Document:

EX-10.4

 

Exhibit
10.4

SECOND LIEN 

GUARANTY AND PLEDGE AGREEMENT

Dated as of

August 1, 2006

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 ANNEX II OF
THE SECOND LIEN BRIDGE LOAN AGREEMENT DATED AUGUST 1, 2006 BY AND AMONG LINN ENERGY,
LLC, BNP PARIBAS, AS ADMINISTRATIVE AGENT AND TERM LENDERS 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 AS DETERMINED WITHOUT
REGARD TO SUCH ANNEX II OF SUCH TERM LOAN AGREEMENT, THE PROVISIONS OF WHICH ANNEX
II OF SUCH TERM LOAN 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
	 	 	3	 
	Section 1.03 Rules of Interpretation
	 	 	3	 
	 
	 	 	 	 
	ARTICLE II Guarantee
	 	 	3	 
	 
	 	 	 	 
	Section 2.01 Guarantee
	 	 	3	 
	Section 2.02 Right of Contribution
	 	 	4	 
	Section 2.03 No Subrogation
	 	 	5	 
	Section 2.04 Guaranty Amendments, Etc. with respect to the Borrower Obligations
	 	 	5	 
	Section 2.05 Waivers
	 	 	5	 
	Section 2.06 Guaranty Absolute and Unconditional
	 	 	6	 
	Section 2.07 Reinstatement
	 	 	7	 
	Section 2.08 Payments
	 	 	7	 
	 
	 	 	 	 
	ARTICLE III Grant of Security Interest
	 	 	8	 
	 
	 	 	 	 
	Section 3.01 Grant of Security Interest
	 	 	8	 
	Section 3.02 Transfer of Pledged Securities
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV Representations and Warranties
	 	 	8	 
	 
	 	 	 	 
	Section 4.01 Representations in Credit Agreement
	 	 	9	 
	Section 4.02 Title; No Other Liens
	 	 	9	 
	Section 4.03 Perfected First Priority Liens
	 	 	9	 
	Section 4.04 Obligor Information
	 	 	9	 
	Section 4.05 Pledged Securities
	 	 	10	 
	Section 4.06 Benefit to the Guarantor
	 	 	10	 
	Section 4.07 Solvency
	 	 	10	 
	 
	 	 	 	 
	ARTICLE V Covenants
	 	 	10	 
	 
	 	 	 	 
	Section 5.01 Maintenance of Perfected Security Interest; Further Documentation
	 	 	11	 
	Section 5.02 Changes in Locations, Name, Etc
	 	 	11	 
	Section 5.03 Pledged Securities
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VI Remedial Provisions
	 	 	13	 
	 
	 	 	 	 
	Section 6.01 Code and Other Remedies
	 	 	13	 
	Section 6.02 Pledged Securities
	 	 	14	 
	Section 6.03 Private Sales of Pledged Securities
	 	 	16	 
	Section 6.04 Waiver; Deficiency
	 	 	17	 
	Section 6.05 Non-Judicial Enforcement
	 	 	17	 
	 
	 	 	 	 
	ARTICLE VII The Administrative Agent
	 	 	17	 
	 
	 	 	 	 
	Section 7.01 Administrative Agent’s Appointment as Attorney-in-Fact, Etc
	 	 	17	 
	Section 7.02 Duty of Administrative Agent
	 	 	19	 
	Section 7.03 Execution of Financing Statements
	 	 	19	 
	Section 7.04 Authority of Administrative Agent
	 	 	19	 
	 
	 	 	 	 
	ARTICLE VIII Subordination of Indebtedness
	 	 	20	 

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	 	 	Page	 
	Section 8.01 Subordination of All Obligor Claims
	 	 	20	 
	Section 8.02 Claims in Bankruptcy
	 	 	20	 
	Section 8.03 Payments Held in Trust
	 	 	20	 
	Section 8.04 Liens Subordinate
	 	 	21	 
	Section 8.05 Notation of Records
	 	 	21	 
	 
	 	 	 	 
	ARTICLE IX Miscellaneous
	 	 	21	 
	 
	 	 	 	 
	Section 9.01 Waiver
	 	 	21	 
	Section 9.02 Notices
	 	 	21	 
	Section 9.03 Payment of Expenses, Indemnities, Etc
	 	 	21	 
	Section 9.04 Amendments in Writing
	 	 	22	 
	Section 9.05 Successors and Assigns
	 	 	22	 
	Section 9.06 Survival; Revival; Reinstatement
	 	 	22	 
	Section 9.07 Counterparts; Integration; Effectiveness
	 	 	23	 
	Section 9.08 Severability
	 	 	23	 
	Section 9.09 Set-Off
	 	 	23	 
	Section 9.10 Governing Law; Submission to Jurisdiction
	 	 	24	 
	Section 9.11 Headings
	 	 	25	 
	Section 9.12 Acknowledgments
	 	 	25	 
	Section 9.13 Additional Obligors and Pledgors
	 	 	26	 
	Section 9.14 Releases
	 	 	26	 
	Section 9.15 Acceptance
	 	 	27	 

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          This SECOND LIEN GUARANTY AND PLEDGE AGREEMENT, dated as of August 1, 2006, 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 parties to the Second Lien Bridge
Loan Agreement, dated as of June [___], 2006 (as amended, supplemented or otherwise modified from
time to time, the “Credit Agreement”), among the Borrower, the Lenders, the Administrative
Agent, and the other Agents party thereto.

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

ARTICLE I

Definitions

     Section 1.01 Definitions.

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

          (b) The following terms have the following meanings:

     “Agreement” means this 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 Credit 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 Documents).

