Document:

EXHIBIT 10.2

GUARANTY AND PLEDGE AGREEMENT

DATED AS
OF

JUNE 15, 2006

MADE BY

TETON ENERGY CORPORATION

AND

EACH OF THE OTHER OBLIGORS

 

IN FAVOR OF

 

BNP PARIBAS,

AS ADMINISTRATIVE AGENT

TABLE OF CONTENTS

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I Definitions

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.02

  	
  Other Definitional Provisions

  	
   

  	
  4

  
	
  Section 1.03

  	
  Rules of Interpretation

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II Guarantee

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Guarantee

  	
   

  	
  4

  
	
  Section 2.02

  	
  Right of Contribution

  	
   

  	
  5

  
	
  Section 2.03

  	
  No Subrogation

  	
   

  	
  5

  
	
  Section 2.04

  	
  Guaranty Amendments, Etc. with respect to the
  Borrower Obligations

  	
   

  	
  5

  
	
  Section 2.05

  	
  Waivers

  	
   

  	
  6

  
	
  Section 2.06

  	
  Guaranty Absolute and Unconditional

  	
   

  	
  6

  
	
  Section 2.07

  	
  Reinstatement

  	
   

  	
  8

  
	
  Section 2.08

  	
  Payments

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III Grant of Security Interest

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Grant of Security Interest

  	
   

  	
  8

  
	
  Section 3.02

  	
  Transfer of Pledged Securities

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV Representations and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Representations in Credit Agreement

  	
   

  	
  9

  
	
  Section 4.02

  	
  Title; No Other Liens

  	
   

  	
  9

  
	
  Section 4.03

  	
  Perfected First Priority Liens

  	
   

  	
  9

  
	
  Section 4.04

  	
  Obligor Information

  	
   

  	
  10

  
	
  Section 4.05

  	
  Pledged Securities

  	
   

  	
  10

  
	
  Section 4.06

  	
  Benefit to the Guarantor

  	
   

  	
  10

  
	
  Section 4.07

  	
  Solvency

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V Covenants

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Maintenance of Perfected Security Interest; Further
  Documentation

  	
   

  	
  11

  
	
  Section 5.02

  	
  Changes in Locations, Name, Etc

  	
   

  	
  11

  
	
  Section 5.03

  	
  Pledged Securities

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI Remedial Provisions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Code and Other Remedies

  	
   

  	
  13

  
	
  Section 6.02

  	
  Pledged Securities

  	
   

  	
  15

  
	
  Section 6.03

  	
  Private Sales of Pledged Securities

  	
   

  	
  17

  
	
  Section 6.04

  	
  Waiver; Deficiency

  	
   

  	
  17

  
	
  Section 6.05

  	
  Non-Judicial Enforcement

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII The Administrative Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01

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

  	
   

  	
  17

  
	
  Section 7.02

  	
  Duty of Administrative Agent

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  

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  Section 7.03

  	
  Filing of Financing Statements

  	
   

  	
  20

  
	
  Section 7.04

  	
  Authority of Administrative Agent

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII Subordination of Indebtedness

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01

  	
  Subordination of All Obligor Claims

  	
   

  	
  20

  
	
  Section 8.02

  	
  Claims in Bankruptcy

  	
   

  	
  21

  
	
  Section 8.03

  	
  Payments Held in Trust

  	
   

  	
  21

  
	
  Section 8.04

  	
  Liens Subordinate

  	
   

  	
  21

  
	
  Section 8.05

  	
  Notation of Records

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.01

  	
  Waiver

  	
   

  	
  21

  
	
  Section 9.02

  	
  Notices

  	
   

  	
  22

  
	
  Section 9.03

  	
  Payment of Expenses, Indemnities, Etc

  	
   

  	
  22

  
	
  Section 9.04

  	
  Amendments in Writing

  	
   

  	
  22

  
	
  Section 9.05

  	
  Successors and Assigns

  	
   

  	
  22

  
	
  Section 9.06

  	
  Survival; Revival; Reinstatement

  	
   

  	
  23

  
	
  Section 9.07

  	
  Counterparts; Integration; Effectiveness

  	
   

  	
  23

  
	
  Section 9.08

  	
  Severability

  	
   

  	
  24

  
	
  Section 9.09

  	
  Set-Off

  	
   

  	
  24

  
	
  Section 9.10

  	
  Governing Law; Submission to Jurisdiction

  	
   

  	
  24

  
	
  Section 9.11

  	
  Headings

  	
   

  	
  25

  
	
  Section 9.12

  	
  Acknowledgments

  	
   

  	
  25

  
	
  Section 9.13

  	
  Additional Obligors and Pledgors

  	
   

  	
  26

  
	
  Section 9.14

  	
  Releases

  	
   

  	
  26

  
	
  Section 9.15

  	
  Acceptance

  	
   

  	
  27

  

 

SCHEDULES:

1                                          Notice Addresses of Obligors

2                                          Description of Pledged
Securities

3                                          Filings and Other Actions
Required to Perfect Security Interests

4                                          Location of Jurisdiction of Organization
and Chief Executive Office

ANNEXES:

I                                            Form of Assumption
Agreement

II                                        Form of Supplement

 

 3

 

 

This
GUARANTY AND PLEDGE AGREEMENT, dated as of June 15, 2006, is made by TETON
ENERGY CORPORATION, a Delaware corporation (the “Borrower”), and each of
the signatories hereto (the Borrower and each of the signatories hereto,
together with any other Subsidiary or holding company of the Borrower that
becomes a party hereto from time to time after the date hereof, the “Obligors”),
in favor of BNP PARIBAS, as administrative agent (in such capacity, together
with its successors in such capacity, the “Administrative
Agent”).

R E C I T A L S

A.                                   The Borrower has entered into
that certain Credit Agreement dated as of the date hereof among the Borrower,
the financial institutions now or hereafter signatory thereto (the “Lenders”),
the Administrative Agent for the Lenders, and the other Agents and Lenders
party thereto (as the same may be from time to time amended, supplemented or
restated, the “Credit Agreement”).

B.                                     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 Obligors shall have executed
and delivered this Agreement to the Administrative Agent for the ratable
benefit of the Lenders.

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

ARTICLE I
Definitions

Section
1.01                                Definitions.

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

(b)                                 The following terms have the
following meanings:

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

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

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

“Borrower
Obligations” means the collective reference to the payment and performance
of all Indebtedness and all obligations of the Borrower and its Subsidiaries
under the Guaranteed Documents, including, without limitation, the unpaid
principal of and interest on the Loans and

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the LC Exposure and all other
obligations and liabilities of the Borrower and its Subsidiaries (including,
without limitation, interest accruing at the then applicable rate provided in
the Credit Agreement after the maturity of the Loans and LC Exposure and
interest accruing 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 Guaranteed Creditors, 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
Guaranteed Documents, whether on account of principal, interest, reimbursement
obligations, payments in respect of an early termination date, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Guaranteed Creditors that are required
to be paid by the Borrower pursuant to the terms of any Guaranteed Documents).

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

“Guaranteed
Creditors” means the collective reference to the Administrative Agent, the
Lenders and the Affiliates of Lenders that are parties to Guaranteed Swap
Agreements.

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

“Guaranteed
Swap Agreement” means any Swap Agreement between the Borrower or any of its
Subsidiaries and any Lender or any Affiliate of any Lender while such Person
(or, in the case of an Affiliate of a Lender, the Person affiliated therewith)
is a Lender regardless of when such Swap Agreement was entered into. For the
avoidance of doubt, a Swap Agreement ceases to be a Guaranteed Swap Agreement
if the Person that is the counterparty to the Borrower or one of its
Subsidiaries under a Swap Agreement ceases to be a Lender under the Credit
Agreement (or, in the case of an Affiliate of a Lender, the Person affiliated
therewith ceases to be a Lender under the Credit Agreement).

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

“Guarantors”
means the collective reference to each Obligor other than the Borrower.

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

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

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

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

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

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

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

“Pledged
LLC Interests” means, with respect to each Pledgor, all right, title and
interest of such Pledgor as a member of each LLC and all right, title and
interest of any Pledgor in, to and under each LLC Agreement.

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

“Pledged
Securities” means: (a) the Equity Interests described or referred to
in Schedule 2 (as the same may be supplemented from time to time pursuant to a
Supplement); and (b) (i) the certificates or instruments, if any,
representing such Equity Interests, (ii) all dividends (cash, Equity
Interests or otherwise), cash, instruments, rights to subscribe, purchase or
sell and all other rights and Property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
securities, (iii) all replacements, additions to and substitutions for any
of the Property referred to in this definition, including, without limitation,
claims against third parties, (iv) the proceeds, interest, profits and
other income of or on any of the Property referred to in this definition, (v) all
security entitlements in respect of any of the foregoing, if any and (vi) all
books and records relating to any of the Property referred to in this
definition.

“Pledgor”
means any Obligor that now or hereafter pledges Pledged Securities hereunder.

“Proceeds”
means all “proceeds” as such term is defined in Section 9.102(65) of the Uniform Commercial Code in effect
in the State of Texas on the date hereof and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Securities,
collections thereon or distributions or payments with respect thereto.

“Securities
Act” shall mean the Securities Act of 1933, as amended.

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

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

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

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

ARTICLE II
Guarantee

Section
2.01                                Guarantee.

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

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

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

(d)                                 Each Guarantor agrees that if
the maturity of the Borrower Obligations is accelerated by bankruptcy or
otherwise, such maturity shall also be deemed accelerated for the purpose of
this guarantee without demand or notice to such Guarantor. The guarantee
contained in this ARTICLE II shall remain in full force and effect until all
the Borrower Obligations shall have been satisfied by payment in full in cash,
no Letter of Credit shall be outstanding and all of

 

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the Commitments
are terminated, notwithstanding that from time to time during the term of the
Credit Agreement, no Borrower Obligations may be outstanding.

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

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

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

Section
2.04                                Guaranty Amendments, Etc. with
respect to the Borrower Obligations. Each Guarantor shall remain obligated hereunder, and such
Guarantor’s obligations hereunder shall not be released, discharged or
otherwise affected, notwithstanding that, without any reservation of rights
against any Guarantor and without notice to, demand upon or further assent

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by any
Guarantor (which notice, demand and assent requirements are hereby expressly
waived by such Guarantor), (a) any demand for payment of any of the
Borrower Obligations made by any Guaranteed Creditor may be rescinded by such
Guaranteed Creditor or otherwise and any of the Borrower Obligations continued;
(b) the Borrower Obligations, the liability of any other Person upon or
for any part thereof or any collateral security or guarantee therefor or right
of offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by, or any indulgence or forbearance in respect thereof
granted by, any Guaranteed Creditor; (c) any Guaranteed Document may be
amended, modified, supplemented or terminated, in whole or in part, as the
Guaranteed Creditors may deem advisable from time to time; (d) any collateral
security, guarantee or right of offset at any time held by any Guaranteed
Creditor for the payment of the Borrower Obligations may be sold, exchanged,
waived, surrendered or released; (e) any additional guarantors, makers or
endorsers of the Borrower’s Obligations may from time to time be obligated on
the Borrower’s Obligations or any additional security or collateral for the
payment and performance of the Borrower’s Obligations may from time to time
secure the Borrower’s Obligations; or (f) any other event shall occur
which constitutes a defense or release of sureties generally. No Guaranteed
Creditor shall have any obligation to protect, secure, perfect or insure any
Lien at any time held by it as security for the Borrower Obligations or for the
guarantee contained in this ARTICLE II or any Property subject thereto.

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

Section
2.06                                Guaranty Absolute and
Unconditional.

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

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

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

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

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

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

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

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

(viii)                        (A) any Guaranteed Creditor’s
election, in any proceeding instituted under chapter 11 of the Bankruptcy Code,
of the application of Section 1111(b)(2) of the Bankruptcy Code; (B) any
borrowing or grant of a Lien by the Borrower, as debtor-in-possession, or
extension of credit, under Section 364 of the Bankruptcy Code; (C) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any
portion of any Guaranteed Creditor’s claim (or claims) for repayment of the
Obligations; (D) any use of cash collateral under Section 363 of the
Bankruptcy Code; (E) any agreement or stipulation as to the provision of
adequate protection in any bankruptcy proceeding; (F) the avoidance of any
Lien in favor of the Guaranteed Creditors or any of them for any reason; or (G) failure
by any Guaranteed Creditor to file or enforce a claim against the Borrower or
its estate in any bankruptcy or insolvency case or proceeding; or

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

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

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

Section
2.08                                Payments. Each Guarantor hereby
guarantees that payments hereunder will be paid to the Administrative Agent,
for the ratable benefit of the Guaranteed Creditors, without set-off, deduction
or counterclaim, in dollars, in immediately available funds, at the offices of
the Administrative Agent specified in Section 12.01 of the Credit
Agreement.

