Document:

Exhibit 10.19

Execution Version

 

SECOND LIEN 

GUARANTY AND PLEDGE AGREEMENT

 

DATED AS OF

JANUARY 31, 2008

 

 

MADE BY

 

 

LINN ENERGY, LLC

AND

EACH OF THE OTHER OBLIGORS (AS DEFINED HEREIN)

 

 

IN FAVOR OF

 

 

BNP PARIBAS,

AS ADMINISTRATIVE AGENT

 

 

ALL
LIENS GRANTED BY THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN THE
INTERCREDITOR AGREEMENT DATED JANUARY 31, 2008 BY AND AMONG LINN ENERGY, LLC,
BNP PARIBAS, AS SENIOR ADMINISTRATIVE AGENT, BNP PARIBAS, AS SUBORDINATED
ADMINISTRATIVE AGENT AND PARTIES THERETO, BE SUBORDINATE AND JUNIOR TO ALL
LIENS GRANTED BY GRANTOR TO SECURE THE SENIOR INDEBTEDNESS REGARDLESS OF THE
RELATIVE PRIORITY OF SUCH LIENS, SUCH INTERCREDITOR AGREEMENT BEING
INCORPORATED HEREIN AND BY THIS REFERENCE BEING MADE A PART HEREOF.

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I Definitions

  	
  1

  
	
   

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
  1

  
	
  Section 1.02

  	
  Other
  Definitional Provisions

  	
  6

  
	
  Section 1.03

  	
  Rules of
  Interpretation

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE II Guarantee

  	
  6

  
	
   

  	
   

  
	
  Section 2.01

  	
  Guarantee

  	
  6

  
	
  Section 2.02

  	
  Right of
  Contribution

  	
  7

  
	
  Section 2.03

  	
  No
  Subrogation

  	
  7

  
	
  Section 2.04

  	
  Guaranty
  Amendments, Etc. with respect to the Borrower Obligations

  	
  7

  
	
  Section 2.05

  	
  Waivers

  	
  8

  
	
  Section 2.06

  	
  Guaranty
  Absolute and Unconditional

  	
  8

  
	
  Section 2.07

  	
  Reinstatement

  	
  10

  
	
  Section 2.08

  	
  Payments

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE III Grant of Security
  Interest 

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Grant of
  Security Interest

  	
  10

  
	
  Section 3.02

  	
  Transfer
  of Pledged Securities

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV Representations and
  Warranties

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Representations
  in Loan Agreement

  	
  11

  
	
  Section 4.02

  	
  Title; No
  Other Liens

  	
  11

  
	
  Section 4.03

  	
  Perfected
  Priority Liens

  	
  12

  
	
  Section 4.04

  	
  Obligor
  Information

  	
  12

  
	
  Section 4.05

  	
  Pledged
  Securities

  	
  12

  
	
  Section 4.06

  	
  Benefit
  to the Guarantor

  	
  13

  
	
  Section 4.07

  	
  Solvency

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE V Covenants 

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Maintenance
  of Perfected Security Interest; Further Documentation

  	
  13

  
	
  Section 5.02

  	
  Changes
  in Locations, Name, Etc

  	
  13

  
	
  Section 5.03

  	
  Pledged
  Securities

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI Remedial Provisions 

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Code and
  Other Remedies

  	
  16

  
	
  Section 6.02

  	
  Pledged
  Securities

  	
  17

  
	
  Section 6.03

  	
  Private
  Sales of Pledged Securities

  	
  19

  
	
  Section 6.04

  	
  Waiver;
  Deficiency

  	
  20

  
	
  Section 6.05

  	
  Non-Judicial
  Enforcement

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII The Administrative
  Agent 

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 7.01

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

  	
  20

  
	
  Section 7.02

  	
  Duty of
  Administrative Agent

  	
  21

  
	
  Section 7.03

  	
  Execution
  of Financing Statements

  	
  22

  
	