     “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 Credit Agreement, the
other Loan Documents and any other document made, delivered or given in connection with any of the
foregoing.

     “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.

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

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

     “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 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.

- 2 -

 

     “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
Uniform Commercial Code in effect in the State of Texas on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the Pledged Securities, collections
thereon or distributions or payments with respect thereto.

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

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

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

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

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

ARTICLE II

Guarantee

     Section 2.01 Guarantee.

- 3 -

 

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

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

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

- 4 -

 

     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 and all of the Commitments are
terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at
any time when all of the Borrower Obligations shall not have been irrevocably and indefeasibly paid
in full in cash or any of the Commitments are in effect, such amount shall be held by such
Guarantor in trust for the Guaranteed Creditors, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor
(duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against
the Borrower Obligations, whether matured or unmatured, in accordance with Section 10.02(c) of the
Credit Agreement.

     Section 2.04 Guaranty Amendments, Etc. with respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder, and such Guarantor’s obligations hereunder shall not be
released, discharged or otherwise affected, notwithstanding that, without any reservation of rights
against any Guarantor and without notice to, demand upon or further assent by any Guarantor (which
notice, demand and assent requirements are hereby expressly waived by such Guarantor), (a) any
demand for payment of any of the Borrower Obligations made by any Guaranteed Creditor may be
rescinded by such Guaranteed Creditor or otherwise and any of the Borrower Obligations continued;
(b) the Borrower Obligations, the liability of any other Person upon or for any part thereof or any
collateral security or guarantee therefor or right of offset with respect thereto, may, from time
to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by, or any indulgence or forbearance in respect thereof granted by,
any Guaranteed Creditor; (c) any Guaranteed Document may be amended, modified, supplemented or
terminated, in whole or in part, as the Guaranteed Creditors may deem advisable from time to time;
(d) any collateral security, guarantee or right of offset at any time held by any Guaranteed
Creditor for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or
released; (e) any additional guarantors, makers or endorsers of the Borrower’s Obligations may from
time to time be obligated on the Borrower’s Obligations or any additional security or collateral
for the payment and performance of the Borrower’s Obligations may from time to time secure the
Borrower’s Obligations; or (f) any other event shall occur which constitutes a defense or release
of sureties generally. No Guaranteed Creditor shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Borrower Obligations or for
the guarantee contained in this ARTICLE II or any Property subject thereto.

     Section 2.05 Waivers. Each Guarantor hereby waives any and all notice of the creation,
renewal, extension or accrual of any of the Borrower Obligations and notice of or proof of reliance
by any Guaranteed Creditor upon the guarantee contained in this ARTICLE II or acceptance of the
guarantee contained in this ARTICLE II; the Borrower Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,

- 5 -

 

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 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;

- 6 -

 

               (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 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

- 7 -

 

Creditors, without
set-off, deduction or counterclaim, in dollars, in immediately available funds, at the offices of
the Administrative Agent specified in Section 12.01 of the Credit Agreement.

ARTICLE III

Grant of Security Interest

     Section 3.01 Grant of Security Interest. Each Pledgor hereby pledges, assigns and
transfers to the Administrative Agent, and hereby grants to the Administrative Agent, for the
ratable benefit of the Guaranteed Creditors, a security interest in all of the following Property
now owned or at any time hereafter acquired by such Pledgor or in which such Pledgor now has or at
any time in the future may acquire any right, title or interest (collectively, the
“Collateral”), as collateral security for the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise) of such Pledgor’s
Obligations:

     (1) all Pledged Securities;

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

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

     Section 3.02 Transfer of Pledged Securities. 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 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, 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 6.03. In addition, during the
continuance of an Event of Default, the Administrative Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing Pledged Securities for certificates
or instruments of smaller or larger denominations.

ARTICLE IV

Representations and Warranties

     To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective loans to the Borrower thereunder, each Obligor hereby
represents and warrants to the Administrative Agent and each Lender that:

- 8 -

 

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

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

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

     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.

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     Section 4.05 Pledged Securities.

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

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

     Section 4.06 Benefit to the Guarantor. The Borrower is a member of an affiliated group of
companies that includes each Guarantor, and the Borrower and the other Guarantors are engaged in
related businesses. Each Guarantor is a Subsidiary of the Borrower and its guaranty and surety
obligations pursuant to this Agreement 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.

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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 and all of the Commitments shall have terminated:

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

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

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

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

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

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     Section 5.03 Pledged Securities.

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

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

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

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

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

          (f) Upon the termination of all loans and commitments under the Senior Revolving Credit
Documents, each Pledgor shall furnish to the Administrative Agent such stock powers and other
instruments as may be required by the Administrative Agent to assure the transferability of the
Pledged Securities when and as often as may be reasonably requested by the Administrative Agent.

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

ARTICLE VI

Remedial Provisions

     Section 6.01 Code and Other Remedies.