ARTICLE III
Grant of
Security Interest

Section 3.01                                Grant of Security Interest. Each Pledgor hereby pledges,
assigns and transfers to the Administrative Agent, and hereby grants to the
Administrative Agent, for the ratable benefit of the Guaranteed Creditors, a
security interest in all of the following Property now owned or at any time
hereafter acquired by such Pledgor or in which such Pledgor 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
Pledgor’s Obligations:

(1)                             all Pledged Securities;

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

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

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

ARTICLE IV
Representations
and Warranties

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

Section
4.01                                Representations in Credit
Agreement. In the case of each Guarantor, the representations and warranties
set forth in Article VII of the Credit Agreement as they relate to such
Guarantor or to the Loan Documents to which such Guarantor is a party are true
and correct in all material respects, provided that each reference in each such
representation and warranty to the Borrower’s knowledge shall, for the purposes
of this Section 4.01, be deemed to be a reference to such Guarantor’s
knowledge.

Section
4.02                                Title;
No Other Liens.
Except for the security interest granted to the Administrative Agent for the
ratable benefit of the Guaranteed Creditors pursuant to this Agreement, such
Pledgor is the record and beneficial owner of its respective items of the
Collateral free and clear of any and all Liens and has rights in or the power
to transfer each item of the Collateral in which a Lien is granted by it
hereunder, free and clear of any Lien. No financing statement or other public
notice with respect to all or any part of the Collateral is on file or of
record in any public office, except such as have been filed in favor of the
Administrative Agent, for the ratable benefit of the Guaranteed Creditors,
pursuant to this Agreement or the Security Instruments.

Section
4.03                                Perfected
First Priority Liens.
The security interests granted pursuant to this Agreement (a) upon the completion
of the filings and the other actions specified on Schedule 3 constitute valid
perfected security interests in all of the Collateral in favor of the

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Administrative
Agent, for the ratable benefit of the Guaranteed Creditors, as collateral
security for such Pledgor’s Obligations, enforceable in accordance with the
terms hereof against all creditors of such Pledgor and any Persons purporting
to purchase any Collateral from such Pledgor and (b) are prior to all
other Liens on the Collateral in existence on the date hereof.

Section
4.04                                Obligor
Information.
On the date hereof, the correct legal name of such Obligor, all names and trade
names that such Obligor has used in the last five years, such Obligor’s
jurisdiction of organization and each jurisdiction of organization of such
Obligor over the last five years, organizational number, taxpayor
identification number, and the location(s) of such Obligor’s chief
executive office or sole place of business over the last five years are
specified on Schedule 4.

Section 4.05                                Pledged
Securities.

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

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

Section
4.06                                Benefit
to the Guarantor.
The Borrower is a member of an affiliated group of companies that includes each
Guarantor, and the Borrower and the other Guarantors are engaged in related
businesses. Each Guarantor is a Subsidiary of the Borrower and its guaranty and
surety obligations pursuant to this Agreement may reasonably be expected to
benefit, directly or indirectly, such Subsidiary; and each Guarantor has
determined that this Agreement is necessary and convenient to the conduct,
promotion and attainment of the business of such Guarantor and the Borrower.

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Section
4.07                                Solvency. Each Obligor (a) is not
insolvent as of the date hereof and will not be rendered insolvent as a result
of this Agreement (after giving effect to Section 2.02), (b) is not
engaged in business or a transaction, or about to engage in a business or a
transaction, for which any Property remaining with it constitutes unreasonably
small capital, and (c) does not intend to incur, or believe it will incur,
Debt that will be beyond its ability to pay as such Debt matures.

ARTICLE V
Covenants

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

Section
5.01                                Maintenance
of Perfected Security Interest; Further Documentation. Each Pledgor agrees that:

(a)                                  it shall maintain the security
interest created by this Agreement as a perfected security interest having at
least the priority described in Section 4.03 and shall defend such
security interest against the claims and demands of all Persons whomsoever.

(b)                                 it will furnish to the
Administrative Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.

(c)                                  At any time and from time to
time, upon the written request of the Administrative Agent, and at the sole
expense of such Pledgor, it 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 deem necessary for the
purpose of obtaining or preserving the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation, the
delivery of certificated securities  and
the filing of any financing or continuation statements under the UCC (or other
similar laws) in effect in any jurisdiction with respect to the security
interests created hereby.

Section
5.02                                Changes
in Locations, Name, Etc. Such Obligor recognizes that financing statements
pertaining to the Collateral have been or may be filed where such Obligor
maintains any Collateral or is organized. Without limitation of Section 8.01(l) of
the Credit Agreement or any other covenant herein, such Obligor will not cause
or permit any change in its (a) corporate name or in any trade name used
to identify it in the conduct of its business or in the ownership of its
Properties, (b) the location of its chief executive office or principal
place of business, (c) its identity or corporate structure or in the
jurisdiction in which it is incorporated or formed, (d) its jurisdiction
of organization or its organizational identification number in such
jurisdiction of organization or (e) its federal taxpayer identification
number, unless, in each case, such Obligor shall have first (i) notified
the Administrative Agent of such change at least thirty (30) days prior to the
effective date of such change, and (ii) taken all action reasonably
requested

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by the
Administrative Agent for the purpose of maintaining the perfection and priority
of the Administrative Agent’s security interests under this Agreement. In any
notice furnished pursuant to this Section 5.02, such Obligor will
expressly state in a conspicuous manner that the notice is required by this Agreement
and contains facts that may require additional filings of financing statements
or other notices for the purposes of continuing perfection of the
Administrative Agent’s security interest in the Collateral. At the request of
the Administrative Agent, on or prior to the occurrence of such event, the
Borrower will provide to the Administrative Agent and the Lenders an opinion of
counsel, in form and substance reasonably satisfactory to the Administrative
Agent, to the effect that such event will not impair the validity of the
security interests hereunder, the perfection and priority thereof, the
enforceability of the Loan Documents, and such other matters as may be
reasonably requested by the Administrative Agent.

Section
5.03                                Pledged
Securities.

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

(b)                                 Without the prior written
consent of the Administrative Agent, such Pledgor will not (i) unless
otherwise expressly permitted hereby or under the other Loan Documents, vote to
enable, or take any other action to permit, any Issuer to issue any Equity
Interests of any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any Equity Interests of any
nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Pledged Securities or
Proceeds thereof (except pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Pledged Securities 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 Pledgor or
the Administrative Agent to sell, assign or transfer any of the Pledged
Securities or Proceeds thereof.

(c)                                  In the case of each Pledgor that
is an Issuer, such Issuer agrees that (i) it will be bound by the terms of
this Agreement relating to the Pledged Securities issued by it and will comply
with such terms insofar as such terms are applicable to it, (ii) it will
notify the Administrative Agent promptly in writing of the occurrence of any of
the events described in Section 5.03(a) with respect to the Pledged
Securities issued by it and (iii) the terms of Sections Section 6.02(a) and
Section 6.03 shall apply to it, mutatis mutandis, with respect to all actions

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that may be
required of it pursuant to Section 6.02(d) or Section 6.03 with
respect to the Pledged Securities issued by it.

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

(e)                                  Such Pledgor shall not agree to
any amendment of a Partnership Agreement or LLC Agreement that in any way
adversely affects the perfection of the security interest of the Administrative
Agent in the Pledged Partnership Interests or Pledged LLC Interests pledged by
such Pledgor hereunder, including any amendment electing to treat the
membership interest or partnership interest of such Pledgor as a security under
Section 8-103 of the UCC.

(f)                                    Each Pledgor shall furnish to
the Administrative Agent such stock powers and other instruments as may be
required by the Administrative Agent to assure the transferability of the
Pledged Securities when and as often as may be reasonably requested by the
Administrative Agent.

(g)                                 The Pledged Securities will at
all times constitute not less than 100% of the Equity Interests of the Issuer
thereof owned by any Pledgor. Each Pledgor will not permit any Issuer of any of
the Pledged Securities to issue any new shares of any class of Equity Interests
of such Issuer without the prior written consent of the Administrative Agent.

ARTICLE VI
Remedial
Provisions

Section
6.01                                Code
and Other Remedies.

(a)                                  Upon the occurrence and during
the continuance of an Event of Default, the Administrative Agent, on behalf of
the Guaranteed Creditors, may exercise, in addition to all other rights and
remedies granted to them in this Agreement, the other Loan Documents and in any
other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the UCC or any
other applicable law or otherwise available at law or equity. Without limiting
the generality of the foregoing, the Administrative Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Pledgor or any other Person (all and each of which demands, defenses,
advertisements and notices are

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hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of any Guaranteed Creditor or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
Any Guaranteed Creditor 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 Pledgor, which right or equity is hereby
waived and released. If applicable to any particular item of Collateral, each
Pledgor further agrees, at the Administrative Agent’s request, to assemble the
Collateral and make it available to the Administrative Agent at places which
the Administrative Agent shall reasonably select, whether at such Pledgor’s
premises or elsewhere. Any such sale or transfer by the Administrative Agent
either to itself or to any other Person shall be absolutely free from any claim
of right by Pledgor, including any equity or right of redemption, stay or
appraisal which Pledgor has or may have under any rule of law, regulation
or statute now existing or hereafter adopted (and such Pledgor hereby waives
any rights it may have in respect thereof). Upon any such sale or transfer, the
Administrative Agent shall have the right to deliver, assign and transfer to
the purchaser or transferee thereof the Collateral so sold or transferred. The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.01, after deducting all reasonable costs and
expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Administrative Agent and the Guaranteed
Creditors hereunder, including, without limitation, reasonable attorneys’ fees
and disbursements, to the payment in whole or in part of the Obligations, in
accordance with Section 10.02(c) of the Credit Agreement, and only
after such application and after the payment by the Administrative Agent of any
other amount required by any provision of law, including, without limitation, Section 9.615
of the UCC, need the Administrative Agent account for the surplus, if any, to
any Pledgor. To the extent permitted by applicable law, each Pledgor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Guaranteed Creditor arising out of the exercise by them of any rights
hereunder except to the extent caused by the gross negligence or willful
misconduct of the Administrative Agent or such Guaranteed Creditor or their
respective agents. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.

(b)                                 In the event that the
Administrative Agent elects not to sell the Collateral, the Administrative
Agent retains its rights to dispose of or utilize the Collateral or any part or
parts thereof in any manner authorized or permitted by law or in equity, and to
apply the proceeds of the same towards payment of the Obligations. Each and
every method of disposition of the Collateral described in this Agreement shall
constitute disposition in a commercially reasonable manner.

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

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Section
6.02                                Pledged
Securities.

(a)                                  Unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
notice to the relevant Pledgor of the Administrative Agent’s intent to exercise
its corresponding rights pursuant to Section 6.02(c), each Pledgor shall
be permitted to receive all cash dividends paid in respect of the Pledged
Securities paid in the normal course of business of the relevant Issuer (other
than liquidating or distributing dividends), to the extent permitted in the
Credit Agreement. Any sums paid upon or in respect of any Pledged Securities
upon the liquidation or dissolution of any issuer of any Pledged Securities,
any distribution of capital made on or in respect of any Pledged Securities or
any property distributed upon or with respect to any Pledged Securities
pursuant to the recapitalization or reclassification of the capital of any
issuer of Pledged Collateral or pursuant to the reorganization thereof shall,
unless otherwise subject to a perfected security interest in favor of the
Administrative Agent, be delivered to the Administrative Agent to be held by it
hereunder as additional collateral security for the Obligations. If any sum of
money or property so paid or distributed in respect of any Pledged Securities
shall be received by such Pledgor, such Pledgor 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, segregated from other funds of
such Pledgor, as additional security for the Obligations.

(b)                                 Unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
notice to the relevant Pledgor of the Administrative Agent’s intent to exercise
its corresponding rights pursuant to Section 6.02(c), each Pledgor shall
be entitled to exercise all voting, consent and corporate, partnership or
limited liability rights with respect to the Pledged Securities; provided,
however, that no vote shall be cast, consent given or right exercised or other
action taken by such Pledgor that would impair the Collateral, be inconsistent
with or result in any violation of any provision of the Credit Agreement, this
Agreement or any other Loan Document or, without the prior consent of the
Administrative Agent and the Lenders, enable or permit any issuer of Pledged
Collateral to issue any Equity Interest or to issue any other securities
convertible into or granting the right to purchase or exchange for any Stock of
any issuer of Pledged Collateral other than as permitted by the Credit
Agreement.

