
<PAGE>   1
                                                                   EXHIBIT 10.19


                                                                  EXECUTION COPY



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                       GUARANTEE AND COLLATERAL AGREEMENT


                                     made by


                              RENTERS CHOICE, INC.


                         and certain of its Subsidiaries


                                   in favor of


                            THE CHASE MANHATTAN BANK,
                             as Administrative Agent



                           Dated as of August 5, 1998



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<PAGE>   2



                                TABLE OF CONTENTS

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<S>          <C>                                                                                                            <C>
SECTION 1.  DEFINED TERMS                                                                                                    1
         1.1  Definitions                                                                                                    1
         1.2  Other Definitional Provisions                                                                                  5

SECTION 2.  GUARANTEE                                                                                                        5
         2.1  Guarantee                                                                                                      5
         2.2  Right of Contribution                                                                                          6
         2.3  No Subrogation                                                                                                 6
         2.4  Amendments, etc. with respect to the Borrower Obligations                                                      6
         2.5  Guarantee Absolute and Unconditional                                                                           7
         2.6  Reinstatement                                                                                                  7
         2.7  Payments                                                                                                       8

SECTION 3.  GRANT OF SECURITY INTEREST                                                                                       8

SECTION 4.  REPRESENTATIONS AND WARRANTIES                                                                                   8
         4.1  Title; No Other Liens                                                                                          9
         4.2  Perfected First Priority Liens                                                                                 9
         4.3  Chief Executive Office                                                                                         9
         4.4  Inventory and Equipment                                                                                        9
         4.5  Farm Products                                                                                                  9
         4.6  Investment Property                                                                                            9
         4.7  Receivables                                                                                                   10
         4.8  Contracts                                                                                                     10
         4.9  Intellectual Property                                                                                         10

SECTION 5.  COVENANTS                                                                                                       11
         5.1  Delivery of Instruments, Certificated Securities and Chattel Paper                                            11
         5.2  Maintenance of Insurance                                                                                      11
         5.3  Payment of Obligations                                                                                        11
         5.4  Maintenance of Perfected Security Interest; Further Documentation                                             12
         5.5  Changes in Locations, Name, etc.                                                                              12
         5.6  Notices                                                                                                       12
         5.7  Investment Property                                                                                           13
         5.8  Receivables                                                                                                   14
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<S>          <C>                                                                                                            <C>
         5.9  Contracts                                                                                                     14
         5.10  Intellectual Property                                                                                        14

SECTION 6.  REMEDIAL PROVISIONS                                                                                             15
         6.1  Certain Matters Relating to Receivables 15
         6.2  Communications with Obligors; Grantors Remain Liable                                                          16
         6.3  Pledged Stock                                                                                                 16
         6.4  Proceeds to be Turned Over To Administrative Agent                                                            17
         6.5  Application of Proceeds                                                                                       17
         6.6  Code and Other Remedies                                                                                       18
         6.7  Registration Rights                                                                                           18
         6.8  Waiver; Deficiency                                                                                            19

SECTION 7.  THE ADMINISTRATIVE AGENT                                                                                        19
         7.1  Administrative Agent's Appointment as Attorney-in-Fact, etc                                                   20
         7.2  Duty of Administrative Agent                                                                                  21
         7.3  Execution of Financing Statements                                                                             21
         7.4  Authority of Administrative Agent                                                                             22

SECTION 8.  MISCELLANEOUS                                                                                                   22
         8.1  Amendments in Writing                                                                                         22
         8.2  Notices                                                                                                       22
         8.3  No Waiver by Course of Conduct; Cumulative Remedies                                                           22
         8.4  Enforcement Expenses; Indemnification                                                                         22
         8.5  Successors and Assigns                                                                                        23
         8.6  Set-Off                                                                                                       23
         8.7  Counterparts                                                                                                  23
         8.8  Severability                                                                                                  23
         8.9  Section Headings                                                                                              23
         8.10  Integration                                                                                                  24
         8.11  GOVERNING LAW                                                                                                24
         8.12  Submission To Jurisdiction; Waivers                                                                          24
         8.13  Acknowledgements                                                                                             24
         8.14  Additional Grantors                                                                                          25
         8.15  Releases                                                                                                     25
         8.16  WAIVER OF JURY TRIAL                                                                                         25
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SCHEDULES

Schedule 1                 Notice Addresses
Schedule 2                 Investment Property
Schedule 3                 Perfection Matters
Schedule 4                 Jurisdictions of Organization and Chief Executive Offices
Schedule 5                 Inventory and Equipment Locations
Schedule 6                 Intellectual Property
Schedule 7                 Contracts
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<PAGE>   5



                  GUARANTEE AND COLLATERAL AGREEMENT, dated as of August 5,
1998, made by each of the signatories hereto (together with any other entity
that may become a party hereto as provided herein, the "Grantors"), in favor of
THE CHASE MANHATTAN BANK, as Administrative Agent (in such capacity, the
"Administrative Agent") for the banks and other financial institutions (the
"Lenders") from time to time parties to the Credit Agreement, dated as of August
5, 1998 (as amended, waived, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Renters Choice, Inc. (the "Borrower"), the
Lenders, the Documentation Agent and Syndication Agent named therein and the
Administrative Agent.


                              W I T N E S S E T H:

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

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

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

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

                  WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of the Lenders;

                  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:

                            SECTION 1   .DEFINED TERMS

                       1.1    Definitions. Unless otherwise defined herein,
                              terms defined in the Credit Agreement and used
                              herein shall have the meanings given to them in
                              the Credit Agreement, and the following terms are
                              used herein as defined in the New York UCC:
                              Accounts, Certificated Security, Chattel Paper,
                              Documents, Equipment, Farm Products, Instruments
                              and Inventory.




<PAGE>   6



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

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

                  "Borrower Obligations": the collective reference to the unpaid
         principal of and interest on the Loans and Reimbursement Obligations
         and all other obligations and liabilities of the Borrower (including,
         without limitation, interest accruing at the then applicable rate
         provided in the Credit Agreement after the maturity of the Loans and
         Reimbursement Obligations and interest accruing at the then applicable
         rate provided in the Credit Agreement after the filing of any petition
         in bankruptcy, or the commencement of any insolvency, reorganization or
         like proceeding, relating to the Borrower, whether or not a claim for
         post-filing or post-petition interest is allowed in such proceeding) to
         the Administrative Agent or any Lender (or, in the case of any Lender
         Hedge Agreement, any Affiliate of any Lender), whether direct or
         indirect, absolute or contingent, due or to become due, or now existing
         or hereafter incurred, which may arise under, out of, or in connection
         with, the Credit Agreement, this Agreement, the other Loan Documents,
         any Letter of Credit, any Lender Hedge Agreement or any other document
         made, delivered or given in connection with any of the foregoing, in
         each case whether on account of principal, interest, reimbursement
         obligations, fees, indemnities, costs, expenses or otherwise
         (including, without limitation, all fees and disbursements of counsel
         to the Administrative Agent or to the Lenders that are required to be
         paid by the Borrower pursuant to the terms of any of the foregoing
         agreements).

                  "Collateral": as defined in Section 3.

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

                  "Contracts": the contracts and agreements listed in Schedule
         7, as the same may be amended, supplemented or otherwise modified from
         time to time, including, without limitation, (i) all rights of any
         Grantor to receive moneys due and to become due to it thereunder or in
         connection therewith, (ii) all rights of any Grantor to damages arising
         thereunder and (iii) all rights of any Grantor to perform and to
         exercise all remedies thereunder.

                  "Copyrights": (i) all copyrights arising under the laws of the
         United States, any other country or any political subdivision thereof,
         whether registered or unregistered and whether published or unpublished
         (including, without limitation, those listed in Schedule 6), all
         registrations and recordings thereof, and all applications in
         connection therewith, including, without limitation, all registrations,
         recordings and applications in the United States Copyright Office, and
         (ii) the right to obtain all renewals thereof.



                                       -2-

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

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

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

                  "Foreign Subsidiary Voting Stock": the voting Capital Stock of
         any Foreign Subsidiary.