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

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released.
If applicable to any particular item of Collateral, each Pledgor further agrees, at the
Administrative Agent’s request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall reasonably select, whether at
such Pledgor’s premises or elsewhere. Any such sale or transfer by the Administrative Agent either
to itself or to any other Person shall be absolutely free from any claim of right by Pledgor,
including any equity or right of redemption, stay or appraisal which Pledgor has or may have under
any rule of law, regulation or statute now existing or hereafter adopted (and such Pledgor hereby
waives any rights it may have in respect thereof). Upon any such sale or transfer, the
Administrative Agent shall have the right to deliver, assign and transfer to the purchaser or
transferee thereof the Collateral so sold or transferred. The Administrative Agent shall apply the
net proceeds of any action taken by it pursuant to this Section 6.01, after deducting all
reasonable costs and expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights
of the Administrative Agent and the Guaranteed Creditors hereunder, including, without limitation,
reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the
Obligations, in accordance with Section 10.02(c) of the Credit Agreement, and only after such
application and after the payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9.615 of the UCC, need the Administrative
Agent account for the surplus, if any, to any Pledgor. To the extent permitted by applicable law,
each Pledgor waives all claims, damages and demands it may acquire against the Administrative Agent
or any Guaranteed Creditor arising out of the exercise by them of any rights hereunder except to
the extent caused by the gross negligence or willful misconduct of the Administrative Agent or such
Guaranteed Creditor or their respective agents. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.

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

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

     Section 6.02 Pledged Securities.

          (a) Unless an Event of Default shall have occurred and be continuing and the Administrative
Agent shall have given notice to the relevant Pledgor of the Administrative Agent’s intent to
exercise its corresponding rights pursuant to Section 6.02(c), each Pledgor shall be permitted to
receive all cash dividends paid in respect of the Pledged Securities paid in the normal course of
business of the relevant Issuer (other than liquidating or distributing dividends), to the extent
permitted in the Credit Agreement. Any sums paid upon or in respect of any Pledged Securities upon
the liquidation or dissolution of any issuer of any Pledged Securities, any distribution of capital
made on or in respect of any Pledged Securities or any property distributed upon or with respect to
any Pledged Securities pursuant to the recapitalization or

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reclassification of the capital of any
issuer of Pledged Collateral or pursuant to the reorganization thereof shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral security for the
Obligations. If any sum of money or property so paid or distributed in respect of any Pledged
Securities shall be received by such Pledgor, such Pledgor shall, until such money or property is
paid or delivered to the Administrative Agent, hold such money or property in trust for the
Administrative Agent, segregated from other funds of such Pledgor, as additional security for the
Obligations.

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

          (c) Upon the occurrence and during the continuance of an Event of Default, upon notice by the
Administrative Agent of its intent to exercise such rights to the relevant Pledgor or Pledgors, (i)
the Administrative Agent shall have the right to receive any and all cash dividends, payments,
Property or other Proceeds paid in respect of the Pledged Securities and make application thereof
to the Borrower Obligations in accordance with Section 10.02(c) of the Credit Agreement, and (ii)
any or all of the Pledged Securities shall be registered in the name of the Administrative Agent or
its nominee, and (iii) the Administrative Agent or its nominee may exercise (A) all voting,
consent, corporate, partnership or limited liability and other rights pertaining to such Pledged
Securities at any meeting of shareholders, partners or members (or
other equivalent body), as the case may be, of the relevant Issuer or Issuers or otherwise and
(B) any and all rights of conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of the Pledged Securities
upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the
organizational structure of any Issuer, or upon the exercise by any Pledgor or the Administrative
Agent of any right, privilege or option pertaining to such Pledged Securities, and in connection
therewith, the right to deposit and deliver any and all of the Pledged Securities with any
committee, depositary, transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability except to account for
Property actually received by it, but the Administrative Agent shall have no duty to any Pledgor to
exercise any such right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.

          (d) Upon the occurrence and during the continuance of an Event of Default, in order to permit
the Administrative Agent to exercise the voting and other consensual rights that it

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

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

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

     Section 6.03 Private Sales of Pledged Securities.

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

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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 Credit Agreement.

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

     Section 6.05 Non-Judicial Enforcement. 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
take any and all reasonably appropriate action and to execute any and all documents and instruments
which may be reasonably necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Pledgor hereby gives the Administrative
Agent the power and right, on behalf of such Pledgor, without notice to or assent by such Pledgor,
to do any or all of the following:

               (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

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Administrative Agent for the purpose
of collecting any such moneys due with respect to any other Collateral whenever payable;

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

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

               (iv) (A) direct any party liable for any payment under any of the Collateral to make payment
of any and all moneys due or to become due thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct; (B) ask or demand for, collect, and receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of any Collateral; (D) defend any
suit, action or proceeding brought against such Pledgor with respect to any Collateral; (E) settle,
compromise or adjust any such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may deem appropriate; and (F) generally, sell,
transfer, pledge and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the
Administrative Agent’s option and such Pledgor’s expense, at any time, or from time to time,
all acts and things which the Administrative Agent deems necessary to protect, preserve or realize
upon the Collateral and the Administrative Agent’s and the Guaranteed Creditors’ security interests
therein and to effect the intent of this Agreement, all as fully and effectively as such Pledgor
might do.

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

          (b) If any 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 Credit Agreement, but in no event to exceed
the Highest Lawful Rate, from the date of payment by the Administrative Agent to the date
reimbursed by the relevant Obligor, shall be payable by such Obligor to the Administrative Agent on
demand.

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

     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

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

ARTICLE VIII

Subordination of Indebtedness

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

     Section 8.02 Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings involving any
Obligor, the Administrative Agent on behalf of the Administrative Agent and the Guaranteed
Creditors shall have the right to prove their claim in any proceeding, so as to establish their
rights hereunder and receive directly from the receiver, trustee or other court custodian,
dividends and payments which would otherwise be payable upon Obligor Claims. Each Obligor hereby
assigns such dividends and payments to the Administrative Agent for the benefit of the
Administrative Agent and the Guaranteed Creditors for application against the Borrower Obligations
as provided under Section 10.02(c) of the Credit Agreement. Should any Agent or Guaranteed
Creditor receive, for application upon the Obligations, any such dividend or payment which is
otherwise payable to any Obligor, and which, as between such Obligors, shall constitute a credit
upon the Obligor Claims, then upon payment in full in cash of the Borrower Obligations and the
termination of all of the Commitments, the intended recipient shall become subrogated to the rights
of the Administrative Agent and the Guaranteed Creditors to the extent that such payments to the
Administrative Agent and the Guaranteed Creditors on the Obligor Claims have contributed toward the
liquidation of the Obligations, and such subrogation shall be with respect to that proportion of
the Obligations which would have been unpaid if the Administrative Agent and the Guaranteed
Creditors had not received dividends or payments upon the Obligor Claims.