  Section 7.04

  	
  Authority
  of Administrative Agent

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII Subordination of
  Indebtedness

  	
  22

  

 

i

 

	
  Section 8.01

  	
  Subordination
  of All Obligor Claims

  	
  23

  
	
  Section 8.02

  	
  Claims in
  Bankruptcy

  	
  23

  
	
  Section 8.03

  	
  Payments
  Held in Trust

  	
  23

  
	
  Section 8.04

  	
  Liens
  Subordinate

  	
  23

  
	
  Section 8.05

  	
  Notation
  of Records

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX Miscellaneous 

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
  Waiver

  	
  24

  
	
  Section 9.02

  	
  Notices

  	
  24

  
	
  Section 9.03

  	
  Payment
  of Expenses, Indemnities, Etc

  	
  24

  
	
  Section 9.04

  	
  Amendments
  in Writing

  	
  25

  
	
  Section 9.05

  	
  Successors
  and Assigns

  	
  25

  
	
  Section 9.06

  	
  Survival;
  Revival; Reinstatement

  	
  25

  
	
  Section 9.07

  	
  Counterparts;
  Integration; Effectiveness

  	
  26

  
	
  Section 9.08

  	
  Severability

  	
  26

  
	
  Section 9.09

  	
  Set-Off

  	
  26

  
	
  Section 9.10

  	
  Governing
  Law; Submission to Jurisdiction

  	
  27

  
	
  Section 9.11

  	
  Headings

  	
  28

  
	
  Section 9.12

  	
  Acknowledgments

  	
  28

  
	
  Section 9.13

  	
  Additional
  Obligors and Pledgors

  	
  28

  
	
  Section 9.14

  	
  Releases

  	
  29

  
	
  Section 9.15

  	
  Acceptance

  	
  29

  

 

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

 

ii

 

This SECOND LIEN GUARANTY AND PLEDGE
AGREEMENT, dated as of January 31, 2008, is made by LINN ENERGY, LLC, a
Delaware limited liability company (the “Borrower”), and each of the
signatories hereto (the Borrower and each of the signatories hereto, together
with any other Subsidiary 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”), for the banks and other financial institutions (the “Lenders”)
from time to time party to the Second Lien Term Loan Agreement dated of even
date herewith (as amended, supplemented or otherwise modified from time to
time, the “Loan Agreement”), among the Borrower, the Lenders and the
Administrative Agent.

 

R E C I T A L S

 

A.            It is a condition precedent to the
effectiveness of the Loan Agreement that the Obligors shall have executed and
delivered this Agreement to the Administrative Agent for the ratable benefit of
the Lenders.

 

G.            NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:

 

ARTICLE I

Definitions

 

Section 1.01           Definitions.

 

(a)           Unless
otherwise defined herein, terms defined in the Loan Agreement and used herein
have the meanings given to them in the Loan 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 Second
Lien 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 all other obligations and liabilities of the Borrower and its
Subsidiaries (including, without limitation, interest accruing at the then
applicable rate provided in the Loan Agreement after the maturity of the Loans
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 Document).

 

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

 

“Guaranteed Creditors” means the
collective reference to the Administrative Agent and the Lenders.

 

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

 

“Guaranteed Swap Agreement”
means any present or future Swap Agreement between the Borrower or any
Subsidiary and any Senior Revolving Lender or any Affiliate of any Senior
Revolving Lender while such Person (or, in the case of an Affiliate of a Senior
Revolving Lender, the Person affiliated therewith) is a Senior Revolving 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 a Subsidiary under a Swap Agreement ceases to be a Senior
Revolving Lender under the Senior Revolving Credit Agreement (or, in the case
of an Affiliate of a Senior Revolving Lender, the Person affiliated therewith
ceases to be a Senior Revolving Lender under the Senior Revolving 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 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.

