EXHIBIT 10.3

FIRST CONTINUED, AMENDED AND RESTATED SECURITY AGREEMENT
 
FIRST CONTINUED, AMENDED AND RESTATED SECURITY AGREEMENT, dated as of October
11, 2007 (this “Agreement”) made by INDUSTRIAL ENTERPRISES OF AMERICA, INC., a
Nevada corporation, having its principal office at 711 Third Avenue, New York,
New York 10017 (“Parent”), UNIFIDE INDUSTRIES, LIMITED LIABILITY COMPANY, a New
Jersey limited liability company, having its principal office at 121 Highway 36,
Suite 125, West Long Branch, New Jersey 07764 (“Unifide”), PITT PENN OIL CO.,
LLC, an Ohio limited liability company, having its principal office at 426
Freeport Road, P.O. Box 296, Creighton, Pennsylvania 15030 (“Pitt Penn”), EMC
PACKAGING, INC., a Delaware corporation, having its principal office at 550
James Street, Lakewood, New Jersey 08701 (“EMC”), TODAYS WAY MANUFACTURING LLC,
a New Jersey limited liability company, having its principal office at 1081
Rosemary Boulevard, Akron, Ohio 44306 (“Todays Way”), and PITT PENN HOLDING CO.,
LLC, an Ohio limited liability company having its principal office at 426
Freeport Road, P.O. Box 296, Creighton, Pennsylvania 15030 (“Pitt Holding”,
together with Parent, Unifide, Pitt Penn, EMC and Todays Way, each a “Debtor” or
“Grantor” and collectively, the “Debtors or “Grantors”), in favor of SOVEREIGN
BANK, a federal savings bank (“Secured Party”) and its successors and assigns.
 
W I T N E S S E T H:
 
WHEREAS, each Debtor is entering into a Credit Agreement dated as of even date
herewith with Secured Party pursuant to which, inter alia, Secured Party may
provide loans and other financial accommodations to Debtors (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”); and
 
WHEREAS, in order to induce Secured Party to enter into the Credit Agreement and
the other Loan Documents, (a) Debtors have agreed to grant to Secured Party a
first priority perfected security interest in the Collateral (defined below) as
collateral security for, inter alia, the payment and performance of all
Obligations and (b) Debtors have agreed to provide Secured Party with other
rights and remedies; and
 
WHEREAS, Debtors or certain of them have previously granted a security interest
in substantially all of their existing and future assets and properties to
Secured Party pursuant to a Security Agreement or Security Agreements dated in
2007 (collectively, the “Existing Security Agreement”) and Debtors and Secured
Party wish to continue, amend and restate the Existing Security Agreement on the
terms and conditions hereinafter set forth; and
 
WHEREAS, the Grantors have determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of,
the Grantors.
 
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce the Secured Party to accept the Credit Agreement and the Loan
Documents, the Grantors hereby agree as follows in favor of Secured Party:
 
SECTION 1. Definitions.
 
(a) All capitalized terms and phrases used in this Agreement and the recitals
hereto without definition shall have the respective meanings set forth in the
Credit Agreement or, if not defined therein, as set forth in Articles 8 or 9 of
the Uniform Commercial Code as in effect in the State of New York on this date
(the “UCC” or the “Code”).  The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
 
(b) Notwithstanding the above or anything in this Agreement, the following terms
shall have the respective meanings provided for in the Code: “Accounts”, “Cash
Proceeds”, “Chattel Paper”, “Commercial Tort
 
 
 

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Claim”, “Commodity Account”, “Commodity Contracts”, “Deposit Account”,
“Documents”, “Electronic Chattel Paper”, “Equipment”, “Fixtures”, “General
Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”,
“Letter-of-Credit Rights”, “Noncash Proceeds”, “Payment Intangibles”,
“Proceeds”, “Promissory Notes”, “Security”, “Record”, “Security Account”,
“Software”, and “Supporting Obligations”.
(c) As used in this Agreement, the following terms shall have the respective
meanings indicated below, such meanings to be applicable equally to both the
singular and plural forms of such terms:
 
“Affiliate” shall mean a Person (1) which directly or indirectly controls, or is
controlled by, or is under common control with a Person or any of its
Subsidiaries, (2) which directly or indirectly beneficially owns or holds ten
(10%) percent or more of any class of voting stock of a Person or any of its
Subsidiaries, or (3) ten (10%) percent or more of the voting stock of which is
directly or indirectly beneficially owned or held by a Person or any of its
Subsidiaries.  The term “control” means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract, or
otherwise.
 
“Capital Stock” means (i) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, and (ii) with respect
to any Person that is not a corporation, any and all partnership, membership or
other equity interests of such Person.
 
“Copyright Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to use or sell any works covered by any Copyright
(including, without limitation, all Copyright Licenses set forth in Schedule II
hereto).
 
“Copyrights” means all domestic and foreign copyrights, whether registered or
not, including, without limitation, all copyright rights throughout the universe
(whether now or hereafter arising) in any and all media (whether now or
hereafter developed), in and to all original works of authorship fixed in any
tangible medium of expression, acquired or used by any Grantor (including,
without limitation, all copyrights described in Schedule II hereto), all
applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.
 
“Corporate Subsidiary” means any Subsidiary which is treated as an association
taxable as a corporation for U.S. income tax purposes under the IRC.
 
“Event of Default” shall have the meaning set forth in the Credit Agreement.
 
“Excluded Collateral” shall mean all property of any Grantor not subject to
Secured Party’s security interest to the extent specified in the next to last
paragraph of Section 2 of this Agreement.
 
“Governmental Authority” means any nation or government, any Federal, state,
city, town, municipality, county, local or other political subdivision thereof
or thereto and any department, commission, board, bureau, instrumentality,
agency or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.
 
“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United
States Code) or under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
 
“Intellectual Property” means the Copyrights, Trademarks and Patents.
 
“IRC” means the United States Internal Revenue Code of 1986, as amended.
 
 
 

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“Licenses” means the Copyright Licenses, the Trademark Licenses and the Patent
Licenses.
 
“Lien” means any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in any property or assets (including accounts and contract
rights).
 
“Obligations” shall mean the collective reference to the existing and future
unpaid principal of and interest and fees and drawings on or under or in
connection with this Agreement, the Credit Agreement, the Revolving Credit Note
and the other Loan Documents and all other existing and future debts,
obligations and liabilities of the Debtors or any of the Debtors to the Secured
Party, its successors and assigns of any and every kind (including, without
limitation, interest accruing during or after any Event of Default and interest
accruing during or after any Event of Default based on the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), 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, any, certain or all of this
Agreement, the Credit Agreement, the Revolving Credit Note, the other Loan
Documents or any other documents or transactions, any replacements or
refinancings of any of the foregoing, in each case whether on account of
principal, interest, reimbursement or other obligations, fees, costs, expenses,
damages, indemnities, covenants or otherwise (including, without limitation, all
fees and disbursements of counsel to the Secured Party that are required to be
paid by the Debtors or any of them pursuant to the terms of this Agreement, the
Credit Agreement, the Revolving Credit Note and/or the other Loan Documents and
all amounts advanced or spent by the Secured Party for the maintenance or
preservation of the Collateral and all other expenditures the Secured Party may
make under the provisions of this Agreement, the Credit Agreement, the Revolving
Credit Note and/or the other Loan Documents for the benefit of Debtors or any of
the Debtors).
 