     Section 8.03 Payments Held in Trust. In the event that, notwithstanding Section 8.01 and
Section 8.02, any Obligor should receive any funds, payments, claims or distributions which is
prohibited by such Sections, then it agrees: (a) to hold in trust for the Administrative

- 20 -

 

Agent and
the Guaranteed Creditors an amount equal to the amount of all funds, payments, claims or
distributions so received, and (b) that it shall have absolutely no dominion over the amount of
such funds, payments, claims or distributions except to pay them promptly to the Administrative
Agent, for the benefit of the Guaranteed Creditors; and each Obligor covenants promptly to pay the
same to the Administrative Agent.

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

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

ARTICLE IX

Miscellaneous

     Section 9.01 Waiver. No failure on the part of the Administrative Agent or any Lender to
exercise and no delay in exercising, and no course of dealing with respect to, any right, power,
privilege or remedy or any abandonment or discontinuance of steps to enforce such right, power,
privilege or remedy under this Agreement or any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power, privilege or remedy under
this Agreement or any other Loan Document preclude or be construed as a waiver of any other or
further exercise thereof or the exercise of any other right, power, privilege or remedy. The
remedies provided herein are cumulative and not exclusive of any remedies provided by law or
equity.

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

     Section 9.03 Payment of Expenses, Indemnities, Etc.

          (a) Each Guarantor agrees to pay or reimburse each Guaranteed Creditor and the Administrative
Agent for all out-of-pocket expenses incurred by such Person, including the

- 21 -

 

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
with respect to any of the Collateral or in connection with any of the transactions contemplated by
this Agreement.

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

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

     Section 9.05 Successors and Assigns. The provisions of this Agreement shall be binding
upon the Obligors and their successors and assigns and shall inure to the benefit of the
Administrative Agent and the Guaranteed Creditors and their respective successors and assigns;
provided that except as set forth in Section 9.12 of the Credit Agreement, no Obligor may assign,
transfer or delegate any of its rights or obligations under this Agreement without the prior
written consent of the Administrative Agent and the Lenders, and any such purported assignment,
transfer or delegation shall be null and void.

     Section 9.06 Survival; Revival; Reinstatement.

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

- 22 -

 

repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement, any other Loan Document or any
provision hereof or thereof.

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

     Section 9.07 Counterparts; Integration; Effectiveness.

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

          (b) This Agreement, the other Loan Documents and any separate letter agreements with respect
to fees payable to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and thereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof and thereof. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS 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. 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

- 23 -

 

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 at any time owing by
such Lender or Affiliate to
or for the credit or the account of any Obligor against any of and all the obligations of the
Obligor owed to such Lender now or hereafter existing under this Agreement or any other Loan
Document, irrespective of whether or not such Lender shall have made any demand under this
Agreement or any other Loan Document and although such obligations may be unmatured. The rights of
each Lender under this Section 9.09 are in addition to other rights and remedies (including other
rights of setoff) which such Lender or its Affiliates may have.

     Section 9.10 Governing Law; Submission to Jurisdiction.

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

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

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

          (d) EACH PARTY HEREBY (1) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM

- 24 -

 

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

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

     Section 9.12 Acknowledgments. Each Obligor hereby acknowledges that:

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

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

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

          (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

- 25 -

 

PARTY HAD NO NOTICE OR KNOWLEDGE
OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

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

     Section 9.14 Releases.

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

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

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

- 26 -

 

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]

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

	 	 	 	 	 	 	 
	BORROWER:	 	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.	 	 
	 
	 	 	 	 	 	 
	 	 	LINN ENERGY WESTERN HOLDINGS, LLC	 	 
	 
	 	 	 	 	 	 
	 	 	LINN ENERGY MID-CONTINENT HOLDINGS, LLC	 	 
	 
	 	 	 	 	 	 
	 	 	LINN WESTERN OPERATING, INC.	 	 
	 
	 	 	 	 	 	 
	 	 	LINN WESTERN PROCESSING, 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/ Douglas R. Liftman
	 

	 	 	 	 
	 	 	Name: Douglas R. Liftman
	 	 	Title:   Managing Director
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Betsy Jocher
	 

	 	 	 	 
	 	 	Name: Betsy Jocher
	 	 	Title:   Director

Signature Page — Guaranty and Pledge AgreementEX-10.1

 

Exhibit 10.1

AGREEMENT

          This Agreement (“Agreement”) is made by and between JOHN LOUGH (“Lough”) and ABERCROMBIE &
FITCH MANAGEMENT CO., a Delaware corporation with its principal place of business in New Albany,
Ohio, which, together with its subsidiaries and affiliates, are collectively referred to herein as
the “Company.”