(c)                                  Upon the occurrence and during
the continuance of an Event of Default, upon notice by the Administrative Agent
of its intent to exercise such rights to the relevant Pledgor or Pledgors, (i) the
Administrative Agent shall have the right to receive any and all cash
dividends, payments, Property or other Proceeds paid in respect of the Pledged
Securities and make application thereof to the Borrower Obligations in
accordance with Section 10.02(c) of the Credit Agreement, and (ii) any
or all of the Pledged Securities shall be registered in the name of the
Administrative Agent or its nominee, and (iii) the Administrative Agent or
its nominee may exercise (A) all voting, consent, corporate, partnership
or limited liability and other rights pertaining to such Pledged Securities at
any meeting of shareholders, partners or members (or other equivalent body), as
the case may be, of the relevant Issuer or Issuers or otherwise and (B) any
and all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to such Pledged Securities as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Securities

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upon the
merger, consolidation, reorganization, recapitalization or other fundamental
change in the organizational structure of any Issuer, or upon the exercise by
any Pledgor or the Administrative Agent of any right, privilege or option
pertaining to such Pledged Securities, and in connection therewith, the right
to deposit and deliver any and all of the Pledged Securities 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 Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to do
so or delay in so doing.

(d)                                 Upon the occurrence and during
the continuance of an Event of Default, in order to permit the Administrative
Agent to exercise the voting and other consensual rights that it may be
entitled to exercise pursuant hereto and to receive all dividends and other
distributions that it may be entitled to receive hereunder, (i) each
Pledgor shall promptly execute and deliver (or cause to be executed and delivered)
to the Administrative Agent all such proxies, dividend payment orders and other
instruments as the Administrative Agent may from time to time reasonably
request and (ii) without limiting the effect of clause (i) above,
such Pledgor hereby grants to the Administrative Agent an irrevocable proxy to
vote all or any part of the Pledged Securities and to exercise all other
rights, powers, privileges and remedies to which a holder of the Pledged
Securities would be entitled (including giving or withholding written consents
of shareholders, partners or members, as the case may be, calling special
meetings of shareholders, partners or members, as the case may be, and voting
at such meetings), which proxy shall be effective, automatically and without
the necessity of any action (including any transfer of any Pledged Securities
on the record books of the Issuer thereof) by any other Person (including the
Issuer of such Pledged Collateral or any officer or agent thereof).

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

(f)                                    Upon the occurrence and during
the continuance of an Event of Default, if the Issuer of any Pledged Securities
is the subject of bankruptcy, insolvency, receivership, custodianship or other
proceedings under the supervision of any Governmental Authority, then all
rights of the Pledgor in respect thereof to exercise the voting and other
consensual rights which such Pledgor would otherwise be entitled to exercise
with respect to the Pledged Securities issued by such Issuer shall cease, and
all such rights shall thereupon become vested in the Administrative Agent who
shall thereupon have the sole right to exercise such voting and other consensual
rights, but the Administrative Agent shall have no duty to exercise any such
voting or other consensual rights and shall not be responsible for any failure
to do so or delay in so doing.

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Section
6.03                                Private Sales of Pledged
Securities.

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

(b)                                 Each Pledgor agrees to use its
best efforts to do or cause to be done all such other acts as may reasonably be
necessary to make such sale or sales of all or any portion of the Pledged
Securities pursuant to this Section 6.03 valid and binding and in
compliance with any and all other applicable Governmental Requirements. Each
Pledgor further agrees that a breach of any of the covenants contained in this Section 6.03
will cause irreparable injury to the Guaranteed Creditors, that the Guaranteed
Creditors have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 6.03
shall be specifically enforceable against such Pledgor, and such Pledgor 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 or is continuing under the Credit Agreement.

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

Section
6.05                                Non-Judicial Enforcement. Provided that there is no
breach of the peace, the Administrative Agent may enforce its rights hereunder
without prior judicial process or judicial hearing, and to the extent permitted
by and carried out in accordance with applicable law, each Pledgor expressly
waives any and all legal rights which might otherwise require the
Administrative Agent to enforce its rights by judicial process.

ARTICLE VII
The
Administrative Agent

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

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

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such Pledgor
and in the name of such Pledgor or in its own name, for the purpose of carrying
out the terms of this Agreement, to take any and all reasonably appropriate
action and to execute any and all documents and instruments which may be
reasonably necessary or desirable to accomplish the purposes of this Agreement,
and, without limiting the generality of the foregoing, each Pledgor hereby
gives the Administrative Agent the power and right, on behalf of such Pledgor,
without notice to or assent by such Pledgor, to do any or all of the following;
provided, the Administrative Agent agrees that it will not exercise any of the
following rights under such power of attorney unless an Event of Default shall
have occurred and be continuing:

(i)                                     in the name of such Pledgor or
its own name, or otherwise, take possession of and indorse and collect any
check, draft, note, acceptance or other instrument for the payment of moneys
due with respect to any 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 such moneys due with
respect to any other Collateral whenever payable;

(ii)                                  unless being disputed under Section 8.04
of the Credit Agreement, pay or discharge Taxes and Liens levied or placed on
or threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement or any other Loan Document and pay
all or any part of the premiums therefor and the costs thereof;

(iii)                               execute, in connection with any
sale provided for in Section 6.01 or Section 6.03, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral; and

(iv)                              (A) direct any party liable
for any payment under any of the Collateral to make payment of any and all
moneys due or to become due thereunder directly to the Administrative Agent or
as the Administrative Agent shall direct; (B) ask or demand for, collect,
and receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of any
Collateral; (C) 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; (D) defend any suit, action or proceeding brought against
such Pledgor with respect to any Collateral; (E) 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;
and (F) 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 Pledgor’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 Guaranteed Creditors’ security interests
therein and to effect the intent of this Agreement, all as fully and
effectively as such Pledgor might do.

(b)                                 If any Obligor fails to perform
or comply with any of its agreements contained herein within the applicable
grace periods, the Administrative Agent, at its option, but

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without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.

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

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

Section
7.07                                Duty
of Administrative Agent. The Administrative Agent’s sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9.207 of the UCC or otherwise, shall be to deal
with it in the same manner as the Administrative Agent deals with similar
Property for its own account and shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which comparable
secured parties accord comparable collateral. Neither the Administrative Agent,
any Guaranteed Creditor nor any of their Related Parties shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Pledgor 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 Guaranteed
Creditors hereunder are solely to protect the Administrative Agent’s and the
Guaranteed Creditors’ interests in the Collateral and shall not impose any duty
upon the Administrative Agent or any Guaranteed Creditor to exercise any such
powers. The Administrative Agent and the Guaranteed Creditors shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their Related Parties
shall be responsible to any Obligor for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct. To the fullest
extent permitted by applicable law, the Administrative Agent shall be under no
duty whatsoever to make or give any presentment, notice of dishonor, protest,
demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection
with any Collateral or the Obligations, or to take any steps necessary to
preserve any rights against any Pledgor or other Person or ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not it has or is deemed to
have knowledge of such matters. Each Obligor, to the extent permitted by
applicable law, waives any right of marshaling in respect of any and all
Collateral, and waives any right to require the Administrative Agent or any
Guaranteed Creditor to proceed against any Obligor or other Person, exhaust any
Collateral or enforce any other remedy which the Administrative Agent or any
Guaranteed Creditor now has or may hereafter have against any Obligor or other
Person.

 

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Section 7.03                                Filing
of Financing Statements. Pursuant to the UCC and any other applicable law,
each Pledgor 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 Pledgor in such form and in
such offices as the Administrative Agent reasonably determines appropriate to
perfect the security interests of the Administrative Agent under this Agreement.
A photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.

Section 7.04                                Authority
of Administrative Agent. Each Obligor 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 Guaranteed
Creditors, 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 Obligors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Guaranteed Creditors with
full and valid authority so to act or refrain from acting, and no Obligor shall
be under any obligation, or entitlement, to make any inquiry respecting such
authority.

ARTICLE VIII
Subordination
of Indebtedness

Section 8.01                                Subordination
of All Obligor Claims. As used herein, the term “Obligor Claims”
shall mean all debts and obligations of the Borrower or any other Obligor to
any other Obligor, whether such debts and obligations now exist or are
hereafter incurred or arise, or whether the obligation of the debtor thereon be
direct, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or obligations be evidenced
by note, contract, open account, or otherwise, and irrespective of the Person
or Persons in whose favor such debts or obligations may, at their inception,
have been, or may hereafter be created, or the manner in which they have been
or may hereafter be acquired. After and during the continuation of an Event of
Default, no Obligor shall receive or collect, directly or indirectly, from any
other obligor in respect thereof any amount upon the Obligor Claims.

Section 8.02                                Claims
in Bankruptcy. In the event of receivership, bankruptcy, reorganization,
arrangement, debtor’s relief, or other insolvency proceedings involving any
Obligor, the Administrative Agent on behalf of the Administrative Agent and the
Guaranteed Creditors shall have the right to prove their claim in any
proceeding, so as to establish their rights hereunder and receive directly from
the receiver, trustee or other court custodian, dividends and payments which
would otherwise be payable upon Obligor Claims. Each Obligor hereby assigns
such dividends and payments to the Administrative Agent for the benefit of the
Administrative Agent and the Guaranteed Creditors for application against the
Borrower Obligations as provided under Section 10.02(c) of the Credit
Agreement. Should any Agent or Guaranteed Creditor receive, for application
upon the Obligations, any such dividend or payment which is otherwise payable
to any Obligor, and which, as between such Obligors, shall constitute a credit
upon the Obligor Claims, then upon payment in full in cash of the Borrower
Obligations, the expiration of

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all Letters of Credit outstanding under the Credit
Agreement and the termination of all of the Commitments, the intended recipient
shall become subrogated to the rights of the Administrative Agent and the
Guaranteed Creditors to the extent that such payments to the Administrative
Agent and the Guaranteed Creditors on the Obligor Claims have contributed toward
the liquidation of the Obligations, and such subrogation shall be with respect
to that proportion of the Obligations which would have been unpaid if the
Administrative Agent and the Guaranteed Creditors had not received dividends or
payments upon the Obligor Claims.

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

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

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

ARTICLE IX
Miscellaneous

Section 9.01                                Waiver.
No failure on the part of the Administrative Agent or any Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any
right, power, privilege or remedy or any abandonment or discontinuance of steps
to enforce such right, power, privilege or remedy under this Agreement or any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, privilege or remedy under this Agreement
or any other Loan Document preclude or be construed as a waiver of any other or
further exercise thereof or the exercise of any other right, power, privilege
or remedy.

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The remedies provided
herein are cumulative and not exclusive of any remedies provided by law or
equity.

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

Section 9.03                                Payment
of Expenses, Indemnities, Etc.

(a)                                  Each Guarantor agrees to pay or
reimburse each Guaranteed Creditor and the Administrative Agent for all
out-of-pocket expenses incurred by such Person, including the fees, charges and
disbursements of any counsel for the Administrative Agent or any Guaranteed
Creditor, in connection with the enforcement or protection of its rights in
connection with this Agreement or any other Loan Document, including, without
limitation, all costs and expenses incurred in collecting against such
Guarantor under the guarantee contained in ARTICLE II or otherwise enforcing or
preserving any rights under this Agreement and the other Loan Documents to
which such Guarantor is a party in accordance with the applicable provisions of
the Credit Agreement.

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

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

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

Section 9.05                                Successors
and Assigns. The provisions of this Agreement shall be binding upon the
Obligors and their successors and assigns and shall inure to the benefit of the
Administrative Agent and the Guaranteed Creditors and their respective
successors and assigns; provided that except as set forth in Section 9.11
of the Credit Agreement, no Obligor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent and the Lenders, and any such purported assignment,
transfer or delegation shall be null and void.

Section 9.06                                Survival;
Revival; Reinstatement.

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(a)                                  All covenants, agreements,
representations and warranties made by any Obligor herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document to which it is a party shall be
considered to have been relied upon by the Administrative Agent, the other
Agents, the Issuing Bank and the Lenders and shall survive the execution and
delivery of this Agreement and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the other
Agents, the Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under the Credit Agreement is outstanding and unpaid or any Letter of
Credit is outstanding and so long as the Commitments have not expired or
terminated. The provisions of Section 9.03 shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement, any other Loan Document or any provision hereof or thereof in
accordance with Section 12.05 of the Credit Agreement.

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

Section 9.07                                Counterparts;
Integration; Effectiveness.

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

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

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

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

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

Section 9.10                                Governing
Law; Submission to Jurisdiction.

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

(b)                                 ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN
THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF THE PARTIES HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY
LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.

(c)                                  EACH PARTY IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR

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

(d)                                 EACH PARTY HEREBY (1) IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (2) IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM
OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; (3) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (4) ACKNOWLEDGES THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 9.10.

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

Section 9.12                                Acknowledgments.
Each Obligor 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 Guaranteed Creditor has any fiduciary relationship with or duty to any
Obligor arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Obligors, on the one hand, and
the Administrative Agent and Guaranteed Creditors, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and

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

 25
 

 

 

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

Section 9.13                                Additional
Obligors and Pledgors. Each Subsidiary of the Borrower that is required to
become a party to this Agreement pursuant to Section 8.14 of the Credit
Agreement shall become an Obligor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement and shall
thereafter have the same rights, benefits and obligations as an Obligor party
hereto on the date hereof. Each Guarantor that is required to pledge Equity
Interests of its Subsidiaries shall execute and deliver a Supplement, if such
Equity Interests were not previously pledged.