“Patent Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to manufacture, use or sell any invention covered by any
Patent (including, without limitation, all Patent Licenses set forth in Schedule
II hereto).
 
“Patents” means all domestic and foreign letters patent, design patents, utility
patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how,
formulae, rights of publicity and other general intangibles of like nature, now
existing or hereafter acquired (including, without limitation, all domestic and
foreign letters patent, design patents, utility patents, industrial designs,
inventions, trade secrets, ideas, concepts, methods, techniques, processes,
proprietary information, technology, know-how and formulae described in Schedule
II hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office, or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations, continuations in part and extensions or
renewals thereof.
 
“Permitted Liens” shall mean Liens on assets or properties of Debtors permitted
by Section 7.2 of the Credit Agreement.
 
“Titled Collateral” means motor vehicles or any asset in which ownership or
Liens are evidenced by a certificate of title or other similar evidence of
title.
 
“Trademark Licenses” means all licenses, contracts or other agreements, of any
and every kind and nature, wherever located, including, without limitation, all
of such Debtor’s present and future right, title and interest in all of the
following, whether now or hereafter owned or existing or acquired or created,
wherever located, all of such collateral, whether written or oral, naming any
Grantor as licensor or licensee and providing for the grant of any right
concerning any Trademark, together with any goodwill connected with and
symbolized by any such trademark licenses, contracts or agreements and the right
to prepare for sale or lease and sell or lease any and all Inventory now or
hereafter owned by any Grantor and now or hereafter covered by such licenses
(including, without limitation, all Trademark Licenses described in Schedule II
hereto).
 
“Trademarks” means all domestic and foreign trademarks, service marks,
collective marks, certification marks, trade names, business names, d/b/a’s,
Internet domain names, trade styles, designs, logos
 
 
 

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and other source or business identifiers and all general intangibles of like
nature, now or hereafter owned, adopted, acquired or used by any Grantor
(including, without limitation, all domestic and foreign trademarks, service
marks, collective marks, certification marks, trade names, business names,
d/b/a’s, Internet domain names, trade styles, designs, logos and other source or
business identifiers described in Schedule II hereto), all applications,
registrations and recordings thereof (including, without limitation,
applications, registrations and recordings 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), and
all reissues, extensions or renewals thereof, together with all goodwill of the
business symbolized by such marks and all customer lists, formulae and other
Records of any Grantor relating to the distribution of products and services in
connection with which any of such marks are used.
 
SECTION 2. Continuation and Grant of Security Interest.
 
(a) Each Debtor hereby covenants to and agrees with Secured Party that this
Agreement continues, amends and restates, in its entirety, without a breach in
continuity, the Existing Security Agreement, and shall not be construed as in
any way extinguishing or terminating the obligations (as defined under the
Existing Security Agreement) or the security interests granted under the
Existing Security Agreement or any other rights granted in favor of the Secured
Party thereunder.  Each Debtor also hereby represents, warrants and covenants to
the Secured Party that the Debtors party to the Existing Security Agreement,
pursuant to the Existing Security Agreement, granted to the Secured Party a
first priority perfected security interest in all of the collateral (as defined
in the Existing Security Agreement) as security for all of the obligations (as
defined in the Existing Security Agreement).
 
(b) As collateral security for all of the Obligations, each Grantor hereby
pledges and assigns to the Secured Party and grants to the Secured Party a
continuing security interest in, all of such Grantor’s now or hereafter owned or
existing or acquired or created assets and properties of any and every kind and
nature, wherever located, including, without limitation, all of such Grantor’s
present and future right, title and interest in all of the following, whether
now or hereafter owned or existing or acquired or created, wherever located (all
of such collateral, collectively, the “Collateral”):
 
(i) all Accounts;
 
(ii) all Chattel Paper (whether tangible or electronic), including, without
limitation, Electronic Chattel Paper;
 
(iii) the Commercial Tort Claims specified on Schedule VI hereto;
 
(iv) all Deposit Accounts, all cash and other property from time to time
deposited therein and the monies and property in the possession or under the
control of the Secured Party or any Affiliate, representative, agent or
correspondent of the Secured Party;
 
(v) all Documents;
 
(vi) all Equipment;
 
(vii) all Fixtures;
 
(viii) all General Intangibles (including, without limitation, all Payment
Intangibles and Software);
 
(ix) all Goods;
 
(x) all Instruments (including, without limitation, all Promissory Notes and
each certificated Security);
 
 
 

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(xi) all Inventory;
 
(xii) all Investment Property;
 
(xiii) all Copyrights, Patents and Trademarks, and all Licenses;
 
(xiv) all letters of credit and Letter-of-Credit Rights;
 
(xv) all oil, gas and minerals before extraction;
 
(xvi) all Supporting Obligations;
 
(xvii) all other tangible and intangible personal property of each Grantor
(whether or not subject to the Code), including, without limitation, all bank
and other accounts and all cash, money and all investments therein, all
proceeds, products, offspring, accessions, rents, profits, income, benefits,
substitutions and replacements of and to any of the property of any Grantor
described in the preceding clauses of this Section 2(b) (including, without
limitation, any proceeds of insurance thereon and all causes of action, claims
and warranties now or hereafter held by each Grantor in respect of any insurance
or any of the items listed above), and all books, correspondence, files and
other Records, including, without limitation, all tapes, desks, cards, Software,
data and computer programs in the possession or under the control of any Grantor
or any other Person from time to time acting for any Grantor, in each case, to
the extent of such Grantors rights therein, that at any time evidence or contain
information relating to any of the property described in the preceding clauses
of this Section 2(b) or are otherwise necessary or helpful in the collection or
realization thereof; and
 
(xviii) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and
products of any and all of the foregoing Collateral;
 
in each case howsoever any Grantor’s interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
 
Notwithstanding anything herein to the contrary, the term “Collateral” shall not
include in the case of a Corporate Subsidiary of such Grantor organized under
the laws of a jurisdiction other than the United States, any of the states
thereof or the District of Columbia (a “Foreign Subsidiary”), more than 65% (or
such greater percentage that, due to a change in applicable law after the date
hereof, (i) would not reasonably be expected to cause the undistributed earnings
of such Foreign Subsidiary as determined for United States federal income tax
purposes to be treated as a deemed dividend to such Foreign Subsidiary’s United
States parent and (ii) would not reasonably be expected to cause any material
adverse tax consequences) of the issued and outstanding shares of Capital Stock
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (it
being understood and agreed that the Collateral shall include 100% of the issued
and outstanding shares of Capital Stock not entitled to vote (within the meaning
of Treas. Reg. Section 1.956-2(c)(2)) or other equity interest of such Foreign
Subsidiary).
 
The Grantors agree that the pledge of the shares of Capital Stock acquired by a
Grantor of any and all Persons now or hereafter existing who is a Foreign
Subsidiary may in Secured Party’s sole discretion be supplemented by one or more
separate pledge agreements, deeds of pledge, share charges, or other similar
agreements or instruments, executed and delivered by the relevant Grantors in
favor of the Secured Party, which pledge agreements will provide for the pledge
of such shares of Capital Stock in accordance with the laws of the applicable
foreign jurisdiction.  With respect to such shares of Capital Stock, the Secured
Party may, at any time and from time to time, in its sole discretion, take
actions and require Grantors to take actions in such foreign jurisdictions that
will result in a perfected first priority enforceable Lien created in such
shares of Capital Stock and/or enhanced rights respecting such Liens or the
enforceability, perfection or priority thereof.
 