          WHEREAS, Lough has been employed by the Company as an officer since on or about June 21, 1999;

          WHEREAS, Lough has decided to retire effective May 5, 2006; and

          WHEREAS, the parties wish to define the terms and conditions of Lough’s retirement from
employment with the Company;

          NOW, THEREFORE, in exchange for and in consideration of the following mutual covenants and
promises, the undersigned parties, intending to be legally bound, hereby agree as follows:

          1. Retirement Date. Lough’s retirement will be effective May 5, 2006 (“Retirement
Date”). On the Retirement Date, Lough’s employment with the Company and all further compensation,
remuneration, bonuses, and eligibility of Lough under Company benefit plans shall terminate, and
Lough shall not be entitled to receive any further payments or benefits of any kind from the
Company except as otherwise provided in this Agreement or by applicable law.

          2. Retirement Benefits Following Resignation Date. The Company will pay to Lough the
following (all hereinafter referred to collectively as the “Retirement Package”):

	 	a.	 	Compensation: The equivalent of five
(5) months salary in the amount of Two Hundred Thirty Nine Thousand
Five Hundred Eighty Three and 35/100 ($239,583.35), less applicable
taxes, payable in one lump sum upon the next regularly scheduled pay
period after the effective date of this Agreement.
	 
	 	 	 	For purposes of this Agreement, the effective date of this Agreement
shall be the eighth (8th) day after Lough signs this Agreement
(“effective date”), unless Lough has revoked the Agreement prior to that
time in the manner discussed in Paragraph 8(d) below.
	 
	 	b.	 	Health Care:

	 	i.	 	The Company shall pay Lough the
equivalent of five (5) months of COBRA health care continuation
costs for dependant plus one coverage in the amount of Five
Thousand Five Hundred Eighty Six and 20/100 dollars
($5,586.20), less applicable taxes. Said amount is the cost of
associate plus one coverage as of the effective date of this
Agreement and will be paid in one lump sum upon the next
regularly scheduled pay period after the effective date of this
Agreement. In the event that the monthly cost of family COBRA
coverage should increase during the five month period following the effective
date of this Agreement, Lough is responsible for any additional
premiums required to purchase coverage during this period. Lough
shall be responsible for the actual election and payment of any
health care continuation costs subsequent to the Retirement Date
and shall maintain all of his rights pursuant to COBRA for
continued election of coverage.
	 
	 	ii.	 	After the five (5) months in
paragraph 2(b)(i) above have passed, Lough shall be entitled to
purchase continued medical and dental coverage from the Company
for himself and his eligible spouse or domestic partner at the
effective rate for COBRA participants for such coverage until
Lough’s sixty-fifth birthday and, thereafter, for his eligible
spouse or domestic partner at the effective rate for COBRA
participants until said spouse or partner’s sixty-fifth
birthday, which effective rates may be increased periodically by
the same percentage that costs for the same coverage to COBRA
participants are actually increased for that year; provided
that, no continued medical and dental coverage will be provided
beyond the second calendar year after the calendar year in which
the retirement date occurs unless permitted by final regulations
issued pursuant to Section 409A of the Internal Revenue Code of
1986 as amended (the “Code”) prior to the end of such second
calendar year.

 

 

	 	c.	 	Retirement Plans

	 	i.	 	Qualified Savings and Retirement
Plans: Lough shall be entitled to determine the desired
treatment of the balance contained in his Savings and Retirement
Plan according to the terms and conditions set forth in the
plan.
	 
	 	ii.	 	Non-Qualified Savings Plan:
Lough shall be entitled to payment of the balance in his
Non-Qualified Savings Plan. This balance will be paid out over
a ten (10) year period in equal annual installments, plus
interest. Notwithstanding the foregoing, no payment of any post
2004 contributions shall be made prior to the six month
anniversary of Lough’s retirement date.

	 	d.	 	Stock

	 	i.	 	Options: Lough shall be entitled
to a period of three (3) years from his Retirement Date, but not
to exceed the original term set forth in the grant, to exercise
any vested options he may have. Any unvested options will be
forfeited upon Lough’s Retirement Date; provided however, the
vested options shall expire on December 31, 2006 except to the
extent a further extension within the 3 year period following
Lough’s retirement date is permissible by regulations issued
pursuant to Section 409A of the Code before December 31, 2006.
	 
	 	ii.	 	Restricted Stock: Any unvested
shares of restricted stock shall be forfeited by Lough upon the
Retirement Date.

	 	e.	 	Incentive Compensation Bonus: the
Company shall pay Lough a pro-rated portion of the Incentive
Compensation Bonus payable in August 2006, to cover the period February
1, 2006 through May 5, 2006. Said pro-rated portion of the Incentive
Compensation Bonus shall be paid by August 31, 2006 and in the amount
of Sixty Thousand Eighty Four and 28/100 dollars ($60,084.28), less
applicable taxes.
	 
	 	f.	 	Other Benefits:

	 	i.	 	Vacation: The Company shall pay
Lough the value of fifteen (15) days of unused vacation payable
in one lump sum, less applicable taxes, upon the next regularly
scheduled pay period after the effective date of this Agreement.
	 
	 	ii.	 	Life Insurance: Lough shall have
the right to convert his existing life insurance coverage to an
individual policy pursuant to the terms set forth by the
insurer. Lough shall pay the full cost of any such policy.
	 
	 	iii.	 	Associate Discount: Lough shall
be entitled to an associate discount for himself and his
eligible dependents based on the current home office associate
discount at the time the discount is applied; provided that, no
associate discount will be provided beyond the second calendar
year after the calendar year in which the retirement date occurs
unless permitted by final regulations issued pursuant to Section
409A of the Code prior to the end of such second calendar year.
	 
	 	iv.	 	Employee Assistance Program
(“EAP”): Lough shall be entitled to utilize the services of the
EAP pursuant to the terms and conditions set forth for all home
office associates; provided that, no entitlement to the use of
the services of the Employee Assistance Program will continue
beyond the second calendar year after the calendar year in which the retirement date
occurs unless permitted by final regulations issued pursuant
to Section 409A of the Code prior to the end of such second
calendar year.
	 
	 	v.	 	Expense Reimbursement: Subject
to the Company’s Travel and Expense Policy, Lough shall be
entitled to payment of any unreimbursed employment related
expenses incurred by Lough prior to the Retirement Date. Said
expenses must be submitted by Lough within ninety (90) days of
the Retirement Date and shall be paid by the Company no later
than December 31, 2006.
	 
	 	vi.	 	Cellular Phone: the Company
shall allow Lough to keep the Company PDA/cell phone currently
being used by him. The Company will remove the number assigned
to the PDA/cell phone from the Company account so that Lough may
convert the number to an individual service plan.

2

 

          The Retirement Package shall be the sole payment made to Lough and shall constitute the entire
consideration to be paid by the Company in exchange for the promises of Lough set forth herein.

          The Company and Lough each intend that the benefits provided hereunder either not be subject
to Section 409A of the Code, or comply with the requirements of Section 409A of the Code.
Therefore, the intended economic impact of the benefits on the respective parties is as though the
benefits do not violate Section 409A and continue beyond the restrictions currently imposed by
Section 409A as set forth in paragraphs 2.b.iii, 2.d.i and 2.f.iii and 2.f.iv above. Accordingly,
if any of the benefits hereunder are or become subject to Section 409A, the Company and Lough agree
to negotiate in good faith changes in such benefits in order to preserve the intended economics of
such benefits to each party.

          5. Lough Covenants.

               a. Non-Disclosure and Non-Use: Lough shall not, without the written authorization of
the Chairman and Chief Executive Officer (“CEO”) of the Company, use (except for the benefit of the
Company) any Confidential and Trade Secret Information relating to the Company. Lough shall hold
in strictest confidence and shall not, without the written authorization of the Chairman and CEO of
the Company, disclose to anyone, other than directors, officers, employees and counsel of the
Company in furtherance of the business of the Company, any Confidential and Trade Secret
Information relating to the Company. For purposes of this Agreement, Confidential and Trade Secret
information includes: the general or specific nature of any concept in development, the business
plan or development schedule of any concept, vendor, merchant or customer lists or other vendor,
merchant or customer information, all technical and business information relating to products,
processes, know-how, designs, formulas, methods, software, improvements, technology, new products,
marketing and selling plans, business plans, development schedules, budgets and unpublished
financial statements, licenses, prices and costs, suppliers, and information regarding the skills,
compensation or duties of employees, independent contractors or consultants of the Company and any
other information about the Company that is proprietary or confidential. Confidential and Trade
Secret Information specifically includes, but is not limited to, the general and specific nature
of, and information related to, the development of Concept 5 and Project P.

               The restrictions set forth in this Section shall not apply to information that is or becomes
generally available to the public other than as a result of its wrongful disclosure by Lough, or
information received on a non-confidential basis from sources other than the Company who are not in
violation of a confidentiality agreement with the Company. This confidentiality covenant has no
temporal, geographical or territorial restriction.

               Lough further represents and agrees that at and after the Retirement Date it is his sole
obligation to comply with the rules and regulations of the Securities and Exchange Commission
(“SEC”) regarding trading shares and/or exercising options related to the Company’s stock. Lough
acknowledges that the Company has not provided opinions or legal advice to him regarding his
obligations in this respect and that it is Lough’s responsibility to seek independent legal advice
with respect to any stock or option transaction.

               b. Non-Disparagement and Cooperation. Lough shall not state or publish anything about
the Company or its officers to any media entity, including, but not limited to television,
newspaper, magazine, magalog, website bulletin boards, blogs or editorials (hereinafter
collectively referred to as “the Media”), or any representative or agent of the Media which would
adversely affect the reputation, image or business relationships and goodwill of the Company in its
market and community at large. Lough shall not otherwise state or publish anything about the
Company or its officers which would materially and adversely affect the reputation, image or
business relationships and goodwill of the Company in its market and community at large. Lough
shall fully cooperate with the Company in defense of legal claims asserted against the Company and
other matters requiring the testimony or input and knowledge of Lough. If at any time Lough should
be required to cooperate with the Company pursuant to this Section, the Company agrees to reimburse
Lough for reasonable costs and expenses incurred as a result thereof. Lough agrees that he will
not speak or communicate with any party or representative of any party, who is known to Lough to be
either adverse to the Company in litigation or administrative proceedings or to have threatened to
commence litigation or administrative proceedings against the Company, with respect to the pending
or threatened legal action, unless Lough receives the written consent

3

 

of the Company to do so, or is otherwise compelled by law to do so, and then only after
advance notice to the Company.

               c. Non-Competition. During the nine (9) month period following the Retirement Date,
Lough shall not, directly or indirectly, without the prior written consent of the CEO, own, manage,
operate, join, control, be employed by, consult with or participate in the ownership, management,
operation or control of, or be connected with (as a stockholder, partner, or otherwise), any entity
listed on Appendix A attached to this Agreement, any of their subsidiaries and affiliates engaged
in a business that is competitive with the Company, and any other entity that the Company
reasonably determines is a competitor of the Company (“Competing Entity”); provided,
however, that the “beneficial ownership” by Lough after the Retirement Date, either
individually or by a “group” of which Lough is a member as such terms are used in Rule 13d of the
General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), of less than two percent (2%) of the voting stock of any publicly held corporation shall not
be a violation of this Section 5c.