                  "General Intangibles": all "general intangibles" as such term
         is defined in Section 9-106 of the New York UCC and, in any event,
         including, without limitation, with respect to any Grantor, all
         contracts, agreements, instruments and indentures in any form, and
         portions thereof, to which such Grantor is a party or under which such
         Grantor has any right, title or interest or to which such Grantor or
         any property of such Grantor is subject, as the same may from time to
         time be amended, supplemented or otherwise modified, including, without
         limitation, (i) all rights of such Grantor to receive moneys due and to
         become due to it thereunder or in connection therewith, (ii) all rights
         of such Grantor to damages arising thereunder and (iii) all rights of
         such Grantor to perform and to exercise all remedies thereunder, in
         each case to the extent the grant by such Grantor of a security
         interest pursuant to this Agreement in its right, title and interest in
         such contract, agreement, instrument or indenture is not prohibited by
         such contract, agreement, instrument or indenture without the consent
         of any other party thereto, would not give any other party to such
         contract, agreement, instrument or indenture the right to terminate its
         obligations thereunder, or is permitted with consent if all necessary
         consents to such grant of a security interest have been obtained from
         the other parties thereto (it being understood that the foregoing shall
         not be deemed to obligate such Grantor to obtain such consents);
         provided, that the foregoing limitation shall not affect, limit,
         restrict or impair the grant by such Grantor of a security interest
         pursuant to this Agreement in any Receivable or any money or other
         amounts due or to become due under any such contract, agreement,
         instrument or indenture.

                  "Guarantor Obligations": with respect to any Guarantor, all
         obligations and liabilities of such Guarantor which may arise under or
         in connection with this Agreement (including, without limitation,
         Section 2) or any other Loan Document to which such Guarantor is a
         party, in each case whether on account of guarantee obligations,
         reimbursement obligations, fees, indemnities, costs, expenses or
         otherwise (including, without limitation, all fees and disbursements of
         counsel to the Administrative Agent or to the Lenders that are required
         to


                                                             -3-

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         be paid by such Guarantor pursuant to the terms of this Agreement or
         any other Loan Document).

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

                  "Intellectual Property": the collective reference to all
         rights, priorities and privileges relating to intellectual property,
         whether arising under United States, multinational or foreign laws or
         otherwise, including, without limitation, the Copyrights, the Copyright
         Licenses, the Patents, the Patent Licenses, the Trademarks and the
         Trademark Licenses, and all rights to sue at law or in equity for any
         infringement or other impairment thereof, including the right to
         receive all proceeds and damages therefrom.

                  "Intercompany Note": any promissory note evidencing loans made
         by any Grantor to the Borrower or any of its Subsidiaries.

                  "Investment Property": the collective reference to (i) all
         "investment property" as such term is defined in Section 9-115 of the
         New York UCC (other than any Foreign Subsidiary Voting Stock excluded
         from the definition of "Pledged Stock") and (ii) whether or not
         constituting "investment property" as so defined, all Pledged Notes and
         all Pledged Stock.

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

                  "Lender Hedge Agreements": all interest rate swaps, caps or
         collar agreements or similar arrangements entered into by the Borrower
         with any Lender (or any Affiliate of any Lender) providing for
         protection against fluctuations in interest rates or currency exchange
         rates or the exchange of nominal interest obligations, either generally
         or under specific contingencies, for the purposes set forth in Section
         6.9 of the Credit Agreement.

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

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

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



                                       -4-

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

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

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

                  "Proceeds": all "proceeds" as such term is defined in Section
         9-306(1) of the New York UCC and, in any event, shall include, without
         limitation, all dividends or other income from the Investment Property,
         collections thereon or distributions or payments with respect thereto.

                  "Receivable": any right to payment for goods sold or leased or
         for services rendered, whether or not such right is evidenced by an
         Instrument or Chattel Paper and whether or not it has been earned by
         performance (including, without limitation, any Account).

                  "Securities Act": the Securities Act of 1933, as amended.

                  "Specified Collateral": all Collateral other than Collateral
         referred to in Section 3(l) and the Proceeds and products thereof.

                  "Trademarks": (i) all trademarks, trade names, corporate
         names, company names, business names, fictitious business names, trade
         styles, service marks, logos and other source or business identifiers,
         and all goodwill associated therewith, now existing or hereafter
         adopted or acquired, all registrations and recordings thereof, and all
         applications in connection therewith, whether in the United States
         Patent and Trademark Office or in any similar office or agency of the
         United States, any State thereof or any other country or any political
         subdivision thereof, or otherwise, and all common-law rights related
         thereto, including, without limitation, any of the foregoing referred
         to in Schedule 6, and (ii) the right to obtain all renewals thereof.

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                  "Trademark License": any agreement, whether written or oral,
         providing for the grant by or to any Grantor of any right to use any
         Trademark, including, without limitation, any of the foregoing referred
         to in Schedule 6.

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

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

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


                                             SECTION 2      .GUARANTEE

                       2.1    Guarantee. Each of the Guarantors hereby, jointly
                              and severally, unconditionally and irrevocably,
                              guarantees to the Administrative Agent, for the
                              ratable benefit of the Lenders and their
                              respective successors, indorsees, transferees and
                              assigns, the prompt and complete payment and
                              performance by the Borrower when due (whether at
                              the stated maturity, by acceleration or otherwise)
                              of the Borrower Obligations.

                              (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
                                     2.2).

                              (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
                                     Section 2 or affecting the rights and
                                     remedies of the Administrative Agent or any
                                     Lender hereunder.


                                       -6-

<PAGE>   11



                              (d)    The guarantee contained in this Section 2
                                     shall remain in full force and effect until
                                     all the Borrower Obligations and the
                                     obligations of each Guarantor under the
                                     guarantee contained in this Section 2 shall
                                     have been satisfied by payment in full, no
                                     Letter of Credit shall be outstanding and
                                     the Commitments shall be terminated,
                                     notwithstanding that from time to time
                                     during the term of the Credit Agreement the
                                     Borrower may be free from any Borrower
                                     Obligations.

                              (e)    No payment made by the Borrower, any of the
                                     Guarantors, any other guarantor or any
                                     other Person or received or collected by
                                     the Administrative Agent or any Lender from
                                     the Borrower, any of the Guarantors, any
                                     other guarantor or any other Person by
                                     virtue of any action or proceeding or any
                                     set-off or appropriation or application at
                                     any time or from time to time in reduction
                                     of or in payment of the Borrower
                                     Obligations shall be deemed to modify,
                                     reduce, release or otherwise affect the
                                     liability of any 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, no Letter of Credit shall
                                     be outstanding and the Commitments are
                                     terminated.

                       2.2    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
                              2.3. The provisions of this Section 2.2 shall in
                              no respect limit the obligations and liabilities
                              of any Guarantor to the Administrative Agent and
                              the Lenders, and each Guarantor shall remain
                              liable to the Administrative Agent and the Lenders
                              for the full amount guaranteed by such Guarantor
                              hereunder.

                       2.3    No Subrogation. Notwithstanding any payment made
                              by any Guarantor hereunder or any set-off or
                              application of funds of any Guarantor by the
                              Administrative Agent or any Lender, no Guarantor
                              shall be entitled to be subrogated to any of the
                              rights of the

                                       -7-

<PAGE>   12



                              Administrative Agent or any Lender against the
                              Borrower or any other Guarantor or any collateral
                              security or guarantee or right of offset held by
                              the Administrative Agent or any Lender for the
                              payment of the Borrower Obligations, nor shall any
                              Guarantor seek or be entitled to seek any
                              contribution or reimbursement from the Borrower or
                              any other Guarantor in respect of payments made by
                              such Guarantor hereunder, until all amounts owing
                              to the Administrative Agent and the Lenders by the
                              Borrower on account of the Borrower Obligations
                              are paid in full, no Letter of Credit shall be
                              outstanding and 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 paid in full, such amount shall be held
                              by such Guarantor in trust for the Administrative
                              Agent and the Lenders, segregated from other funds
                              of such Guarantor, 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 such order as the
                              Administrative Agent may determine.