 

“Intercreditor Agreement” means
that certain Intercreditor Agreement dated as of the date hereof entered into
by and among the Senior Revolving Administrative Agent, the Administrative
Agent, and the Borrower and the Guarantors, as the same may from time to time
be amended, modified, supplemented or restated.

 

“Issuers” means the collective
reference to the issuers of the Pledged Securities.

 

“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.

 

2

 

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

 

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

 

“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 (as the same may be supplemented from time to time pursuant to a Supplement)
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(64)  of the UCC on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the Pledged
Securities, collections thereon or distributions or payments with respect
thereto.

 

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

 

“Senior
Indebtedness” means and includes (a) all principal indebtedness for
loans now outstanding or hereafter incurred, and all letter of credit
reimbursement obligations now existing 

 

3

 

or
hereafter arising, under the Senior Revolving Credit Agreement, (b) all
amounts now or hereafter owing to any of the Senior Revolving Lenders or any of
their Affiliates under any Guaranteed Swap Agreement, (c) all interest
accruing on the Senior Indebtedness described in the preceding clauses (a) and
(b), and (d) all other monetary obligations (whether now outstanding or
hereafter incurred) for which the Borrower or any Guarantor is responsible or
liable as obligor, guarantor or otherwise under or pursuant to any of the
Senior Revolving Credit Documents including, without limitation, all fees,
penalties, yield protections, breakage costs, damages, indemnification
obligations, reimbursement obligations, and expenses (including, without
limitation, fees and expenses of counsel to the Senior Indebtedness
Representative and the Senior Revolving Lenders) together with interest on the
foregoing to the extent provided for in the Senior Revolving Credit
Documents.  The interest described in the
preceding clause (c) and the premiums and penalties described in the
preceding clause (d) include, without limitation, all interest accruing
after the commencement of any Insolvency Proceeding under the terms of the
Senior Revolving Credit Documents whether or not such interest constitutes an
allowed claim in any such Insolvency Proceeding.

 

“Senior
Indebtedness Representative” means (a) initially, BNP Paribas, as
administrative agent for the Senior Revolving Lenders under the Senior
Revolving Credit Agreement or (b) such other Person selected by the
Majority Lenders (as such term is defined in the Senior Revolving Credit
Agreement) to replace BNP Paribas or the then Senior Indebtedness Representative.

 

“Senior Revolving Administrative
Agent” means BNP Paribas, as administrative agent for the Senior Revolving
Lenders.

 

“Senior Revolving Borrower
Obligations” means the collective reference to the payment and performance
of all Senior Indebtedness and all obligations of the Borrower and its
Subsidiaries under the Senior Revolving Credit Documents, including, without
limitation, the unpaid principal of and interest on the Loans and the LC
Exposure (as such terms are defined in the Senior Revolving Credit Agreement)
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 Senior Revolving 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 Senior Revolving
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 Senior Revolving 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 Senior Revolving Guaranteed Creditors that are required to be paid by
the Borrower pursuant to the terms of any Senior Revolving Guaranteed
Document).

 

“Senior Revolving Credit Agreement”
means that certain Third Amended and Restated Credit Agreement dated as of August 1,
2007, as amended by that certain First Amendment to Third Amended and Restated
Credit Agreement, dated November 2, 2007 and the Second Amendment to Third
Amended and Restated Credit Agreement, dated January 31, 2008, among 

 

4

 

the
Borrower, BNP Paribas, as administrative agent, and the financial institutions
listed therein from time to time as Senior Revolving Lenders, as from time to
time renewed, extended, amended, supplemented, or restated, and any agreements
representing the refinancing, replacement, or substitution in whole or in part
of the revolving credit loans and letter of credit liabilities made or incurred
under such Senior Revolving Credit Agreement, provided that the terms of such
refinancing, replacement or substitution and the financing documentation
entered into in connection therewith are consistent with the terms of the
Senior Revolving Credit Agreement and other Senior Revolving Credit Documents
in effect prior to such refinancing, replacement or substitution or could have
been included in such Senior Revolving Credit Documents by an amendment or
other modification that would not be prohibited by the terms of the
Intercreditor Agreement.