               d. Non-Solicitation. During the nine (9) month period following the Retirement Date
(the “Non-Solicitation Period”), Lough shall not, either directly or indirectly, alone or in
conjunction with another party, interfere with or harm, or attempt to interfere with or harm, the
relationship of the Company with any person who at any time was a customer or supplier of the
Company or otherwise had a business relationship with the Company. During the Non-Solicitation
Period, Lough shall not without the prior written consent of the CEO, hire, solicit for hire, aid
in the hire, or cause to be hired, either as an employee, contractor or consultant, any person who
is currently employed, or was employed at any time during the six month period prior thereto, as an
employee, contractor or consultant of the Company.

               e. Remedies. Lough agrees that any breach of the terms of Paragraphs 5a through 5d of
this Agreement could result in irreparable injury and damage to the Company for which the Company
would have no adequate remedy at law. Lough agrees that in the event of said breach or any threat
of breach, the Company shall be entitled to an immediate injunction and restraining order to
prevent such breach and threatened breach and/or continued breach by Lough and/or any and all
persons and/or entities acting for and/or with Lough, without having to prove damages, and to all
costs and expenses incurred by the Company in seeking to enforce its rights under this Agreement.
These remedies are in addition to any other remedies to which the Company may be entitled at law or
in equity. Lough agrees that the covenants of Lough contained herein are reasonable and the
Company would not have entered into this Agreement but for the inclusion of such covenants.
Without limitation on the foregoing, the Company may cancel or recover from Lough, and Lough shall
repay promptly, the payments provided Lough in Paragraphs 2a and 2bi in the event that he violates
the covenants contained herein. The existence of any claim or cause of action by Lough against the
Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of the covenants and agreements of this Agreement; provided,
however, that this paragraph shall not, in and of itself, preclude Lough from defending
himself against the enforceability of the covenants and agreements of this Agreement.

          6. Confidentiality. Lough and the Company agree not to talk about, write about, or
otherwise publicize or disclose at any time to any person or company the terms or existence of this
Agreement, or any fact concerning its negotiation, execution, or implementation, provided,
however, that Lough may disclose such information to the following individuals provided that they
agree to abide by the confidentiality provisions of this Agreement: (a) to his immediate family;
(b) to his attorney(s); (c) as may be necessary for the proper tax treatment of the costs, expenses or proceeds of the Retirement
Package, including disclosure to his tax accountants, tax advisors, or taxing authorities; or (d)
as is otherwise required by law. The Company may disclose such information on an “as needed”
basis to (a) individuals within the Company; or (b) its business advisors, including but not
limited to its attorneys, accountants and auditors, or (c) as is otherwise required by law.

          The provisions of this paragraph concerning confidentiality obligations are expressly
acknowledged by the parties to constitute material consideration for the obligations under this
Agreement. Any breach by a party of these confidentiality provisions shall afford the other party
an action in law to recover the actual damages incurred thereby. Notwithstanding any violation of
this paragraph 6, the provisions and covenants contained in this Agreement shall remain in effect
and be enforceable.

4

 

          7. Releases. Lough does hereby for himself and for each of his past, present and
future heirs, administrators, executors, representatives, agents, attorneys, assigns and all others
claiming by or through him or them, forever release and discharge the Company, and its past,
present and future shareholders, representatives, agents, servants, parents, subsidiaries,
affiliates, divisions, officers, directors, employees, insurers, successors, predecessors,
administrators, attorneys, assigns and all others claiming by or through them, jointly or
severally, (hereinafter “the Released Parties”) from any and all charges, claims, demands,
judgments, actions, causes of action, damages, debts, agreements, remedies, promises, suits,
losses, obligations, expenses, costs, attorneys’ fees, liabilities and claims for relief of every
kind and nature, whether matured or unmatured, known or unknown, direct or indirect, foreseen or
unforeseen, vested or contingent, in law, equity or otherwise, under any federal or state statute
or common law, which Lough has ever had, now has, or may have in the future, against any of the
Released Parties for or on account of any matter, cause or thing whatsoever that was or could have
been asserted or that occurred up to the date of this Agreement. This release shall include
without limitation all claims arising under Title VII of the Civil Rights Act of 1964, as amended,
the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and
Medical Leave Act of 1993, the Ohio Civil Rights Act, any claim for unpaid wages, and any other
federal and state civil rights laws or laws relating to employment, all laws of any other nation,
or state or local government including, without limitation, any workers’ compensation or disability
claims under any such laws, and any and all tort claims.

     The Company does hereby for itself and for its parents, subsidiaries, affiliates, divisions,
and all others claiming by or through them, jointly or severally, forever release and discharge
Lough from any and all charges, claims, demands, judgments, actions, causes of action, damages,
debts, agreements, remedies, promises, suits, losses, obligations, expenses, costs, attorneys’
fees, liabilities and claims for relief of every kind and nature, whether matured or unmatured,
known or unknown, direct or indirect, foreseen or unforeseen, vested or contingent, in law, equity
or otherwise, under any federal or state statute or common law, which the Company has ever had, now
has, or may have in the future, against Lough for or on account of any matter, cause or thing
whatsoever that was or could have been asserted or that occurred up to the date of this Agreement.