 
 

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SECTION 3. Security for Obligations.  The security interest created hereby in
the Collateral constitutes continuing collateral security for the payment,
performance and observance of all existing and future Obligations.
 
SECTION 4. Representations and Warranties.  Each Grantor represents and warrants
as of the date of this Agreement as follows:
 
(a) Schedule I hereto sets forth (i) the exact legal name of each Grantor, and,
if any such name has changed within the last 5 years, all predecessor names of
such Grantor, and if such Grantor has consolidated or merged with any Person in
the last 5 years, or acquired substantially all or a substantial portion of the
assets of a Person within the last 5 years, the name of the Person with whom
such Grantor merged or consolidated, or whose assets or equity was purchased and
from whom such assets or equity was purchased, and (ii) the state of
incorporation, organization or formation and the organizational identification
number of each Grantor in such state.
 
(b) There is no pending or, to its knowledge, written notice threatening any
action, suit, proceeding or claim affecting any Grantor before any governmental
authority or any arbitrator, or any order, judgment or award issued by any
governmental authority or arbitrator, in each case, that may adversely affect
the grant by any Grantor, or the perfection, of the security interest purported
to be created hereby in the Collateral, or the exercise by the Secured Party of
any of its rights or remedies hereunder.
 
(c) All Equipment, Fixtures, Goods and Inventory of each Grantor now existing
are, and all Equipment, Fixtures, Goods and Inventory of each Grantor hereafter
existing will be, located and/or based at the addresses specified therefor in
Schedule III hereto.  Each Grantor will give the Secured Party written notice of
any change in the location of any such Collateral within 20 days of such change,
other than to locations set forth on Schedule III hereto (or a new Schedule III
delivered by the Grantors to the Secured Party from time to time) and with
respect to which the Secured Party has filed financing statements and otherwise
fully perfected its Liens thereon or will take such actions pursuant to Section
5(a).  Each Grantor’s chief place of business and chief executive office, the
place where each Grantor keeps its Records concerning Accounts and all originals
of all Chattel Paper are located at the addresses specified therefor in Schedule
III hereto.  None of the Accounts is evidenced by Promissory Notes or other
Instruments.  Set forth in Schedule IV hereto is a complete and accurate list,
as of the date of this Agreement, of (i) each Promissory Note, Security,
Investment Property and other Instrument owned by each Grantor and (ii) each
Deposit Account, Securities Account and Commodities Account of each Grantor,
together with the name and address of each institution at which each such
account is maintained, the account number for each such account and a
description of the purpose of each such account (not Account).  Set forth in
Schedule II hereto is a complete and correct list of each trade name used by
each Grantor and the name of, and each trade name used by, each Person from
which each Grantor has acquired any substantial part of the Collateral.
 
(d) Each Grantor has delivered to the Secured Party complete and correct copies
of each License described in Schedule II hereto, including all schedules and
exhibits thereto, which represents all of the Licenses existing on the date of
this Agreement.  Each such License sets forth the entire agreement and
understanding of the parties thereto relating to the subject matter thereof, and
there are no other agreements, arrangements or understandings, written or oral,
relating to the matters covered thereby or the rights of such Grantor or any of
its affiliates in respect thereof.  Each material License now existing is, and
any material License entered into in the future will be, the legal, valid and
binding obligation of the parties thereto, enforceable against such parties in
accordance with its terms.  No default under any material License by any such
party has occurred, nor does any defense, offset, deduction or counterclaim
exist thereunder in favor of any such party.  No License prevents, impairs or
affects Secured Party’s right to dispose of the Inventory utilizing or
incorporating intellectual property of others and no consent of any Person is
required to be obtained under any  License before Secured Party disposes of such
Inventory utilizing or incorporating intellectual property of others.
 
(e) Each Grantor owns and controls, or otherwise possesses adequate rights to
use, all Trademarks, Patents and Copyrights, which are the only trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity necessary to conduct its
business in
 
 
 

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substantially the same manner as conducted as of the date hereof.  Schedule II
hereto sets forth a true and complete list of all registered Copyrights, issued
Patents, Trademarks, and Licenses owned or used by each Grantor as of the date
hereof.  To the best knowledge of each Grantor, all such Intellectual Property
of each Grantor is subsisting and in full force and effect, has not been
adjudged invalid or unenforceable, is valid and enforceable and has not been
abandoned in whole or in part.  Except as set forth in Schedule II, no such
Intellectual Property is the subject of any licensing or franchising
agreement.  Each Grantor has no knowledge of any conflict with the rights of
others to any such Intellectual Property and, to the best knowledge of each
Grantor, each Grantor is not now infringing or in conflict with any such rights
of others in any material respect, and to the best knowledge of each Grantor, no
other Person is now infringing or in conflict in any material respect with any
such properties, assets and rights owned or used by each Grantor.  No Grantor
has received any notice that it is violating or has violated the trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity or other intellectual
property rights of any third party.
 
(f) Each Grantor is and will be at all times the sole and exclusive owner of, or
otherwise has and will have adequate rights in, the Collateral free and clear of
any Liens, except for Permitted Liens.  No effective financing statement or
other instrument similar in effect covering all or any part of the Collateral is
on file in any recording or filing office except such as (i) may have been filed
in favor of the Secured Party relating to this Agreement and (ii) the Permitted
Liens.
 
(g) The exercise by the Secured Party of any of its rights and remedies
hereunder will not contravene any law, rule or regulation or any contractual
restriction binding on or otherwise affecting each Grantor or any of its
properties and will not result in or require the creation of any Lien, upon or
with respect to any of its properties.
 
(h) No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or other regulatory body, is required for
(i) the grant by each Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral, or (ii) the exercise by the
Secured Party of any of its rights and remedies hereunder, except (except
(A) for the filing under the Uniform Commercial Code as in effect in the
applicable jurisdiction of the financing statements described in Schedule V
hereto (or a new Schedule V delivered by the Grantors to the Secured Party from
time to time), all of which financing statements have been duly filed and are in
full force and effect or will be duly filed and in full force and effect, (B)
with respect to Deposit Accounts, and all cash and other property from time to
time deposited therein, for the execution of a control agreement with the
depository institution with which such account is maintained, as provided in
Section 5(i), (C) with respect to Commodity Contracts, for the execution of a
control agreement with the commodity intermediary with which such commodity
contract is carried, as provided in Section 5(i), (D) with respect to the
perfection of the security interest created hereby in the United States
Intellectual Property and Licenses, for the recording of the appropriate
Assignment for Security, substantially in the form of Exhibit A hereto in the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable, (E) with respect to the perfection of the security interest
created hereby in foreign Intellectual Property and Licenses, for registrations
and filings in jurisdictions located outside of the United States and covering
rights in such jurisdictions relating to such foreign Intellectual Property and
Licenses, (F) with respect to the perfection of the security interest created
hereby in Titled Collateral, for the submission of an appropriate application
requesting that the Lien of the Secured Party be noted on the Certificate of
Title or certificate of ownership, completed and authenticated by the applicable
Grantor, together with the Certificate of Title or certificate of ownership,
with respect to such Titled Collateral, to the appropriate governmental
authority, (G) with respect to the perfection of the security interest created
hereby in any Letter-of-Credit Rights, for the consent of the issuer of the
applicable letter of credit to the assignment of proceeds as provided in the
Uniform Commercial Code as in effect in the applicable jurisdiction, (H) with
respect to any action that may be necessary to obtain control of Collateral
constituting Deposit Accounts, Commodity Contracts, Electronic Chattel Paper,
Investment Property or Letter-of-Credit Rights, the taking of such actions, and
(I) the Secured Party having possession of all Documents, Chattel Paper,
Instruments and cash constituting Collateral (subclauses (A), (B), (C), (D),
(E), (F), G), (H) and (I), each a “Perfection Requirement” and collectively, the
“Perfection Requirements”).
 