 

“Senior Revolving Credit Documents”
means, collectively, (a) the Senior Revolving Credit Agreement and the
Guaranteed Swap Agreements, (b) any note, bond or other instrument
evidencing Senior Indebtedness, (c) all mortgages, security agreements,
pledge agreements or financing statements evidencing, creating or perfecting
any Lien to secure the Senior Indebtedness in any way, (d) all guarantees
of the Senior Indebtedness, (e) all other documents, instruments or
agreements relating to the Senior Indebtedness now or hereafter executed or
delivered by and among the Borrower, any Subsidiary, the Senior Indebtedness
Representative or any Senior Revolving Lender, including without limitation
each of the other “Loan Documents” as such term is defined in the Senior
Revolving Credit Agreement, and (f) all renewals, extensions, amendments,
modifications or restatements of the foregoing.

 

“Senior Revolving Guaranteed
Creditors” means the collective reference to the Senior Revolving
Administrative Agent, the Senior Revolving Lenders and the Affiliates to the
Senior Revolving Lenders party to the Guaranteed Swap Agreements.

 

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

 

“Senior Revolving Guarantor
Obligations” means with respect to any Guarantor, the collective reference
to (a) the Senior Revolving Borrower Obligations and (b) all
obligations and liabilities of such Guarantor which may arise under or in
connection with any Senior Revolving 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 fees and disbursements of counsel to any
Senior Revolving Guaranteed Creditor under any Senior Revolving Guaranteed
Document).

 

“Senior Revolving Lenders” means
all Persons which now or hereafter constitute a “Lender” under the Senior
Revolving Credit Agreement and their respective successors and assigns, and all
Persons refinancing any Senior Indebtedness and their respective successors and
assigns.

 

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

 

5

 

“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
Loan Agreement are hereby incorporated herein by reference and shall apply to
this Agreement, mutatis mutandis.

 

ARTICLE II

Guarantee

 

Section 2.01           Guarantee.

 

(a)           Each of the Guarantors hereby jointly and severally,
unconditionally and irrevocably, guarantees to the 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.

 

(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 

 

6

 

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.

 

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.  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, 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 Loan Agreement.

 

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

 

7

 

 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 (other than a defense of payment
or performance in full) 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;

 

(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

 

8

 

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.

 

(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

 

9

 

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 Loan 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
Pledged Securities; 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.

 

Section 3.02           Transfer of Pledged Securities.  Upon
the payment in full of all Senior Revolving Guarantor Obligations, the
termination of the commitments under the Senior Revolving Credit Documents and
the expiration, termination, or cash-collateralization of all letters of credit
issued by any holder of Senior Indebtedness and to the extent the Pledge
Securities constitute “securities” under Article 8 of the UCC, 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 

 

10

 

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, to the extent the Pledge
Securities constitute “securities” under Article 8 of the UCC and upon the
payment in full of all Senior Revolving Guarantor Obligations, the termination
of the commitments under the Senior Revolving Credit Documents and the
expiration, termination, or cash-collateralization of all letters of credit
issued by any holder of Senior Indebtedness, 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
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 6.02(b).  In addition, during the continuance of an
Event of Default, after payment in full of all Senior Revolving Guarantor
Obligations, the termination of the commitments under the Senior Revolving
Credit Documents and the expiration, termination, or cash-collateralization of
all letters of credit issued by any holder of Senior Indebtedness, 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 Loan Agreement, each Obligor hereby
represents and warrants to the Administrative Agent and each Lender that:

 

Section 4.01           Representations in Loan Agreement.
In the case of each Guarantor, the representations and warranties set forth in
Article VII of the Loan 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 and the security interest granted to the Senior
Revolving Administrative Agent to secure the Senior Revolving Guarantor
Obligations, 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 and such as have been filed in favor of the Senior Revolving
Administrative Agent, for the ratable benefit of the Senior Revolving
Guaranteed Creditors, pursuant to the Senior Revolving Credit Documents.