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

                                                             -8-

<PAGE>   13



                              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
                              Section 2 or any property subject thereto.

                       2.5    Guarantee Absolute and Unconditional. Each
                              Guarantor waives any and all notice of the
                              creation, renewal, extension or accrual of any of
                              the Borrower Obligations and notice of or proof of
                              reliance by the Administrative Agent or any Lender
                              upon the guarantee contained in this Section 2 or
                              acceptance of the guarantee contained in this
                              Section 2; the Borrower Obligations, and any of
                              them, shall conclusively be deemed to have been
                              created, contracted or incurred, or renewed,
                              extended, amended or waived, in reliance upon the
                              guarantee contained in this Section 2; and all
                              dealings between the Borrower and any of the
                              Guarantors, on the one hand, and the
                              Administrative Agent and the Lenders, on the other
                              hand, likewise shall be conclusively presumed to
                              have been had or consummated in reliance upon the
                              guarantee contained in this Section 2. 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. Each Guarantor understands and agrees
                              that the guarantee contained in this Section 2
                              shall be construed as a continuing, absolute and
                              unconditional guarantee of payment without regard
                              to (a) the validity or enforceability of the
                              Credit Agreement or any other Loan Document, any
                              of the Borrower Obligations or any other
                              collateral security therefor or guarantee or right
                              of offset with respect thereto at any time or from
                              time to time held by the Administrative Agent or
                              any Lender, (b) any defense, set-off or
                              counterclaim (other than a defense of payment or
                              performance) which may at any time be available to
                              or be asserted by the Borrower or any other Person
                              against the Administrative Agent or any Lender, or
                              (c) any other circumstance whatsoever (with or
                              without notice to or knowledge of the Borrower or
                              such 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 Section 2, in
                              bankruptcy or in any other instance. When making
                              any demand hereunder or otherwise pursuing its
                              rights and remedies hereunder against any
                              Guarantor, the Administrative Agent or any Lender
                              may, but shall be under no obligation to, make a
                              similar demand on or otherwise pursue such rights
                              and remedies as it may have against the Borrower,
                              any other 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

                                       -9-

<PAGE>   14



                              by the Administrative Agent or any Lender to make
                              any such demand, to pursue such other rights or
                              remedies or to collect any payments from the
                              Borrower, any other 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 the
                              Administrative Agent or any Lender against any
                              Guarantor. For the purposes hereof "demand" shall
                              include the commencement and continuance of any
                              legal proceedings.

                       2.6    Reinstatement. The guarantee contained in this
                              Section 2 shall continue to be effective, or be
                              reinstated, as the case may be, if at any time
                              payment, or any part thereof, of any of the
                              Borrower Obligations is rescinded or must
                              otherwise be restored or returned by the
                              Administrative Agent or any Lender upon the
                              insolvency, bankruptcy, dissolution, liquidation
                              or reorganization of the Borrower or any
                              Guarantor, or upon or as a result of the
                              appointment of a receiver, intervenor or
                              conservator of, or trustee or similar officer for,
                              the Borrower or any Guarantor or any substantial
                              part of its property, or otherwise, all as though
                              such payments had not been made.

                       2.7    Payments. Each Guarantor hereby guarantees that
                              payments hereunder will be paid to the
                              Administrative Agent without set-off or
                              counterclaim in Dollars at the office of the
                              Administrative Agent located at 270 Park Avenue,
                              New York, New York 10017.


                                        SECTION 3   .   GRANT OF SECURITY 
                                                    INTEREST

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

                              (a)    all Accounts;


                                      -10-

<PAGE>   15



                              (b)    all Chattel Paper;

                              (c)    all Contracts;

                              (d)    all Deposit Accounts;

                              (e)    all Documents;

                              (f)    all Equipment;

                              (g)    all General Intangibles;

                              (h)    all Instruments;

                              (i)    all Intellectual Property;

                              (j)    all Inventory;

                              (k)    all Investment Property;

                              (l)    all other property not otherwise described
                                     above;

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

                              (n)      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 4   .   REPRESENTATIONS AND
                                                    WARRANTIES

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

                       4.1    Title; No Other Liens. Except for the security
                              interest granted to the Administrative Agent for
                              the ratable benefit of the Lenders pursuant to
                              this Agreement and the other Liens permitted to
                              exist on the Collateral by the Credit Agreement,
                              such Grantor owns each item of the Specified
                              Collateral free and clear of any and all Liens or
                              claims

                                      -11-

<PAGE>   16



                              of others. No financing statement or other public
                              notice with respect to all or any part of the
                              Specified 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 Lenders, pursuant to this
                              Agreement or as are permitted by the Credit
                              Agreement.

                       4.2    Perfected First Priority Liens. The security
                              interests granted pursuant to this Agreement upon
                              completion of the filings and other actions
                              specified on Schedule 3 (which, in the case of all
                              filings and other documents referred to on said
                              Schedule, have been delivered to the
                              Administrative Agent in completed and duly
                              executed form) will constitute valid perfected
                              security interests in all of the Specified
                              Collateral (other than Deposit Accounts and the
                              Proceeds thereof) in favor of the Administrative
                              Agent, for the ratable benefit of the Lenders, as
                              collateral security for such Grantor's
                              Obligations, enforceable in accordance with the
                              terms hereof against all creditors of such Grantor
                              and any Persons purporting to purchase any
                              Specified Collateral (other than Deposit Accounts
                              and the Proceeds thereof) from such Grantor and
                              are prior to all other Liens on the Specified
                              Collateral (other than Deposit Accounts and the
                              Proceeds thereof) in existence on the date hereof
                              except for unrecorded Liens permitted by the
                              Credit Agreement which have priority over the
                              Liens on such Specified Collateral by operation of
                              law.

                       4.3    Chief Executive Office. On the date hereof, such
                              Grantor's jurisdiction of organization and the
                              location of such Grantor's chief executive office
                              or sole place of business are specified on
                              Schedule 4.

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

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

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


                                      -12-

<PAGE>   17



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

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

                              (d)    Such Grantor is the record and beneficial
                                     owner of, and has good and marketable title
                                     to, the Investment Property pledged by it
                                     hereunder, free of any and all Liens or
                                     options in favor of, or claims of, any
                                     other Person, except the security interest
                                     created by this Agreement and any Liens in
                                     favor of a "securities intermediary"
                                     pursuant to and as defined in Article 8 of
                                     the New York UCC.

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

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

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

                       4.8    Contracts. No consent of any party (other than
                              such Grantor) to any Contract is required, or
                              purports to be required, in connection with the
                              execution, delivery and performance of this
                              Agreement.

                              (b)    Each Contract is in full force and effect
                                     and constitutes a valid and legally
                                     enforceable obligation of the parties
                                     thereto, subject to the effects of
                                     bankruptcy, insolvency, fraudulent
                                     conveyance, reorganization, moratorium and
                                     other similar laws relating to or affecting
                                     creditors' rights generally, general
                                     equitable principles (whether considered in
                                     a proceeding in

                                      -13-

<PAGE>   18



                                     equity or at law) and an implied covenant
                                     of good faith and fair dealing.

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

                              (d)    Neither such Grantor nor (to the best of
                                     such Grantor's knowledge) any of the other
                                     parties to the Contracts is in default in
                                     the performance or observance of any of the
                                     terms thereof in any manner that, in the
                                     aggregate, could reasonably be expected to
                                     have a Material Adverse Effect.

                              (e)    The right, title and interest of such
                                     Grantor in, to and under the Contracts are
                                     not subject to any defenses, offsets,
                                     counterclaims or claims that, in the
                                     aggregate, could reasonably be expected to
                                     have a Material Adverse Effect.

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

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

                              (h)    None of the parties to any Contract is a
                                     Governmental Authority.

                       4.9    Intellectual Property. Schedule 6 lists all
                              Intellectual Property owned by such Grantor in its
                              own name on the date hereof.