(i) This Agreement creates in favor of the Secured Party a legal, valid and
enforceable security interest in the Collateral, as security for the
Obligations.  The Perfection Requirements result in the perfection of such
security interests.  Such security interests are, or in the case of Collateral
in which each Grantor
 
 
 

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obtains rights after the date hereof, will be, perfected, first priority
security interests, subject only to Permitted Liens and the Perfection
Requirements and the financing statements described in Schedule 4(g).  Such
recordings and filings and all other action necessary to perfect and protect
such security interest have been duly taken or will be taken pursuant to Section
5(n), and, in the case of Collateral in which each Grantor obtains rights after
the date hereof, will be duly taken, except for the Secured Party’s having
possession of all Documents, Chattel Paper, Instruments and cash constituting
Collateral after the date hereof and the other actions, filings and recordations
described above, including the Perfection Requirements.
 
(j) As of the date hereof, no Grantor holds any Commercial Tort Claims or has
knowledge of any pending Commercial Tort Claims, except for such Commercial Tort
Claims described in Schedule VI.
 
(k) No Grantor owns any interest in real property except as set forth on
Schedule VII and Schedule VII accurately reflects the name, address and contact
information of all landlords that lease real property to any Grantor.
 
(l) Schedule VIII contains a true, correct and complete list of all insurance
policies owned by any, certain or all Grantors indicating the insurance company,
a summary of the coverage, the policy numbers of said policies, and an
indication as to the name of all additional insureds and loss payees in respect
of such policies.  Schedule IX contains a true, correct and complete list of all
guarantees and insurance provided by EXIM Bank and which Account Debtor’s
Accounts are guaranteed or insured by EXIM Bank and whether and to what extent
there has been an assignment or transfer of or loss payees or additional
insureds designated in respect of any such guarantees and insurance.
 
SECTION 5. Covenants as to the Collateral.  So long as any of the Obligations
shall remain outstanding, and also for as long as any Letter of Credit is
outstanding or the Revolving Credit Line Facility has not been terminated,
unless the Secured Party shall otherwise consent in writing:
 
(a) Further Assurances.  Each Grantor will at its expense, at any time and from
time to time, promptly execute and deliver all further instruments and documents
and take all further action that the Secured Party may reasonably request in
order to:  (i) perfect and protect the security interest purported to be created
hereby; (ii) enable the Secured Party to exercise and enforce its rights and
remedies hereunder in respect of the Collateral; or (iii) otherwise effect the
purposes of this Agreement, including, without limitation:  (A) marking
conspicuously all Chattel Paper and each License and, at the request of the
Secured Party, each of its Records pertaining to the Collateral with a legend,
in form and substance satisfactory to the Secured Party, indicating that such
Chattel Paper, License or Collateral is subject to the security interest created
hereby, (B) delivering and pledging to the Secured Party each Promissory Note,
Security, Chattel Paper or other Instrument, now or hereafter owned by any
Grantor, duly endorsed and accompanied by executed instruments of transfer or
assignment, all in form and substance satisfactory to the Secured Party, (C)
executing and filing (to the extent, if any, that any Grantor’s signature is
required thereon) or authenticating the filing of, such financing or
continuation statements, or amendments thereto, as may be necessary or  that the
Secured Party may reasonably request in order to perfect and preserve the
security interest purported to be created hereby, (D) furnishing to the Secured
Party from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral in each case as the Secured Party may reasonably request, all in
reasonable detail, (E) if any Collateral shall be in the possession of a third
party, or in premises of a third party, notifying such Person of the Secured
Party’s security interest created hereby and obtaining a written agreement in
form and substance satisfactory to the Secured Party from such Person providing
access to such Collateral in order to remove such Collateral from such premises
during an Event of Default and acknowledging that such Person holds possession
of the Collateral for the benefit of the Secured Party, and agreeing to such
other matters as Secured Party may reasonably require; (F) if at any time after
the date hereof, any Grantor acquires or holds any Commercial Tort Claim,
promptly notifying the Secured Party in a writing signed by such Grantor setting
forth a brief description of such Commercial Tort Claim and granting to the
Secured Party a security interest therein and in the proceeds thereof, which
writing shall incorporate the provisions hereof and shall be in form and
substance satisfactory to the Secured Party, (G) upon the acquisition after the
date hereof by any Grantor of any motor vehicle or other Equipment subject to a
certificate of title or ownership (other than a Motor Vehicle or Equipment that
is subject to a purchase money security interest), causing the Secured Party to
be listed as the lienholder on such certificate of title or ownership and
delivering evidence of the same to the
 
 
 

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Secured Party in accordance with Section 5(j) hereof; and (H) taking all actions
required by any earlier versions of the Uniform Commercial Code or by other law,
as applicable, in any relevant Uniform Commercial Code jurisdiction, or by other
law as applicable in any foreign jurisdiction (I) fulfilling the Perfection
Requirements; and (J) obtaining consents from licensors under any Licenses so
that the Secured Party can dispose of Inventory incorporating or utilizing
intellectual property of others, in form and substance satisfactory to Secured
Party.
 
(b) Location of Equipment and Inventory.  Each Grantor will keep the Equipment
and Inventory (i) at the locations specified therefor on Schedule III hereto, or
(ii) at such other locations set forth on Schedule III (or a new Schedule III
delivered by the Grantors to Secured Party from time to time) and with respect
to which the Secured Party has filed financing statements and otherwise fully
perfected its Liens thereon, or (iii) at such other locations in the United
States, provided that within 20 days following the relocation of Equipment or
Inventory to such other location or the acquisition of Equipment or Inventory,
such Grantor shall deliver to the Secured Party a new Schedule III indicating
such new locations.
 
(c) Provisions Concerning the Accounts and the Licenses.
 
(i) Each Grantor will (A) give the Secured Party at least 30 days’ prior written
notice of any change in such Grantor’s name, identity or organizational
structure, (B) maintain its jurisdiction of incorporation, organization or
formation as set forth in Schedule I hereto, and (C) immediately notify the
Secured Party upon obtaining an organizational identification number, if on the
date hereof such Grantor did not have such identification number.
 
