been paid in
      full (other than contingent indemnification obligations not then due or
      asserted), such amount shall be held by such Subsidiary Guarantor in trust
      for
      the Administrative Agent and the Lenders, segregated from other funds of such
      Subsidiary Guarantor, and shall, forthwith upon receipt by such Subsidiary
      Guarantor, be turned over to the Administrative Agent in the exact form received
      by such Subsidiary Guarantor (duly indorsed by such Subsidiary Guarantor to
      the
      Administrative Agent, if required), to be applied against the Borrower
      Obligations, whether matured or unmatured, in such order as the Administrative
      Agent may determine.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        7

      

       

    

    2.4     Amendments,
      etc. with respect to the Borrower ObligationsEach
      Subsidiary Guarantor shall remain obligated hereunder notwithstanding that,
      without any reservation of rights against any Subsidiary Guarantor and without
      notice to or further assent by any Subsidiary Guarantor, any demand for payment
      of any of the Borrower Obligations made by the Administrative Agent or any
      Lender may be rescinded by the Administrative Agent or such Lender and any
      of
      the Borrower Obligations continued, and the Borrower Obligations, or the
      liability of any other Person upon or for any part thereof, or any collateral
      security or guarantee therefor or right of offset with respect thereto, may,
      from time to time, in whole or in part, subject to the applicable requirements
      of the Credit Agreement and the other Loan Documents, be renewed, extended,
      amended, modified, accelerated, compromised, waived, surrendered or released
      by
      the Administrative Agent or any Lender, and the Credit Agreement and the other
      Loan Documents and any other documents executed and delivered in connection
      therewith may, subject to the applicable requirements of the Credit Agreement
      and other Loan Documents, be amended, modified, supplemented or terminated,
      in
      whole or in part, as the Administrative Agent (or the Required Lenders or all
      Lenders, as the case may be) may deem reasonably necessary from time to time,
      and any collateral security, guarantee or right of offset at any time held
      by
      the Administrative Agent or any Lender for the payment of the Borrower
      Obligations may be sold, exchanged, waived, surrendered or released. Neither
      the
      Administrative Agent nor any Lender shall have any obligation to protect,
      secure, perfect or insure any Lien at any time held by it as security for the
      Obligations or any property subject thereto. 

     

    2.5     Guarantee
      Absolute and Unconditional.
      Each
      Subsidiary Guarantor waives any and all notice of the creation, renewal,
      extension or accrual of any of the Borrower Obligations and notice of or proof
      of reliance by the Administrative Agent or any Lender upon the guarantee
      contained in this Section 2 or acceptance of the guarantee contained in this
      Section 2; the Borrower Obligations, and any of them, shall conclusively be
      deemed to have been created, contracted or incurred, or renewed, extended,
      amended or waived, in reliance upon the guarantee contained in this Section
      2;
      and all dealings between the Borrower and any of the Subsidiary Guarantors,
      on
      the one hand, and the Administrative Agent and the Lenders, on the other hand,
      likewise shall be conclusively presumed to have been had or consummated in
      reliance upon the guarantee contained in this Section 2. To the extent permitted
      by applicable law, each Subsidiary Guarantor waives diligence, presentment,
      protest, demand for payment and notice of default or nonpayment to or upon
      the
      Borrower or any of the Subsidiary Guarantors with respect to the Borrower
      Obligations. Each Subsidiary Guarantor understands and agrees that the guarantee
      contained in this Section 2 shall be construed as a continuing, absolute and
      unconditional guarantee of payment without regard to (a) the validity or
      enforceability of the Credit Agreement or any other Loan 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
      the Administrative Agent or any Lender; (b) 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 the
      Administrative Agent or any Lender, or (c) any other circumstance whatsoever
      (with or without notice to or knowledge of the Borrower or such Subsidiary
      Guarantor) which constitutes, or might be construed to constitute, an equitable
      or legal discharge of the Borrower for the Borrower Obligations, or of such
      Subsidiary Guarantor under the guarantee contained in this Section 2, in
      bankruptcy or in any other instance. When making any demand hereunder or
      otherwise pursuing its rights and remedies hereunder against any Subsidiary
      Guarantor, the Administrative Agent or any Lender may, but shall be under no
      obligation to, make a similar demand on or otherwise pursue such rights and
      remedies as it may have against the Borrower, any other Subsidiary 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 the Administrative Agent or any Lender to make any such demand,
      to
      pursue such other rights or remedies or to collect any payments from the
      Borrower, any other Subsidiary 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 Subsidiary Guarantor or any
      other Person or any such collateral security, guarantee or right of offset,
      shall not relieve any Subsidiary Guarantor of any obligation or liability
      hereunder, and shall not impair or affect the rights and remedies, whether
      express, implied or available as a matter of law, of the Administrative Agent
      or
      any Lender against any Subsidiary Guarantor. For the purposes hereof “demand”
shall include the commencement and continuance of any legal
      proceedings.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        8

      

       

    

    2.6     Reinstatement.
      The
      guarantee contained in this Section 2 shall continue to be effective, or be
      reinstated, as the case may be, if at any time payment, or any part thereof,
      of
      any of the Borrower Obligations is rescinded or must otherwise be restored
      or
      returned by the Administrative Agent or any Lender 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.

     

    2.7     Payments.
      Each
      Subsidiary Guarantor hereby guarantees that payments hereunder will be paid
      to
      the Administrative Agent without set-off or counterclaim in Dollars at the
      Funding Office.

     

     

    SECTION
      3. GRANT
      OF
      SECURITY INTEREST

     

    Each
      Grantor hereby assigns and transfers to the Administrative Agent, and hereby
      grants to the Administrative Agent, for the ratable benefit of the Secured
      Parties, a security interest in, all of the following property now owned or
      at
      any time hereafter acquired by such Grantor or in which such Grantor now has
      or
      at any time in the future may acquire any right, title or interest
      (collectively, the “Collateral”),
      as
      collateral security for the prompt and complete payment and performance when
      due
      (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s
      Obligations:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        9

      

       

    

    (a)     all
      Accounts;

     

    (b)     all
      Chattel Paper;

     

    (c)     all
      Deposit
      Accounts; 

     

    (d)     all
      Documents; 

     

    (e)     all
      Equipment;

     

    (f)     all
      Fixtures;

     

    (g)     all
      General
      Intangibles;

     

    (h)     all
      Instruments;

     

    (i)     all
      Intellectual Property;

     

    (j)     all
      Inventory;

     

    (k)     all
      Investment Property;

     

    (l)     all
      Letter-of-Credit Rights;

     

    (m)     all
      other
      tangible and intangible personal property not otherwise described
      above

     

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

     

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

     

    provided,
      however,
      that
      notwithstanding any of the other provisions set forth in this Section 3, this
      Agreement shall not constitute a grant of a security interest in (i) any
      leasehold interest in real property, (ii) any property to the extent that such
      grant of a security interest is prohibited by any Requirements of Law of a
      Governmental Authority, requires a consent not obtained of any Governmental
      Authority pursuant to such Requirement of Law or conflicts with or is prohibited
      by, or constitutes a breach or default under or results in the termination
      of or
      requires any consent not obtained under, any contract, license, agreement,
      instrument or other document evidencing or giving rise to such property or,
      in
      the case of any Investment Property, Pledged Stock or Pledged Note, any
      applicable shareholder or similar agreement, except to the extent that such
      Requirement of Law or the term in such contract, license, agreement, instrument
      or other document or shareholder or similar agreement providing for such
      prohibition, breach, default or termination or requiring such consent is
      ineffective under applicable law, and (iii) any Collateral that constitutes
      Equipment subject to a certificate of title statute. It is hereby understood
      and
      agreed that any property described in the preceding proviso, and any property
      that is otherwise expressly excluded from any clause in this section above,
      and
      any property specifically excluded from any defined term used in any clause
      of
      this section above, shall be excluded from the definition of “Collateral”.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        10

      

    

     

    SECTION
      4. 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 extensions of credit to the
      Borrower thereunder, each Grantor hereby represents and warrants to the
      Administrative
      Agent
      and each Lender that:

     

    4.1     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
      (i)
      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, (ii) financing statements which have been filed without
      the consent of the Grantor and with respect to which no Lien has been created,
      and (iii) financing statements which have been terminated. 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.

     

    4.2     Perfected
      First Priority Liens.
      (a)
      This
      Agreement is effective to create in favor of the Administrative Agent, for
      the
      benefit of the Secured Parties, a legal, valid and enforceable security interest
      in the Collateral. In the case of the Pledged Stock, when stock certificates
      representing such Pledged Stock are delivered to the Administrative Agent,
      in
      the case of the other Collateral, when financing statements and other filings
      specified in Schedule 3 hereto in appropriate form are filed in the offices
      specified on Schedule 3 and, in case of property acquired after the date hereof,
      any other action required pursuant to Section 6.11 of the Credit Agreement,
      the
      security interests created pursuant to this Agreement shall constitute valid
      perfected security interests in such Collateral and the proceeds thereof (to
      the
      extent a security interest in such Collateral can be perfected through the
      filing of such financing statements or the delivery of such Pledged Stock or
      the
      taking of such other actions required pursuant to Section 6.11 of the Credit
      Agreement) as security for the Obligations. 

     

    (b)     The
      security interests created pursuant to this Agreement are prior to all other
      Liens on the Collateral in existence on the date hereof except for Liens
      permitted by the Credit Agreement which have priority over the Liens on the
      Collateral by operation of law.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        11

      

       

    

    4.3     Jurisdiction
      of Organization; Chief Executive Office.
      On the
      date hereof, such Grantor’s jurisdiction of organization, identification number
      from the jurisdiction of organization (if any), and the location of such
      Grantor’s chief executive office or sole place of business or principal
      residence, as the case may be, 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. 

     

    4.4     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.

     

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

     

    4.6     Investment
      Property.
      (a)
      The
      shares of Pledged Stock pledged by such Grantor hereunder constitute all the
      issued and outstanding shares of all classes of the Capital Stock of each Issuer
      directly owned by such Grantor or, in the case of Foreign Subsidiary Voting
      Stock, if less, 66% (or such lesser percentage representing the percentage
      owned
      by such Grantor) of the outstanding Foreign Subsidiary Voting Stock of each
      relevant Issuer.