          8. Age Discrimination Claims and Older Worker’s Benefit Protection Act Terms. Lough
specifically acknowledges that the release of his claims under this Agreement includes, without
limitation, waiver and release of all claims against the Company and Released Parties under the
federal Age Discrimination in Employment Act (“ADEA”), and Lough further acknowledges and agrees
that:

	 	a.	 	Lough waives his claims under ADEA
knowingly and voluntarily in exchange for the commitments made
herein by the Company, and that certain of the benefits
provided thereby constitute consideration of value to which the
Lough would not otherwise have been entitled;
	 
	 	b.	 	Lough was and is hereby advised to
consult an attorney in connection with this Agreement;
	 
	 	c.	 	Lough has been given a period of 21
days within which to consider the terms of this Agreement;
	 
	 	d.	 	Lough may revoke his signature on this
Agreement for a period of 7 days following his execution of
this Agreement, rendering the Agreement null and void;
	 
	 	e.	 	this Agreement is written in plain and
understandable language which Lough fully understands;
	 
	 	f.	 	this Agreement complies in all respects
with Section 7(f) of ADEA and the waiver provisions of the
federal Older Worker Benefit Protection Act; and
	 
	 	g.	 	Lough does not waive any rights or
claims that may arise after the date the waiver is executed.

5

 

          9.
Indemnification. Lough agrees that he shall be exclusively liable for payment
of any and all taxes due by him in connection with the Retirement Package and agrees to indemnify
the Company for any liability incurred because of Lough’s failure to pay such taxes, assessments,
or reimbursements, or penalties, which may be assessed by any taxing authority in connection with
any payments made pursuant to this Agreement.

          10. Return of Property. Lough agrees that in connection with his retirement, he shall
promptly return to the Company all Company documents and property in his possession or control
including, but not limited to, Computer(s) and all Software, Security Keys and Badges, Price Lists,
Supplier and Customer Lists, Employee Lists, including compensation, salary and benefit
information, Files, Reports, all correspondence both internal and external (memo’s, letters, quotes,
etc.), Business Plans, Budgets, Designs, and any and all other property of the Company.

          11. No Liability or Admission of Any Party. This Agreement and the terms hereof are
not and shall not be used or construed as evidence of an admission by the Company, the Released
Parties, or Lough of any wrongdoing by them whatsoever, all of which is expressly denied.
Moreover, this Agreement shall not be offered as evidence for any purpose in any litigation, or in
any other forum, matter or otherwise, other than for the purpose of enforcing the terms of this
Agreement.

          12. Governing Law. The validity, construction and interpretation of this Agreement
and the rights and duties of the parties hereto shall be governed by the laws of Ohio. Any actions
or proceedings instituted under this Agreement with respect to any matters arising under or related to
this Agreement, shall be brought and tried only in the Court of Common Pleas, Franklin County, Ohio
except that the Company, in its sole election and discretion, can bring suit in any jurisdiction in
which Lough may be in violation of this Agreement. Lough consents to the jurisdiction of the Court
of Common Pleas, Franklin County, Ohio or any other jurisdiction in which the Company has the right
to bring suit and expressly waives his right to cause any such actions or proceedings to be brought
or tried elsewhere.

          13. Enforcement of Terms. Failure to insist upon strict compliance with any of the
terms, covenants, or conditions hereof shall not be deemed a waiver of any such term, covenant or
condition, nor shall such failure at any one time or more times be deemed a waiver or
relinquishment of any other time or times of any right under the terms, covenants, or conditions
hereof. If any provision hereof shall be determined to be unlawful or improper, or unenforceable
for any other reason, the remaining provisions of this Agreement shall remain in full force and
effect.

          14. Modifications. No modification hereof shall be effective unless the same be in
writing duly executed by all parties hereto.

          15. Original and Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which shall constitute a
single memorandum.

          16. Entire Agreement. This Agreement is the complete and exclusive statement of the
agreement among the parties, superseding all proposals and prior agreements, oral or written, and
all other communication among the parties relating to the subject matter herein. The parties
understand and acknowledge that this Agreement is made without reliance upon any statement or
representation other than those expressly contained herein. This Agreement shall not be subject to
any claim of mistake of fact. This Agreement expresses the full and complete settlement of all
liability claimed and denied and is intended to avoid litigation and to be final and complete.

          17. Knowing and Voluntary Execution. Each of the parties hereto further states and
represents that he or it has carefully read the foregoing Agreement, consisting of nine (9) pages,
and knows the contents thereof, and that he or it has executed the same as his or its own free act
and deed. Lough further acknowledges that he has been and is hereby advised to consult with an
attorney concerning this Agreement and that he had adequate opportunity to seek the advice of legal
counsel in connection with this Agreement. Lough also acknowledges that he has had the opportunity
to ask questions about each and every provision of this Agreement and that he fully understands the
effect of the provisions contained herein upon his legal rights.

          IN
WITNESS WHEREOF, the undersigned has hereto set his hand this
1st day
of August, 2006.

	 	 	 	 	 
	WITNESSED:

	 	 	 	 
	 
	 	/s/ John W. Lough	 	 
	 

	 	 	 	 
	 

	 	JOHN LOUGH	 	 
	/s/
Edward Pippen
	 	 	 	 
	 	 
	 	 	 

          IN
WITNESS WHEREOF, the undersigned has hereto set its hand this
1st day of August, 2006.

	 	 	 	 	 
	WITNESSED:

	 	 	 	ABERCROMBIE & FITCH MANAGEMENT CO.
	 
	 	 	 	 
	/s/
Melinda Mcafee

	 	By:	 	/s/ Jay Yano
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Its:	 	SVP and General Counsel
	 

	 	 	 	 

6

 

Appendix A

	 	 	 
	Aeropostale

	 	J. Crew
	American Eagle

	 	Limited (all divisions)
	Victoria’s Secret

	 	Limited Too
	Gap (all divisions)

	 	Urban Outfitter/Anthropologie
	Wet Seal

	 	Pacific Sunwear

7

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