                              (b)    On the date hereof, all material
                                     Intellectual Property is valid, subsisting,
                                     unexpired and enforceable, has not been
                                     abandoned and does not materially infringe
                                     the intellectual property rights of any
                                     other Person.


                                      -14-

<PAGE>   19



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

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

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

                                           SECTION 5   .   COVENANTS

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

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

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

                                      -15-

<PAGE>   20



                              may be reasonably satisfactory to the
                              Administrative Agent and the Lenders.

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

                              (c)    The Borrower shall deliver annually to the
                                     Administrative Agent and the Lenders a
                                     certificate of a reputable insurance broker
                                     with respect to such insurance as promptly
                                     as practicable upon receipt thereof from
                                     such insurance broker and such supplemental
                                     reports with respect thereto as the
                                     Administrative Agent may from time to time
                                     reasonably request.

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

                       5.4    Maintenance of Perfected Security Interest;
                              Further Documentation. Such Grantor shall maintain
                              the security interest created by this Agreement as
                              a perfected security interest having at least the
                              priority described in Section 4.2 and shall defend
                              such security interest against the claims and
                              demands of all Persons whomsoever.

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

                                      -16-

<PAGE>   21




                              (c)    At any time and from time to time, upon the
                                     written request of the Administrative
                                     Agent, and at the sole expense of such
                                     Grantor, such Grantor will promptly and
                                     duly execute and deliver, and have
                                     recorded, such further instruments and
                                     documents and take such further actions as
                                     the Administrative Agent may reasonably
                                     request for the purpose of obtaining or
                                     preserving the full benefits of this
                                     Agreement and of the rights and powers
                                     herein granted, including, without
                                     limitation, (i) filing any financing or
                                     continuation statements under the Uniform
                                     Commercial Code (or other similar laws) in
                                     effect in any jurisdiction with respect to
                                     the security interests created hereby, (ii)
                                     in the case of Investment Property (other
                                     than the Investment Property purchased with
                                     the amounts referred to in clause (b) of
                                     the definition of "Funded Debt" contained
                                     in Section 1.1 of the Credit Agreement) and
                                     any other relevant Collateral, taking any
                                     actions necessary to enable the
                                     Administrative Agent to obtain "control"
                                     (within the meaning of the applicable
                                     Uniform Commercial Code) with respect
                                     thereto and (iii) in the case of Deposit
                                     Accounts, taking any actions necessary to
                                     enable the Administrative Agent to obtain a
                                     perfected security interest in Deposit
                                     Accounts.

                       5.5    Changes in Locations, Name, etc. Such Grantor will
                              not, except upon 15 days' prior written notice to
                              the Administrative Agent and delivery to the
                              Administrative Agent of (a) all additional
                              executed financing statements and other documents
                              reasonably requested by the Administrative Agent
                              to maintain the validity, perfection and priority
                              of the security interests provided for herein and
                              (b) if applicable, a written supplement to
                              Schedule 5 showing any additional location at
                              which Inventory or Equipment shall be kept:

                  (i) permit any material portion of the Inventory or Equipment
         to be kept at a location other than those listed on Schedule 5;

                  (ii) change its jurisdiction of organization or the location
         of its chief executive office or sole place of business from that
         referred to in Section 4.3; or

                  (iii) change its name, identity or corporate structure to such
         an extent that any financing statement filed by the Administrative
         Agent in connection with this Agreement would become misleading.


                                      -17-

<PAGE>   22



                       5.6    Notices. Such Grantor will advise the
                              Administrative Agent promptly, in reasonable
                              detail, of:

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

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

                       5.7    Investment Property. If such Grantor 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 Capital Stock of any Issuer, whether in
                              addition to, in substitution of, as a conversion
                              of, or in exchange for, any shares of the Pledged
                              Stock, or otherwise in respect thereof, such
                              Grantor shall accept the same as the agent of the
                              Administrative Agent and the Lenders, hold the
                              same in trust for the Administrative Agent and the
                              Lenders and deliver the same forthwith to the
                              Administrative Agent in the exact form received,
                              duly indorsed by such Grantor to the
                              Administrative Agent, if required, together with
                              an undated stock power covering such certificate
                              duly executed in blank by such Grantor and with,
                              if the Administrative Agent so requests, signature
                              guaranteed, to be held by the Administrative
                              Agent, subject to the terms hereof, as additional
                              collateral security for the Obligations. Any sums
                              paid upon or in respect of the Investment Property
                              upon the liquidation or dissolution of any Issuer
                              shall be paid over to the Administrative Agent to
                              be held by it hereunder as additional collateral
                              security for the Obligations, and in case any
                              distribution of capital shall be made on or in
                              respect of the Investment Property or any property
                              shall be distributed upon or with respect to the
                              Investment Property pursuant to the
                              recapitalization or reclassification of the
                              capital of any Issuer or pursuant to the
                              reorganization thereof, the property so
                              distributed shall, unless otherwise subject to a
                              perfected security interest in favor of the
                              Administrative Agent, be delivered to the
                              Administrative Agent to be held by it hereunder as
                              additional collateral security for the

                                      -18-

<PAGE>   23



                              Obligations. If any sums of money or property so
                              paid or distributed in respect of the Investment
                              Property shall be received by such Grantor, such
                              Grantor shall, until such money or property is
                              paid or delivered to the Administrative Agent,
                              hold such money or property in trust for the
                              Lenders, segregated from other funds of such
                              Grantor, as additional collateral security for the
                              Obligations.

                              (b)    Without the prior written consent of the
                                     Administrative Agent, such Grantor will not
                                     (i) vote to enable, or take any other
                                     action to permit, any Issuer of Pledged
                                     Stock to issue any stock or other equity
                                     securities of any nature or to issue any
                                     other securities convertible into or
                                     granting the right to purchase or exchange
                                     for any stock or other equity securities of
                                     any nature of any Issuer, (ii) sell,
                                     assign, transfer, exchange, or otherwise
                                     dispose of, or grant any option with
                                     respect to, the Investment Property or
                                     Proceeds thereof (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 Investment Property or
                                     Proceeds thereof, or any interest therein,
                                     except for the security interests created
                                     or permitted by this Agreement or the
                                     Credit Agreement or (iv) enter into any
                                     agreement or undertaking restricting the
                                     right or ability of such Grantor or the
                                     Administrative Agent to sell, assign or
                                     transfer any of the Investment Property or
                                     Proceeds thereof.

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

                       5.8    Receivables. Other than in the ordinary course of
                              business consistent with its past practice, such
                              Grantor will not (i) grant any extension of the
                              time of payment of any Receivable, (ii) compromise
                              or settle any Receivable for less than the full
                              amount thereof, (iii)

                                      -19-

<PAGE>   24



                              release, wholly or partially, any Person liable
                              for the payment of any Receivable, (iv) allow any
                              credit or discount whatsoever on any Receivable or
                              (v) amend, supplement or modify any Receivable in
                              any manner that could adversely affect the value
                              thereof.

                              (b)    Such Grantor will deliver to the
                                     Administrative Agent a copy of each demand,
                                     notice or document received by it that
                                     questions or calls into doubt the validity
                                     or enforceability of any outstanding
                                     Receivables constituting a material portion
                                     of the Collateral.

                       5.9    Contracts. Such Grantor will perform and comply in
                              all material respects with all its obligations
                              under the Contracts.

                              (b)    Such Grantor will not amend, modify,
                                     terminate or waive any provision of any
                                     Contract in any manner which could
                                     reasonably be expected to materially
                                     adversely affect the value of such Contract
                                     as Collateral.

                              (c)    Such Grantor will exercise promptly and
                                     diligently each and every material right
                                     which it may have under each Contract
                                     (other than any right of termination).

                              (d)    Such Grantor will deliver to the
                                     Administrative Agent a copy of each
                                     material demand, notice or document
                                     received by it relating in any way to any
                                     Contract that questions the validity or
                                     enforceability of such Contract.

                       5.10   Intellectual Property. Such Grantor (either itself
                              or through licensees) will (i) continue to use
                              each material Trademark on each and every
                              trademark class of goods applicable to its current
                              line as reflected in its current catalogs,
                              brochures and price lists in order to maintain
                              such Trademark in full force free from any claim
                              of abandonment for non-use, (ii) maintain as in
                              the past the quality of products and services
                              offered under such Trademark, (iii) use such
                              Trademark with the appropriate notice of
                              registration and all other notices and legends
                              required by applicable Requirements of Law, (iv)
                              not adopt or use any mark which is confusingly
                              similar or a colorable imitation of such Trademark
                              unless the Administrative Agent, for the ratable
                              benefit of the Lenders, shall obtain a perfected
                              security interest in such mark pursuant to this
                              Agreement, and (v) not (and not permit any
                              licensee or sublicensee thereof to) do any act or
                              knowingly

                                      -20-

<PAGE>   25



                              omit to do any act whereby such Trademark may
                              become invalidated or impaired in any way.

                              (b)    Such Grantor (either itself or through
                                     licensees) will not do any act, or omit to
                                     do any act, whereby any material Patent may
                                     become forfeited, abandoned or dedicated to
                                     the public.

                              (c)    Such Grantor (either itself or through
                                     licensees) (i) will employ each material
                                     Copyright and (ii) will not (and will not
                                     permit any licensee or sublicensee thereof
                                     to) do any act or knowingly omit to do any
                                     act whereby any material portion of the
                                     Copyrights may become invalidated or
                                     otherwise impaired. Such Grantor will not
                                     (either itself or through licensees) do any
                                     act whereby any material portion of the
                                     Copyrights may fall into the public domain.

                              (d)    Such Grantor (either itself or through
                                     licensees) will not do any act that
                                     knowingly uses any material Intellectual
                                     Property to infringe the intellectual
                                     property rights of any other Person.

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

                              (f)    Whenever such Grantor, either by itself or
                                     through any agent, employee, licensee or
                                     designee, shall file an application for the
                                     registration of any Intellectual Property
                                     with the United States Patent and Trademark
                                     Office, the United States Copyright Office
                                     or any similar office or agency in any
                                     other country or any political subdivision
                                     thereof, such Grantor shall report such
                                     filing to the Administrative Agent within
                                     five Business Days after the last day of
                                     the fiscal quarter in which such filing
                                     occurs. Upon request of the Administrative

                                      -21-

<PAGE>   26



                                     Agent, such Grantor shall execute and
                                     deliver, and have recorded, any and all
                                     agreements, instruments, documents, and
                                     papers as the Administrative Agent may
                                     request to evidence the Administrative
                                     Agent's and the Lenders' security interest
                                     in any Copyright, Patent or Trademark and
                                     the goodwill and general intangibles of
                                     such Grantor relating thereto or
                                     represented thereby.

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

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


                                       SECTION 6   .REMEDIAL PROVISIONS

                       6.1    Certain Matters Relating to Receivables. The
                              Administrative Agent shall have the right to make
                              test verifications of the Receivables in any
                              manner and through any medium that it reasonably
                              considers advisable, and each Grantor shall
                              furnish all such assistance and information as the
                              Administrative Agent may require in connection
                              with such test verifications. After an Event of
                              Default shall have occurred and be continuing, at
                              any time and from time to time, upon the
                              Administrative Agent's request and at the

                                      -22-

<PAGE>   27



                              expense of the relevant Grantor, such Grantor
                              shall cause independent public accountants or
                              others satisfactory to the Administrative Agent to
                              furnish to the Administrative Agent reports
                              showing reconciliations, aging and test
                              verifications of, and trial balances for, the
                              Receivables.

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

                              (c)    At the Administrative Agent's request, at
                                     any time after the occurrence and during
                                     the continuance of an Event of Default,
                                     each Grantor shall deliver to the
                                     Administrative Agent (to the extent such
                                     Grantor has possession thereof) all
                                     documents evidencing, and relating to, the
                                     agreements and transactions which gave rise
                                     to the Receivables, including, without
                                     limitation, all original orders, invoices
                                     and shipping receipts.

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


                                      -23-

<PAGE>   28



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

                              (c)    Anything herein to the contrary
                                     notwithstanding, each Grantor shall remain
                                     liable under each of the Receivables and
                                     Contracts to observe and perform all the
                                     conditions and obligations to be observed
                                     and performed by it thereunder, all in
                                     accordance with the terms of any agreement
                                     giving rise thereto. Neither the
                                     Administrative Agent nor any Lender shall
                                     have any obligation or liability under any
                                     Receivable (or any agreement giving rise
                                     thereto) or Contract by reason of or
                                     arising out of this Agreement or the
                                     receipt by the Administrative Agent or any
                                     Lender of any payment relating thereto, nor
                                     shall the Administrative Agent or any
                                     Lender be obligated in any manner to
                                     perform any of the obligations of any
                                     Grantor under or pursuant to any Receivable
                                     (or any agreement giving rise thereto) or
                                     Contract, to make any payment, to make any
                                     inquiry as to the nature or the sufficiency
                                     of any payment received by it or as to the
                                     sufficiency of any performance by any party
                                     thereunder, to present or file any claim,
                                     to take any action to enforce any
                                     performance or to collect the payment of
                                     any amounts which may have been assigned to
                                     it or to which it may be entitled at any
                                     time or times.

                       6.3    Pledged Stock. Unless an Event of Default shall
                              have occurred and be continuing and the
                              Administrative Agent shall have given notice to
                              the relevant Grantor of the Administrative Agent's
                              intent to exercise its corresponding rights
                              pursuant to Section 6.3(b), each Grantor shall be
                              permitted to receive all cash dividends paid in
                              respect of the Pledged Stock and all payments made
                              in respect of the Pledged Notes, in each case paid
                              in the normal course of business of the relevant
                              Issuer and consistent with past practice, to the
                              extent permitted in the Credit Agreement, and to
                              exercise all voting and corporate rights with
                              respect to the Investment Property; provided,
                              however, that no vote shall be cast or corporate
                              right exercised or other action taken which, in
                              the Administrative Agent's reasonable

                                      -24-

<PAGE>   29



                              judgment, would impair the Collateral or which
                              would be inconsistent with or result in any
                              violation of any provision of the Credit
                              Agreement, this Agreement or any other Loan
                              Document.

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

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

                                      -25-

<PAGE>   30



                                     other or further instructions from such
                                     Grantor, and each Grantor 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 Investment Property directly to the
                                     Administrative Agent.

                       6.4    Proceeds to be Turned Over To Administrative
                              Agent. In addition to the rights of the
                              Administrative Agent and the Lenders specified in
                              Section 6.1 with respect to payments of
                              Receivables, if an Event of Default shall occur
                              and be continuing, all Proceeds received by any
                              Grantor consisting of cash, checks and other
                              near-cash items shall be held by such Grantor in
                              trust for the Administrative Agent and the
                              Lenders, segregated from other funds of such
                              Grantor, and shall, forthwith upon receipt by such
                              Grantor, be turned over to the Administrative
                              Agent in the exact form received by such Grantor
                              (duly indorsed by such Grantor to the
                              Administrative Agent, if required). All Proceeds
                              received by the Administrative Agent hereunder
                              shall be held by the Administrative Agent in a
                              Collateral Account maintained under its sole
                              dominion and control. All Proceeds while held by
                              the Administrative Agent in a Collateral Account
                              (or by such Grantor in trust for the
                              Administrative Agent and the Lenders) shall
                              continue to be held as collateral security for all
                              the Obligations and shall not constitute payment
                              thereof until applied as provided in Section  .