 

11

 

Section 4.03           Perfected 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 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 except for Liens securing the Senior Revolving Guarantor
Obligations.

 

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 Loan 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 the security interests in favor
of the Senior Revolving Administrative Agent to secure the Senior Revolving
Guarantor Obligations, 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 except for Liens securing the Senior Revolving Guarantor Obligations.

 

(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 transfer of the Pledged LLC
Interests or the Pledged Partnership Interests pursuant to an exercise of
remedies hereunder in respect of the Pledged LLC Interests and the Pledged
Partnership Interests, a transferee 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.

 

12

 

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 reasonably may be expected to
benefit, directly or indirectly, it; and it has determined that this Agreement
is necessary and convenient to the conduct, promotion and attainment of the
business of such Guarantor and the Borrower.

 

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:

 

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, other than the
Senior Revolving Guaranteed Creditors, 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 the payment in full of
all Senior Revolving Guarantor Obligations, the termination of the commitments
under the Senior Revolving Credit Documents and the expiration, termination, or
cash-collateralization of all letters of credit issued by any holder of Senior
Indebtedness, 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 

 

13

 

maintains any Collateral or
is organized.  Without limitation of
Section 8.01(l) of the Loan 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 (i) notify
the Administrative Agent of such change within ten (10) days after any
such change, and (ii) take all action reasonably requested 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)           Upon the payment in full of all
Senior Revolving Guarantor Obligations, the termination of the commitments
under the Senior Revolving Credit Documents and the expiration, termination, or
cash-collateralization of all letters of credit issued by any holder of Senior
Indebtedness, 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 Loan 

 

14

 

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 and the Liens securing the Senior
Revolving Guarantor Obligations 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 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 without the prior written consent of the
Administrative Agent.

 

(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.

 

15

 

ARTICLE VI

Remedial Provisions

 

Section 6.01           Code and Other Remedies.

 

(a)           Subject to the Intercreditor
Agreement and the rights of the Senior Revolving Guaranteed Creditors in the
Collateral, 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 and subject to the Intercreditor
Agreement and the rights of the Senior Revolving Guaranteed Creditors in the
Collateral, 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
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 and subject to the Intercreditor Agreement, 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 and subject to the rights of the Senior Revolving Guaranteed Creditors
in the Collateral, the Administrative Agent shall have the right to deliver,
assign and transfer to the purchaser or transferee thereof the Collateral so
sold or transferred.  Subject to the
Intercreditor Agreement, 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
Loan 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 

 

16

 

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, subject to the Intercreditor Agreement and the rights of the Senior
Revolving Guaranteed Creditors in the Collateral, 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.

 

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
Loan Agreement.  Subject to the
Intercreditor Agreement, any sums paid upon or in respect of any Pledged
Securities upon the liquidation or dissolution of any Issuer, 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 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 or the
Senior Revolving 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 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 Loan
Agreement, this Agreement or any other Loan Document or, without the prior
consent of the

 

17

 

 Administrative Agent and the Lenders, enable
or permit any Issuer to issue any Equity Interest or to issue any other
securities convertible into or granting the right to purchase or exchange for
any Equity Interest of any Issuer other than as permitted by the Loan
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, and
subject in all respects to the Intercreditor Agreement, (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 Loan 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 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 and subject in all respects to the
Intercreditor Agreement, 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 such
Issuer or any officer or agent thereof).

 

(e)           Subject to the Intercreditor Agreement, each
Pledgor hereby authorizes and instructs each Issuer of any Pledged Securities
pledged by such Pledgor hereunder to (i) 

 

18

 

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, subject to the Intercreditor Agreement, 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.

 

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, 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.  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 commercially
reasonable 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 Loan Agreement.

 

19

 

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.  The Administrative Agent may enforce its
rights hereunder without prior judicial process or judicial hearing, and to the
extent permitted by 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 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, subject to the
Intercreditor Agreement, 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 but subject to the
Intercreditor Agreement, without notice to or assent by such Pledgor, to do any
or all of the following:

 

(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 Loan 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 

 

20

 

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.

 

Anything in this
Section 7.01(a) to the contrary notwithstanding, the Administrative
Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Section 7.01(a) unless (a) an Event of
Default shall have occurred and be continuing and (b) a “Blockage Period”
or “Standstill Period”, as such terms are defined in the Intercreditor
Agreement, shall not have occurred and be continuing.

 

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

 

(c)           The expenses of the Administrative
Agent incurred in connection with actions undertaken as provided in this
Section 7.01, together with interest thereon at a rate per annum equal to
the post-default rate specified in Section 3.02(c) of the Loan
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 7.02           Duty of Administrative Agent.  The Administrative Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9.207 of the UCC or otherwise, shall be
to deal with it in the same manner as the Administrative Agent deals with
similar Property for its own account and the Administrative Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which comparable secured parties accord comparable
collateral.  Neither the Administrative
Agent, any 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

21

 

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.

 

Section 7.03           Execution 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 Loan 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

 

22

 

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 by
such other Obligor.  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, subject in all respects to the
Intercreditor Agreement, 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 Loan
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 under the Loan
Agreement, 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 and
subject in all respects to the Intercreditor Agreement, any Obligor should
receive any funds, payments, claims or distributions which are 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 or the Senior Revolving Administrative
Agent, for the benefit of the Senior Revolving Guaranteed Creditors; and each
Obligor covenants promptly to pay the same to the Administrative Agent or the
Senior Revolving Administrative Agent.

 

Section 8.04           Liens Subordinate.  Each
Obligor agrees that, until the Borrower Obligations are paid in full in cash,
any Liens securing payment of the Obligor Claims shall be and remain inferior
and subordinate to any Liens securing payment of the Obligations and the Liens
securing payment of the Senior Revolving Guarantor Obligations, regardless of
whether

 

23

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 and subject in all respects
to the Intercreditor Agreement, no Obligor, during the period in which any of
the Borrower Obligations are outstanding, 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.  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 Loan 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.

 

(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 

 

24

 

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 Loan 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 Loan 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 Loan 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.

 

(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 and the Lenders and shall survive the execution and delivery of this
Agreement and the making of any Loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the Administrative
Agent, the other Agents 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 Loan Agreement is outstanding and unpaid.  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 or the
termination of this Agreement, any other Loan Document or any provision hereof
or thereof.

 

(b)           To the extent that any payments on
the 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 

 

 

25

 

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 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.

 

(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. 
Subject to the Intercreditor Agreement, 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.

 

26

 

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.  THIS SUBMISSION TO JURISDICTION IS
NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER
ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.

 

(c)           EACH PARTY IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OF THE
LOAN AGREEMENT (OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 12.01
OF THE LOAN 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 

 

27

 

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.

 

(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 Loan 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.

 

28

 

Section 9.14           Releases.

 

(a)           Release Upon Payment in Full.  The grant of a security interest hereunder
and of all 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 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 Loan 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
Loan Agreement; provided that the Borrower shall have delivered to the
Administrative Agent, 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 Loan 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 page follows]

 

29

 

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

 

 

	
  BORROWER:

  	
  LINN ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kolja Rockov

  
	
   

  	
   

  	
  Kolja Rockov

  
	
   

  	
   

  	
  Executive Vice President and Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  GUARANTORS:

  	
  LINN ENERGY HOLDINGS, LLC

  
	
   

  	
  LINN OPERATING, INC.