(ii) Each Grantor will, except as otherwise provided in this subsection (c),
continue to collect, at its own expense, all amounts due or to become due under
the Accounts for deposit into the Lockbox Account.  In connection with such
collections, any Grantor may (and, at the Secured Party’s direction, will) take
such action as any Grantor or the Secured Party may deem necessary or advisable
to enforce collection or performance of the Accounts; provided, however, that
the Secured Party shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default, to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the Secured
Party and to direct such account debtors or obligors to make payment of all
amounts due or to become due to any Grantor thereunder directly to the Secured
Party or its designated agent and, upon such notification and at the expense of
any Grantor and to the extent permitted by law, to enforce collection of any
such Accounts and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as any Grantor might have done.  After
receipt by any Grantor of a notice from the Secured Party that the Secured Party
has notified, intends to notify, or has enforced or intends to enforce any
Grantor’s rights against the account debtors or obligors under any Accounts as
referred to in the proviso to the immediately preceding sentence, (A) all
amounts and proceeds (including Instruments) received by any Grantor in respect
of the Accounts shall be received in trust for the benefit of the Secured Party
hereunder, shall be segregated from other funds of any Grantor and shall be
forthwith paid over to the Secured Party in the same form as so received (with
any necessary endorsement) to be applied as specified in Section 7(b) hereof,
and (B) no Grantor will adjust, settle or compromise the amount or payment of
any Account or release wholly or partly any account debtor or obligor thereof or
allow any credit or discount thereon.  In addition, upon the occurrence and
during the continuance of an Event of Default, the Secured Party may (in its
sole and absolute discretion) direct any or all of the banks and financial
institutions with which any Grantor either maintains a Deposit Account or a
lockbox or deposits the proceeds of any Accounts to send immediately to the
Secured Party by wire transfer (to such account as the Secured Party shall
specify, or in such other manner as the Secured Party shall direct) all or a
portion of such securities, cash, investments and other items held by such
institution.  Any such securities, cash, investments and other items so received
by the Secured Party shall be applied as specified in accordance with Section
7(b) hereof.
 
(iii) Upon the occurrence and during the continuance of any breach or default
under any material License referred to in Schedule II hereto by any party
thereto other than any Grantor, each Grantor party thereto will, promptly after
obtaining knowledge thereof, give the Secured Party written notice of the nature
and duration thereof, specifying what action, if any, it has taken and proposes
to take with respect thereto and thereafter will take reasonable steps to
protect and preserve its rights and remedies in respect of such breach or
default, or will obtain or acquire an appropriate substitute License.
 
 
 

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(iv) Each Grantor will, at its expense, promptly deliver to the Secured Party a
copy of each notice or other communication received by it by which any other
party to any material License referred to in Schedule II hereto purports to
exercise any of its rights or affect any of its obligations thereunder, together
with a copy of any reply by such Grantor thereto.
 
(v) Each Grantor will exercise promptly and diligently each and every right
which it may have under each material License (other than any right of
termination) and will duly perform and observe in all respects all of its
obligations under each material License and will take all action reasonably
necessary to maintain such Licenses in full force and effect.  No Grantor will,
without the prior written consent of the Secured Party, cancel, terminate, amend
or otherwise modify in any respect, or waive any provision of, any material
License referred to in Schedule II hereto.
 
(d) Transfers and Other Liens.  No Grantor will sell, assign (by operation of
law or otherwise), lease, license, exchange or otherwise transfer or dispose of
any of the Collateral, except as specifically permitted by the Credit Agreement.
 
(e) Intellectual Property.
 
(i) If applicable, any Grantor shall, upon the Secured Party’s written request,
duly execute and deliver the applicable Assignment for Security in the form
attached hereto as Exhibit A.  Each Grantor (either itself or through licensees)
will, and will cause each licensee thereof to, take all action necessary to
maintain all of the Intellectual Property in full force and effect, including,
without limitation, using the proper statutory notices and markings and using
the Trademarks on each applicable trademark class of goods in order to so
maintain the Trademarks in full force and free from any claim of abandonment for
non-use, and each Grantor will not (nor permit any licensee thereof to) do any
act or knowingly omit to do any act whereby any Intellectual Property may become
invalidated; provided, however, that so long as no Event of Default has occurred
and is continuing, no Grantor shall have an obligation to use or to maintain any
Intellectual Property (A) that relates solely to any product or work, that has
been, or is in the process of being, discontinued, abandoned or terminated, (B)
that is being replaced with Intellectual Property substantially similar to the
Intellectual Property that may be abandoned or otherwise become invalid, so long
as the failure to use or maintain such Intellectual Property does not materially
adversely affect the validity of such replacement Intellectual Property and so
long as such replacement Intellectual Property is subject to the Lien created by
this Agreement or (C) that is substantially the same as another Intellectual
Property that is in full force, so long the failure to use or maintain such
Intellectual Property does not materially adversely affect the validity of such
replacement Intellectual Property and so long as such other Intellectual
Property is subject to the Lien and security interest created by this
Agreement.  Each Grantor will cause to be taken all necessary steps in any
proceeding before the United States Patent and Trademark Office and the United
States Copyright Office or any similar office or agency in any other country or
political subdivision thereof to maintain each registration of the Intellectual
Property (other than the Intellectual Property described in the proviso to the
immediately preceding sentence), including, without limitation, filing of
renewals, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and payment of maintenance fees,
filing fees, taxes or other governmental fees.  If any Intellectual Property
(other than Intellectual Property described in the proviso to the first sentence
of subsection (i) of this clause (h)) is infringed, misappropriated, diluted or
otherwise violated in any material respect by a third party, each Grantor shall
(x) upon learning of such infringement, misappropriation, dilution or other
violation, promptly notify the Secured Party and (y) to the extent any Grantor
shall deem appropriate under the circumstances, promptly sue for infringement,
misappropriation, dilution or other violation, seek injunctive relief where
appropriate and recover any and all damages for such infringement,
misappropriation, dilution or other violation, or take such other actions as
such Grantor shall deem appropriate under the circumstances to protect such
Intellectual Property.  Each Grantor shall furnish to the Secured Party from
time to time upon its request statements and schedules further identifying and
describing the Intellectual Property and Licenses and such other reports in
connection with the Intellectual Property and Licenses as the Secured Party may
reasonably request, all in reasonable detail and promptly upon request of the
Secured Party, following receipt by the Secured Party of any such statements,
schedules or reports, each Grantor shall modify this Agreement by amending
Schedule II hereto, as the case may be, to include any Intellectual Property and
License, as the case may be, which becomes part of the Collateral under this
Agreement and shall execute and authenticate such documents and do such acts as
shall be necessary or, in the reasonable judgment of the Secured Party,
desirable to subject such Intellectual
 
 
 

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Property and Licenses to the Lien and security interest created by this
Agreement.  Notwithstanding anything herein to the contrary, upon the occurrence
and during the continuance of an Event of Default, no Grantor may abandon or
otherwise permit any Intellectual Property to become invalid without the prior
written consent of the Secured Party, and if any Intellectual Property is
infringed, misappropriated, diluted or otherwise violated in any material
respect by a third party, each Grantor will take such action as the Secured
Party shall deem appropriate under the circumstances to protect such
Intellectual Property.
 
(ii) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for the registration of any
Trademark or Copyright or the issuance of any Patent with the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable, or in any similar office or agency of the United States or any
country or any political subdivision thereof unless it gives the Secured Party
prior written notice thereof.  Upon request of the Secured Party, any Grantor
shall execute, authenticate and deliver any and all assignments, agreements,
instruments, documents and papers as the Secured Party may reasonably request to
evidence the Secured Party’s security interest hereunder in such Intellectual
Property and the General Intangibles of any Grantor relating thereto or
represented thereby, and each Grantor hereby appoints the Secured Party its
attorney-in-fact to execute and/or authenticate and file all such writings for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed, and such power (being coupled with an interest) shall be irrevocable
until the indefeasible payment in full in cash of all of the Obligations in
full.
 