                       6.5    Application of Proceeds. At such intervals as may
                              be agreed upon by the Borrower and the
                              Administrative Agent, or, if an Event of Default
                              shall have occurred and be continuing, at any time
                              at the Administrative Agent's election, the
                              Administrative Agent may apply all or any part of
                              Proceeds held in any Collateral Account in payment
                              of the then due and owing Obligations in such
                              order as the Administrative Agent may elect, and
                              any part of such funds which the Administrative
                              Agent elects not so to apply and deems not
                              required as collateral security for the
                              Obligations shall be paid over from time to time
                              by the Administrative Agent to the Borrower or to
                              whomsoever may be lawfully entitled to receive the
                              same. Any balance of such Proceeds remaining after
                              the Obligations shall have been paid in full, no
                              Letters of Credit shall be outstanding and the
                              Commitments shall have terminated shall be paid
                              over to the Borrower or to whomsoever may be
                              lawfully entitled to receive the same.


                                      -26-

<PAGE>   31



                       6.6    Code and Other Remedies. If an Event of Default
                              shall occur and be continuing, the Administrative
                              Agent, on behalf of the Lenders, may exercise, in
                              addition to all other rights and remedies granted
                              to them in this Agreement and in any other
                              instrument or agreement securing, evidencing or
                              relating to the Obligations, all rights and
                              remedies of a secured party under the New York UCC
                              or any other applicable law. Without limiting the
                              generality of the foregoing, the Administrative
                              Agent, without demand of performance or other
                              demand, presentment, protest, advertisement or
                              notice of any kind (except any notice expressly
                              required by this Agreement or the other Loan
                              Documents or by law referred to below) to or upon
                              any Grantor or any other Person (all and each of
                              which demands, defenses, advertisements and
                              notices are hereby waived), may in such
                              circumstances forthwith collect, receive,
                              appropriate and realize upon the Collateral, or
                              any part thereof, and/or may forthwith sell,
                              lease, assign, give option or options to purchase,
                              or otherwise dispose of and deliver the Collateral
                              or any part thereof (or contract to do any of the
                              foregoing), in one or more parcels at public or
                              private sale or sales, at any exchange, broker's
                              board or office of the Administrative Agent or any
                              Lender 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.
                              The Administrative Agent or any Lender shall have
                              the right upon any such public sale or sales, and,
                              to the extent permitted by law, upon any such
                              private sale or sales, to purchase the whole or
                              any part of the Collateral so sold, free of any
                              right or equity of redemption in any Grantor,
                              which right or equity is hereby waived and
                              released. Each Grantor further agrees, at the
                              Administrative Agent's request, to assemble the
                              Collateral and make it available to the
                              Administrative Agent at places which the
                              Administrative Agent shall reasonably select,
                              whether at such Grantor's premises or elsewhere.
                              The Administrative Agent shall apply the net
                              proceeds of any action taken by it pursuant to
                              this Section 6.6, after deducting all reasonable
                              costs and expenses of every kind incurred in
                              connection therewith or incidental to the care or
                              safekeeping of any of the Collateral or in any way
                              relating to the Collateral or the rights of the
                              Administrative Agent and the Lenders hereunder,
                              including, without limitation, reasonable
                              attorneys' fees and disbursements, to the payment
                              in whole or in part of the then due and owing
                              Obligations, in such order as the Administrative
                              Agent may elect, and only after such application
                              and after the payment by the Administrative Agent
                              of any other amount required by any provision of
                              law, including, without limitation, Section
                              9-504(1)(c) of the New York UCC, need

                                      -27-

<PAGE>   32



                              the Administrative Agent account for the surplus,
                              if any, to any Grantor. To the extent permitted by
                              applicable law, each Grantor waives all claims,
                              damages and demands it may acquire against the
                              Administrative Agent or any Lender arising out of
                              the exercise by them of any rights hereunder. If
                              any notice of a proposed sale or other disposition
                              of Collateral shall be required by law, such
                              notice shall be deemed reasonable and proper if
                              given at least 10 days before such sale or other
                              disposition.

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

                              (b)    Each Grantor recognizes that the
                                     Administrative Agent may be unable to
                                     effect a public sale of any or all the
                                     Pledged Stock, by reason of certain
                                     prohibitions contained in the Securities
                                     Act and applicable state securities laws or

                                      -28-

<PAGE>   33



                                                                      
                                     otherwise, and may be compelled to resort
                                     to one or more private sales thereof to a
                                     restricted group of purchasers which will
                                     be obliged to agree, among other things, to
                                     acquire such securities for their own
                                     account for investment and not with a view
                                     to the distribution or resale thereof. Each
                                     Grantor acknowledges and agrees that any
                                     such private sale may result in prices and
                                     other terms less favorable than if such
                                     sale were a public sale 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 Stock for the
                                     period of time necessary to permit the
                                     Issuer thereof to register such securities
                                     for public sale under the Securities Act,
                                     or under applicable state securities laws,
                                     even if such Issuer would agree to do so.

                              (c)    Each Grantor agrees to use its best efforts
                                     to do or cause to be done all such other
                                     acts as may be necessary to make such sale
                                     or sales of all or any portion of the
                                     Pledged Stock pursuant to this Section 6.7
                                     valid and binding and in compliance with
                                     any and all other applicable Requirements
                                     of Law. Each Grantor further agrees that a
                                     breach of any of the covenants contained in
                                     this Section 6.7 will cause irreparable
                                     injury to the Administrative Agent and the
                                     Lenders, that the Administrative Agent and
                                     the Lenders have no adequate remedy at law
                                     in respect of such breach and, as a
                                     consequence, that each and every covenant
                                     contained in this Section 6.7 shall be
                                     specifically enforceable against such
                                     Grantor, and such Grantor hereby waives and
                                     agrees not to assert any defenses against
                                     an action for specific performance of such
                                     covenants except for a defense that no
                                     Event of Default has occurred and is
                                     continuing under the Credit Agreement.

                       6.8    Waiver; Deficiency. Each Grantor waives and agrees
                              not to assert any rights or privileges which it
                              may acquire under Section 9-112 of the New York
                              UCC. Each Grantor shall remain liable for any
                              deficiency if the proceeds of any sale or other
                              disposition of the Collateral are insufficient to
                              pay its Obligations and the fees and disbursements
                              of any attorneys employed by the Administrative
                              Agent or any Lender to collect such deficiency.



                                      -29-

<PAGE>   34



                                   SECTION 7   .THE ADMINISTRATIVE AGENT

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

                  (i) in the name of such Grantor or its own name, or otherwise,
         take possession of and indorse and collect any checks, drafts, notes,
         acceptances or other instruments for the payment of moneys due under
         any Receivable or Contract or with respect to any other Collateral and
         file any claim or take any other action or proceeding in any court of
         law or equity or otherwise deemed appropriate by the Administrative
         Agent for the purpose of collecting any and all such moneys due under
         any Receivable or Contract or with respect to any other Collateral
         whenever payable;

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

                  (iii) 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 and pay all or any part of
         the premiums therefor and the costs thereof;

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

                  (v)        (i)     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; ask or demand for, collect, and
                                     receive payment of and receipt for, any and
                                     all moneys,

                                      -30-

<PAGE>   35



                                     claims and other amounts due or to become
                                     due at any time in respect of or arising
                                     out of any Collateral; sign and indorse any
                                     invoices, freight or express bills, bills
                                     of lading, storage or warehouse receipts,
                                     drafts against debtors, assignments,
                                     verifications, notices and other documents
                                     in connection with any of the Collateral;
                                     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; defend any suit, action or
                                     proceeding brought against such Grantor
                                     with respect to any Collateral; 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;
                                     assign any Copyright, Patent or Trademark
                                     (along with the goodwill of the business to
                                     which any such Copyright, Patent or
                                     Trademark pertains), throughout the world
                                     for such term or terms, on such conditions,
                                     and in such manner, as the Administrative
                                     Agent shall in its sole discretion
                                     determine; and generally, sell, transfer,
                                     pledge and make any agreement with respect
                                     to or otherwise deal with any of the
                                     Collateral as fully and completely as
                                     though the Administrative Agent were the
                                     absolute owner thereof for all purposes,
                                     and do, at the Administrative Agent's
                                     option and such Grantor's expense, at any
                                     time, or from time to time, all acts and
                                     things which the Administrative Agent deems
                                     necessary to protect, preserve or realize
                                     upon the Collateral and the Administrative
                                     Agent's and the Lenders' security interests
                                     therein and to effect the intent of this
                                     Agreement, all as fully and effectively as
                                     such Grantor might do.

         Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.

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

                                      -31-

<PAGE>   36



                                     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 7.1,
                                     together with interest thereon at a rate
                                     per annum equal to the highest rate per
                                     annum at which interest would then be
                                     payable on any category of past due ABR
                                     Loans under the Credit Agreement, from the
                                     date of payment by the Administrative Agent
                                     to the date reimbursed by the relevant
                                     Grantor, shall be payable by such Grantor
                                     to the Administrative Agent on demand.

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

                       7.2    Duty of Administrative Agent. The Administrative
                              Agent's sole duty with respect to the custody,
                              safekeeping and physical preservation of the
                              Collateral in its possession, under Section 9-207
                              of the New York UCC or otherwise, shall be to deal
                              with it in the same manner as the Administrative
                              Agent deals with similar property for its own
                              account. Neither the Administrative Agent, any
                              Lender nor any of their respective officers,
                              directors, employees or agents shall be liable for
                              failure to demand, collect or realize upon any of
                              the Collateral or for any delay in doing so or
                              shall be under any obligation to sell or otherwise
                              dispose of any Collateral upon the request of any
                              Grantor or any other Person or to take any other
                              action whatsoever with regard to the Collateral or
                              any part thereof. The powers conferred on the
                              Administrative Agent and the Lenders hereunder are
                              solely to protect the Administrative Agent's and
                              the Lenders' interests in the Collateral and shall
                              not impose any duty upon the Administrative Agent
                              or any Lender to exercise any such powers. The
                              Administrative Agent and the Lenders shall be
                              accountable only for amounts that they actually
                              receive as a result of the exercise of such
                              powers, and neither they nor any of their
                              officers, directors, employees or agents shall be
                              responsible to any Grantor for any act or failure
                              to act hereunder, except for their own gross
                              negligence or willful misconduct.


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<PAGE>   37



                       7.3    Execution of Financing Statements. Pursuant to
                              Section 9-402 of the New York UCC and any other
                              applicable law, each Grantor authorizes the
                              Administrative Agent to file or record financing
                              statements and other filing or recording documents
                              or instruments with respect to the Collateral
                              without the signature of such Grantor in such form
                              and in such offices as the Administrative Agent
                              determines appropriate to perfect the security
                              interests of the Administrative Agent under this
                              Agreement. A photographic or other reproduction of
                              this Agreement shall be sufficient as a financing
                              statement or other filing or recording document or
                              instrument for filing or recording in any
                              jurisdiction.

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


                                        SECTION 8    .MISCELLANEOUS

                       8.1    Amendments in Writing. None of the terms or
                              provisions of this Agreement may be waived,
                              amended, supplemented or otherwise modified except
                              in accordance with Section 10.1 of the Credit
                              Agreement.

                       8.2    Notices. All notices, requests and demands to or
                              upon the Administrative Agent or any Grantor
                              hereunder shall be effected in the manner provided
                              for in Section 10.2 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.


                                      -33-

<PAGE>   38



                       8.3    No Waiver by Course of Conduct; Cumulative
                              Remedies. Neither the Administrative Agent nor any
                              Lender shall by any act (except by a written
                              instrument pursuant to Section 8.1), delay,
                              indulgence, omission or otherwise be deemed to
                              have waived any right or remedy hereunder or to
                              have acquiesced in any Default or Event of
                              Default. No failure to exercise, nor any delay in
                              exercising, on the part of the Administrative
                              Agent or any Lender, any right, power or privilege
                              hereunder shall operate as a waiver thereof. No
                              single or partial exercise of any right, power or
                              privilege hereunder shall preclude any other or
                              further exercise thereof or the exercise of any
                              other right, power or privilege. A waiver by the
                              Administrative Agent or any Lender of any right or
                              remedy hereunder on any one occasion shall not be
                              construed as a bar to any right or remedy which
                              the Administrative Agent or such Lender would
                              otherwise have on any future occasion. The rights
                              and remedies herein provided are cumulative, may
                              be exercised singly or concurrently and are not
                              exclusive of any other rights or remedies provided
                              by law.

                       8.4    Enforcement Expenses; Indemnification. Each
                              Guarantor agrees to pay or reimburse each Lender
                              and the Administrative Agent (in the case of each
                              Lender, after the occurrence and during the
                              continuance of an Event of Default) for all its
                              costs and expenses incurred in collecting against
                              such Guarantor under the guarantee contained in
                              Section 2 or otherwise enforcing or preserving any
                              rights under this Agreement and the other Loan
                              Documents to which such Guarantor is a party,
                              including, without limitation, the fees and
                              disbursements of counsel (including the allocated
                              fees and expenses of in-house counsel (but not
                              both outside and in-house counsel)) to each Lender
                              and of counsel to the Administrative Agent.

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

                              (c)    Each Guarantor agrees to pay, and to save
                                     the Administrative Agent and the Lenders
                                     harmless from, any and all liabilities,
                                     obligations, losses, damages, penalties,
                                     actions, judgments, suits, costs, expenses
                                     or disbursements of any kind or nature
                                     whatsoever with respect to the execution,
                                     delivery,

                                      -34-

<PAGE>   39



                                                                      
                                     enforcement, performance and administration
                                     of this Agreement to the extent the
                                     Borrower would be required to do so
                                     pursuant to Section 10.5 of the Credit
                                     Agreement.

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

                       8.5    Successors and Assigns. This Agreement shall be
                              binding upon the successors and assigns of each
                              Grantor and shall inure to the benefit of the
                              Administrative Agent and the Lenders and their
                              successors and assigns; provided that no Grantor
                              may assign, transfer or delegate any of its rights
                              or obligations under this Agreement without the
                              prior written consent of the Administrative Agent.

                       8.6    Set-Off. Each Grantor hereby irrevocably
                              authorizes the Administrative Agent and each
                              Lender at any time and from time to time while an
                              Event of Default shall have occurred and be
                              continuing, without notice to such Grantor or any
                              other Grantor, any such notice being expressly
                              waived by each Grantor, to set-off and appropriate
                              and apply any and all deposits (general or
                              special, time or demand, provisional or final), in
                              any currency, and any other credits, indebtedness
                              or claims, in any currency, in each case whether
                              direct or indirect, absolute or contingent,
                              matured or unmatured, at any time held or owing by
                              the Administrative Agent or such Lender to or for
                              the credit or the account of such Grantor, or any
                              part thereof in such amounts as the Administrative
                              Agent or such Lender may elect, against and on
                              account of the obligations and liabilities of such
                              Grantor to the Administrative Agent or such Lender
                              hereunder and claims of every nature and
                              description of the Administrative Agent or such
                              Lender against such Grantor, in any currency,
                              whether arising hereunder, under the Credit
                              Agreement, any other Loan Document or otherwise,
                              as the Administrative Agent or such Lender may
                              elect, whether or not the Administrative Agent or
                              any Lender has made any demand for payment and
                              although such obligations, liabilities and claims
                              may be contingent or unmatured. The Administrative
                              Agent and each Lender shall notify such Grantor
                              promptly of any such set-off and the application
                              made by the Administrative Agent or such Lender of
                              the proceeds thereof, provided that the failure to
                              give such notice shall not affect the validity of
                              such set-off and application. The rights of the
                              Administrative Agent and each Lender under this
                              Section 8.6 are in addition to other rights and
                              remedies (including,

                                      -35-

<PAGE>   40



                              without limitation, other rights of set-off) which
                              the Administrative Agent or such Lender may have.

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

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

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

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

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

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

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

                                      -36-

<PAGE>   41



                                     Southern District of New York, and
                                     appellate courts from any thereof;

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

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

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

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

                       8.13   Acknowledgements. Each Grantor hereby acknowledges
                              that:

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

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

                              (c)    no joint venture is created hereby or by
                                     the other Loan Documents or otherwise
                                     exists by virtue of the transactions

                                      -37-

<PAGE>   42



                                     contemplated hereby among the Lenders or
                                     among the Grantors and the Lenders.

                       8.14   Additional Grantors. Each Subsidiary of the
                              Borrower that is required to become a party to
                              this Agreement pursuant to Section 6.10 of the
                              Credit Agreement shall become a Grantor for all
                              purposes of this Agreement upon execution and
                              delivery by such Subsidiary of an Assumption
                              Agreement in the form of Annex 1 hereto.

                       8.15   Releases. (a) At such time as the Loans, the
                              Reimbursement Obligations and the other
                              Obligations shall have been paid in full, the
                              Commitments have been terminated and no Letters of
                              Credit shall be outstanding, the Collateral shall
                              be released from the Liens created hereby, and
                              this Agreement and all obligations (other than
                              those expressly stated to survive such
                              termination) of the Administrative Agent and each
                              Grantor hereunder shall terminate, all without
                              delivery of any instrument or performance of any
                              act by any party, and all rights to the Collateral
                              shall revert to the Grantors. At the request and
                              sole expense of any Grantor following any such
                              termination, the Administrative Agent shall
                              deliver to such Grantor any Collateral held by the
                              Administrative Agent hereunder, and execute and
                              deliver to such Grantor such documents as such
                              Grantor shall reasonably request to evidence such
                              termination.

                  (b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral. At the request and sole expense of the Borrower, a
Subsidiary Guarantor shall be released from its obligations hereunder in the
event that all the Capital Stock of such Subsidiary 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 for release identifying the relevant Subsidiary 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.

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

                                      -38-

<PAGE>   43



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

                                             RENTERS CHOICE, INC.


                                             By:
                                                Title:


                                             COLORTYME, INC.


                                             By:
                                                Title:


                                             RENT-A-CENTER, INC.


                                             By:
                                                Title:


                                             RAC RENTALS TRADING, INC.


                                             By:
                                                Title:


                                             REMCO AMERICA, INC.


                                             By:
                                                Title:


                                             ADVANTAGE COMPANIES, INC.


                                             By:
                                                Title:


                                      -39-

<PAGE>   44





                                             RAC USA, INC.


                                             By:
                                                Title:


                                             RAC FINANCE SERVICES, INC.


                                             By:
                                                Title:


                                             RAC CHECK CASHING, INC.


                                             By:
                                                Title:


                                             ADVANTEDGE AUTO, INC.


                                             By:
                                                Title:


                                             ADVANTEDGE QUALITY CARS, L.L.C.


                                             By:
                                                Title:





                                      -40-

<PAGE>   45




                                                                      Schedule 1


                         NOTICE ADDRESSES OF GUARANTORS










                                      -41-

<PAGE>   46




                                                                      Schedule 2


                       DESCRIPTION OF INVESTMENT PROPERTY


PLEDGED STOCK:


<TABLE>
<CAPTION>
Issuer                        Class of              Stock Certificate           No. of
                              Stock                 No.                         Shares
<S>                           <C>                  <C>                          <C>






</TABLE>







PLEDGED NOTES:


<TABLE>
<CAPTION>
Issuer                                  Payee                     Principal Amount
<S>                                     <C>                       <C>








</TABLE>






*        Stock is assumed to be common stock unless otherwise indicated.

<PAGE>   47




                                                                      Schedule 3


                            FILINGS AND OTHER ACTIONS
                     REQUIRED TO PERFECT SECURITY INTERESTS


                         Uniform Commercial Code Filings


          [List each office where a financing statement is to be filed]




                          Patent and Trademark Filings


                               [List all filings]




                      Actions with respect to Pledged Stock




                                  Other Actions


                      [Describe other actions to be taken]


*        Stock is assumed to be common stock unless otherwise indicated.

<PAGE>   48




                                                                      Schedule 4


       LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE


                    Grantor                        Location





*        Stock is assumed to be common stock unless otherwise indicated.

<PAGE>   49




                                                                      Schedule 5


                       LOCATION OF INVENTORY AND EQUIPMENT


                    Grantor                        Location


*        Stock is assumed to be common stock unless otherwise indicated.

<PAGE>   50




                                                                      Schedule 6


                        COPYRIGHTS AND COPYRIGHT LICENSES




                           PATENTS AND PATENT LICENSES




                        TRADEMARKS AND TRADEMARK LICENSES


*        Stock is assumed to be common stock unless otherwise indicated.

<PAGE>   51




                                                                      Schedule 7


                                    CONTRACTS


*        Stock is assumed to be common stock unless otherwise indicated.

<PAGE>   52





                         ACKNOWLEDGEMENT AND CONSENT(1)


         The undersigned hereby acknowledges receipt of a copy of the Guarantee
and Collateral Agreement dated as of August __, 1998 (the "Agreement"), made by
the Grantors parties thereto for the benefit of The Chase Manhattan Bank, as
Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:

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

2        . The undersigned will notify the Administrative Agent promptly in
         writing of the occurrence of any of the events described in Section
         5.7(a) of the Agreement.

3        . The terms of Sections 6.3(c) and 6.7 of the Agreement shall apply to
         it, mutatis mutandis, with respect to all actions that may be required
         of it pursuant to Section 6.3(c) or 6.7 of the Agreement.


                                        [NAME OF ISSUER]


                                        By
                                          --------------------------------------
                                           Name:
                                           Title:


                                        Address for Notices:

                                        ----------------------------------------

                                        ----------------------------------------

                                        ----------------------------------------

                                        Fax:


----------
1        This consent is necessary only with respect to any Issuer which is not
also a Grantor.


*        Stock is assumed to be common stock unless otherwise indicated.

<PAGE>   53


                                                                               1



                                                                      Annex 1 to
                                              Guarantee and Collateral Agreement



                  ASSUMPTION AGREEMENT, dated as of ________________, 199_, made
by ______________________________, a ______________ corporation (the "Additional
Grantor"), in favor of THE CHASE MANHATTAN BANK, as administrative agent (in
such capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Lenders") parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.


                              W I T N E S S E T H :


                  WHEREAS, Renters Choice, Inc. (the "Borrower"), the Lenders
and the Administrative Agent have entered into a Credit Agreement, dated as of
August 5, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement");

                  WHEREAS, in connection with the Credit Agreement, the Borrower
and certain of its Affiliates (other than the Additional Grantor) have entered
into the Guarantee and Collateral Agreement, dated as of August 5, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
and Collateral Agreement") in favor of the Administrative Agent for the benefit
of the Lenders;

                  WHEREAS, the Credit Agreement requires the Additional Grantor
to become a party to the Guarantee and Collateral Agreement; and

                  WHEREAS, the Additional Grantor has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Guarantee
and Collateral Agreement;

                  NOW, THEREFORE, IT IS AGREED:

                  1. Guarantee and Collateral Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 8.14 of the Guarantee and Collateral Agreement, hereby becomes a party
to the Guarantee and Collateral Agreement as a Grantor thereunder with the same
force and effect as if originally named therein as a Grantor and, without
limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor thereunder. The information set forth
in Annex 1-A hereto is hereby added to the information set forth in the
Schedules to the Guarantee and Collateral Agreement. The Additional Grantor
hereby represents and warrants that each of the representations and



<PAGE>   54


                                                                               2



warranties contained in Section 4 of the Guarantee and Collateral Agreement is
true and correct on and as the date hereof (after giving effect to this
Assumption Agreement) as if made on and as of such date.

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


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

                                     [ADDITIONAL GRANTOR]


                                     By:
                                        ----------------------------------------
                                        Name:
                                        Title:




*        Stock is assumed to be common stock unless otherwise indicated.


<PAGE>   55


                                                                               1


                                                                    Annex 1-A to
                                                            Assumption Agreement

                            Supplement to Schedule 1




                            Supplement to Schedule 2




                            Supplement to Schedule 3




                            Supplement to Schedule 4




                            Supplement to Schedule 5




                            Supplement to Schedule 6




                            Supplement to Schedule 7