     

    (b)     All
      the
      shares of the Pledged Stock have been duly and validly issued and , to the
      extent applicable, are fully paid and nonassessable.

     

    (c)     Each
      of
      the Pledged Notes constitutes the legal, valid and binding obligation of the
      obligor with respect thereto, enforceable in accordance with its terms, subject
      to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
      moratorium and other similar laws relating to or affecting creditors’ rights
      generally, general equitable principles (whether considered in a proceeding
      in
      equity or at law) and an implied covenant of good faith and fair
      dealing.

     

    (d)     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 Liens permitted
      by
      the Credit Agreement and the security interest created by this
      Agreement.

     

    4.7     Receivables.
      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 in
      all
      material respects. 

     

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

         

        (b)     Except
          as
          set forth in Schedule 6, to the knowledge of such Grantor, on
          the date
          hereof, all
          material Intellectual Property owned by such Grantor is valid, subsisting,
          unexpired and enforceable, has not been abandoned and does
          not
          infringe the intellectual property rights of any other Person.
           

        

        (c)     Except
          as
          set forth in Schedule 6, on the date hereof, no
          Intellectual Property owned by such Grantor is
          the
          subject of any licensing or franchise agreement pursuant to which such
          Grantor
          is the licensor or franchisor, excluding all Intellectual Property that
          is the
          subject of an express or implied non-exclusive license granted to a third
          Person
          in such Grantor’s ordinary course of business.

         

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          12

        

         

        (d)     To
          the
          knowledge of such Grantor, 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 owned by such Grantor 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 (i) seeking to limit, cancel or question the validity
            of any
Intellectual
            Property owned by such Grantor
            or such
            Grantor’s ownership interest therein, or (ii) which, if adversely determined,
            could have a material adverse effect on the value of such
            Grantor’s Intellectual Property. 
             

          

        

      

    

    SECTION
      5. COVENANTS

     

    Each
      Grantor covenants and agrees with the Administrative Agent and the Lenders
      that,
      from and after the date of this Agreement until the Obligations shall have
      been
      paid in full (other than contingent indemnification obligations not then due
      or
      asserted), no Letter of Credit shall be outstanding and the Commitments shall
      have terminated:

     

    5.1     Delivery
      of Instruments, Certificated Securities and Chattel Paper.
      Upon
      the occurrence and during the continuance of an Event of Default, 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 promptly delivered
      to the Administrative Agent, duly indorsed in a manner reasonably satisfactory
      to the Administrative Agent, to be held as Collateral pursuant to this
      Agreement. No Grantor will deliver possession of any Instrument, Certificated
      Security or Chattel Paper to any Person (other the Administrative Agent) in
      connection with the creation of a Lien on such Instrument, Certificated Security
      or Chattel Paper, as applicable.

     

    5.2     Maintenance
      of
      Insurance.
      (a)
      Such
      Grantor will maintain, with financially sound and reputable companies, insurance
      policies (i) insuring the Inventory and Equipment against loss by fire,
      explosion, theft and such other casualties as may be reasonably satisfactory
      to
      the Administrative Agent and (ii) to the extent reasonably requested by the
      Administrative Agent, insuring such Grantor, the Administrative Agent and the
      Lenders against liability for personal injury and property damage relating
      to
      such Inventory and Equipment, such policies to be in such form and amounts
      and
      having such coverage as may be reasonably satisfactory to the Administrative
      Agent.

     

    (b)     All
      such
      insurance shall (i) provide that no cancellation, material reduction in amount
      or material change in coverage thereof shall be effective until at least 30
      days
      after receipt by the Administrative Agent of written notice thereof, (ii) name
      the Administrative Agent as insured party or loss payee, and (iii) be reasonably
      satisfactory in all other respects to the Administrative Agent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        13

      

       

    

    (c)     The
      Borrower shall deliver to the Administrative Agent and the Lenders a report
      of a
      reputable insurance broker with respect to such insurance substantially
      concurrently with each delivery of the Borrower’s audited annual financial
      statements and such supplemental reports with respect thereto as the
      Administrative Agent may from time to time reasonably request.

     

    5.3     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
      4.2 and shall defend such security interest against the claims and demands
      of
      all Persons claiming the same security interest or any interest therein adverse
      to the Administrative Agent, 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 reasonable written request of the
      Administrative Agent, and at the sole expense of such Grantor, such Grantor
      will
      promptly and duly execute and deliver, and have recorded, such further
      instruments and documents and take such further actions as the Administrative
      Agent may reasonably request for the purpose of obtaining or preserving the
      full
      benefits of this Agreement and of the rights and powers herein granted,
      including, without limitation, (i) filing any financing or continuation
      statements under the Uniform Commercial Code (or other similar laws) in effect
      in any jurisdiction with respect to the security interests created hereby and
      (ii) 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.

     

    5.4     Changes
      in Name, etc.
      Such
      Grantor will not, except upon 15 days’ prior written notice to the
      Administrative Agent and delivery to the Administrative Agent of all additional
      executed financing statements and other documents reasonably requested by the
      Administrative Agent to maintain the validity, perfection and priority of the
      security interests provided for herein, (i) change its jurisdiction of
      organization or the location of its chief executive office or sole place of
      business or principal residence from that referred to in Section 4.3 or (ii)
      change its name.

     

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

     

    5.6     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 Capital Stock of any Issuer, whether in addition
      to,
      in substitution of, as a conversion of, or in exchange for, any shares of the
      Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
      same as the agent of the Administrative Agent and the Lenders, hold the same
      in
      trust for the Administrative Agent and the Lenders 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
      additional collateral security for the Obligations, except to the extent that
      any of the foregoing actions could result in more than 66% of the total
      outstanding Foreign Subsidiary Voting Stock being pledged hereunder. If an
      Event
      of Default shall have occurred and be continuing, 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.
      Upon the occurrence and during the continuance of an Event of Default, 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        14

      

       

    

    (b)     Without
      the prior written consent of the Administrative Agent, such Grantor will not
      (i)
      vote to enable, or take any other action to permit, any Issuer to issue any
      Capital Stock of any nature or to issue any other securities convertible into
      or
      granting the right to purchase or exchange for any Capital Stock of any nature
      of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose
      of,
      or grant any option with respect to, the Investment Property or Proceeds
      thereof, (iii) create, incur or permit to exist any Lien or option in favor
      of,
      or any claim of any Person with respect to, any of the Investment Property
      or
      Proceeds thereof, or any interest therein, except for the security interests
      created by this Agreement or (iv) enter into any agreement or undertaking
      restricting the right or ability of such Grantor or the Administrative Agent
      to
      sell, assign or transfer any of the Investment Property or Proceeds thereof;
      provided
      that no
      such consent shall be required for (a) a Holdings Change in Control Transaction
      or any other transaction expressly permitted by the Credit Agreement, or (b)
      the
      issuance of any Capital Stock of Holdings (or, after a Holdings Change in
      Control Transactions, the Borrower) or any other securities convertible into
      or
      granting the right to purchase or exchange for any such Capital Stock of in
      connection with management compensation, management incentive plans or similar
      management compensation arrangements. 

     

    (c)     In
      the
      case of each Grantor which is an Issuer, such Issuer agrees that (i) it will
      be
      bound by the terms of this Agreement relating to the Investment Property issued
      by it and will comply with such terms insofar as such terms are applicable
      to
      it, (ii) it will notify the Administrative Agent promptly in writing of the
      occurrence of any of the events described in Section 5.7(a) with respect to
      the
      Investment Property issued by it and (iii) the terms of Sections 6.3(c) and
      6.7
      shall apply to it, mutatis mutandis,
      with
      respect to all actions that may be required of it pursuant to Section 6.3(c)
      or
      6.7 with respect to the Investment Property issued by it.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        15

      

       

    

    5.7     Intellectual
      Property.
      (a)
      Such
      Grantor (either itself or through licensees) will (i) in its reasonable business
      judgment, continue to use each material Trademark owned
      by
      such Grantor consistent with past practice,
      in order
      to maintain such Trademark in full force free from any claim of abandonment
      for
      non-use, (ii) maintain as in the past the quality of products and services
      offered under such Trademark, (iii) use such Trademark in
      material compliance with applicable
      Requirements of Law, (iv)
      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 (v)
      not (and not knowingly permit any licensee or sublicensee thereof to) do any
      act
      or knowingly omit to do any act whereby
      such Trademark is likely to become invalidated or abandoned,
      in each
      case, except as could not reasonably be expected to have a Material Adverse
      Effect.

     

    (b)     Such
      Grantor (either itself or through licensees) will not (and will not knowingly
      permit any licensee or sublicense thereof to) do any act, or knowingly omit
      to
      do any act, whereby any
      material Patent owned
      by
      such Grantor is
      likely
      to become forfeited, abandoned or dedicated to the public,
      except
      as could not reasonably be expected to have a Material Adverse
      Effect.

     

    (c)     Such
      Grantor (either itself or through licensees) will not
      (and
      will not knowingly permit any licensee or sublicensee thereof to) do any act
      or
      knowingly omit to do any act whereby any material portion of the Copyrights
      owned by such Grantor
      is
      likely to fall into the public domain or become abandoned, except as could
      not
      reasonably be expected to have a Material Adverse Effect.

     

    (d)     Such
      Grantor (either itself or through licensees) will not (and will not knowingly
      permit any licensee or sublicense thereof to) do any act that knowingly
uses
      any
      material Intellectual Property owned by such Grantor to infringe the
      intellectual property rights of any other Person.

     

    (e)     Such
      Grantor will notify the Administrative Agent and the Lenders immediately if
      it
      knows that any application or
      registration relating to any material Intellectual Property owned by such
      Grantor
      (i) may
      become forfeited,
      abandoned
      or
      dedicated to the public or (ii) is the subject of any ruling of invalidity
      or
      final rejection by any applicable Government Authority.

     

    (f)     Whenever
      such Grantor, either by itself or through any agent, employee, licensee or
      designee, shall file an application for the registration of any Intellectual
      Property owned by such Grantor 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 the
      reasonable request of the Administrative Agent, such Grantor shall execute
      and
      deliver, and have recorded, any and all agreements, instruments, documents,
      and
      papers as the Administrative Agent may reasonably request to evidence the
      Administrative Agent’s and the Lenders’ security interest in any Copyright,
      Patent or Trademark owned by such Grantor and the goodwill and general
      intangibles of such Grantor relating thereto or represented
      thereby.

     

    
      
        
        

      

      
        
        

        
          

        

      

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

     

    (h)     In
      the
      event that any material Intellectual
      Property owned by such Grantor is
      infringed, misappropriated or diluted by a third party, such Grantor
      shall
      (i) take
      such actions as such Grantor shall reasonably deem appropriate under the
      circumstances to protect such Grantor’s Intellectual Property and (ii) if such
      Grantor’s Intellectual Property is of material economic value, promptly notify
      the Administrative Agent after it learns thereof and,
      where
      appropriate, as such Grantor reasonably deems appropriate under the
      circumstances,
      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. 

     

     

    5.8     Receivables.
      With
      respect to any Receivables owed by any Governmental Authority, from time to
      time
      upon the reasonable request by the Administrative Agent, such Grantor will
      deliver to the Administrative Agent a schedule setting forth a true and complete
      list of all Receivables owed by any Governmental Authority to such Grantor
      and
      will take such actions as the Administrative Agent may reasonably request to
      comply with any applicable requirements of the Assignment of Claims Act of
      1940.

     

     

    SECTION
      6. REMEDIAL
      PROVISIONS

     

    6.1     Certain
      Matters Relating to Receivables.
      (a)
      If an
      Event of Default shall have occurred and be continuing, upon the Administrative
      Agent’s reasonable request and at the expense of the relevant Grantor, such
      Grantor shall cause independent public accountants or others reasonably
      satisfactory to the Administrative Agent to furnish to the Administrative Agent
      reports showing reconciliations, aging and test verifications of, and trial
      balances for, the Receivables.

     

    (b)     The
      Administrative Agent hereby authorizes each Grantor to collect such Grantor’s
      Receivables, subject to the Administrative Agent’s direction and control, and
      the Administrative Agent may curtail or terminate said authority at any time
      after the occurrence and during the continuance of an Event of Default. If
      required by the Administrative Agent at any time after the occurrence and during
      the continuance of an Event of Default, any payments of Receivables, when
      collected by any Grantor, (i) shall be forthwith (and, in any event, within
      five
      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 6.5, and (ii) until so turned
      over, shall be held by such Grantor in trust for the Administrative Agent and
      the Lenders, segregated from other funds of such Grantor. Each such deposit
      of
      Proceeds of Receivables shall be accompanied by a report identifying in
      reasonable detail the nature and source of the payments included in the
      deposit.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
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    (c)     If
      an
      Event of Default has occurred and be continuing, 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.

     

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

     

    (b)     Upon
      the
      reasonable 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 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 Secured Party 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 Secured Party
      of any payment relating thereto, nor shall the Administrative Agent or any
      Secured Party be obligated in any manner to perform any of the obligations
      of
      any Grantor under or pursuant to any Receivable (or any agreement giving rise
      thereto), 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.

     

    6.3     Pledged
      Stock.
      (a)
      Unless
      an Event of Default shall have occurred and be continuing and the Administrative
      Agent shall have given written notice to the relevant Grantor of the
      Administrative Agent’s intent to exercise its corresponding rights pursuant to
      Section 6.3(b), each Grantor shall be permitted to receive all cash dividends
      paid in respect of the Pledged Stock and all payments made in respect of the
      Pledged Notes, in each case paid in the normal course of business of the
      relevant Issuer and consistent with past practice, to the extent permitted
      in
      the Credit Agreement, and to exercise all voting and corporate or other
      organizational rights with respect to the Investment Property.

     

    
      
        
        

      

      
        
        

        
          

        

      

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

     

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

     

    6.4     Proceeds
      to be Turned Over To Administrative Agent.
      If an
      Event of Default shall have occurred 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 6.5.

     

    6.5     Application
      of Proceeds.
      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 guarantees set forth in Section 2 of this
      Agreement and Article III of the Credit Agreement, in payment of the Obligations
      in the following order:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
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    First,
      to pay
      incurred and unpaid out-of-pocket fees and expenses of the Administrative Agent
      required to be paid under the Loan Documents;

     

    Second,
      to the
      Administrative Agent, for application by it towards payment of amounts then
      due
      and owing and remaining unpaid in respect of the Obligations, pro rata
      among
      the Secured Parties according to the amounts of the Obligations then due and
      owing and remaining unpaid to the Secured Parties;

     

    Third,
      to the
      Administrative Agent, for application by it towards prepayment of the
      Obligations, pro rata
      among
      the Secured Parties according to the amounts of the Obligations then held by
      the
      Secured Parties; and

     

    Fourth,
      any
      balance remaining after the Obligations shall have been paid in full (other
      than
      contingent indemnification obligations not then due or asserted), no Letters
      of
      Credit shall be outstanding and the Commitments shall have terminated shall
      be
      paid over to the Borrower or to whomsoever may be lawfully entitled to receive
      the same.

     

    6.6     Code
      and Other Remedies.
      If an
      Event of Default shall occur and be continuing, the Administrative Agent, on
      behalf of the Lenders, may exercise, in addition to all other rights and
      remedies granted to them in this Agreement and in any other instrument or
      agreement securing, evidencing or relating to the Obligations, all rights and
      remedies of a secured party under the New York UCC or any other applicable
      law.
      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 commercially reasonable public or private sale or sales,
      at
      any exchange, broker’s board or office of the Administrative Agent or any
      Secured Party or elsewhere upon such terms and conditions as it may deem
      necessary and at such prices as it may deem best, for cash or on credit or
      for
      future delivery without assumption of any credit risk. The Administrative Agent
      or any Secured Party shall have the right upon any such public sale or sales,
      and, to the extent permitted by law, upon any such private sale or sales, to
      purchase the whole or any part of the Collateral so sold, free of any right
      or
      equity of redemption in any Grantor, which right or equity is hereby waived
      and
      released. Each Grantor further agrees, at the Administrative Agent’s reasonable
      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. The Administrative Agent shall apply
      the net proceeds of any action taken by it pursuant to this Section 6.6, after
      deducting all reasonable out-of-pocket 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 Lenders hereunder, including, without limitation,
      reasonable attorneys’ fees and disbursements, to the payment in whole or in part
      of the Obligations, in such order as the Administrative Agent may elect, 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 New York 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 Lender arising out of the
      exercise by them of any rights hereunder. 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
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    6.7     Registration
      Rights.
      (a)
      Upon the
      occurrence and during the continuance of an Event of Default, if the
      Administrative Agent shall determine to exercise its right to sell any or all
      of
      the Pledged Stock pursuant to Section 6.6, and if in the reasonable opinion
      of
      the Administrative Agent it is necessary or advisable to have the Pledged Stock,
      or that portion thereof to be sold, registered under the provisions of the
      Securities Act, the relevant Grantor will use its commercially reasonable best
      efforts to cause the Issuer thereof to (i) execute and deliver, and cause the
      directors and officers of such Issuer to execute and deliver, all such
      instruments and documents, and do or cause to be done all such other acts as
      may
      be, in the reasonable opinion of the Administrative Agent, necessary or
      advisable to register the Pledged Stock, or that portion thereof to be sold,
      under the provisions of the Securities Act, (ii) cause the registration
      statement relating thereto to become effective and to remain effective for
      a
      period of six months from the date of the first public offering of the Pledged
      Stock, or that portion thereof to be sold, and (iii) make all amendments thereto
      and/or to the related prospectus which, in the opinion of the Administrative
      Agent, are necessary or advisable, all in conformity with the requirements
      of
      the Securities Act and the rules and regulations of the Securities and Exchange
      Commission applicable thereto. Each Grantor agrees to use commercially
      reasonable best efforts to cause such Issuer to comply with the provisions
      of
      the securities or “Blue Sky” laws of any and all jurisdictions which the
      Administrative Agent shall designate and to make available to its security
      holders, as soon as practicable, an earnings statement (which need not be
      audited) which will satisfy the provisions of Section 11(a) of the Securities
      Act.

     

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

     

    (c)     Each
      Grantor agrees to use its commercially reasonable 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 Stock pursuant to this Section 6.7 valid
      and
      binding and in compliance with any and all other applicable Requirements of
      Law.
      Each Grantor further agrees that a breach of any of the covenants contained
      in
      this Section 6.7 will cause irreparable injury to the Administrative Agent
      and
      the Lenders, that the Administrative Agent and the Lenders have no adequate
      remedy at law in respect of such breach and, as a consequence, that each and
      every covenant contained in this Section 6.7 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
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    6.8     Subordination.
      Each
      Grantor hereby agrees that, if an Event of Default shall have occurred and
      be
      continuing, unless otherwise agreed by the Administrative Agent, all
      Indebtedness owing by it to any Subsidiary of the Borrower shall be fully
      subordinated to the indefeasible payment in full in cash of such Grantor’s
      Obligations.

     

    6.9     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 reasonable out-of-pocket fees and disbursements of any attorneys employed
      by
      the Administrative Agent or any Lender to collect such deficiency.

     

     

    SECTION
      7. THE
      ADMINISTRATIVE AGENT

     

    7.1     Administrative
      Agent’s Appointment as Attorney-in-Fact, etc.
      (a)
      Each
      Grantor hereby irrevocably constitutes and appoints the Administrative Agent
      and
      any officer or agent thereof, with full power of substitution, as its true
      and
      lawful attorney-in-fact with full irrevocable power and authority in the place
      and stead of 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 (provided
      that anything in this Section 7.1(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 7.1(a) unless an Event of Default
      shall
      have occurred and be continuing):

     

    (i)     in
      the
      name of such Grantor or its own name, or otherwise, take possession of and
      indorse and collect any checks, drafts, notes, acceptances or other instruments
      for the payment of moneys due under any Receivable or 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;

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

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

     

    (iv)     execute,
      in connection with any sale provided for in Section 6.6 or 6.7, any
      indorsements, assignments or other instruments of conveyance or transfer with
      respect to the Collateral; and

     

    (v)     (1)  direct
      any party liable for any payment under any of the Collateral to make payment
      of
      any and all moneys due or to become due thereunder directly to the
      Administrative Agent or as the Administrative Agent shall direct; (2)  
      ask or demand for, collect, and receive payment of and receipt for, any and
      all
      moneys, claims and other amounts due or to become due at any time in respect
      of
      or arising out of any Collateral; (3)  
      sign and 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; (4)
      commence
      and prosecute any suits, actions or proceedings at law or in equity in any
      court
      of competent jurisdiction to collect the Collateral or any portion thereof
      and
      to enforce any other right in respect of any Collateral; (5) defend
      any suit, action or proceeding brought against such Grantor with respect to
      any
      Collateral; (6)
      settle,
      compromise or adjust any such suit, action or proceeding and, in connection
      therewith, give such discharges or releases as the Administrative Agent may
      deem
      appropriate; (7)
      assign
      any Copyright, Patent or Trademark (along with the goodwill of the business
      to
      which any such 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 (8)
      generally, sell, transfer, pledge and make any agreement with respect to or
      otherwise deal with any of the Collateral as fully and completely as though
      the
      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 Lenders’ security interests therein and to effect
      the intent of this Agreement, all as fully and effectively as such Grantor
      might
      do..

     

    (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 give such Grantor written notice of such failure to perform or comply,
      and
      if such Grantor fails to perform or comply within five Business Days of
      receiving such notice (or if the Administrative Agent reasonably determines
      that
      harm to the Collateral or to the security interest of the Administrative Agent
      hereunder could result prior to the end of such five Business Day period),
      then
      the Administrative Agent may perform or comply, or otherwise cause performance
      or compliance, with such agreement. 

     

    (c)     The
      reasonable out-of-pocket expenses of the Administrative Agent incurred in
      connection with actions undertaken as provided in this Section 7.1, together
      with interest thereon at a rate per annum equal to the highest rate per annum
      at
      which interest would then be payable on any category of past due ABR Loans
      under
      the Credit Agreement, 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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
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    (d) To
      the
      extent permitted by applicable law, 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 or the security
      interests created hereby are released.

     

    7.2     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 New York 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.
      Neither the Administrative Agent, any Lender nor any of their respective
      officers, directors, employees or agents 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 Lenders hereunder are solely
      to
      protect the Administrative Agent’s and the Lenders’ interests in the Collateral
      and shall not impose any duty upon the Administrative Agent or any Lender to
      exercise any such powers. The Administrative Agent and the Lenders shall be
      accountable only for amounts that they actually receive as a result of the
      exercise of such powers, and neither they nor any of their officers, directors,
      employees or agents shall be responsible to any Grantor for any act or failure
      to act hereunder, except for their own gross negligence or willful
      misconduct.

     

    7.3     Execution
      of Financing Statements.
      Pursuant to any 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. Each Grantor authorizes the Administrative Agent to use the
      collateral description “all personal property” 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.

     

    7.4     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 Lenders, 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 Lenders 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        24

      

    

     

    SECTION
      8. MISCELLANEOUS

     

    8.1     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 10.02 of the Credit
      Agreement.

     

    8.2     Notices.
      All
      notices, requests and demands to or upon the Administrative Agent or any Grantor
      hereunder shall be effected in the manner provided for in Section 10.01 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.

     

    8.3     No
      Waiver by Course of Conduct; Cumulative Remedies.
      Neither
      the Administrative Agent nor any Lender shall by any act (except by a written
      instrument pursuant to Section 8.1), 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 Lender, any right,
      power or privilege hereunder shall operate as a waiver thereof. No single or
      partial exercise of any right, power or privilege hereunder shall preclude
      any
      other or further exercise thereof or the exercise of any other right, power
      or
      privilege. A waiver by the Administrative Agent or any Lender of any right
      or
      remedy hereunder on any one occasion shall not be construed as a bar to any
      right or remedy which the Administrative Agent or such Lender 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.

     

    8.4     Enforcement
      Expenses; Indemnification.
      (a)
      Each
      Guarantor agrees to pay or reimburse each Lender and the Administrative Agent
      for all its costs and expenses incurred in collecting against such Guarantor
      under the guarantee contained in Section 2 of this Agreement or the guarantee
      contained in Article III of the Credit Agreement, as applicable, or otherwise
      enforcing or preserving any rights under this Agreement and the other Loan
      Documents to which such Guarantor is a party, including, without limitation,
      the
      reasonable fees and disbursements of counsel (including the allocated fees
      and
      expenses of in-house counsel) to each Lender and of counsel to the
      Administrative Agent.

     

    (b)     Each
      Guarantor agrees to pay, and to save the Administrative Agent and the Lenders
      harmless from, any and all liabilities with respect to, or resulting from any
      delay in paying, any and all stamp, excise, sales or 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 Lenders
      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 and Article III of the Credit
      Agreement to the extent the Borrower would be required to do so pursuant to
      Section 10.03 of the Credit Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        25

      

          

    

    (d)     The
      agreements in this Section 8.4 shall survive repayment of the Obligations and
      all other amounts payable under the Credit Agreement and the other Loan
      Documents.

     

    8.5     Successors
      and Assigns.
      This
      Agreement shall be binding upon the successors and assigns of each Grantor
      and
      shall inure to the benefit of the Administrative Agent and the Lenders and
      their
      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.

     

    8.6     Set-Off.
      If an
      Event of Default shall have occurred and be continuing, each Lender shall have
      the right, without notice to any Grantor, any such notice being expressly waived
      by each Grantor to the extent permitted by applicable law, upon any Obligations
      becoming due and payable by any Grantor (whether at the stated maturity, by
      acceleration or otherwise), to set-off and appropriate and apply to the payment
      of such Obligations any and all deposits (general or special, time or demand,
      provisional or final, but excluding, to the extent not permitted by law, trust
      accounts, employee benefit accounts, payroll and withholding accounts and
      similar accounts), in any currency, and any other credits, indebtedness or
      claims, in any currency, in each case whether direct or indirect, absolute
      or
      contingent, matured or unmatured, at any time held or owing by such Lender,
      any
      affiliate thereof or any of their respective branches or agencies to or for
      the
      credit or the account of such Grantor. Each Lender agrees promptly to notify
      the
      relevant Grantor and the Administrative Agent after any such application made
      by
      such Lender, provided that the failure to give such notice shall not affect
      the
      validity of such application.

     

    8.7     Counterparts.
      This
      Agreement may be executed by one or more of the parties to this Agreement on
      any
      number of separate counterparts (including by telecopy), and all of said
      counterparts taken together shall be deemed to constitute one and the same
      instrument.

     

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

     

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

     

    8.10     Integration.
      This
      Agreement and the other Loan Documents represent the agreement of the Grantors,
      the Administrative Agent and the Lenders with respect to the subject matter
      hereof and thereof, and there are no promises, undertakings, representations
      or
      warranties by the Administrative Agent or any Lender relative to subject matter
      hereof and thereof not expressly set forth or referred to herein or in the
      other
      Loan Documents.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        26

      

       

    

    8.12     Submission
      To Jurisdiction; Waivers.
      Each
      Grantor hereby irrevocably and unconditionally:

     

    (a)     submits
      for itself and its property in any legal action or proceeding relating to this
      Agreement and the other Loan Documents to which it is a party, or for
      recognition and enforcement of any judgment in respect thereof, to the
      non-exclusive general jurisdiction of the courts of the State of New York,
      the
      courts of the United States of America for the Southern District of
      New York, and appellate courts from any thereof;

     

    (b)     consents
      that any such action or proceeding may be brought in such courts and waives
      any
      objection that it may now or hereafter have to the venue of any such action
      or
      proceeding in any such court or that such action or proceeding was brought
      in an
      inconvenient court and agrees not to plead or claim the same;

     

    (c)     agrees
      that service of process in any such action or proceeding may be effected by
      mailing a copy thereof by registered or certified mail (or any substantially
      similar form of mail), postage prepaid, to such Grantor at its address referred
      to in Section 8.2 or at such other address of which the Administrative Agent
      shall have been notified pursuant thereto;

     

    (d)     agrees
      that nothing herein shall affect the right to effect service of process in
      any
      other manner permitted by law or shall limit the right to sue in any other
      jurisdiction; and

     

    (e)     waives,
      to
      the maximum extent not prohibited by law, any right it may have to claim or
      recover in any legal action or proceeding referred to in this Section any
      special, exemplary, punitive or consequential damages.

     

    8.13     Acknowledgements.
      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 Lender 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 Lenders, 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 Lenders or among the
      Grantors and the Lenders.

     

    8.14     Additional
      Grantors.
      Each
      Subsidiary of the Borrower that is required to become a party to this Agreement
      pursuant to Section 6.11 of the Credit Agreement shall become a Grantor for
      all
      purposes of this Agreement upon execution and delivery by such Subsidiary of
      an
      Assumption Agreement in the form of Annex 1 hereto.

     

    8.15     Releases.
      (a) Immediately
      and automatically upon the consummation of a Holdings Change in Control
      Transaction, Holdings shall be released entirely from its obligations under
      this
      Agreement, the Credit Agreement, , and all other Loan Documents (including,
      without limitation, the guarantee set forth in Article III of the Credit
      Agreement) all without delivery of any instrument or performance of any act
      by
      Holdings, and any Collateral pledged by Holdings (including, without limitation,
      any Pledged Stock pledged by Holdings) pursuant to the terms of this Agreement,
      the Credit Agreement, and any other Loan Document shall be released from any
      and
      all Liens and any and all other security interests created hereby and thereby,
      and any and all rights thereto shall thereupon automatically revert to
      Holdings

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        27

      

       

    

    (b)     At
      such
      time as the Obligations shall have been paid in full (other than contingent
      indemnification obligations not then due or asserted and obligations in respect
      of Specified Swap Agreements and Specified Cash Management Agreements not then
      due or asserted), no Letter of Credit shall be outstanding and the Commitments
      have expired or terminated, the Collateral shall be released from any and all
      Liens created hereby, and any Guarantor Obligation (other than those expressly
      stated to survive such termination) shall thereupon immediately terminate,
      all
      without delivery of any instrument or performance of any act by any party.
      

     

    (c)     If
      any of
      the Collateral shall be sold, transferred or otherwise disposed of by any
      Grantor in a transaction permitted by the Credit Agreement or that has been
      consented to in accordance with Section 10.02 of the Credit Agreement, then
      the
      Administrative Agent, at the request and the sole expense of such Grantor,
      shall
      execute and deliver to such Grantor all releases or other documents reasonably
      necessary for the release of any Liens created hereby on such Collateral.

     

    8.16     WAIVER
      OF JURY TRIAL.
      EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
      ANY
      LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
      AND FOR ANY COUNTERCLAIM THEREIN.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    
      	 	 	 
	 	
              TELEPHONICS
                CORPORATION,

              as Grantor 

            
	 
 	 
 	 
 
	 	By:  	/s/ Joseph
              J.
              Battaglia
	 	
              
Name:
              Joseph J. Battaglia
	 	Title:
              President

    

     

    
      
        
           

          [Signature
            Page to Guarantee and Collateral Agreement]

          

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

     

    
      	 	 	 
	 	
              GRITEL
                HOLDING CO., INC., as Grantor 

            
	 
 	 
 	 
 
	 	By:  	/s/ Patrick
              L. Alesia
	 	
              
Name:
              Patrick L. Alesia
	 	Title:
              Sec.Unassociated Document

    Exhibit
      4.4 

     

    NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
      SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
      AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

    

    COMMON
      STOCK PURCHASE WARRANT

    

    To
      Purchase 3,000,000 Shares of Common Stock of

     

    WITS
      BASIN PRECIOUS MINERALS INC.

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, Platinum Long Term Growth V, LLC, a Delaware
      limited liability company (the “Holder”),
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after July 27, 2007 (the
      “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the fifth anniversary of the Initial
      Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from Wits Basin Precious Minerals
      Inc., a Minnesota corporation (the “Company”),
      subject to the limitations in Section 2(f), up to 3,000,000 shares (the
“Warrant
      Shares”)
      of
      Common Stock, par value $.01 per share, of the Company (the “Common
      Stock”).
      The
      purchase price of one share of Common Stock under this Warrant shall be equal
      to
      the Exercise Price, as defined in Section 2(b). 

     

    Section
      1. Definitions.
      Capitalized terms used and not otherwise defined herein shall have the meanings
      set forth on Exhibit A hereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    Section
      2. Exercise.

     

    a) Exercise
      of Warrant.
      Exercise of the purchase rights represented by this Warrant may be made, in
      whole or in part, at any time or times on or after the Initial Exercise Date
      and
      on or before the Termination Date by delivery to the Company of a duly executed
      facsimile copy of the Notice of Exercise Form annexed hereto (or such other
      office or agency of the Company as it may designate by notice in writing to
      the
      registered Holder at the address of such Holder appearing on the books of the
      Company); provided,
      however,
      within
      5 Trading Days of the date said Notice of Exercise is delivered to the Company,
      if this Warrant is exercised in full, the Holder shall have surrendered this
      Warrant to the Company and the Company shall have received payment of the
      aggregate Exercise Price of the shares thereby purchased by wire transfer or
      cashier’s check drawn on a United States bank. Notwithstanding anything herein
      to the contrary, the Holder shall not be required to physically surrender this
      Warrant to the Company until the Holder has purchased all of the Warrant Shares
      available hereunder and the Warrant has been exercised in full. Partial
      exercises of this Warrant resulting in purchases of a portion of the total
      number of Warrant Shares available hereunder shall have the effect of lowering
      the outstanding number of Warrant Shares purchasable hereunder in an amount
      equal to the applicable number of Warrant Shares purchased. The Holder and
      the
      Company shall maintain records showing the number of Warrant Shares purchased
      and the date of such purchases. The Company shall deliver any objection to
      any
      Notice of Exercise Form within 1 Business Day of receipt of such notice. In
      the
      event of any dispute or discrepancy, the records of the Company shall be
      controlling and determinative in the absence of manifest error. The Holder
      and
      any assignee, by acceptance of this Warrant, acknowledge and agree that, by
      reason of the provisions of this paragraph, following the purchase of a portion
      of the Warrant Shares hereunder, the number of Warrant Shares available for
      purchase hereunder at any given time may be less than the amount stated on
      the
      face hereof.

     

    b) Exercise
      Price.
      The
      exercise price of the Common Stock under this Warrant shall be $0.01,
      subject
      to adjustment hereunder (the “Exercise
      Price”).

     

    c) Cashless
      Exercise.
      This
      Warrant may also be exercised at any time by means of a “cashless exercise” in
      which the Holder shall be entitled to receive a certificate for the number
      of
      Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),
      where:

     

    (A)
      = the
      VWAP on the Trading Day immediately preceding the date of such
      election;

    

    (B)
      = the
      Exercise Price of this Warrant, as adjusted; and 

    

    (X)
      = the
      number of Warrant Shares issuable upon exercise of this Warrant in accordance
      with the terms of this Warrant by means of a cash exercise rather than a
      cashless exercise.

    

    Notwithstanding
      anything herein to the contrary, on the Termination Date, this Warrant shall
      be
      automatically exercised via cashless exercise pursuant to this Section
      2(c).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    d) Exercise
      Limitations.
      The
      Company shall not effect any exercise of this Warrant, and a 
      Holder
      shall not have the right to exercise any portion of this Warrant, pursuant
      to
      Section 2(c) or otherwise, to the extent that after giving effect to such
      issuance after exercise, such Holder (together with such Holder’s Affiliates,
      and any other person or entity acting as a group together with such Holder
      or
      any of such Holder’s Affiliates), as set forth on the applicable Notice of
      Exercise, would beneficially own in excess of 4.99% of the number of shares
      of
      the Common Stock outstanding immediately after giving effect to such
      issuance.  For purposes of the foregoing sentence, the number of shares of
      Common Stock beneficially owned by such Holder and its Affiliates shall include
      the number of shares of Common Stock issuable upon exercise of this Warrant
      with
      respect to which the determination of such sentence is being made, but shall
      exclude the number of shares of Common Stock which would be issuable upon (A)
      exercise of the remaining, nonexercised portion of this Warrant beneficially
      owned by such Holder or any of its Affiliates and (B) exercise or conversion
      of
      the unexercised or nonconverted portion of any other securities of the Company
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein beneficially owned by such Holder or any of its
      Affiliates.  Except as set forth in the preceding sentence, for purposes of
      this Section 2(d), beneficial ownership shall be calculated in accordance with
      Section 13(d) of the Exchange Act and the rules and regulations promulgated
      thereunder, it being acknowledged by a Holder that the Company is not
      representing to such Holder that such calculation is in compliance with Section
      13(d) of the Exchange Act and such Holder is solely responsible for any
      schedules required to be filed in accordance therewith. To the extent that
      the
      limitation contained in this Section 2(d) applies, the determination of whether
      this Warrant is exercisable (in relation to other securities owned by such
      Holder) and of which a portion of this Warrant is exercisable shall be in the
      sole discretion of a Holder, and the submission of a Notice of Exercise shall
      be
      deemed to be each Holder’s determination of whether this Warrant is exercisable
      (in relation to other securities owned by such Holder) and of which portion
      of
      this Warrant is exercisable, in each case subject to such aggregate percentage
      limitation, and the Company shall have no obligation to verify or confirm the
      accuracy of such determination. In addition, a determination as to any group
      status as contemplated above shall be determined in accordance with Section
      13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
      For purposes of this Section 2(d), in determining the number of outstanding
      shares of Common Stock, a Holder may rely on the number of outstanding shares
      of
      Common Stock as reflected in (x) the Company’s most recent Form 10-QSB or Form
      10-KSB, as the case may be, (y) a more recent public announcement by the Company
      or (z) any other notice by the Company or the Company’s Transfer Agent setting
      forth the number of shares of Common Stock outstanding.  Upon the written
      or oral request of a Holder, the Company shall within two Trading Days confirm
      orally and in writing to such Holder the number of shares of Common Stock then
      outstanding.  In any case, the number of outstanding shares of Common Stock
      shall be determined after giving effect to the conversion or exercise of
      securities of the Company, including this Warrant, by such Holder or its
      Affiliates since the date as of which such number of outstanding shares of
      Common Stock was reported. The provisions of this Section 2(d) may be waived
      by
      such Holder, at the election of such Holder, upon not less than 61 days’ prior
      notice to the Company, and the provisions of this Section 2(d) shall continue
      to
      apply until such 61st
      day (or
      such later date, as determined by such Holder, as may be specified in such
      notice of waiver). The
      provisions of this paragraph shall be implemented in a manner otherwise than
      in
      strict conformity with the terms of this Section 2(d) to correct this paragraph
      (or any portion hereof) which may be defective or inconsistent with the intended
      4.99% beneficial ownership limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such 4.99%
      limitation. The limitations contained in this paragraph shall apply to a
      successor holder of this Warrant. The holders of Common Stock of the Company
      shall be third party beneficiaries of this Section 2(d) and the Company may
      not
      waive this Section 2(d) without the consent of holders of a majority of its
      Common Stock. 

     

    e) Mechanics
      of Exercise.
      

     

    i. Authorization
      of Warrant Shares.
      Subject
      to Section 5(e) hereof, the Company covenants that all Warrant Shares which
      may
      be issued upon the exercise of the purchase rights represented by this Warrant
      will, upon exercise of the purchase rights represented by this Warrant, be
      duly
      authorized, validly issued, fully paid and nonassessable and free from all
      taxes, liens and charges in respect of the issue thereof (other than taxes
      in
      respect of any transfer occurring contemporaneously with such issue).

     

    ii. Delivery
      of Certificates Upon Exercise.
      Certificates for shares purchased hereunder shall be transmitted by the transfer
      agent of the Company to the Holder by crediting the account of the Holder’s
      prime broker with the Depository Trust Company through its Deposit Withdrawal
      Agent Commission (“DWAC”)
      system
      if the Company is a participant in such system, and otherwise by physical
      delivery to the address specified by the Holder in the Notice of Exercise within
      3 Trading Days from the delivery to the Company of the Notice of Exercise Form,
      surrender of this Warrant (if required) and payment of the aggregate Exercise
      Price as set forth above (“Warrant
      Share Delivery Date”),
      free
      and clear of all legends (other than as required by law). This Warrant shall
      be
      deemed to have been exercised on the date the Exercise Price is received by
      the
      Company. The Warrant Shares shall be deemed to have been issued, and the 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 the
      Warrant has been exercised by payment to the Company of the Exercise Price
      and
      all taxes required to be paid by the Holder, if any, pursuant to Section
      2(e)(vii) prior to the issuance of such shares, have been paid. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    iii. Delivery
      of New Warrants Upon Exercise.
      If this
      Warrant shall have been exercised in part, the Company shall, at the request
      of
      a Holder and upon surrender of this Warrant certificate, 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
      Warrant Shares called for by this Warrant, which new Warrant shall in all other
      respects be identical with this Warrant.

     

    iv. Rescission
      Rights.
      If the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Shares pursuant to this
      Section 2 by the Warrant Share Delivery Date, then the Holder will have the
      right to rescind such exercise.

     

    v. Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.
      In
      addition to any other rights available to the Holder, if the Company fails
      to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the Warrant Shares pursuant to an exercise on or before the Warrant
      Share Delivery Date, and if after such date the Holder is required by its broker
      to purchase (in an open market transaction or otherwise) shares of Common Stock
      to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
      the Holder anticipated receiving upon such exercise (a “Buy-In”),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of Warrant Shares that the Company was required
      to
      deliver to the Holder in connection with the exercise at issue times (B) the
      price at which the sell order giving rise to such purchase obligation was
      executed, and (2) at the option of the Holder, either reinstate the portion
      of
      the Warrant and equivalent number of Warrant Shares for which such exercise
      was
      not honored or deliver to the Holder the number of shares of Common Stock that
      would have been issued had the Company timely complied with its exercise and
      delivery obligations hereunder. For example, if the Holder purchases Common
      Stock having a total purchase price of $11,000 to cover a Buy-In with respect
      to
      an attempted exercise of shares of Common Stock with an aggregate sale price
      giving rise to such purchase obligation of $10,000, under clause (1) of the
      immediately preceding sentence the Company shall be required to pay the Holder
      $1,000. The Holder shall provide the Company written notice indicating the
      amounts payable to the Holder in respect of the Buy-In, together with applicable
      confirmations and other evidence reasonably requested by the Company. Nothing
      herein shall limit a Holder’s right to pursue any other remedies available to it
      hereunder, at law or in equity including, without limitation, a decree of
      specific performance and/or injunctive relief with respect to the Company’s
      failure to timely deliver certificates representing shares of Common Stock
      upon
      exercise of the Warrant as required pursuant to the terms hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    vi. No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall pay
      a
      cash adjustment in respect of such final fraction in an amount equal to such
      fraction multiplied by the Exercise Price.

     

    vii. Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    viii. Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

     

    f) Vesting
      Schedule.
      Notwithstanding anything to the contrary contained herein, it is understood
      and
      agreed that this Warrant shall vest and only be exercisable for Warrant Shares
      on a monthly basis as is set forth in Section 4(b) of the Consulting Agreement
      (as defined below). Upon termination of the Consulting Agreement, vesting of
      the
      shares hereunder shall cease in accordance with the terms of the Consulting
      Agreement; provided that the portion of this Warrant that shall have previously
      vested shall remain vested and exercisable for the Term, and shall not be
      forfeited by the Holder. 

     

    Section
      3. Certain
      Adjustments.

     

    a) Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding: (A) pays a stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company pursuant to this Warrant), (B)
      subdivides outstanding shares of Common Stock into a larger number of shares,
      (C) combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by reclassification
      of shares of the Common Stock any shares of capital stock of the Company, then
      in each case the Exercise Price shall be multiplied by a fraction of which
      the
      numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding immediately before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding
      immediately after such event and the number of shares issuable upon exercise
      of
      this Warrant shall be proportionately adjusted. Any adjustment made pursuant
      to
      this Section 3(a) shall become effective immediately after the record date
      for
      the determination of stockholders entitled to receive such dividend or
      distribution and shall become effective immediately after the effective date
      in
      the case of a subdivision, combination or re-classification.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    b) Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while this Warrant
      is outstanding, shall offer, sell, grant any option to purchase or offer, sell
      or grant any right to reprice its securities, or otherwise dispose of or issue
      (or announce any offer, sale, grant or any option to purchase or other
      disposition) any Common Stock or Common Stock Equivalents entitling any Person
      to acquire shares of Common Stock, at an effective price per share less than
      the
      then Exercise Price (such lower price, the “Base
      Share Price”
and
      such issuances collectively, a “Dilutive
      Issuance”),
      as
      adjusted hereunder (if the holder of the Common Stock or Common Stock
      Equivalents so issued shall at any time, whether by operation of purchase price
      adjustments, reset provisions, floating conversion, exercise or exchange prices
      or otherwise, or due to warrants, options or rights per share which is issued
      in
      connection with such issuance, be entitled to receive shares of Common Stock
      at
      an effective price per share which is less than the Exercise Price, such
      issuance shall be deemed to have occurred for less than the Exercise Price
      on
      such date of the Dilutive Issuance), then the Exercise Price shall be reduced
      and only reduced to equal the Base Share Price and the number of Warrant Shares
      issuable hereunder shall be increased such that the aggregate Exercise Price
      payable hereunder, after taking into account the decrease in the Exercise Price,
      shall be equal to the aggregate Exercise Price prior to such adjustment. Such
      adjustment shall be made whenever such Common Stock or Common Stock Equivalents
      are issued. The Company shall notify the Holder in writing, no later than the
      Trading Day following the issuance of any Common Stock or Common Stock
      Equivalents subject to this section, indicating therein the applicable issuance
      price, or of applicable reset price, exchange price, conversion price and other
      pricing terms (such notice the “Dilutive
      Issuance Notice”).
      For
      purposes of clarification, whether or not the Company provides a Dilutive
      Issuance Notice pursuant to this Section 3(b), upon the occurrence of any
      Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
      entitled to receive a number of Warrant Shares based upon the Base Share Price
      regardless of whether the Holder accurately refers to the Base Share Price
      in
      the Notice of Exercise. Notwithstanding the foregoing, this Section 3(b) shall
      not apply in respect of an Exempt Issuance. 

     

    c) Pro
      Rata Distributions.
      If the
      Company, at any time prior to the Termination Date, shall distribute to all
      holders of Common Stock (and not to Holders of the Warrants) evidences of its
      indebtedness or assets (including cash and cash dividends) or rights or warrants
      to subscribe for or purchase any security other than the Common Stock (which
      shall be subject to Section 3(b)), then in each such case the Exercise Price
      shall be adjusted by multiplying the Exercise Price in effect immediately prior
      to the record date fixed for determination of stockholders entitled to receive
      such distribution by a fraction of which the denominator shall be the VWAP
      determined as of the record date mentioned above, and of which the numerator
      shall be such VWAP on such record date less the then per share fair market
      value
      at such record date of the portion of such assets or evidence of indebtedness
      so
      distributed applicable to one outstanding share of the Common Stock as
      determined by the Board of Directors in good faith. In either case the
      adjustments shall be described in a statement provided to the Holder of the
      portion of assets or evidences of indebtedness so distributed or such
      subscription rights applicable to one share of Common Stock. Such adjustment
      shall be made whenever any such distribution is made and shall become effective
      immediately after the record date mentioned above.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    d) Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (in any such case, a “Fundamental
      Transaction”),
      then,
      upon any subsequent exercise of this Warrant, the Holder shall have the right
      to
      receive, for each Warrant Share that would have been issuable upon such exercise
      immediately prior to the occurrence of such Fundamental Transaction, at the
      option of the Holder, (a) upon exercise of this Warrant, the number of shares
      of
      common stock or other securities of the successor or acquiring corporation
      or of
      the Company, if it is the surviving corporation, and any additional
      consideration (the “Alternate
      Consideration”)
      receivable upon or as a result of such reorganization, reclassification, merger,
      consolidation or disposition of assets by a Holder of the number of shares
      of
      Common Stock for which this Warrant is exercisable immediately prior to such
      event or (b) if the Company is acquired in an all cash transaction, cash equal
      to the value of this Warrant as determined in accordance with the Black-Scholes
      option pricing formula. For purposes of any such exercise, the determination
      of
      the Exercise Price shall be appropriately adjusted to apply to such Alternate
      Consideration based on the amount of Alternate Consideration issuable in respect
      of one share of Common Stock in such Fundamental Transaction, and the Company
      shall apportion the Exercise Price among the Alternate Consideration in a
      reasonable manner reflecting the relative value of any different components
      of
      the Alternate Consideration. If holders of Common Stock are given any choice
      as
      to the securities, cash or property to be received in a Fundamental Transaction,
      then the Holder shall be given the same choice as to the Alternate Consideration
      it receives upon any exercise of this Warrant following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall issue to the Holder a new warrant consistent with the foregoing provisions
      and evidencing the Holder’s right to exercise such warrant into Alternate
      Consideration. A condition to the consummation of a Fundamental Transaction
      shall require any such successor or surviving entity to comply with the
      provisions of this Section 3(d) and ensure that this Warrant (or any such
      replacement security) will be similarly adjusted upon any subsequent transaction
      analogous to a Fundamental Transaction and upon any other circumstances as
      set
      forth in Section 3 herein. For the avoidance of doubt, it is understood and
      agreed that this Warrant shall be adjusted pursuant to this 3(d) (or otherwise
      entitled to the provisions of this Section 3(d)), irrespective of whether a
      sufficient number of authorized shares of Common Stock shall be available to
      permit exercise of this Warrant immediately prior to any Fundamental
      Transaction.

     

    e) Calculations.
      All
      calculations under this Section 3 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      3,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding. To the extent that any Common
      Stock or any Common Stock Equivalents (or any warrants or other rights therefor)
      shall be 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 Common Stock or Common Stock Equivalents are offered
      by
      the Company for subscription, the subscription price, or, if such Common Stock
      or Common Stock Equivalents 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 dividends 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 shall be 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 value of such consideration at the time of such issuance as
      mutually determined in good faith by the Board of Directors of the Company
      and
      the Holder. The consideration for any Common Stock 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
      divided by the number of shares of Common Stock issuable upon the exercise
      of
      such warrant or right plus the additional consideration payable to the Company
      upon exercise of such warrant or other right for one share of Common Stock.
      The
      consideration for any Common Stock issuable pursuant to the terms of any Common
      Stock Equivalents shall be the consideration received by the Company for issuing
      such Common Stock Equivalent, divided by the number of shares of Common Stock
      issuable upon the conversion or other exercise of such Common Stock Equivalent,
      plus the additional consideration, if any, payable to the Company upon the
      exercise of the right of conversion or exchange in such Common Stock Equivalent
      for one share of Common Stock. In case of the issuance at any time of any Common
      Stock or Common Stock Equivalents in payment or satisfaction of any dividends
      upon any class of stock other than Common Stock, the Company shall be deemed
      to
      have received for such Additional Shares of Common Stock or Common Stock
      Equivalents a consideration equal to the amount of such dividend so paid or
      satisfied.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    f) Voluntary
      Adjustment By Company.
      The
      Company may at any time during the term of this Warrant reduce the then current
      Exercise Price to any amount and for any period of time deemed appropriate
      by
      the Board of Directors of the Company.

     

    g) Notice
      to Holders.
      

     

    i. Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company
      shall promptly mail to each Holder a notice setting forth the Exercise Price
      after such adjustment and setting forth a brief statement of the facts requiring
      such adjustment. If the Company issues a variable rate security, the Company
      shall be deemed to have issued Common Stock or Common Stock Equivalents at
      the
      lowest possible conversion or exercise price at which such securities may be
      converted or exercised.

     

    ii. Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution) on the Common
      Stock; (B) the Company shall declare a special nonrecurring cash dividend on
      or
      a redemption of the Common Stock; (C) the Company shall authorize the granting
      to all holders of the Common Stock rights or warrants to subscribe for or
      purchase any shares of capital stock of any class or of any rights; (D) the
      approval of any stockholders of the Company shall be required in connection
      with
      any reclassification of the Common Stock, any consolidation or merger to which
      the Company is a party, any sale or transfer of all or substantially all of
      the
      assets of the Company, of any compulsory share exchange whereby the Common
      Stock
      is converted into other securities, cash or property; (E) the Company shall
      authorize the voluntary or involuntary dissolution, liquidation or winding
      up of
      the affairs of the Company; then, in each case, the Company shall cause to
      be
      mailed to the Holder at its last address as it shall appear upon the Warrant
      Register of the Company, at least 10 calendar days prior to the applicable
      record or effective date hereinafter specified, a notice stating (x) the date
      on
      which a record is to be taken for the purpose of such dividend, distribution,
      redemption, rights or warrants, or if a record is not to be taken, the date
      as
      of which the holders of the Common Stock of record to be entitled to such
      dividend, distributions, redemption, rights or warrants are to be determined
      or
      (y) the date on which such reclassification, consolidation, merger, sale,
      transfer or share exchange is expected to become effective or close, and the
      date as of which it is expected that holders of the Common Stock of record
      shall
      be entitled to exchange their shares of the Common Stock for securities, cash
      or
      other property deliverable upon such reclassification, consolidation, merger,
      sale, transfer or share exchange; provided,
      that
      the failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to exercise this Warrant during the
      10-day period commencing on the date of such notice to the effective date of
      the
      event triggering such notice.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    Section
      4. Transfer
      of Warrant; Registration Rights.

     

    a) Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Sections 5(a) and 4(d) hereof, this Warrant and all rights hereunder are
      transferable, in whole or in part, upon surrender of this Warrant at the
      principal office of the Company, together with a written assignment of this
      Warrant substantially in the form attached hereto duly executed by the Holder
      or
      its agent or attorney and funds sufficient to pay any transfer taxes payable
      upon the making of such transfer. Upon such surrender and, if required, such
      payment, the Company shall execute and deliver a new Warrant or Warrants in
      the
      name of the assignee or assignees and in the denomination or denominations
      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. A Warrant, if properly assigned, may be
      exercised by a new holder for the purchase of Warrant Shares without having
      a
      new Warrant issued. 

     

    b) New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 4(a), as to any transfer which 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.

     

    c) Warrant
      Register.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    d) Transfer
      Restrictions.
      If,
      at the
time
      of
      the surrender of this Warrant in connection with any transfer of this Warrant,
      the transfer of this Warrant shall not be registered pursuant to an effective
      registration
      statement under the Securities Act
      and
under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such transfer (i) that the Holder or transferee of this
      Warrant, as the case may be, furnish to the Company, at the Holder’s expense, a
      written opinion of counsel (which opinion shall be in form, substance and scope
      customary for opinions of counsel in comparable transactions) to the effect
      that
      such transfer may be made without
      registration under
      the
      Securities Act and under applicable state securities or blue sky laws, (ii)
      that
      the holder or transferee execute and deliver to the Company an investment letter
      in form and substance acceptable to the Company and (iii) that the transferee
      be
      an “accredited
      investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
      promulgated under the Securities Act or a qualified institutional buyer as
      defined in Rule 144A(a) under the Securities Act. The Company will provide,
      at
      the Company’s expense, such legal opinions in the future as are reasonably
      necessary for the issuance and resale of the Common Stock issuable upon exercise
      of this Warrant pursuant to an effective Registration Statement, Rule 144 under
      the Securities Act or an exemption from registration. In the event that the
      Common Stock is sold in a manner that complies with an exemption from
      registration, the Company will promptly instruct its counsel (at the Company’s
      expense) to issue to the transfer agent an opinion permitting removal of the
      legend (indefinitely, if pursuant to Rule 144(k) under the Securities Act,
      or to
      permit sale of the shares pursuant to other provisions under Rule 144 under
      the
      Securities Act).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    e) Registration
      Rights.
      If the
      Company shall determine to prepare and file with the Commission a registration
      statement (a “Registration
      Statement”)
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act), or their then equivalents,
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, then the Company
      shall send to the Holder a written notice of such determination and, if within
      ten days after the date of such notice, the Holder shall so request in writing,
      the Company shall include in such registration statement all or any part of
      the
      Warrant Shares as the Holder requests to be registered so long as such Warrant
      Shares are proposed to be disposed in the same manner as those set forth in
      the
      Registration Statement; provided, however, that if the number of Warrant Shares
      offered for participation in the proposed offering is greater than, in the
      reasonable opinion of the managing underwriter of the proposed offering, can
      be
      accommodated without adversely affecting the proposed offering, then the number
      of shares of Common Stock included in such registration shall be subject to
      reduction to a number deemed satisfactory by the managing underwriter, which
      reduction shall be allocated pro rata among all parties offering securities
      pursuant to such registration statement. The Company shall use its best efforts
      to cause any Registration Statement to be declared effective by the Commission
      as promptly as is possible following it being filed with the Commission and
      to
      remain effective until all Warrant Shares subject thereto have been sold. All
      fees and expenses incident to the performance of or compliance with this Section
      4(e) by the Company shall be borne by the Company whether or not any Warrant
      Shares are sold pursuant to the Registration Statement. The Company shall,
      notwithstanding any full or partial exercise of this Warrant, indemnify and
      hold
      harmless the Holder, the officers, directors, members, partners, agents,
      brokers, investment advisors and employees of each of them, each person who
      controls the Holder (within the meaning of Section 15 of the Securities Act
      or
      Section 20 of the Exchange Act), and the officers, directors, members,
      shareholders, partners, agents and employees of each such controlling person,
      to
      the fullest extent permitted by applicable law, from and against any and all
      losses, claims, damages, liabilities, costs (including, without limitation,
      reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred,
      arising out of or relating to (1) any untrue or alleged untrue statement of
      a
      material fact contained in the Registration Statement, any prospectus included
      therein or any form of prospectus or in any amendment or supplement thereto
      or
      in any preliminary prospectus, or arising out of or relating to any omission
      or
      alleged omission of a material fact required to be stated therein or necessary
      to make the statements therein (in the case of any prospectus or form of
      prospectus or supplement thereto, in light of the circumstances under which
      they
      were made) not misleading or (2) any violation or alleged violation by the
      Company of the Securities Act, the Exchange Act or any state securities law,
      or
      any rule or regulation thereunder, in connection with the performance of its
      obligations under this Section 4(e), except to the extent, but only to the
      extent, that such untrue statements or omissions referred to in (1) above are
      based solely upon information regarding the Holder furnished in writing to
      the
      Company by the Holder expressly for use therein. The rights of the Holder under
      this Section 4(e) shall survive any full or partial exercise of this Warrant
      until all Warrant Shares have been either registered under a Registration
      Statement or been sold pursuant to an exemption to the registration requirements
      of the Securities Act or are saleable pursuant to Rule 144(k) under the
      Act..

     

    Section
      5. Miscellaneous.

     

    a) Title
      to Warrant.
      Prior
      to the Termination Date and subject to compliance with applicable laws and
      Section 4 of this Warrant, this Warrant and all rights hereunder are
      transferable, in whole or in part, at the office or agency of the Company by
      the
      Holder in person or by duly authorized attorney, upon surrender of this Warrant
      together with the Assignment Form annexed hereto properly endorsed. The
      transferee shall sign an investment letter in form and substance reasonably
      satisfactory to the Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    b) No
      Rights as Shareholder Until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof. Upon the surrender
      of
      this Warrant and the payment of the aggregate Exercise Price (or by means of
      a
      cashless exercise), the Warrant Shares so purchased shall be and be deemed
      to be
      issued to such Holder as the record owner of such shares as of the close of
      business on the later of the date of such surrender or payment.

     

    c) Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares, and in case of loss,
      theft or destruction, of indemnity or security reasonably satisfactory to it
      (which, in the case of the Warrant, shall not include the posting of any bond),
      and upon surrender and cancellation of such Warrant or stock certificate, if
      mutilated, the Company will make and deliver a new Warrant or stock certificate
      of like tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.

     

    d) Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday, Sunday or a legal holiday,
      then such action may be taken or such right may be exercised on the next
      succeeding day not a Saturday, Sunday or legal holiday.

     

    e) Authorized
      Shares.
      

     

    The
      Company covenants that during the period the Warrant is outstanding, it will
      use
      its best efforts to reserve from its authorized and unissued Common Stock a
      sufficient number of shares to provide for the issuance of the Warrant Shares
      upon the exercise of any purchase rights under this Warrant. To the extent
      there
      exist insufficient shares of Common Stock available for reservation on the
      Initial Exercise Date, the Company shall use its best efforts to promptly amend
      its charter documents to permit for such reservation. The Company further
      covenants that its issuance of this Warrant shall constitute full authority
      to
      its officers who are charged with the duty of executing stock certificates
      to
      execute and issue the necessary certificates for the Warrant Shares upon the
      exercise of the purchase rights under this Warrant. The Company will take all
      such reasonable action as may be necessary to assure that such Warrant Shares
      may be issued as provided herein without violation of any applicable law or
      regulation, or of any requirements of the Trading Market upon which the Common
      Stock may be listed. If the Company shall list any shares of Common Stock on
      any
      securities exchange or market it will, at its expense, list thereon, maintain
      and increase when necessary such listing, of, all shares of Warrant Stock from
      time to time issued upon exercise of this Warrant or as otherwise provided
      hereunder, and, to the extent permissible under the applicable securities
      exchange’s rules, all unissued shares of Warrant Stock which are at any time
      issuable hereunder, so long as any shares of Common Stock shall be so listed.
      The Company will also so list on each securities exchange or market, and will
      maintain such listing of, any other securities which the Holder of this Warrant
      shall be entitled to receive upon the exercise of this Warrant if at the time
      any securities of the same class shall be listed on such securities exchange
      or
      market by the Company. The Holder hereby acknowledges that the Company has
      informed the Holder that the Company’s Articles of Incorporation as currently in
      effect do not provide for sufficient authorized and unissued shares of the
      Company’s Common Stock to permit the issuance of all Warrant Shares upon
      exercise of this Warrant through the Term. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or 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 the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially 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.

     

    Before
      taking any action which would result in an adjustment in the number of Warrant
      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.

     

    f) Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflict of laws thereof. The Company hereby irrevocably submits
      to the exclusive jurisdiction of the state and federal courts sitting in the
      City of New York, borough of Manhattan for the adjudication of any dispute
      hereunder or in connection herewith or with any transaction contemplated hereby
      or discussed herein, and hereby irrevocably waives, and agrees not to assert
      in
      any suit, action or proceeding, any claim that it is not personally subject
      to
      the jurisdiction of any such court, that such suit, action or proceeding is
      improper or inconvenient venue for such proceeding. The Company and the Holder
      hereby irrevocably waive personal service of process and consent to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      via registered or certified mail or overnight delivery (with evidence of
      delivery) to such party at the address set forth in the Consulting Agreement
      and
      agrees that such service shall constitute good and sufficient service of process
      and notice thereof. Nothing contained herein shall be deemed to limit in any
      way
      any right to serve process in any manner permitted by law. The parties hereby
      waive all rights to a trial by jury. If the Company or the Holder shall commence
      an action or proceeding to enforce any provisions of this Warrant, then the
      prevailing party in such action or proceeding shall be reimbursed by the other
      party for its attorneys’ fees and other costs and expenses incurred with the
      investigation, preparation and prosecution of such action or
      proceeding.

     

    g) Restrictions.
      The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

    h) Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding the fact that all rights
      hereunder terminate on the Termination Date. If the Company willfully and
      knowingly fails to comply with any provision of this Warrant, which results
      in
      any material damages to the Holder, the Company shall pay to Holder such amounts
      as shall be sufficient to cover any costs and expenses including, but not
      limited to, reasonable attorneys’ fees, including those of appellate
      proceedings, incurred by Holder in collecting any amounts due pursuant hereto
      or
      in otherwise enforcing any of its rights, powers or remedies
      hereunder. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    i) Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      hereunder shall be delivered by certified mail or courier to the addresses
      set
      forth in the Consulting Agreement, dated as of the date hereof, between the
      Holder and the Company (the “Consulting
      Agreement”),
      or
      such other address as specified by the relevant party in writing.

     

    j) Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant or purchase Warrant Shares, and no enumeration herein of the rights
      or privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

     

    k) Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to 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 it 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.

     

    l) Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by any such Holder
      or
      holder of Warrant Shares.

     

    m) Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

     

    n) 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 provisions or the remaining
      provisions of this Warrant.

     

    o) 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.

     

    

    

    Signature
      Page Follows

    

    ********************

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized.

     

    

    Dated:
      February 11, 2008

     

    
      	
              WITS
                BASIN PRECIOUS MINERALS INC.

               

            
	
              By:__________________________________________

              Name:
                Mark D. Dacko

              Title:
                Chief Financial Officer

            

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    Signature
      Page

    to
      Common Stock Purchase Warrant

    to
      Purchase 3,000,000 Shares of Common Stock

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    NOTICE
      OF EXERCISE

    

    TO: WITS
      BASIN PRECIOUS MINERALS INC.

    

    (1) The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

    (2) Payment
      shall take the form of (check applicable box):

     

    o in
      lawful money of
      the United States; or

     

    o the
      cancellation
      of such number of Warrant Shares as is necessary, in accordance with the formula
      set forth in subsection 2(c), to exercise this Warrant with respect to the
      maximum number of Warrant Shares purchasable pursuant to the cashless exercise
      procedure set forth in subsection 2(c).

     

    (3) Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    _______________________________

     

    

    The
      Warrant Shares shall be delivered to the following:

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

    (4)
      Accredited
      Investor.
      The
      undersigned is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act of 1933, as amended.

    

    [SIGNATURE
      OF HOLDER]

     

    Name
      of
      Investing Entity:
      ________________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      ________________________________________________________________________________________

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    

    

    

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to

     

    

    _______________________________________________
      whose address is

    

    _______________________________________________________________.

    

    

    

    _______________________________________________________________

    

    Dated:
      ______________, _______

    

    

    Holder’s
      Signature: _____________________________

    

    Holder’s
      Address: _____________________________

     

    _____________________________

    

    

    

    Signature
      Guaranteed: ___________________________________________

    

    

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
      A

    (Certain
      Definitions)

    

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144 under the Securities
      Act. 

     

    “Business
      Day”
means
      any day except Saturday, Sunday, any day which shall be a federal legal holiday
      in the United States or any day on which banking institutions in the State
      of
      New Jersey are authorized or required by law or other governmental action to
      close.

     

    “Common
      Stock Equivalents”
means
      any securities of the Company or its subsidiaries which would entitle the holder
      thereof to acquire at any time Common Stock, including, without limitation,
      any
      debt, preferred stock, rights, options, warrant or other instrument that is
      at
      any time convertible into or exercisable or exchangeable for, or otherwise
      entitles the holder thereof to receive, Common Stock.

     

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Company pursuant to any stock or option plan duly adopted
      by a
      majority of the non-employee members of the Board of Directors of the Company
      or
      a majority of the members of a committee of non-employee directors established
      for such purpose, (b) securities upon the exercise or exchange of or conversion
      of any securities issued hereunder and/or securities exercisable or exchangeable
      for or convertible into shares of Common Stock issued and outstanding on the
      Initial Exercise Date, provided that such securities have not been amended
      since
      the Initial Exercise Date to increase the number of such securities or to
      decrease the exercise, exchange or conversion price of any such securities,
      (c)
      securities issued pursuant to acquisitions or strategic transactions, provided
      any such issuance shall only be to a person which is, itself or through its
      subsidiaries, an operating company in a business synergistic with the business
      of the Company and in which the Company receives benefits in addition to the
      investment of funds, but shall not include a transaction in which the Company
      is
      issuing securities primarily for the purpose of raising capital or to an entity
      whose primary business is investing in securities, and (d) shares of Common
      Stock (other than as set forth in (a) through (c) above) in an aggregate amount
      not to exceed 3% of the number of shares of Common Stock outstanding on the
      Initial Exercise Date.

     

    “Person”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “Trading
      Day”
means
      a
      day on which the Trading Markets are open for business, or if the Common Stock
      is not then listed on a Trading Market, any business day in New York
      City.

     

    “Trading
      Market”
means
      the following markets or exchanges: the Nasdaq Capital Market, the American
      Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or
      the
      Over-the-Counter Bulletin Board.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading Market on which the Common Stock
      is
      then listed or quoted as reported by BigCharts (based on a Trading Day from
      9:30
      a.m. New York City time to 4:02 p.m. New York City time); (b) if the OTC
      Bulletin Board is not a Trading Market, the volume weighted average price of
      the
      Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
      Board; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin
      Board and if prices for the Common Stock are then reported in the “Pink Sheets”
published by Pink Sheets, LLC (or a similar organization or agency succeeding
      to
      its functions of reporting prices), the most recent bid price per share of
      the
      Common Stock so reported; or (d) in all other cases, the fair market value
      of a
      share of Common Stock as determined by an independent appraiser selected in
      good
      faith by the Holder and reasonably acceptable to the Company.

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