Section 9.14                                Releases.

(a)                                  Release Upon Payment in Full. The grant of a security interest
hereunder and all of rights, powers and remedies in connection herewith shall
remain in full force and effect until the Administrative Agent has (i) retransferred
and delivered all Collateral in its possession to the Pledgors, and (ii) executed
a written release or termination statement and reassigned to the Pledgors
without recourse or warranty any remaining Collateral and all rights conveyed
hereby. Upon the complete payment of the Borrower Obligations, the termination
of all of the Commitments and the compliance by the Obligors with all covenants
and agreements hereof, the Administrative Agent, at the expense of the
Borrower, will promptly release, reassign and transfer the Collateral to the
Pledgors and declare this Agreement to be of no further force or effect.

(b)                                 Partial Releases. If any of the Collateral shall
be sold, transferred or otherwise disposed of by any Pledgor in a transaction
permitted by the Credit Agreement, then the Administrative Agent, at the
request and sole expense of such Pledgor, shall promptly execute and deliver to
such Pledgor all releases or other documents reasonably necessary or desirable
for the release of the Liens created hereby on such Collateral and the Equity
Interests of the Issuer thereof. At the request and sole expense of the
Borrower, a Guarantor shall be released from its obligations hereunder in the
event that all the Equity Interests of such Guarantor shall be sold,
transferred or otherwise disposed of in a transaction permitted by the Credit
Agreement; provided that the Borrower shall have delivered to the
Administrative Agent,

 26
 

 

 

at least ten
Business Days prior to the date of the proposed release, a written request of a
Responsible Officer of the Borrower for release identifying the relevant
Guarantor and the terms of the sale or other disposition in reasonable detail,
including the price thereof and any expenses in connection therewith, together
with a certification by the Borrower stating that such transaction is in
compliance with the Credit Agreement and the other Loan Documents.

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

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

[Remainder
of page intentionally left blank; signature pages follow]

 

 27

 

 

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

	
  BORROWER:

  	
  TETON
  ENERGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karl F. Arleth

  
	
   

  	
  Name:

  	
  Karl F. Arleth

  
	
   

  	
  Title:

  	
  President & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GUARANTORS:

  	
  TETON NORTH AMERICA LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Teton Energy Corporation, its sole member 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karl F. Arleth

  
	
   

  	
  Name:

  	
  Karl F. Arleth

  
	
   

  	
  Title:

  	
  President & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TETON PICEANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Teton North America LLC, its sole member 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karl F. Arleth

  
	
   

  	
  Name:

  	
  Karl F. Arleth

  
	
   

  	
  Title:

  	
  President & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TETON DJ LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Teton North America LLC, its sole member 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karl F. Arleth

  
	
   

  	
  Name:

  	
  Karl F. Arleth

  
	
   

  	
  Title:

  	
  President & CEO

  
	
   

  	
   

  	
   

  
						

 

 SIGNATURE PAGE
 GUARANTY AND PLEDGE AGREEMENT

 

	
  

  	
  TETON WILLISTON LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Teton North America LLC, its sole member 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karl F. Arleth

  
	
   

  	
  Name:

  	
  Karl F. Arleth

  
	
   

  	
  Title:

  	
  President & CEO

  
						

 

 

 

	
  Acknowledged and Agreed to as

  	
   

  
	
  of the date hereof by:

  	
   

  
	
   

  	
   

  
	
  ADMINISTRATIVE
  AGENT:

  	
  BNP
  PARIBAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Dodd

  
	
   

  	
  Name:

  	
  David Dodd

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthieu Milandri

  
	
   

  	
  Name:

  	
  Matthieu Milandri

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

 

 

Schedule 1

NOTICE
ADDRESSES OF OBLIGORS

Teton Energy
Corporation

410 17th Street, Suite 1850

Denver, Colorado  80202

Attention:  Bill I. Pennington

Teton North
America LLC

410 17th Street, Suite 1850

Denver, Colorado  80202

Attention:  Bill I. Pennington

Teton Piceance LLC

410 17th Street, Suite 1850

Denver, Colorado  80202

Attention:  Bill I. Pennington

Teton DJ LLC

410 17th Street, Suite 1850

Denver, Colorado  80202

Attention:  Bill I. Pennington

Teton Williston
LLC

410 17th Street, Suite 1850

Denver, Colorado  80202

Attention:  Bill I. Pennington

 Schedule 1 - 1
 

 

 

Schedule 2

DESCRIPTION
OF PLEDGED SECURITIES

Pledged Securities:

 

	
  Owner

  	
   

  	
  Issuer

  	
   

  	
  Percentage

  Owned

  	
   

  	
  Percentage

  Pledged

  	
   

  	
  Class of

  Stock or other Equity Interest

  
	
  Teton Energy
  Corporation

  	
   

  	
  Teton North
  America LLC

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  Limited
  Liability Company Interests

  
	
  Teton North
  America LLC

  	
   

  	
  Teton Piceance
  LLC

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  Limited
  Liability Company Interests

  
	
  Teton North
  America LLC

  	
   

  	
  Teton DJ LLC

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  Limited
  Liability Company Interests

  
	
  Teton North
  America LLC

  	
   

  	
  Teton Williston
  LLC

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  Limited Liability
  Company Interests

  

 

 Schedule 2 - 1
 

 

 

Schedule 3

FILINGS AND
OTHER ACTIONS

REQUIRED TO PERFECT SECURITY INTERESTS

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

2.                                       Filing of UCC-1 Financing
Statement with respect to the Collateral of each of the Guarantors with the
Secretary of State of Colorado.

 

 Schedule 3 - 1

 

 

Schedule 4

LOCATION
OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE

Legal name of the Borrower: 
Teton Energy Corporation

Address:  410 17th Street, Suite 1850,
Denver, Colorado  80202

All names and trade names that the Borrower has used in the last five
years:  None

Jurisdictions of organization over the last five years:  Delaware

Current jurisdiction of organization:  Delaware

Organizational number:  2896826

Taxpayer identification number:  84-1482290

Location of chief executive office or sole place of business over the last five
years: 410 17th Street, Suite 1850, Denver, Colorado  80202

 

Legal name of the Borrower:  Teton
North America LLC

Address:  410 17th Street, Suite 1850,
Denver, Colorado  80202

All names and trade names that the Borrower has used in the last five
years:  None

Jurisdictions of organization over the last five years:  Colorado

Current jurisdiction of organization: 
Colorado

Organizational number:  20051069170

Location of chief executive office or sole place of business over the last five
years: 410 17th Street, Suite 1850, Denver, Colorado  80202

 

Legal name of the Borrower: 
Teton Piceance LLC

Address:  410 17th Street, Suite 1850,
Denver, Colorado  80202

All names and trade names that the Borrower has used in the last five
years:  None

Jurisdictions of organization over the last five years:  Colorado

Current jurisdiction of organization: 
Colorado

Organizational number:  20051069213

Location of chief executive office or sole place of business over the last five
years: 410 17th Street, Suite 1850, Denver, Colorado  80202

 

Legal name of the Borrower: 
Teton DJ LLC

Address:  410 17th Street, Suite 1850,
Denver, Colorado  80202

All names and trade names that the Borrower has used in the last five
years:  None

Jurisdictions of organization over the last five years:  Colorado

Current jurisdiction of organization: 
Colorado

Organizational number:  20051069240

Location of chief executive office or sole place of business over the last five
years: 410 17th Street, Suite 1850, Denver, Colorado  80202

 

Legal name of Obligor:  Teton
Williston LLC

Address:  410 17th Street, Suite 1850,
Denver, Colorado  80202

All names and trade names that the Borrower has used in the last five
years:  None

Jurisdictions of organization over the last five years:  Colorado

 Schedule 4 - 1
 

 

 

Current jurisdiction of organization: 
Colorado

Organizational number:  20061183886

Location of chief executive office or sole place of business over the last five
years: 410 17th Street, Suite 1850, Denver, Colorado  80202

 

 Schedule 4 - 2

 

 

ACKNOWLEDGMENT
AND CONSENT

The
undersigned hereby acknowledges receipt of a copy of the Guaranty and Pledge
Agreement dated as of June 15, 2006 (the “Guaranty
and Pledge Agreement”), made by the Obligors parties thereto for the
benefit of BNP PARIBAS, as Administrative Agent. The undersigned agrees for the
benefit of the Administrative Agent and the Guaranteed Creditors as follows:

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

2.            The terms of Section 6.01(a) and
Section 6.03 of the Guaranty and Pledge Agreement shall apply to it, mutatis mutandis,
with respect to all actions that may be required of it pursuant to Section 6.02(a) or
Section 6.03 of the Guaranty and Pledge Agreement.

	
   

  	
  [NAME OF ISSUER]

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address for Notices:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  
					

 

 

 

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

 

 

 

Annex
I

Assumption
Agreement

ASSUMPTION
AGREEMENT, dated as of
[                 ],
200[   ], made by
[                 ],
a
[                 ]
(the “Additional Obligor”), in favor of BNP
PARIBAS, as administrative agent (in such capacity, the “Administrative Agent”) for the Guaranteed Creditors
(used herein as defined in the Guaranty and Pledge Agreement referred to below).
All capitalized terms not defined herein shall have the meaning ascribed to
them in the Credit Agreement referred to below.

W I T N E S S E T H:

WHEREAS,
Teton Energy Corporation, a Delaware corporation (the “Borrower”),
the Administrative Agent, and certain financial institutions have entered into
that certain Credit Agreement, dated as of June 15, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);

WHEREAS,
in connection with the Credit Agreement, the Borrower and certain of its
Affiliates (other than the Additional Obligor) have entered into a Guaranty and
Pledge Agreement, dated as of June 15, 2006 (as amended, restated,
supplemented or otherwise modified from time to time, the “Guaranty and Pledge Agreement”) in favor of the
Administrative Agent for the benefit of the Guaranteed Creditors;

WHEREAS,
the Credit Agreement requires the Additional Obligor to become a party to the
Guaranty and Pledge Agreement; and

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

NOW,
THEREFORE, IT IS AGREED:

1.            Guaranty
and Pledge Agreement.
By executing and delivering this Assumption Agreement, the Additional Obligor,
as provided in Section 9.13 of the Guaranty and Pledge Agreement, hereby
becomes a party to the Guaranty and Pledge Agreement as an Obligor thereunder
with the same force and effect as if originally named therein as an Obligor
and, without limiting the generality of the foregoing, hereby expressly assumes
all obligations and liabilities of an Obligor thereunder and expressly grants
to the Administrative Agent, for the benefit of the Guaranteed Creditors, a
security interest in all Collateral owned by such Additional Obligor to secure
all of such Additional Obligor’s obligations and liabilities thereunder. The
information set forth in Annex 1-A hereto is hereby added to the
information set forth in Schedules 1 through 4 to the Guaranty and Pledge
Agreement. The Additional Obligor hereby represents and warrants that each of
the representations and warranties contained in ARTICLE IV of the Guaranty and
Pledge Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.

 

 Annex I - 1
 

 

 

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

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

	
   

  	
  [ADDITIONAL OBLIGOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 Annex I - 2

 

 

Annex
II

Supplement

SUPPLEMENT,
dated as of
[                 ],
200[   ], made by
[                 ],
a
[                 ]
(the “Additional Pledgor”), in favor of BNP
PARIBAS, as administrative agent (in such capacity, the “Administrative Agent”) for the Guaranteed
Creditors (used herein as defined in the Guaranty and Pledge Agreement referred
to below). All capitalized terms not defined herein shall have the meaning
ascribed to them in such Credit Agreement referred to below.

W I T N E S S E T H:

WHEREAS,
Teton Energy Corporation, a Delaware corporation (the “Borrower”),
the Administrative Agent, and certain financial institutions have entered into
an Credit Agreement, dated as of June [ 
], 2006 (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”);

WHEREAS,
in connection with the Credit Agreement, the Borrower and certain of its
Affiliates (other than the Additional Pledgor) have entered into an Guaranty
and Pledge Agreement, dated as of June 15, 2006 (as amended, restated, supplemented
or otherwise modified from time to time, the “Guaranty
and Pledge Agreement”) in favor of the Administrative Agent for the
benefit of the Guaranteed Creditors;

WHEREAS,
the Credit Agreement requires the Additional Pledgor to pledge the Equity Interests
described hereto on Schedule 2-S; and

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

NOW,
THEREFORE, IT IS AGREED:

1.            Guaranty
and Pledge Agreement.
By executing and delivering this Supplement, the Additional Pledgor, as
provided in Section 9.13 of the Guaranty and Pledge Agreement, hereby
becomes a party to the Guaranty and Pledge Agreement as an Obligor thereunder
with the same force and effect as if originally named as an Obligor therein,
and without limiting the generality of the foregoing, hereby pledges and grants
a security interest in (a) the securities described or referred to in
Schedule 2-S and (b) (i) the certificates or instruments, if
any, representing such securities, (ii) all dividends (cash, Equity
Interests or otherwise), cash, instruments, rights to subscribe, purchase or
sell and all other rights and Property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
securities, (iii) all replacements, additions to and substitutions for any
of the Property referred to in this definition, including, without limitation,
claims against third parties, (iv) the proceeds, interest, profits and
other income of or on any of the Property referred to in this definition, (v) all
security entitlements in respect of any of the foregoing, if any, (vi) all
books and records relating to any of the Property referred to in this
definition and (vii) all proceeds of

 Annex II - 1
 

 

 

any of the foregoing
(collectively, the “Collateral”). Upon execution
of this Supplement, such securities will constitute “Pledged Securities” for
purposes of the Guaranty and Pledge Agreement with the same force and effect as
if originally listed on Schedule 2 thereto and, without limiting the generality
of the foregoing, the Additional Pledgor hereby expressly assumes all
obligations and liabilities of a Pledgor thereunder and expressly grants to the
Administrative Agent, for the benefit of the Guaranteed Creditors, a security
interest in all Collateral owned by such Additional Pledgor to secure all of
such its obligations and liabilities thereunder. The information set forth in
Schedule 2-S hereto is hereby added to the information set forth in
Schedule 2 to the Guaranty and Pledge Agreement. The Additional Pledgor hereby
represents and warrants that each of the representations and warranties
contained in ARTICLE IV of the Guaranty and Pledge Agreement is true and
correct on and as the date hereof (after giving effect to this Supplement) as
if made on and as of such date.

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

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

 

	
   

  	
  [ADDITIONAL PLEDGOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 Annex II - 2Exhibit 4.8

FAVRILLE,
INC.

and

                                  ,
As Warrant Agent

FORM OF
COMMON STOCK

WARRANT AGREEMENT

Dated
As Of                                   

 1
 

 

 

	
  ARTICLE 1

  	
   

  	
  ISSUANCE OF
  WARRANTS AND EXECUTION AND DELIVERY OF WARRANT CERTIFICATES

  	
   

  	
  1

  	
   

  
	
  1.1

  	
   

  	
  Issuance of
  Warrants

  	
   

  	
  1

  	
   

  
	
  1.2

  	
   

  	
  Execution and
  Delivery of Warrant Certificates

  	
   

  	
  1

  	
   

  
	
  1.3

  	
   

  	
  Issuance of
  Warrant Certificates

  	
   

  	
  2

  	
   

  
	
  ARTICLE 2

  	
   

  	
  WARRANT PRICE,
  DURATION AND EXERCISE OF WARRANTS

  	
   

  	
  2

  	
   

  
	
  2.1

  	
   

  	
  Warrant Price

  	
   

  	
  2

  	
   

  
	
  2.2

  	
   

  	
  Duration of
  Warrants

  	
   

  	
  2

  	
   

  
	
  2.3

  	
   

  	
  Exercise of
  Warrants

  	
   

  	
  2

  	
   

  
	
  ARTICLE 3

  	
   

  	
  OTHER PROVISIONS
  RELATING TO RIGHTS OF HOLDERS OF WARRANT CERTIFICATES

  	
   

  	
  3

  	
   

  
	
  3.1

  	
   

  	
  No Rights as
  Warrant Securityholder Conferred by Warrants or Warrant Certificates

  	
   

  	
  3

  	
   

  
	
  3.2

  	
   

  	
  Lost, Stolen,
  Mutilated or Destroyed Warrant Certificates

  	
   

  	
  3

  	
   

  
	
  3.3

  	
   

  	
  Holder of
  Warrant Certificate May Enforce Rights

  	
   

  	
  4

  	
   

  
	
  3.4

  	
   

  	
  Adjustments

  	
   

  	
  4

  	
   

  
	
  3.5

  	
   

  	
  Notice to
  Warrantholders

  	
   

  	
  5

  	
   

  
	
  3.6

  	
   

  	
  [If the Warrants
  are subject to acceleration by the Company, insert—Acceleration of Warrants
  by the Company

  	
   

  	
  6]

  	
   

  
	
  ARTICLE 4

  	
   

  	
  EXCHANGE AND
  TRANSFER OF WARRANT CERTIFICATES

  	
   

  	
  7

  	
   

  
	
  4.1

  	
   

  	
  Exchange and
  Transfer of Warrant Certificates

  	
   

  	
  7

  	
   

  
	
  4.2

  	
   

  	
  Treatment of
  Holders of Warrant Certificates

  	
   

  	
  7

  	
   

  
	
  4.3

  	
   

  	
  Cancellation of
  Warrant Certificates

  	
   

  	
  7

  	
   

  
	
  ARTICLE 5

  	
   

  	
  CONCERNING THE
  WARRANT AGENT

  	
   

  	
  8

  	
   

  
	
  5.1

  	
   

  	
  Warrant Agent

  	
   

  	
  8

  	
   

  
	
  5.2

  	
   

  	
  Conditions of
  Warrant Agent’s Obligations

  	
   

  	
  8

  	
   

  
	
  5.3

  	
   

  	
  Resignation and
  Appointment of Successor

  	
   

  	
  9

  	
   

  
	
  ARTICLE 6

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  10

  	
   

  
	
  6.1

  	
   

  	
  Amendment

  	
   

  	
  10

  	
   

  
	
  6.2

  	
   

  	
  Notices and
  Demands to the Company and Warrant Agent

  	
   

  	
  10

  	
   

  
	
  6.3

  	
   

  	
  Addresses

  	
   

  	
  10

  	
   

  
	
  6.4

  	
   

  	
  Governing Law

  	
   

  	
  10

  	
   

  
	
  6.5

  	
   

  	
  Obtaining of
  Governmental Approvals

  	
   

  	
  10

  	
   

  
	
  6.6

  	
   

  	
  Persons Having
  Rights Under Warrant Agreement

  	
   

  	
  11

  	
   

  
	
  6.7

  	
   

  	
  Headings

  	
   

  	
  11

  	
   

  
	
  6.8

  	
   

  	
  Counterparts

  	
   

  	
  11

  	
   

  
	
  6.9

  	
   

  	
  Inspection of Agreement

  	
   

  	
  11

  	
   

  

 

 2

 

FAVRILLE, INC.

Form of
Common Stock Warrant Agreement

THIS COMMON
STOCK WARRANT AGREEMENT is entered into as of             
between FAVRILLE, INC.,
a Delaware corporation (the “Company”), and             ,
a [corporation] [national banking association] organized and existing under the
laws of             
and having a corporate trust office in             ,
as warrant agent (the “Warrant
Agent”).

WHEREAS,
the Company proposes to sell [if Warrants are sold with other securities -
[title of such other securities being offered] (the “Other Securities”)
with] warrant certificates evidencing one or more warrants (the “Warrants” or
individually a “Warrant”)
representing the right to purchase Common Stock of the Company, par value
$0.001 per share (the “Warrant
Securities”), such warrant certificates and other warrant
certificates issued pursuant to this Agreement being herein called the “Warrant Certificates”; and

WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing so to act, in connection with the issuance,
registration, transfer, exchange, exercise and replacement of the Warrant
Certificates, and in this Agreement wishes to set forth, among other things,
the form and provisions of the Warrant Certificates and the terms and
conditions on which they may be issued, registered, transferred, exchanged,
exercised and replaced;

NOW
THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:

ARTICLE
1

ISSUANCE OF WARRANTS AND EXECUTION AND 

DELIVERY OF WARRANT CERTIFICATES

1.1          Issuance of
Warrants. [If Warrants alone - Upon issuance, each Warrant
Certificate shall evidence one or more Warrants.]  [If Other Securities and Warrants - Warrants
shall be [initially] issued in connection with the issuance of the Other
Securities [but shall be separately transferable on and after             
(the “Detachable Date”)]
[and shall not be separately transferable] and each Warrant Certificate shall
evidence one or more Warrants.]  Each
Warrant evidenced thereby shall represent the right, subject to the provisions
contained herein and therein, to purchase one Warrant Security. [If Other
Securities and Warrants - Warrant Certificates shall be initially issued in
units with the Other Securities and each Warrant Certificate included in such a
unit shall evidence             
Warrants for each             
shares of Other Securities included in such unit.]

1.2          Execution
and Delivery of Warrant Certificates. Each Warrant
Certificate, whenever issued, shall be in registered form substantially in the
form set forth in Exhibit A hereto, shall be dated the date of its
countersignature by the Warrant Agent and may have such letters, numbers, or
other marks of identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as the officers of the Company
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange on which the Warrants may be listed, or to conform to usage.
The Warrant Certificates shall be signed on behalf of the Company by any of its
present or future chief executive officers, presidents, senior vice presidents,
vice presidents, chief financial officers, chief legal officers, treasurers,
assistant treasurers, controllers, assistant controllers, secretaries or
assistant secretaries under its corporate seal reproduced thereon. Such
signatures may be manual or facsimile signatures of such authorized officers
and may be imprinted or otherwise reproduced on the Warrant Certificates. The
seal of the Company may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.

 1
 

 

No Warrant Certificate shall be valid for any purpose,
and no Warrant evidenced thereby shall be exercisable, until such Warrant
Certificate has been countersigned by the manual signature of the Warrant Agent.
Such signature by the Warrant Agent upon any Warrant Certificate executed by
the Company shall be conclusive evidence that the Warrant Certificate so
countersigned has been duly issued hereunder.

In case any officer of the Company who shall have
signed any of the Warrant Certificates either manually or by facsimile
signature shall cease to be such officer before the Warrant Certificates so
signed shall have been countersigned and delivered by the Warrant Agent, such
Warrant Certificates may be countersigned and delivered notwithstanding that
the person who signed Warrant Certificates ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf of the Company by
such persons as, at the actual date of the execution of such Warrant
Certificate, shall be the proper officers of the Company, although at the date
of the execution of this Agreement any such person was not such officer.

The term “holder” or “holder of a Warrant Certificate”
as used herein shall mean any person in whose name at the time any Warrant
Certificate shall be registered upon the books to be maintained by the Warrant
Agent for that purpose [If Other Securities and Warrants are not immediately
detachable - or upon the registration of the Other Securities prior to the
Detachable Date. Prior to the Detachable Date, the Company will, or will cause
the registrar of the Other Securities to, make available at all times to the
Warrant Agent such information as to holders of the Other Securities as may be
necessary to keep the Warrant Agent’s records up to date].

1.3          Issuance of
Warrant Certificates. Warrant Certificates evidencing the
right to purchase Warrant Securities may be executed by the Company and
delivered to the Warrant Agent upon the execution of this Warrant Agreement or
from time to time thereafter. The Warrant Agent shall, upon receipt of Warrant
Certificates duly executed on behalf of the Company, countersign such Warrant
Certificates and shall deliver such Warrant Certificates to or upon the order
of the Company.

ARTICLE
2

WARRANT PRICE, DURATION AND EXERCISE OF
WARRANTS

2.1          Warrant
Price. During the period specified in Section 2.2, each
Warrant shall, subject to the terms of this Warrant Agreement and the
applicable Warrant Certificate, entitle the holder thereof to initially
purchase the number of Warrant Securities specified in the applicable Warrant
Certificate at an initial exercise price of $            
per Warrant Security, subject to adjustment upon the occurrence of certain
events, as hereinafter provided. Such purchase price per Warrant Security is
referred to in this Agreement as the “Warrant Price.”

2.2          Duration of
Warrants. Each Warrant may be exercised in whole or in part
at any time, as specified herein, on or after [the date thereof] [            ]
and at or before [            ] p.m.,
[City] time, on             
or such later date as the Company may designate by notice to the Warrant Agent
and the holders of Warrant Certificates mailed to their addresses as set forth
in the record books of the Warrant Agent (the “Expiration Date”). Each Warrant not
exercised at or before [            ] p.m.,
[City] time, on the Expiration Date shall become void, and all rights of the
holder of the Warrant Certificate evidencing such Warrant under this Agreement
shall cease.

2.3          Exercise of Warrants.

(a)           During the period
specified in Section 2.2, the Warrants may be exercised to purchase a
whole number of Warrant Securities in registered form by providing certain
information as set forth on the reverse side of the Warrant Certificate and by
paying in full, in lawful money of the United States of America, [in cash or by
certified check or official bank check in New York Clearing House funds] [by
bank wire transfer in immediately available funds] the Warrant Price for each
Warrant Security with respect to which a Warrant is being exercised to the
Warrant Agent at its corporate trust office, provided
that such exercise is subject to receipt within five business days
of such payment by the Warrant Agent of the Warrant Certificate with the form
of election to purchase Warrant Securities set forth on the reverse side of the
Warrant Certificate properly completed and duly executed. The date on which
payment in full of the Warrant Price is received by the Warrant Agent shall,
subject to receipt of the Warrant Certificate as aforesaid, be deemed to be the
date on which the Warrant is exercised; provided,
however, that if, at the 

 2
 

 

date of receipt of such Warrant Certificates and
payment in full of the Warrant Price, the transfer books for the Warrant
Securities purchasable upon the exercise of such Warrants shall be closed, no
such receipt of such Warrant Certificates and no such payment of such Warrant
Price shall be effective to constitute the person so designated to be named as
the holder of record of such Warrant Securities on such date, but shall be
effective to constitute such person as the holder of record of such Warrant
Securities for all purposes at the opening of business on the next succeeding
day on which the transfer books for the Warrant Securities purchasable upon the
exercise of such Warrants shall be opened, and the certificates for the Warrant
Securities in respect of which such Warrants are then exercised shall be
issuable as of the date on such next succeeding day on which the transfer books
shall next be opened, and until such date the Company shall be under no duty to
deliver any certificate for such Warrant Securities. The Warrant Agent shall
deposit all funds received by it in payment of the Warrant Price in an account
of the Company maintained with it and shall advise the Company by telephone at
the end of each day on which a payment for the exercise of Warrants is received
of the amount so deposited to its account. The Warrant Agent shall promptly
confirm such telephone advice to the Company in writing.

(b)           The Warrant Agent
shall, from time to time, as promptly as practicable, advise the Company of (i) the
number of Warrant Securities with respect to which Warrants were exercised, (ii) the
instructions of each holder of the Warrant Certificates evidencing such
Warrants with respect to delivery of the Warrant Securities to which such
holder is entitled upon such exercise, (iii) delivery of Warrant
Certificates evidencing the balance, if any, of the Warrants for the remaining
Warrant Securities after such exercise, and (iv) such other information as
the Company shall reasonably require.

(c)           As soon as
practicable after the exercise of any Warrant, the Company shall issue to or
upon the order of the holder of the Warrant Certificate evidencing such Warrant
the Warrant Securities to which such holder is entitled, in fully registered form,
registered in such name or names as may be directed by such holder. If fewer
than all of the Warrants evidenced by such Warrant Certificate are exercised,
the Company shall execute, and an authorized officer of the Warrant Agent shall
manually countersign and deliver, a new Warrant Certificate evidencing Warrants
for the number of Warrant Securities remaining unexercised.

(d)           The Company shall
not be required to pay any stamp or other tax or other governmental charge
required to be paid in connection with any transfer involved in the issue of
the Warrant Securities, and in the event that any such transfer is involved,
the Company shall not be required to issue or deliver any Warrant Security
until such tax or other charge shall have been paid or it has been established
to the Company’s satisfaction that no such tax or other charge is due.

(e)           Prior to the
issuance of any Warrants there shall have been reserved, and the Company shall
at all times through the Expiration Date keep reserved, out of its authorized
but unissued Warrant Securities, a number of shares sufficient to provide for
the exercise of the Warrants.

ARTICLE
3

OTHER PROVISIONS RELATING TO RIGHTS

OF HOLDERS OF WARRANT CERTIFICATES

3.1          No Rights as
Warrant Securityholder Conferred by Warrants or Warrant Certificates. No
Warrant Certificate or Warrant evidenced thereby shall entitle the holder
thereof to any of the rights of a holder of Warrant Securities, including,
without limitation, the right to receive the payment of dividends or distributions,
if any, on the Warrant Securities or to exercise any voting rights, except to
the extent expressly set forth in this Agreement or the applicable Warrant
Certificate.

3.2          Lost,
Stolen, Mutilated or Destroyed Warrant Certificates. Upon
receipt by the Warrant Agent of evidence reasonably satisfactory to it and the
Company of the ownership of and the loss, theft, destruction or mutilation of
any Warrant Certificate and/or indemnity reasonably satisfactory to the Warrant
Agent and the Company and, in the case of mutilation, upon surrender of the
mutilated Warrant Certificate to the Warrant Agent 

 3
 

 

for cancellation, then, in the absence of notice to
the Company or the Warrant Agent that such Warrant Certificate has been
acquired by a bona fide purchaser, the Company shall execute, and an authorized
officer of the Warrant Agent shall manually countersign and deliver, in
exchange for or in lieu of the lost, stolen, destroyed or mutilated Warrant
Certificate, a new Warrant Certificate of the same tenor and evidencing
Warrants for a like number of Warrant Securities. Upon the issuance of any new
Warrant Certificate under this Section 3.2, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Warrant Agent) in connection therewith. Every substitute
Warrant Certificate executed and delivered pursuant to this Section 3.2 in
lieu of any lost, stolen or destroyed Warrant Certificate shall represent an
additional contractual obligation of the Company, whether or not the lost,
stolen or destroyed Warrant Certificate shall be at any time enforceable by
anyone, and shall be entitled to the benefits of this Agreement equally and
proportionately with any and all other Warrant Certificates duly executed and
delivered hereunder. The provisions of this Section 3.2 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement of mutilated, lost, stolen or destroyed Warrant
Certificates.

3.3          Holder of
Warrant Certificate May Enforce Rights. Notwithstanding
any of the provisions of this Agreement, any holder of a Warrant Certificate,
without the consent of the Warrant Agent, the holder of any Warrant Securities
or the holder of any other Warrant Certificate, may, in such holder’s own
behalf and for such holder’s own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to enforce,
or otherwise in respect of, such holder’s right to exercise the Warrants
evidenced by such holder’s Warrant Certificate in the manner provided in such
holder’s Warrant Certificate and in this Agreement.

3.4          Adjustments.

(a)           In case the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Warrant Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant
Securities purchasable under the Warrants shall be proportionately increased. Conversely,
in case the outstanding shares of Common Stock of the Company shall be combined
into a smaller number of shares, the Warrant Price in effect immediately prior
to such combination shall be proportionately increased and the number of
Warrant Securities purchasable under the Warrants shall be proportionately
decreased.

(b)           If at any time or
from time to time the holders of Common Stock (or any shares of stock or other
securities at the time receivable upon the exercise of the Warrants) shall have
received or become entitled to receive, without payment therefore,

(i)            Common Stock or any shares of stock or
other securities which are at any time directly or indirectly convertible into
or exchangeable for Common Stock, or any rights or options to subscribe for,
purchase or otherwise acquire any of the foregoing by way of dividend or other
distribution;

(ii)           any cash paid or payable otherwise than
as a cash dividend paid or payable out of the Company’s current or retained
earnings;

(iii)         any evidence of the Company’s indebtedness
or rights to subscribe for or purchase the Company’s indebtedness; or

(iv)          Common Stock or additional stock or other
securities or property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement (other than shares of
Common Stock issued as a stock split or adjustments in respect of which shall
be covered by the terms of Section 3.4(a) above),

then and in each such
case, the holder of each Warrant shall, upon the exercise of the Warrant, be
entitled to receive, in addition to the number of Warrant Securities receivable
thereupon, and without payment of any additional consideration therefore, the
amount of stock and other securities and property (including cash and
indebtedness (or 

 4
 

 

rights to subscribe for
or purchase indebtedness) which such holder would hold on the date of such
exercise had he been the holder of record of such Warrant Securities as of the
date on which holders of Common Stock received or became entitled to receive
such shares or all other additional stock and other securities and property.

(c)           In case of (i) any
reclassification, capital reorganization, or change in the Common Stock of the
Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 3.4(a) or Section 3.4(b) above),
(ii) share exchange, merger or similar transaction of the Company with or
into another person or entity (other than a share exchange, merger or similar
transaction in which the Company is the acquiring or surviving corporation and
which does not result in any change in the Common Stock other than the issuance
of additional shares of Common Stock) or (iii) the sale, exchange, lease,
transfer or other disposition of all or substantially all of the properties and
assets of the Company as an entirety (in any such case, a “Reorganization Event”),
then, as a condition of such Reorganization Event, lawful provisions shall be
made, and duly executed documents evidencing the same from the Company or its
successor shall be delivered to the holders of the Warrants, so that the
holders of the Warrants shall have the right at any time prior to the
expiration of the Warrants to purchase, at a total price equal to that payable
upon the exercise of the Warrants, the kind and amount of shares of stock and
other securities and property receivable in connection with such Reorganization
Event by a holder of the same number of Warrant Securities as were purchasable
by the holders of the Warrants immediately prior to such Reorganization Event. In
any such case appropriate provisions shall be made with respect to the rights
and interests of the holders of the Warrants so that the provisions hereof
shall thereafter be applicable with respect to any shares of stock or other
securities and property deliverable upon exercise the Warrants, and appropriate
adjustments shall be made to the Warrant Price payable hereunder provided the
aggregate purchase price shall remain the same. In the case of any transaction
described in clauses (ii) and (iii) above, the Company shall
thereupon be relieved of any further obligation hereunder or under the
Warrants, and the Company as the predecessor corporation may thereupon or at
any time thereafter be dissolved, wound up or liquidated. Such successor or
assuming entity thereupon may cause to be signed, and may issue either in its
own name or in the name of the Company, any or all of the Warrants issuable
hereunder which heretofore shall not have been signed by the Company, and may
execute and deliver securities in its own name, in fulfillment of its
obligations to deliver Warrant Securities upon exercise of the Warrants. All
the Warrants so issued shall in all respects have the same legal rank and
benefit under this Agreement as the Warrants theretofore or thereafter issued
in accordance with the terms of this Agreement as though all of such Warrants
had been issued at the date of the execution hereof. In any case of any such
Reorganization Event, such changes in phraseology and form (but not in
substance) may be made in the Warrants thereafter to be issued as may be
appropriate.

The Warrant Agent may receive a written opinion of
legal counsel as conclusive evidence that any such Reorganization Event
complies with the provisions of this Section 3.4.

(d)           The Company may, at
its option, at any time until the Expiration Date, reduce the then current
Warrant Price to any amount deemed appropriate by the Board of Directors of the
Company for any period not exceeding twenty consecutive days (as evidenced in a
resolution adopted by such Board of Directors), but only upon giving the
notices required by Section 3.5 at least ten days prior to taking such
action.

(e)           Except as herein
otherwise expressly provided, no adjustment in the Warrant Price shall be made
by reason of the issuance of shares of Common Stock, or securities convertible
into or exchangeable for shares of Common Stock, or securities carrying the
right to purchase any of the foregoing or for any other reason whatsoever.

(f)            No fractional
Warrant Securities shall be issued upon the exercise of Warrants. If more than
one Warrant shall be exercised at one time by the same holder, the number of
full Warrant Securities which shall be issuable upon such exercise shall be
computed on the basis of the aggregate number of Warrant Securities purchased
pursuant to the Warrants so exercised. Instead of any fractional Warrant
Security which would otherwise be issuable upon exercise of any Warrant, the
Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the last sales price (or bid price if there were
no sales) per Warrant Security, in either case as reported on the New York
Stock Exchange Composite Tape on the business day which next precedes the day
of exercise or, if the Warrant Securities are not then listed or admitted to
trading on the New York Stock Exchange, on the principal national securities
exchange on which the Warrant Securities are listed or admitted to trading or,
if not listed or admitted to 

 5
 

 

trading on any national securities exchange, on the
Nasdaq Stock Market, or if the Warrant Securities are not then listed or
admitted to trading on any national securities exchange or quoted on the Nasdaq
Stock Market, the average of the closing high bid and low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market, Inc., or
the National Association of Securities Dealers, Inc., as applicable (“NASDAQ”),
or such other system then in use, or if on any such date the Warrant Securities
are not quoted by any such organization, an amount equal to the same fraction
of the average of the closing bid and asked prices as furnished by any New York
Stock Exchange firm selected from time to time by the Company for that purpose
at the close of business on the business day which next precedes the day of
exercise.

(g)           Whenever the
Warrant Price then in effect is adjusted as herein provided, the Company shall
mail to each holder of the Warrants at such holder’s address as it shall appear
on the books of the Company a statement setting forth the adjusted Warrant
Price then and thereafter effective under the provisions hereof, together with
the facts, in reasonable detail, upon which such adjustment is based.

3.5          Notice to
Warrantholders. In case the Company shall (a) effect any
dividend or distribution described in Section 3.4(b), (b) effect any
Reorganization Event, (c) make any distribution on or in respect of the
Common Stock in connection with the dissolution, liquidation or winding up of
the Company, or (d) reduce the then current Warrant Price pursuant to Section 3.4(d),
then the Company shall mail to each holder of Warrants at such holder’s address
as it shall appear on the books of the Warrant Agent, at least ten days prior
to the applicable date hereinafter specified, a notice stating (x) the
record date for such dividend or distribution, or, if a record is not to be
taken, the date as of which the holders of record of Common Stock that will be
entitled to such dividend or distribution are to be determined, (y) the
date on which such Reorganization Event, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
Reorganization Event, dissolution, liquidation or winding up, or (z) the
first date on which the then current Warrant Price shall be reduced pursuant to
Section 3.4(d). No failure to mail such notice nor any defect therein or
in the mailing thereof shall affect any such transaction or any adjustment in
the Warrant Price required by Section 3.4.

3.6          [If the Warrants are subject to acceleration
by the Company, insert—Acceleration of Warrants by the Company.

(a)           At any time on or
after             ,
the Company shall have the right to accelerate any or all Warrants at any time
by causing them to expire at the close of business on the day next preceding a
specified date (the “Acceleration
Date”), if the Market Price (as hereinafter defined) of the
Common Stock equals or exceeds             
percent (     %) of the then effective Warrant Price
on any twenty Trading Days (as hereinafter defined) within a period of thirty
consecutive Trading Days ending no more than five Trading Days prior to the
date on which the Company gives notice to the Warrant Agent of its election to
accelerate the Warrants.

(b)           “Market Price” for
each Trading Day shall be, if the Common Stock is listed or admitted for
trading on the New York Stock Exchange, the last reported sale price, regular
way (or, if no such price is reported, the average of the reported closing bid
and asked prices, regular way) of Common Stock, in either case as reported on
the New York Stock Exchange Composite Tape or, if the Common Stock is not
listed or admitted to trading on the New York Stock Exchange, on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the Nasdaq Stock Market or, if not listed or admitted to trading
on any national securities exchange or quoted on the Nasdaq Stock Market, the
average of the closing high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ, or such other system then in use, or if on any
such date the shares of Common Stock are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by any New York
Stock Exchange firm selected from time to time by the Company for that purpose.
“Trading Day” shall be each Monday through Friday, other than any day on which
securities are not traded in the system or on the exchange that is the
principal market for the Common Stock, as determined by the Board of Directors
of the Company.

(c)           In the event of an
acceleration of less than all of the Warrants, the Warrant Agent shall select
the Warrants to be accelerated by lot, pro rata or in such other manner as it
deems, in its discretion, to be fair and appropriate.

 6
 

 

(d)           Notice of an
acceleration specifying the Acceleration Date shall be sent by mail first
class, postage prepaid, to each registered holder of a Warrant Certificate representing
a Warrant accelerated at such holder’s address appearing on the books of the
Warrant Agent not more than sixty days nor less than thirty days before the
Acceleration Date. Such notice of an acceleration also shall be given no more
than twenty days, and no less than ten days, prior to the mailing of notice to
registered holders of Warrants pursuant to this Section 3.6, by
publication at least once in a newspaper of general circulation in the City of
New York.

(e)           Any Warrant
accelerated may be exercised until [        ] p.m.,
[City] time, on the business day next preceding the Acceleration Date. The
Warrant Price shall be payable as provided in Section 2.]

ARTICLE 4

EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES

4.1          Exchange and
Transfer of Warrant Certificates. [If Other Securities with
Warrants which are immediately detachable - Upon] [If Other Securities with
Warrants which are not immediately detachable - Prior to the Detachable Date, a
Warrant Certificate may be exchanged or transferred only together with the
Other Security to which the Warrant Certificate was initially attached, and
only for the purpose of effecting or in conjunction with an exchange or
transfer of such Other Security. Prior to any Detachable Date, each transfer of
the Other Security shall operate also to transfer the related Warrant
Certificates. After the Detachable Date, upon] surrender at the corporate trust
office of the Warrant Agent, Warrant Certificates evidencing Warrants may be
exchanged for Warrant Certificates in other denominations evidencing such
Warrants or the transfer thereof may be registered in whole or in part; provided that such other Warrant
Certificates evidence Warrants for the same aggregate number of Warrant
Securities as the Warrant Certificates so surrendered. The Warrant Agent shall
keep, at its corporate trust office, books in which, subject to such reasonable
regulations as it may prescribe, it shall register Warrant Certificates and
exchanges and transfers of outstanding Warrant Certificates, upon surrender of
the Warrant Certificates to the Warrant Agent at its corporate trust office for
exchange or registration of transfer, properly endorsed or accompanied by
appropriate instruments of registration of transfer and written instructions
for transfer, all in form satisfactory to the Company and the Warrant Agent. No
service charge shall be made for any exchange or registration of transfer of
Warrant Certificates, but the Company may require payment of a sum sufficient
to cover any stamp or other tax or other governmental charge that may be
imposed in connection with any such exchange or registration of transfer. Whenever
any Warrant Certificates are so surrendered for exchange or registration of
transfer, an authorized officer of the Warrant Agent shall manually countersign
and deliver to the person or persons entitled thereto a Warrant Certificate or
Warrant Certificates duly authorized and executed by the Company, as so
requested. The Warrant Agent shall not be required to effect any exchange or
registration of transfer which will result in the issuance of a Warrant
Certificate evidencing a Warrant for a fraction of a Warrant Security or a
number of Warrants for a whole number of Warrant Securities and a fraction of a
Warrant Security. All Warrant Certificates issued upon any exchange or
registration of transfer of Warrant Certificates shall be the valid obligations
of the Company, evidencing the same obligations and entitled to the same
benefits under this Agreement as the Warrant Certificate surrendered for such
exchange or registration of transfer.

4.2          Treatment of
Holders of Warrant Certificates. [If Other Securities and
Warrants are not immediately detachable - Prior to the Detachable Date, the
Company, the Warrant Agent and all other persons may treat the owner of the
Other Security as the owner of the Warrant Certificates initially attached
thereto for any purpose and as the person entitled to exercise the rights
represented by the Warrants evidenced by such Warrant Certificates, any notice
to the contrary notwithstanding. After the Detachable Date and prior to due
presentment of a Warrant Certificate for registration of transfer, the]  [T]he Company, the Warrant Agent and all
other persons may treat the registered holder of a Warrant Certificate as the
absolute owner thereof for any purpose and as the person entitled to exercise
the rights represented by the Warrants evidenced thereby, any notice to the
contrary notwithstanding.

4.3          Cancellation
of Warrant Certificates. Any Warrant Certificate surrendered
for exchange, registration of transfer or exercise of the Warrants evidenced
thereby shall, if surrendered to the Company, be delivered to the Warrant Agent
and all Warrant Certificates surrendered or so delivered to the Warrant Agent
shall be promptly canceled by the Warrant Agent and shall not be reissued and,
except as expressly permitted by this 

 7
 

 

Agreement, no Warrant Certificate shall be issued
hereunder in exchange therefor or in lieu thereof. The Warrant Agent shall
deliver to the Company from time to time or otherwise dispose of canceled
Warrant Certificates in a manner satisfactory to the Company.

ARTICLE 5

CONCERNING THE WARRANT AGENT

5.1          Warrant
Agent. The Company hereby appoints             
as Warrant Agent of the Company in respect of the Warrants and the Warrant
Certificates upon the terms and subject to the conditions herein set forth, and
             hereby
accepts such appointment. The Warrant Agent shall have the powers and authority
granted to and conferred upon it in the Warrant Certificates and hereby and
such further powers and authority to act on behalf of the Company as the
Company may hereafter grant to or confer upon it. All of the terms and
provisions with respect to such powers and authority contained in the Warrant
Certificates are subject to and governed by the terms and provisions hereof.

5.2          Conditions
of Warrant Agent’s Obligations. The Warrant Agent accepts its
obligations herein set forth upon the terms and conditions hereof, including
the following to all of which the Company agrees and to all of which the rights
hereunder of the holders from time to time of the Warrant Certificates shall be
subject:

(a)           Compensation and Indemnification. The Company agrees
promptly to pay the Warrant Agent the compensation to be agreed upon with the
Company for all services rendered by the Warrant Agent and to reimburse the
Warrant Agent for reasonable out-of-pocket expenses (including
reasonable counsel fees) incurred without negligence, bad faith or willful
misconduct by the Warrant Agent in connection with the services rendered
hereunder by the Warrant Agent. The Company also agrees to indemnify the
Warrant Agent for, and to hold it harmless against, any loss, liability or
expense incurred without negligence, bad faith or willful misconduct on the
part of the Warrant Agent, arising out of or in connection with its acting as
Warrant Agent hereunder, including the reasonable costs and expenses of
defending against any claim of such liability.

(b)           Agent for the Company. In acting under this Warrant
Agreement and in connection with the Warrant Certificates, the Warrant Agent is
acting solely as agent of the Company and does not assume any obligations or
relationship of agency or trust for or with any of the holders of Warrant
Certificates or beneficial owners of Warrants.

(c)           Counsel. The Warrant Agent may consult with counsel
satisfactory to it, which may include counsel for the Company, and the written
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the advice of such counsel.

(d)           Documents. The Warrant Agent shall be protected and
shall incur no liability for or in respect of any action taken or omitted by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably
believed by it to be genuine and to have been presented or signed by the proper
parties.

(e)           Certain Transactions. The Warrant Agent, and its
officers, directors and employees, may become the owner of, or acquire any
interest in, Warrants, with the same rights that it or they would have if it
were not the Warrant Agent hereunder, and, to the extent permitted by applicable
law, it or they may engage or be interested in any financial or other
transaction with the Company and may act on, or as depositary, trustee or agent
for, any committee or body of holders of Warrant Securities or other
obligations of the Company as freely as if it were not the Warrant Agent
hereunder. Nothing in this Warrant Agreement shall be deemed to prevent the
Warrant Agent from acting as trustee under any indenture to which the Company
is a party.

 8
 

 

(f)            No Liability for Interest. Unless otherwise agreed with
the Company, the Warrant Agent shall have no liability for interest on any
monies at any time received by it pursuant to any of the provisions of this
Agreement or of the Warrant Certificates.

(g)           No Liability for Invalidity. The Warrant Agent shall
have no liability with respect to any invalidity of this Agreement or any of
the Warrant Certificates (except as to the Warrant Agent’s countersignature
thereon).

(h)           No Responsibility for Representations. The Warrant
Agent shall not be responsible for any of the recitals or representations
herein or in the Warrant Certificates (except as to the Warrant Agent’s
countersignature thereon), all of which are made solely by the Company.

(i)            No Implied Obligations. The Warrant Agent shall be
obligated to perform only such duties as are herein and in the Warrant
Certificates specifically set forth and no implied duties or obligations shall
be read into this Agreement or the Warrant Certificates against the Warrant
Agent. The Warrant Agent shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or liability, the payment
of which within a reasonable time is not, in its reasonable opinion, assured to
it. The Warrant Agent shall not be accountable or under any duty or
responsibility for the use by the Company of any of the Warrant Certificates
authenticated by the Warrant Agent and delivered by it to the Company pursuant
to this Agreement or for the application by the Company of the proceeds of the
Warrant Certificates. The Warrant Agent shall have no duty or responsibility in
case of any default by the Company in the performance of its covenants or
agreements contained herein or in the Warrant Certificates or in the case of
the receipt of any written demand from a holder of a Warrant Certificate with
respect to such default, including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or attempt to initiate any
proceedings at law or otherwise or, except as provided in Section 6.2
hereof, to make any demand upon the Company.

5.3          Resignation and Appointment of
Successor.

(a)           The Company agrees,
for the benefit of the holders from time to time of the Warrant Certificates,
that there shall at all times be a Warrant Agent hereunder until all the
Warrants have been exercised or are no longer exercisable.

(b)           The Warrant Agent
may at any time resign as agent by giving written notice to the Company of such
intention on its part, specifying the date on which its desired resignation shall
become effective; provided that
such date shall not be less than three months after the date on which such
notice is given unless the Company otherwise agrees. The Warrant Agent
hereunder may be removed at any time by the filing with it of an instrument in
writing signed by or on behalf of the Company and specifying such removal and
the intended date when it shall become effective. Such resignation or removal
shall take effect upon the appointment by the Company, as hereinafter provided,
of a successor Warrant Agent (which shall be a bank or trust company authorized
under the laws of the jurisdiction of its organization to exercise corporate
trust powers) and the acceptance of such appointment by such successor Warrant
Agent. The obligation of the Company under Section 5.2(a) shall
continue to the extent set forth therein notwithstanding the resignation or
removal of the Warrant Agent.