(iii) All Intellectual Property owned by one Grantor and licensed (or where
permission of use is provided) to another Grantor may be sold or disposed of or
used by Secured Party during an Event of Default without regard to any such
license or other agreement.
 
(f) Deposit, Commodities and Securities Accounts.  Upon the Secured Party’s
written request each Grantor shall cause each bank and other financial
institution where an account referred to in Schedule IV hereto is maintained to
execute and deliver to the Secured Party a control agreement, in form and
substance reasonably satisfactory to the Secured Party, duly executed by each
Grantor and such bank or financial institution, or enter into other arrangements
in form and substance satisfactory to the Secured Party, pursuant to which such
institution shall irrevocably agree, inter alia, that (i) it will comply at any
time with the instructions originated by the Secured Party to such bank or
financial institution directing the disposition of cash, Commodity Contracts,
securities, Investment Property and other items from time to time credited to
such account, without the consent of the applicable Grantor, which instructions
the Secured Party will not give to such bank or other financial institution in
the absence of a continuing Event of Default, (ii) all Commodity Contracts,
securities, Investment Property and other items of each Grantor deposited with
such institution shall be subject to a perfected, first priority security
interest in favor of the Secured Party, (iii) any right of set off (other than
recoupment of standard fees), banker’s Lien or other similar Lien, security
interest or encumbrance shall be fully waived as against the Secured Party, and
(iv) upon receipt of written notice from the Secured Party during the
continuance of an Event of Default, such bank or financial institution shall
immediately send to the Secured Party by wire transfer (to such account as the
Secured Party shall specify, or in such other manner as the Secured Party shall
direct) all such cash, the value of any Commodity Contracts, securities,
Investment Property and other items held by it.  Without the prior written
consent of the Secured Party, each Grantor shall not make or maintain any
Deposit Account, Commodity Account or Securities Account except for the accounts
set forth in Schedule IV hereto.  The provisions of this paragraph 5(f) shall
not apply to (i) Deposit Accounts for which the Secured Party is the depositary
and (ii) Deposit Accounts specially and exclusively used for payroll, payroll
taxes and other employee wage and benefit payments to or for the benefit of each
Grantor’s salaried or hourly employees.
 
(g) Motor Vehicles.  Upon the Secured Party’s written request, each Grantor
shall deliver to the Secured Party originals of the certificates of title or
ownership for all motor vehicles with a value in excess of $50,000, owned by it
with the Secured Party listed as lienholder.
 
(h) Control.  Each Grantor hereby agrees to take any or all action that may be
necessary or that the Secured Party may reasonably request in order for the
Secured Party to obtain control in accordance with Sections 9-105 – 9-107 of the
Code with respect to the following Collateral:  (i) Electronic Chattel Paper,
(ii) Investment Property, and (iii) Letter-of-Credit Rights.
 
 
 

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(i) Inspection and Reporting.  Each Grantor shall permit the Secured Party, or
any agent or representatives thereof or such professionals or other Persons as
the Secured Party may designate to discuss such Grantor’s affairs, finances and
accounts with any of its directors, officers, managerial employees, independent
accountants or any of its other representatives.
 
SECTION 6. Additional Provisions Concerning the Collateral.
 
(a) To the maximum extent permitted by applicable law, and for the purpose of
taking any action that the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, each Grantor hereby (i) authorizes
the Secured Party to execute any agreements, instruments or other documents in
such Grantor’s name and to file such agreements, instruments or other documents
in such Grantor’s name and in any appropriate filing office, (ii) authorizes the
Secured Party at any time and from time to time to file, one or more financing
or continuation statements, and amendments thereto, relating to the Collateral
(including, without limitation, any such financing statements that (A) describe
the Collateral as “all assets” or “all personal property” (or words of similar
effect) or that describe or identify the Collateral by type or in any other
manner as the Secured Party may determine regardless of whether any particular
asset of such Grantor falls within the scope of Article 9 of the Uniform
Commercial Code or whether any particular asset of such Grantor constitutes part
of the Collateral, and (B) contain any other information required by Part 5 of
Article 9 of the Code for the sufficiency or filing office acceptance of any
financing statement, continuation statement or amendment, including, without
limitation, whether such Grantor is an organization, the type of organization
and any organizational identification number issued to such Grantor) and (iii)
ratifies such authorization to the extent that the Secured Party has filed any
such financing or continuation statements, or amendments thereto, prior to the
date hereof.  A photocopy or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
 
(b) Each Grantor hereby irrevocably appoints the Secured Party as its
attorney-in-fact and proxy, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time in the
Secured Party’s discretion, so long as an Event of Default shall have occurred
and is continuing, to take any action and to execute any instrument which the
Secured Party may reasonably deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, (i) to obtain and
adjust insurance required to be paid to the Secured Party pursuant to any of the
Loan Documents, (ii) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any Collateral, (iii) to receive, endorse, and collect any
drafts or other Instruments, Documents and Chattel Paper in connection with
clause (i) or (ii) above, (iv) to file any claims or take any action or
institute any proceedings which the Secured Party may deem necessary or
desirable for the collection of any Collateral or otherwise to enforce the
rights of the Secured Party with respect to any Collateral, and (v) to execute
assignments, licenses and other documents to enforce the rights of the Secured
Party with respect to any Collateral.  This power is coupled with an interest
and is irrevocable until all of the Obligations are indefeasibly paid in full in
cash and all Letters of Credit are no longer outstanding and the Revolving
Credit Line Facility is terminated.
 
(c) For the purpose of enabling the Secured Party to exercise rights and
remedies hereunder, at such time as the Secured Party shall be lawfully entitled
to exercise such rights and remedies, and for no other purpose, each Grantor
hereby grants to the Secured Party, to the extent assignable, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to any Grantor) to use, assign, license or sublicense any
Intellectual Property now owned or hereafter acquired by such Grantor, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof.  Notwithstanding
anything contained herein to the contrary, so long as no Event of Default shall
have occurred and be continuing, any Grantor may exploit, use, enjoy, protect,
license, sublicense, assign, sell, dispose of or take other actions with respect
to the Intellectual Property in the ordinary course of its business.  In
furtherance of the foregoing, unless an Event of Default shall have occurred and
be continuing, the Secured Party shall from time to time, upon the request of
any Grantor, execute and deliver any instruments, certificates or other
documents, in the form so requested, which such Grantor shall have certified are
appropriate (in such Grantor’s judgment) to allow it to take any action
permitted above (including relinquishment of the license provided pursuant to
this clause (c) as to any Intellectual Property).  Further, upon the
indefeasible payment in full in cash of all of the Obligations, if no Letter of
Credit is outstanding
 
 
 

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 and the Revolving Credit Line Facility has been terminated, the Secured Party
(subject to Section 10(e) hereof) shall release and reassign to any Grantor all
of the Secured Party’s right, title and interest in and to the Intellectual
Property, and the Licenses, all without recourse, representation or warranty
whatsoever.  The exercise of rights and remedies hereunder by the Secured Party
shall not terminate the rights of the holders of any licenses or sublicenses
theretofore granted by each Grantor in accordance with the second sentence of
this clause (c).  Each Grantor hereby releases the Secured Party from any
claims, causes of action and demands at any time arising out of or with respect
to any actions taken or omitted to be taken by the Secured Party under the
powers of attorney granted herein other than actions taken or omitted to be
taken through the Secured Party’s gross negligence or willful misconduct, as
determined by a final determination of a court of competent jurisdiction.
 