  
	
   

  	
  PENN WEST PIPELINE, LLC

  
	
   

  	
  MID ATLANTIC WELL SERVICE, INC.

  
	
   

  	
  MID-CONTINENT HOLDINGS I, LLC

  
	
   

  	
  MID-CONTINENT HOLDINGS II, LLC

  
	
   

  	
  MID-CONTINENT I, LLC

  
	
   

  	
  MID-CONTINENT II, LLC

  
	
   

  	
  LINN GAS MARKETING, LLC

  
	
   

  	
  LINN EXPLORATION MIDCONTINENT, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Kolja Rockov

  
	
   

  	
   

  	
  Kolja Rockov

  
	
   

  	
   

  	
  Executive
  Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  

 

Signature Page - Guaranty and
Pledge Agreement

 

 

Acknowledged and Agreed to as

of the date hereof by:

 

	
  ADMINISTRATIVE
  AGENT:

  	
  BNP PARIBAS

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Doug Liftman

  
	
   

  	
  Name: Doug Liftman

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Betsy Jocher

  
	
   

  	
  Name: Betsy Jocher

  
	
   

  	
  Title: Director

  
	
   

  	
   

  

 

 

Signature Page
- Guaranty and Pledge AgreementExhibit 10.2

 

SUMMARY OF COMPENSATION ARRANGEMENTS WITH
NAMED EXECUTIVE OFFICERS

 

On October 31, 2007, the Executive Compensation Committee of J.B.
Hunt Transport Services, Inc. (the “Company”) approved the following base
salaries for Jerry Walton, Paul Bergant and Craig Harper.  On November 1, 2007, the Compensation
Committee of the Company recommended and independent members of the Board of
Directors approved the following base salaries for Wayne Garrison and Kirk
Thompson.  All base salaries were effective
as of November 11, 2007.  The
Compensation Committee approved the following other compensation amounts
(effective January 1, 2008) as indicated:

 

	
  Named Executive Officer

  	
   

  	
  Base 

  Salary

  	
   

  	
  Bonus 

  ($)

  	
   

  	
  Other Annual Compensation

  ($)

  	
   

  	
  All Other Compensation 

  ($)

  	
   

  
	
  Wayne Garrison

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chairman of the Board

  	
   

  	
  $

  	
  515,000

  	
   

  	
  (1

  	
  )

  	
  (2

  	
  )

  	
  (3

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kirk Thompson

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  President and CEO

  	
   

  	
  $

  	
  650,000

  	
   

  	
  (1

  	
  )

  	
  (2

  	
  )

  	
  (3

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jerry Walton

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EVP, Finance/Administration and CFO

  	
   

  	
  $

  	
  383,000

  	
   

  	
  (1

  	
  )

  	
  (2

  	
  )

  	
  (3

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Craig Harper

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EVP, Operations and COO

  	
   

  	
  $

  	
  355,000

  	
   

  	
  (1

  	
  )

  	
  (2

  	
  )

  	
  (3

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Paul Bergant

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EVP, Marketing, CMO, President of Intermodal

  	
   

  	
  $

  	
  340,000

  	
   

  	
  (1

  	
  )

  	
  (2

  	
  )

  	
  (3

  	
  )

  

(1)          The Company has a performance-based bonus program
that is related to the Company’s earnings per share (EPS) for calendar year
2008.  According to the 2008 EPS bonus
plan, each of the Company’s named executive officers may earn a bonus ranging
from 15% to 220% of his annual base salary. 
Based on the Company’s current expectations for 2008 EPS, each named
executive officer can be projected to earn a bonus equal to between 15% and 55%
of his base salary.

 

(2)          The Company will reimburse each named executive
officer up to $10,000 for actual expenses incurred for legal, tax and estate
plan preparation services.

 

(3)          The Company has a 401(k) retirement plan that
includes matching contributions on behalf of each of the named executive
officers.  The plan is expected to pay
each named executive officer approximately $6,000 during 2008.

 

1

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