(c)           In case at any time
the Warrant Agent shall resign, or shall be removed, or shall become incapable
of acting, or shall be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable Federal or state bankruptcy,
insolvency or similar law or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Warrant Agent or its property
or affairs, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due,
or shall take corporate action in furtherance of any such action, or a decree
or order for relief by a court having jurisdiction in the premises shall have
been entered in respect of the Warrant Agent in an involuntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or similar law, or a decree
or order by a court having jurisdiction in the premises shall have been entered
for the appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or similar 

 9
 

 

official) of the Warrant Agent or of its property or
affairs, or any public officer shall take charge or control of the Warrant
Agent or of its property or affairs for the purpose of rehabilitation,
conservation, winding up or liquidation, a successor Warrant Agent, qualified
as aforesaid, shall be appointed by the Company by an instrument in writing,
filed with the successor Warrant Agent. Upon the appointment as aforesaid of a
successor Warrant Agent and acceptance by the successor Warrant Agent of such
appointment, the Warrant Agent shall cease to be Warrant Agent hereunder.

(d)           Any successor
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Warrant Agent, without any further act,
deed or conveyance, shall become vested with all the authority, rights, powers,
trusts, immunities, duties and obligations of such predecessor with like effect
as if originally named as Warrant Agent hereunder, and such predecessor, upon
payment of its charges and disbursements then unpaid, shall thereupon become
obligated to transfer, deliver and pay over, and such successor Warrant Agent
shall be entitled to receive, all monies, securities and other property on
deposit with or held by such predecessor, as Warrant Agent hereunder.

(e)           Any corporation
into which the Warrant Agent hereunder may be merged or converted or any
corporation with which the Warrant Agent may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Warrant Agent shall be a party, or any corporation to which the Warrant Agent
shall sell or otherwise transfer all or substantially all the assets and
business of the Warrant Agent, provided that
it shall be qualified as aforesaid, shall be the successor Warrant Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto.

ARTICLE 6

MISCELLANEOUS

6.1          Amendment. This
Agreement may be amended by the parties hereto, without the consent of the
holder of any Warrant Certificate, for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective provision contained
herein, or making any other provisions with respect to matters or questions
arising under this Agreement as the Company and the Warrant Agent may deem necessary
or desirable; provided that such
action shall not materially adversely affect the interests of the holders of
the Warrant Certificates.

6.2          Notices and
Demands to the Company and Warrant Agent. If the Warrant
Agent shall receive any notice or demand addressed to the Company by the holder
of a Warrant Certificate pursuant to the provisions of the Warrant
Certificates, the Warrant Agent shall promptly forward such notice or demand to
the Company.

6.3          Addresses. Any
communication from the Company to the Warrant Agent with respect to this
Agreement shall be addressed to             ,
Attention:              
and any communication from the Warrant Agent to the Company with respect to
this Agreement shall be addressed to Favrille, Inc., 10421 Pacific Center Court,
Suite 150, San Diego, California 92121, Attention: Chief Financial Officer
(or such other address as shall be specified in writing by the Warrant Agent or
by the Company).

6.4          Governing
Law. This Agreement and each Warrant Certificate issued
hereunder shall be governed by and construed in accordance with the laws of the
State of New York.

6.5          Obtaining of
Governmental Approvals. The Company will from time to time
take all action which may be necessary to obtain and keep effective any and all
permits, consents and approvals of governmental agencies and authorities and
securities act filings under United States Federal and state laws (including
without limitation a registration statement in respect of the Warrants and
Warrant Securities under the Securities Act of 1933, as amended), which may be
or become requisite in connection with the issuance, sale, transfer, and
delivery of the Warrant Securities issued upon exercise of the Warrants, the
issuance, sale, transfer and delivery of the Warrants or upon the expiration of
the period during which the Warrants are exercisable.

 10
 

 

6.6          Persons
Having Rights Under Warrant Agreement. Nothing in this
Agreement shall give to any person other than the Company, the Warrant Agent
and the holders of the Warrant Certificates any right, remedy or claim under or
by reason of this Agreement.

6.7          Headings. The
descriptive headings of the several Articles and Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

6.8          Counterparts.
This Agreement may be executed in any number of counterparts,
each of which as so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.

6.9          Inspection
of Agreement. A copy of this Agreement shall be available at
all reasonable times at the principal corporate trust office of the Warrant
Agent for inspection by the holder of any Warrant Certificate. The Warrant
Agent may require such holder to submit his Warrant Certificate for inspection
by it.

 11

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.

	
  

  	
  FAVRILLE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Warrant Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  

[SIGNATURE
PAGE TO COMMON STOCK WARRANT AGREEMENT]

 

 

EXHIBIT A

FORM OF
WARRANT CERTIFICATE

[Face of Warrant Certificate]

	
  [Form if Warrants are attached to Other
  Securities and are not immediately detachable. 

  	
   

  	
  Prior to
                            ,
  this Warrant Certificate cannot be transferred or exchanged unless attached
  to a [Title of Other Securities].] 

  
	
   

  	
   

  	
   

  
	
  [Form of Legend if Warrants are not immediately
  exercisable. 

  	
   

  	
  Prior to
                            ,
  Warrants evidenced by this Warrant Certificate cannot be exercised.] 

  

EXERCISABLE ONLY
IF COUNTERSIGNED BY THE WARRANT

AGENT AS PROVIDED HEREIN

VOID AFTER [              ] P.M.,
[CITY] TIME, ON                             ,

FAVRILLE, INC.

WARRANT CERTIFICATE
REPRESENTING

WARRANTS TO PURCHASE

COMMON STOCK, PAR VALUE $0.001 PER SHARE

 

	
  No.

  	
   

  	
  Warrants

  

 

This certifies that                                   
or registered assigns is the registered owner of the above indicated number of
Warrants, each Warrant entitling such owner [if Warrants are attached to Other
Securities and are not immediately detachable - , subject to the registered
owner qualifying as a “Holder” of this Warrant Certificate, as hereinafter defined),]
to purchase, at any time [after [                ] p.m.,
[City] time, on                 
and] on or before [        ] p.m.,
[City] time, on                     ,
                
shares of Common Stock, par value $0.001 per share (the “Warrant
Securities”), of Favrille, Inc. (the “Company”)
on the following basis:  during the
period from                   ,
through and including                         ,
the exercise price per Warrant Security will be $                  ,
subject to adjustment as provided in the Warrant Agreement (as hereinafter
defined) (the “Warrant
Price”). The Holder may exercise the Warrants evidenced hereby
by providing certain information set forth on the back hereof and by paying in
full, in lawful money of the United States of America, [in cash or by certified
check or official bank check in New York Clearing House funds] [by bank wire
transfer in immediately available funds], the Warrant Price for each Warrant
Security with respect to which this Warrant is exercised to the Warrant Agent
(as hereinafter defined) and by surrendering this Warrant Certificate, with the
purchase form on the back hereof duly executed, at the corporate trust office
of [name of Warrant Agent], or its successor as warrant agent (the “Warrant Agent”),
which is, on the date hereof, at the address specified on the reverse hereof,
and upon compliance with and subject to the conditions set forth herein and in
the Warrant Agreement (as hereinafter defined).

The term “Holder” as
used herein shall mean [if Warrants are attached to Other Securities and are
not immediately detachable - prior to                         ,
           (the “Detachable Date”), the registered
owner of the Company’s [title of Other Securities] to which this Warrant
Certificate was initially attached, and after such Detachable Date,] the person
in whose name at the time this Warrant Certificate shall be registered upon the
books to be maintained by the Warrant Agent for that purpose pursuant to Section 4
of the Warrant Agreement.

The Warrants evidenced by this Warrant Certificate may
be exercised to purchase a whole number of Warrant Securities in registered
form. Upon any exercise of fewer than all of the Warrants evidenced by this
Warrant Certificate, there shall be issued to the Holder hereof a new Warrant
Certificate evidencing Warrants for the number of Warrant Securities remaining
unexercised.

 

This Warrant Certificate is issued under and in
accordance with the Warrant Agreement dated as of                           ,
         (the “Warrant
Agreement”), between the Company and the Warrant Agent and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate consents
by acceptance hereof. Copies of the Warrant Agreement are on file at the
above-mentioned office of the Warrant Agent.

[If Warrants are attached to Other Securities and are
not immediately detachable - Prior to the Detachable Date, this Warrant
Certificate may be exchanged or transferred only together with the [Title of
Other Securities] (the “Other Securities”)
to which this Warrant Certificate was initially attached, and only for the
purpose of effecting or in conjunction with, an exchange or transfer of such
Other Security. Additionally, on or prior to the Detachable Date, each transfer
of such Other Security on the register of the Other Securities shall operate
also to transfer this Warrant Certificate. After such date, transfer of this]
[If Warrants are attached to Other Securities and are immediately detachable —
Transfer of this] Warrant Certificate may be registered when this Warrant
Certificate is surrendered at the corporate trust office of the Warrant Agent
by the registered owner or such owner’s assigns, in the manner and subject to
the limitations provided in the Warrant Agreement.

[If Other Securities with Warrants which are not
immediately detachable - Except as provided in the immediately preceding
paragraph, after] [If Other Securities with Warrants which are immediately
detachable or Warrants alone - After] countersignature by the Warrant Agent and
prior to the expiration of this Warrant Certificate, this Warrant Certificate
may be exchanged at the corporate trust office of the Warrant Agent for Warrant
Certificates representing Warrants for the same aggregate number of Warrant
Securities.

This Warrant Certificate shall not entitle the Holder
hereof to any of the rights of a holder of the Warrant Securities, including,
without limitation, the right to receive payments of dividends or
distributions, if any, on the Warrant Securities (except to the extent set
forth in the Warrant Agreement) or to exercise any voting rights.

Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set forth at this
place.

This Warrant Certificate shall not be valid or
obligatory for any purpose until countersigned by the Warrant Agent.

IN WITNESS
WHEREOF, the Company has caused this Warrant to be executed
in its name and on its behalf by the facsimile signatures of its duly
authorized officers.

	
   

  	
  Dated:

  	
   

  	
   

  	
  FAVRILLE, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  As Warrant Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  	
   

  	
   

  

 

 

[REVERSE OF WARRANT CERTIFICATE]

(Instructions for
Exercise of Warrant)

To exercise any Warrants evidenced hereby for Warrant
Securities (as hereinafter defined), the Holder must pay, in lawful money of
the United States of America, [in cash or by certified check or official bank check
in New York Clearing House funds] [by bank wire transfer in immediately
available funds], the Warrant Price in full for Warrants exercised, to [Warrant
Agent] [address of Warrant Agent], Attn: 
                          ,
which payment must specify the name of the Holder and the number of Warrants
exercised by such Holder. In addition, the Holder must complete the information
required below and present this Warrant Certificate in person or by mail
(certified or registered mail is recommended) to the Warrant Agent at the
appropriate address set forth above. This Warrant Certificate, completed and
duly executed, must be received by the Warrant Agent within five business days
of the payment.

(To be executed upon
exercise of Warrants)

The undersigned hereby irrevocably elects to exercise                     
Warrants, evidenced by this Warrant Certificate, to purchase                     
shares of the Common Stock, par value $0.001 per share (the “Warrant Securities”),
of Favrille, Inc. and represents that he has tendered payment for such
Warrant Securities, in lawful money of the United States of America, [in cash
or by certified check or official bank check in New York Clearing House funds]
[by bank wire transfer in immediately available funds], to the order of
Favrille, Inc., c/o [insert name and address of Warrant Agent], in the
amount of $                    
in accordance with the terms hereof. The undersigned requests that said Warrant
Securities be in fully registered form in the authorized denominations,
registered in such names and delivered all as specified in accordance with the
instructions set forth below.

If the number of Warrants exercised is less than all
of the Warrants evidenced hereby, the undersigned requests that a new Warrant
Certificate evidencing the Warrants for the number of Warrant Securities
remaining unexercised be issued and delivered to the undersigned unless
otherwise specified in the instructions below.

	
  Dated

  	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  (Please Print)

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Insert Social Security or Other Identifying Number
  of Holder)

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform in all respects to name of
  holder as specified on the face of this Warrant Certificate and must bear a signature
  guarantee by a bank, trust company or member broker of the New York, Midwest
  or Pacific Stock Exchange)

  

 

This Warrant may be exercised at the following
addresses:

	
  By hand at

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

 

	
   

  	
   

  
	
   

  	
   

  
	
  By mail at

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

[Instructions as to form and delivery of Warrant
Securities and, if applicable, Warrant Certificates evidencing Warrants for the
number of Warrant Securities remaining unexercised — complete as appropriate.]

 

ASSIGNMENT

[Form of assignment
to be executed if

Warrant Holder desires to transfer Warrant)

FOR VALUE RECEIVED,                                       
hereby sells, assigns and transfers unto:

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Please print name and address including zip
  code)

  	
   

  	
  Please insert Social Security or other identifying
  number

  

 

the right represented by the within Warrant to
purchase               
shares of [Title of Warrant Securities] of Favrille, Inc. to which the
within Warrant relates and appoints                         
attorney to transfer such right on the books of the Warrant Agent with full
power of substitution in the premises.

	
  Dated

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  (Signature must conform in all respects to name of
  holder as specified on the face of the Warrant)

  
	
  Signature Guaranteed

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