(d) If any Grantor fails to perform any agreement or obligation contained
herein, the Secured Party may itself perform, or cause performance of, such
agreement or obligation, in the name of such Grantor or the Secured Party, and
the expenses of the Secured Party incurred in connection therewith shall be
payable by such Grantor pursuant to the Loan Documents and shall be secured by
the Collateral.
 
(e) The powers conferred on the Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers.  Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Secured Party shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
 
(f) Anything herein to the contrary notwithstanding (i) each Grantor shall
remain liable under the Licenses and otherwise with respect to any of the
Collateral to the extent set forth therein to perform all of its obligations
thereunder to the same extent as if this Agreement had not been executed, (ii)
the exercise by the Secured Party of any of its rights hereunder shall not
release any Grantor from any of its obligations under the Licenses or otherwise
in respect of the Collateral, and (iii) the Secured Party shall not have any
obligation or liability by reason of this Agreement under the Licenses or with
respect to any of the other Collateral, nor shall the Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
 
SECTION 7. Remedies Upon Event of Default.  If any Event of Default shall have
occurred and be continuing:
 
(a) The Secured Party may exercise in respect of the Collateral, in addition to
any other rights and remedies provided for herein or otherwise available to it,
all of the rights and remedies of a secured party upon default under the Code
(whether or not the Code applies to the affected Collateral) or other applicable
Uniform Commercial Code and any other applicable law, and also may (i) take
absolute control of the Collateral, including, without limitation, transfer into
the Secured Party’s name or into the name of its nominee or nominees (to the
extent the Secured Party has not theretofore done so) and thereafter receive,
for the benefit of the Secured Party, all payments made thereon, give all
consents, waivers and ratifications in respect thereof and otherwise act with
respect thereto as though it were the outright owner thereof, (ii) require each
Grantor to, and each Grantor hereby agrees that it will at its expense and upon
request of the Secured Party forthwith, assemble all or part of its respective
Collateral as directed by the Secured Party and make it available to the Secured
Party at a place or places to be designated by the Secured Party that is
reasonably convenient to both parties, and the Secured Party may enter into and
occupy any premises owned or leased by any Grantor where the Collateral or any
part thereof is located or assembled for a reasonable period in order to
effectuate the Secured Party’s rights and remedies hereunder or under law,
without obligation to any Grantor in respect of such occupation, and (iii)
without notice except as specified below and without any obligation to prepare
or process the Collateral for sale, (A) sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any of the Secured Party’s
offices or elsewhere, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as the Secured Party may deem
commercially reasonable and/or (B) lease, license or dispose of the Collateral
or any part thereof upon such terms as the Secured Party may deem commercially
reasonable.  Each Grantor agrees that, to the extent notice of sale or any other
disposition of its respective Collateral shall be required by law, at least ten
(10) days’ notice to any Grantor of the time and place of any public sale or the
time after which any private sale or other disposition of its respective
Collateral is to be made shall constitute reasonable notification.  The Secured
Party shall not be obligated to make
 
 
 

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any sale or other disposition of any Collateral regardless of notice of sale
having been given.  The Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned.  Each Grantor hereby waives any claims against the Secured Party
arising by reason of the fact that the price at which its respective Collateral
may have been sold at a private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the
Obligations, even if the Secured Party accepts the first offer received and does
not offer such Collateral to more than one offeree, and waives all rights that
any Grantor may have to require that all or any part of such Collateral be
marshaled upon any sale (public or private) thereof.  Each Grantor hereby
acknowledges that (i) any such sale of its respective Collateral by the Secured
Party shall be made without warranty, (ii) the Secured Party may specifically
disclaim any warranties of title, possession, quiet enjoyment or the like, and
(iii) such actions set forth in clauses (i) and (ii) above shall not adversely
affect the commercial reasonableness of any such sale of Collateral.  In
addition to the foregoing, (1) upon written notice to any Grantor from the
Secured Party after and during the continuance of an Event of Default, such
Grantor shall cease any use of the Intellectual Property or any trademark,
patent or copyright similar thereto for any purpose described in such notice;
(2) the Secured Party may, at any time and from time to time after and during
the continuance of an Event of Default, upon 10 days’ prior notice to such
Grantor, license, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any of the Intellectual Property, throughout
the universe for such term or terms, on such conditions, and in such manner, as
the Secured Party shall in its sole discretion determine; and (3) the Secured
Party may, at any time, pursuant to the authority granted in Section 6 hereof
(such authority being effective upon the occurrence and during the continuance
of an Event of Default), execute and deliver on behalf of such Grantor, one or
more instruments of assignment of the Intellectual Property (or any application
or registration thereof), in form suitable for filing, recording or registration
in any country.
 
(b) Any cash held by the Secured Party as Collateral and all Cash Proceeds
received by the Secured Party in respect of any sale of or collection from, or
other realization upon, all or any part of the Collateral shall be applied
(after payment of any amounts payable to or for the benefit of the Secured Party
pursuant to the Loan Documents) by the Secured Party against, all or any part of
the Obligations in such order as the Secured Party shall elect, consistent with
the UCC.  Any surplus of such cash or Cash Proceeds held by the Secured Party
and remaining after the indefeasible payment in full in cash of all of the
Obligations shall be paid over to whomsoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall direct.
 
(c) In the event that the proceeds of any such sale, collection or realization
are insufficient to pay all amounts to which the Secured Party is legally
entitled, each Grantor shall be liable for the deficiency, together with
interest thereon at the Default Rate, together with the costs of collection and
the reasonable fees, costs, expenses and other client charges of any attorneys
or agents employed by the Secured Party to collect such deficiency.
 
(d) Each Grantor hereby acknowledges that if the Secured Party complies with any
applicable state, provincial, or federal law requirements in connection with a
disposition of the Collateral, such compliance will not adversely affect the
commercial reasonableness of any sale or other disposition of the Collateral.
 
(e) The Secured Party shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or Collateral or other assurances
of payment in any particular order, and all of the Secured Party’s rights
hereunder and in respect of such collateral security or Collateral and other
assurances of payment shall be cumulative and in addition to all other rights,
however existing or arising.  To the extent that any Grantor lawfully may, each
Grantor hereby agrees that it will not invoke any law relating to the marshaling
of collateral which might cause delay in or impede the enforcement of the
Secured Party’s rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
each Grantor hereby irrevocably waives the benefits of all such laws.
 
(f) Secured Party has no obligation to clean-up or otherwise prepare the
Collateral for sale.
 
 
 

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(g) Secured Party has no obligation to attempt to satisfy the Obligations by
collecting them from any other Person liable for them and Secured Party may
release, modify or waive any collateral provided by any other Person to secure
any of the Obligations, all without affecting Secured Party’s rights against
Grantors.  Each Grantor waives any right it may have to require Secured Party to
pursue any third Person for any of the Obligations.
 
(h) In the event the Secured Party seeks to take possession of all or any
portion of the Collateral by judicial process, each Grantor irrevocably waives
(i) the posting of any bond, surety or security with respect thereto which might
otherwise be required, (ii) any demand for possession prior to the commencement
of any suit or action to recover the Collateral, and (iii) any requirement that
the Secured Party retain possession and not dispose of any Collateral until
after trial or final judgment.
 
(i) The Secured Party shall have the right, in addition to any rights and
remedies provided hereunder, and at law, without prior notice to the Grantors
after or during the occurrence of an Event of Default, to set-off and
appropriate and apply any and all deposits and any other credits, indebtedness
or claims, whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Secured Party to or for the credit
or the account of any, certain or all of the Grantors.  No right of set-off
shall be deemed to have been waived by any act or conduct on the part of the
Secured Party or the Grantors, or by any neglect to exercise such right of
set-off, or by any delay in doing so.  Every right of set-off shall continue in
full force and effect until specifically waived or released by an instrument in
writing executed by the Secured Party.
 
(j) The Secured Party is hereby authorized by Grantor to appoint a liquidator(s)
or agent(s) to exercise any of Secured Party’s rights and remedies in respect of
any Collateral.
 
(k) The enumeration of the foregoing rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies the Secured Party may have under the
UCC or other applicable law or any of the Loan Documents.  The Secured Party
shall have the right, in its sole discretion, to determine which rights and
remedies, and in which order any of the same, are to be exercised, and to
determine which Collateral is to be proceeded against and in which order and the
exercise of any right or remedy shall not preclude the exercise of any others,
all of which shall be cumulative.
 
SECTION 8. Notices, Etc.  All notices and other communications provided for
hereunder shall be in writing and shall be given in accordance with the
requirements of the Credit Agreement and shall be effective on the terms set
forth therein and, to the extent notices are required to be given to the
Grantors, such notices may be provided in care of the Parent at the two
addresses for the Parent determined in accordance with the Credit Agreement.
 
SECTION 9. Miscellaneous.
 
(a) No amendment of any provision of this Agreement shall be effective unless it
is in writing and signed by each Grantor and the Secured Party, and no waiver of
any provision of this Agreement, and no consent to any departure by any Grantor
therefrom, shall be effective unless it is in writing and signed by the Secured
Party, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
 
(b) No failure on the part of the Secured Party to exercise, and no delay in
exercising, any right hereunder or under any of the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.  The rights and remedies of the Secured Party provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law.  The rights of the Secured
Party under any of the other Loan Documents against any party thereto are not
conditional or contingent on any attempt by such Person to exercise any of its
rights under any of the other Loan Documents against such party or against any
other Person, including but not limited to, any Grantor.
 
 
 

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(c) Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction or with respect to any Grantor shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction or with respect to
any other Grantor.
 
(d) This Agreement shall create a continuing security interest in the Collateral
and shall (i) remain in full force and effect until the indefeasible payment in
full in cash of the Obligations, the termination of the Revolving Credit Line
Facility and the termination of all outstanding Letters of Credit, and (ii) be
binding on each Grantor and all other Persons who become bound as debtor to this
Agreement in accordance with Section 9-203(d) of the Code and shall inure,
together with all rights and remedies of the Secured Party hereunder, to the
Secured Party and its successors, transferees and assigns.  Without limiting the
generality of clause (ii) of the immediately preceding sentence, without notice
to any Grantor, the Secured Party may assign or otherwise transfer their rights
and obligations under this Agreement and any of the other Loan Documents, to any
other Person and such other Person shall thereupon become vested with all of the
benefits in respect thereof granted to the Secured Party.  Upon any such
assignment or transfer, all references in this Agreement to the Secured Party
shall mean the assignee of the Secured Party.  None of the rights or obligations
of any Grantor hereunder may be assigned or otherwise transferred without the
prior written consent of the Secured Party, and any such assignment or transfer
without the consent of the Secured Party shall be null and void.
 
(e) Upon the indefeasible payment in full in cash of the Obligations, the
termination of the Revolving Credit Line Facility and the termination of all
outstanding Letters of Credit (i) this Agreement and the security interests
created hereby shall terminate and all rights to the Collateral shall revert to
the respective Grantor that granted such security interests hereunder, and (ii)
the Secured Party will, upon any Grantor’s request and at such Grantor’s
expense, (A) return to such Grantor such of the Collateral as shall not have
been sold or otherwise disposed of or applied pursuant to the terms hereof, and
(B) execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination, all without any representation,
warranty or recourse whatsoever.
 
(f) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICTS OF
LAWS PRINCIPLES EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO
THE EXTENT THAT THE PERFECTION OR THE EFFECT OF PERFECTION OR NON-PERFECTION OF
THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE REQUIRED TO BE GOVERNED BY THE LAW OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
 
(g) EACH OF THE DEBTORS AND THE SECURED PARTY MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WIAVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE SECURED PARTY TO ACCEPT THIS
AGREEMENT AND MAKE ANY REVOLVING CREDIT LOAN.
 
(h) Except as prohibited by law, each party hereto hereby waives any right it
may have to claim or recover in any litigation referred to in Section 9(g) any
special, exemplary or punitive damages.
 
(i) Each party hereto (i) certifies that no representative, agent or attorney of
the Secured Party has represented, expressly or otherwise, that the Secured
Party would not, in the event of litigation, seek to enforce the foregoing
waivers and (ii) acknowledges that it has been induced to enter into this
Agreement or the other Loan Documents, as applicable, by, among other things,
the mutual waivers and certifications herein.
 
(j) Any legal action or proceeding with respect to this Agreement or the
Revolving Credit Note or any other Loan Document may be brought in the courts of
New York County in the State of New York or of
 
 
 

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the United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the Debtors hereby accepts for
themselves and in respect of their property, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts.
 
(k) Each of the Debtors hereby irrevocably waives, in connection with any such
action or proceeding, any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which they may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions.
 
(l) Each of the Debtors hereby irrevocably consents to the service of process of
any of the aforementioned courts in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to each such
person, as the case may be, at its address set forth in the Credit Agreement.
 
(m) Nothing herein shall affect the right of the Secured Party to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against any Debtor in any other jurisdiction.
 
(n) Section headings herein are included for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
 
(o) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together constitute one in the same
Agreement.
 
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
 
Notice Addresses :
 
CITIBANK, N.A.
 
Hauppauge, NY 11788
INDUSTRIAL ENTERPRISES OF
AMERICA, INC.
 
By: ____________________________
Name:
Title:
 

 
 
 
New York, NY 10017
UNIFIDE INDUSTRIES, LIMITED LIABILITY COMPANY
 
By: ____________________________
Name:
Title:
 

   
 
 
New York, NY 10017
PITT PENN OIL CO., LLC
 
By: ____________________________
Name:
Title:
 
    BANK OF AMERICA, N.A.
 
New York, NY 10036
EMC PACKAGING, INC.
 
By: ____________________________
Name:
Title:
 
TODAYS WAY MANUFACTURING LLC
 
By: ____________________________
Name:
Title:
 
PITT PENN HOLDING CO., LLC
 
By: ____________________________
Name:
Title:
 
 
SOVEREIGN BANK
 
By: ____________________________
Name:
Title: